UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities
Exchange Act of 1934
I-MINERALS INC.
(Exact name of registrant as specified in its charter)
Canada | 20-4644299 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
Suite 880, 580
Hornby Street,
Vancouver, BC Canada |
V6C 3B6 | |
(Address of principal executive offices) | (Zip Code) | |
(604) 303-6573 | ||
Registrant’s telephone number | ||
Securities to be registered under Section 12(b) of the Exchange Act:
Tile of each
class to be so registered
NONE. |
Name of exchange
on which each class is to be registered.
N/A |
|
Securities to be registered under Section 12(g) of the Exchange Act:
COMMON SHARES, WITHOUT PAR VALUE
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
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I-MINERALS INC.
FORM 10
TABLE OF CONTENTS
Page 2 of 60
GLOSSARY OF TECHNICAL GEOLOGICAL TERMS
The following defined technical geological terms are used in our registration statement:
Adamellite | An intrusive, felsic, igneous rock that has an approximately equal proportion of orthoclase and plagioclase feldspars. It is typically a light colored phaneritic to porphyritic granitic rock. Also known as quartz monzonite. |
Alumina | An oxide of aluminum and important constituent of clay minerals. |
Aluminosilicate | Minerals composed of aluminium, silicon, and oxygen, plus countercations. They are a major component of kaolin and other clay minerals. |
Amorphus | Means without a clearly defined shape or form. |
Apatite | A group of phosphate minerals, usually referring to hydroxylapatite, fluorapatite and chlorapatite, named for high concentrations of OH−, F− and Cl− ions, respectively, in the crystal. |
Aphyric | The texture of fine-grained igneous rocks, showing two generations of the same mineral but without phenocrysts. |
Argillite | A compact rock, derived either from mudstone (claystone or siltstone), or shale, that has undergone a somewhat higher degree of induration than mudstone or shale but is less clearly laminated and without its fissility, and that lacks the cleavage distinctive of slate. |
Basalt | A common extrusive igneous rock formed from the rapid cooling of basaltic lava exposed at or very near the surface of a planet or moon. |
Basin | A natural depression of strata containing a coalbed or other stratified deposit. |
Bauxite | An off-white, grayish, brown, yellow, or reddish brown rock composed of amorphous or microcrystalline aluminum oxides and oxyhydroxides. It is massive, pisolitic, earthy; occurs as weathered surface deposits after prolonged leaching of silica from aluminous rocks under tropical to subtropical weathering, also transported deposits. Bauxite is the chief ore of aluminum. |
Bedrock | Solid rock exposed at the surface of the Earth or overlain by unconsolidated material, weathered rock, or soil. |
Benefication | Concentration or other preparation of coal or ores for smelting by drying, flotation, or magnetic separation. |
Block Faulting | A type of normal faulting in which the crust is divided into structural or fault blocks of different elevations and orientations. It is the process by which block mountains are formed. |
Biotite | A common phyllosilicate mineral within the mica group. |
Cathodoluminescence | An optical and electromagnetic phenomenon in which electrons impacting on a luminescent material such as a phosphor, cause the emission of photons which may have wavelengths in the visible spectrum. |
Calcium Carbonate | One of the most stable, common, and widely dispersed of materials. It occurs in nature as aragonite, calcite, chalk, limestone, lithographic stone, marble, marl, and travertine. |
Clast | A rock fragment or grain resulting from the breakdown of larger rocks. |
Clay | An extremely fine-grained natural earthy material composed primarily of hydrous aluminum silicates. It may be a mixture of clay minerals and small amounts of nonclay materials or it may be predominantly one clay mineral. The type is determined by the predominant clay mineral. Clay is plastic when sufficiently pulverized and wetted, rigid when dry, and vitreous when fired to a sufficiently high temperature. |
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Conifer | Any of various mostly needle-leaved or scale-leaved, chiefly evergreen, cone-bearing gymnospermous trees or shrubs such as pines, spruces, and firs. |
Cretaceous | Of, denoting, or formed in the last period of the Mesozoic era, between the Jurassic and Tertiary periods, lasting 80 million years during which chalk deposits were formed and flowering plants first appeared. |
Devitrify | To cause (a glassy material) to become crystalline and brittle. |
Eocene | The Eocene epoch, lasting from 56 to 33.9 million years ago, is a major division of the geologic timescale and the second epoch of the Paleogene Period in the Cenozoic Era. |
Electron Microprobe | Also known as an electron probe microanalyzer or electron micro probe analyzer, is an analytical tool used to non-destructively determine the chemical composition of small volumes of solid materials. |
Epidote | Epidote is a calcium aluminium iron sorosilicate mineral. |
Facies | A term of wide application, referring to such aspects of rock units as rock type, mode of origin, composition, fossil content, or environment of deposition. |
Feldspar | A group of rock forming minerals that make up approximately 60% of the earth’s crust and occurs in all rock types and decomposes to form much of the clay in soil, including kaolinite. |
Fold | A curve or bend of a planar structure such as rock strata, bedding planes, foliation, or cleavage. A fold is usually a product of deformation, although its definition is descriptive and not genetic and may include primary structures. |
Garnet | Garnets are a group of silicate minerals that have been used since the Bronze Age as gemstones and abrasives. All species of garnets possess similar physical properties and crystal forms, but differ in chemical composition. |
Gneiss | A common and widely distributed rock formed by high grade regional metamorphic processes and pre-existing formations. |
Granitic | Pertaining to or composed of granite. |
Granite | A common and widely occurring type of intrusive, felsic and igneous rock. |
Granitoid | A granitoid or granitic rock is a variety of coarse grained plutonic rock similar to granite which mineralogically are composed predominantly of feldspar and quartz. |
Granodiorite | A group of coarse-grained plutonic rocks containing quartz, plagioclase and potassium feldspar. |
Granular | Resembling or consisting of small grains or particles. |
Groundmass | The material between the phenocrysts of a porphyritic igneous rock. |
Halloysite | A monoclinic mineral that is part of the kaolinite-serpentine group; made up of slender tubes as shown by electron microscopy; a gangue mineral in veins. |
Horneblende | A complex inosilicate series of minerals. It is not a recognized mineral in its own right, but the name is used as a general or field term, to refer to a dark amphibole. |
Hydrous | Containing water as a constituent. |
Igneous | Produced under conditions involving intense heat, as rocks of volcanic origin or rocks crystallized from molten magma. |
Ilmenite | Ilmenite is a weakly magnetic titanium-iron oxide mineral which is iron-black or steel-gray. It is a crystalline iron titanium oxide. It crystallizes in the trigonal system. |
Intergranular | Occurring along the boundaries between the crystals or grains of a metal. |
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K-Feldspar | K-feldspar is widespread and common in a wide variety of igneous and metamorphic rocks and in some sedimentary rocks. Its chemistry and atomic arrangement are variable, so optical properties vary as well. The three principle varieties of K-feldspar are microcline (low temperature), orthoclase (medium temperature), sanidine (high temperature). |
Na-Feldspar | Most common feldspars contain both sodium and potassium. |
Kaoline | A fine usually white clay formed by the weathering of aluminous minerals (as feldspar); used in ceramics and as an absorbent and as a filler (e.g., in paper). |
Kaolinite | A monoclinic mineral part of the kaolinite-serpentine group; kaolinite structure consists of a sheet of tetrahedrally bonded silica and a sheet of octahedrally bonded alumina with little tolerance for cation exchange or expansive hydration; polymorphous with dickite, halloysite, and nacrite; soft; white; formed by hydrothermal alteration or weathering of aluminosilicates, esp. feldspars and feldspathoids; formerly called kaolin. |
Lattice | An array of points in space such that each point is in an identical point environment. Thus, any straight line drawn between any two points in a lattice and continued will pass at equal intervals through a succession of similar points. Fourteen possible lattices exist. |
Magma | A mixture of molten or semi-molten rock, volatiles and solids that is found beneath the surface of the Earth, and is expected to exist on other terrestrial planets. |
Metaargillite | An argillite that has been metamorphosed. |
Metasiltite | A silitite that has been metamorphosed. |
Metakaolin | a dehydroxylated form of the clay mineral kaolinite. |
Metasediment | A sediment or sedimentary rock that shows evidence of having been subjected to metamorphism. |
Mica | A group of sheet silicate minerals including several closely related materials having close to perfect basal cleavage. |
Microphenocryst | A very small crystal in a fine-grained porphyritic rock. |
Muscovite | A phyllosilicate mineral of aluminium and potassium. It has a highly-perfect basal cleavage yielding remarkably-thin laminæ which are often highly elastic |
Olivine | The mineral olivine is a magnesium iron silicate. |
Open Pit | A mine that is entirely on surface. Also referred to as open-cut or open-cast mine. |
Orogeny | The formation of mountain ranges by intense upward displacement of the earth's crust, usually associated with folding, thrust faulting, and other compressional processes |
Outcrop | The part of a rock formation that appears at the surface of the ground. |
Outgas | To remove embedded gas from (a solid), as by heating or reducing the pressure. |
Overburden | Loose soil, sand, gravel, etc. that lies above the bedrock. Also called burden, capping, cover, drift, mantle, surface. |
Paragneiss | A gneiss derived from a sedimentary rock. |
Paraschist | A schist derived from sedimentary rock |
Pegmatoid | An igneous rock that has the coarse-grained texture of a pegmatite but that lacks graphic intergrowths or typically granitic composition. |
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Permian | The Permian is a geologic period and system which extends from 298.9 to 252.2 million years ago. It is the last period of the Paleozoic Era, following the Carboniferous Period and preceding the Triassic Period of the Mesozoic Era. |
Plagioclase | An important series of tectosilicate minerals within the feldspar family. Rather than referring to a particular mineral with a specific chemical composition, plagioclase is a solid solution series, more properly known as the plagioclase feldspar series. |
Pleistocene | The Pleistocene is the geological epoch which lasted from about 2,588,000 to 11,700 years ago, spanning the world's recent period of repeated glaciations. |
Pod | A rudely cylindrical orebody that decreases at the ends like a cigar or a potato. |
Porphyritic | An adjective used in geology, specifically for igneous rocks, for a rock that has a distinct difference in the size of the crystals, with at least one group of crystals obviously larger than another group. |
Precambrian | Noting or pertaining to the earliest era of earth history, ending 570 million years ago, during which the earth's crust formed and life first appeared in the seas. |
Proterozoic | A geological eon from 2,500 Ma to 542.0±1.0 Ma (million years ago). |
Pyroclastic flow | A pyroclastic flow is a fast-moving current of hot gas and rock. |
Pyrometric | Measuring of high temperatures. |
Pyroxene | A group of important rock-forming inosilicate minerals found in many igneous and metamorphic rocks. |
Quartz | A mineral whose composition is silicon dioxide and most abundant in the Earth’s crust. |
Quartzite | A very hard but unmetamorphosed sandstone, consisting chiefly of quartz grains that are so completely cemented with secondary silica that the rock breaks across or through the grains rather than around them; an orthoquartzite. |
Refractory | A nonmetallic material suitable for use in high-temperature applications. |
Relief | Refers specifically to the quantitative measurement of vertical elevation change in a landscape. |
Residual Deposit | An ore deposit in clay formed by near-surface oxidation. |
Rifting | The process of splitting hand-cobbed mica into sheets of usable thicknesses. |
Roof Rock | A rock forming the ceiling of a cave passage, underground chamber or mine opening. |
Schist | A strongly foliated crystalline rock that can be readily split into thin flakes or slabs. |
Sedimentary | A type of rock that is formed by the process of sedimentation. |
Silica | The chemically resistant dioxide of silicon. |
Siltite | Indurated silt having a shalelike texture and composition, which is also known as siltstone. |
Spheroid | A body that is shaped like a sphere but is not perfectly round, especially an ellipsoid that is generated by revolving an ellipse around one of its axes. |
Tailings | The gangue and other refuse material resulting from the washing, concentration, or treatment of ground ore. |
Thrust Fault | A fault with a dip of 45 degrees or less over much of its extent, on which the hanging wall appears to have moved upward relative to the footwall. Horizontal compression rather than vertical displacement is its characteristic feature. |
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Tonolite | An igneous, plutonic rock, of felsic composition, with phaneritic texture. Feldspar is present as plagioclase with 10% or less alkali feldspar. Quartz is present as more than 20% of the rock. |
Tonstein | A compact argillaceous rock containing the clay mineral kaolinite in a variety of forms together with occasional detrital and carbonaceous material; commonly occurring as a thin band in a Carboniferous coal seam (or locally in the roof of a seam). |
Topography | The description of such surface shapes and features (especially their depiction in maps). |
X-Ray Diffraction | One of the primary techniques used by mineralogists and solid state chemists to examine the physico-chemical make-up of unknown solids. |
Xenolith | A rock fragment foreign to the igneous mass in which it occurs. |
Water Catchment Basin | The area drained by a river and all its tributaries. |
Zircon |
A mineral belonging to the group of nesosilicates. Its chemical name
is zirconium silicate.
|
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this registration statement constitute "forward-looking statements.” These statements, identified by words such as “plan,” "anticipate,” "believe,” "estimate,” "should,” "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; changes in project parameters as plans continue to be refined; changes in labour costs or other costs of production; future mineral prices; equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry, including but not limited to environmental hazards, cave-ins, pit-wall failures, flooding, rock bursts and other acts of God or unfavourable operating conditions and losses; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section titled "Risk Factors" in this registration statement.
Forward looking statements are based on a number of material factors and assumptions, including the results of exploration and drilling activities, the availability and final receipt of required approvals, licenses and permits, that sufficient working capital is available to complete proposed exploration and drilling activities, that contracted parties provide goods and/or services on the agreed time frames, the equipment necessary for exploration is available as scheduled and does not incur unforeseen break downs, that no labour shortages or delays are incurred and that no unusual geological or technical problems occur. While we consider these assumptions may be reasonable based on information currently available to it, they may prove to be incorrect. Actual results may vary from such forward-looking information for a variety of reasons, including but not limited to risks and uncertainties disclosed in the section titled “Risk Factors” in this registration statement.
We intend to discuss in our Quarterly Reports and Annual Reports any events or circumstances that occurred during the period to which such documents relate that are reasonably likely to cause actual events or circumstances to differ materially from those disclosed in this registration statement. New factors emerge from time to time, and it is not possible for management to predict all of such factors and to assess in advance the impact of each such factor on our business or the extent to which any factor, or combination of such factors, may cause actual results to differ materially from those contained in any forwarding looking statement.
As used in this Registration Statement, unless the context otherwise requires, “we,” “us,” “our,” the “Company” and “I-Minerals” refers to I-Minerals Inc. All dollar amounts in this registration statement are in U.S. dollars unless otherwise stated.
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CAUTIONARY NOTE TO U.S. INVESTORS REGARDING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES AND PROVEN AND PROBABLE RESERVES
The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended (the “CIM Definition Standards”). These definitions differ from the definitions in the United States Securities and Exchange Commission (“SEC”) Industry Guide 7 (“SEC Industry Guide 7”) under the United States Securities Act of 1933, as amended (the “Securities Act”). Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves, and the primary environmental analysis or report must be filed with the appropriate governmental authority.
In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that all or any part of a mineral deposit in these categories will ever be converted into reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all, or any part, of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of unit measures in a resource is permitted disclosure under Canadian regulations; however, the SEC only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in place tonnage and grade without reference to unit measures.
Accordingly, information contained in this registration statement and the documents incorporated by reference herein contain descriptions of our mineral deposits that may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.
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BUSINESS
General
We were incorporated under the laws of British Columbia, Canada in 1984. In 2004, we changed our corporate jurisdiction from a British Columbia company to a Canadian corporation. In December 2011, we amended our articles to change our name from “i-minerals inc.” to “I-Minerals Inc.”
We are an exploration stage company engaged in the exploration and development of our Helmer-Bovill industrial minerals property (the “Helmer-Bovill Property”). The Helmer-Bovill Property, which we hold a 100% interest, is comprised of 11 mineral leases totaling 5,140.64 acres located approximately 6 miles southwest of Bovill, Latah County, Idaho.
We acquired the Helmer-Bovill Property from Idaho Industrial Minerals (“IIM”) pursuant to an Assignment Agreement with Contingent Right of Reverter (the “IIM Agreement”) dated August 12, 2002, as amended August 10, 2005, August 10, 2008 and January 21, 2010, between I-Minerals USA (formerly Alchemy Kaolin Corporation), our wholly owned subsidiary, and IIM. Under the terms of the IIM Agreement, we issued a total of 1,800,000 common shares to IIM. See “Properties – Helmer-Bovill Property”.
Our principal executive office is located at is Suite 880, 580 Hornby Street, Vancouver, British Columbia, Canada and our telephone number is (877) 303-6573.
To date, we have not earned significant revenues from the operation of our mineral properties. Accordingly, we are dependent on debt and equity financing as its primary source of operating working capital. Our capital resources are largely determined by the strength of the junior resource markets and by the status of our projects in relation to these markets, and its ability to compete for investor support of its projects.
Our Principal Projects
Our operations at the Helmer-Bovill Property are focused on developing the Bovill Kaolin Project and the WBL Tailings Project.
The Bovill Kaolin Project
Our lead project, the Bovill Kaolin Project, is a strategically located long term resource of high purity quartz, potassium feldspar (“K-spar”), halloysite and kaolin formed through weathering of a border phase of the Idaho Batholith causing all minerals to be contained within a fine white clay-sand mixture referred to as “primary clay.” The Bovill Kaolin Project is located within 5 kilometers of state highways with electricity and natural gas already at the property boundary.
Since 2010, our exploration work has focused diamond drilling on the Bovill Kaolin Project. To date, a total of 322 diamond drill holes were drilled totaling 35,909 feet. As a result of these drill campaigns, four deposits have been identified: Kelly Hump, Kelly South, Middle Ridge and WBL.
In June 2014, we completed an updated pre-feasibility study on the Bovill Kaolin Project (the “2014 PFS”), which included the following highlights:
● Updated Measured and Indicated Resource Estimate
● Measured Resources of 3.3 million tons containing 76.1% quartz/K-spar sand, 12.7% Kaolinite and 4.5% Halloysite.
● Indicated Resources of 7.9 million tons containing 74.4% quartz/K-spar sand, 15.6% Kaolinite and 2.7% Halloysite.
● 363,000 tons of contained halloysite, 1,657,600 tons of contained kaolinite and 8,407,000 tons of contained quartz/K-spar.
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● Mineral Reserve Estimate
Reserve |
Million
Tons |
Halloysite
Grade |
Kaolin
Grade |
Quartz & K-Spar
Sand (%) |
Halloysite
Tons |
Kaolinite
Tons |
Quartz & K-Spar
Sand (t) |
Kelly Hump | |||||||
Proven
Probable |
1.7
1.0 |
4.8%
6.0% |
13.5%
15.4% |
81.7%
78.6% |
82,000
60,000 |
229,000
154,000 |
1,389,000
782,000 |
Kelly South | |||||||
Proven
Probable |
0
1.3 |
0
1.6% |
0
23.2% |
0
75.3% |
0
20,000 |
0
296,000 |
0
959,000 |
Middle Ridge | |||||||
Proven
Probable |
0.7
1.4 |
6.9%
4.6% |
12.8%
13.1% |
80.3%
82.3% |
48,000
66,000 |
90,000
187,000 |
563,000
1,179,000 |
WBL | |||||||
Proven
Probable |
0
0.8 |
0
2.4% |
0
16.5% |
0
81.1% |
0
18,000 |
0
128,000 |
0
629,000 |
● Economic Analysis
● US$330 million Pre-Tax NPV; US$212 million After Tax NPV using a 6% discount rate.
● 38.2% Pre-Tax IRR; 30.5% After Tax IRR.
● Initial Capital Cost of $72.7 million and Total Life of Mine capital costs $90.8 million.
● Life of Mine in excess of 25 years with a stripping ratio of 0.69:1 (waste:ore).
● 3 year estimated after tax payback.
With the 2014 PFS finalized, our focus will be to complete a feasibility study on the Bovill Kaolin Project. We anticipate that a feasibility study will be finalized within the next 12 to 18 months.
See “Properties – Helmer-Bovill Property – 2014 Pre-Feasibility Study”.
The WBL Tailings Project
We also plan to commence mining operations at the WBL Tailings Project. The WBL Tailings Project is feldspathic sands deposited as tailings from clay mining operations during the period from 1961 to 1974. In September 2012, we received approval of our Mine Plan of Operations (“MPO”) from the Idaho Department of Lands. The MPO allows us to mine up to 50,000 tons per annum from feldspathic sands from June to October for a period of 10 years.
Three Year History
During the last three fiscal years, our operations have focused on completing an extensive diamond drill program on the Bovill Kaolin Project, acquiring a 100% interest in the Helmer-Bovill Property and obtaining approval of our MPO for the WBL Tailings Project.
Drill Programs at Bovill Kaolin Project
Over the last three years, we have completed two extensive diamond drill programs on the Bovill Kaolin Project. In 2011, a 66 hole diamond drill program was conducted at the Middle Ridge and WBL deposits for a total of 7,747 feet. In 2013, a 167 hole diamond drill program was completed at the Middle Ridge, Kelly Hump and Kelly South deposits for a total of 17,811 feet. These programs allowed us to better define our four key deposits at the Bovill Kaolin Project and complete our 2014 PFS. See “Properties – Helmer-Bovill Property”.
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WBL Tailings Project
In September 2012, we received approval of our MPO from the Idaho Department of Lands. The MPO allows us to mine up to 50,000 tons per annum from feldspathic sands from June to October for a period of 10 years. Shortly thereafter, in October 2012, we completed our first production and inaugural sale of 30 tons of feldspathic sand from the WBL Tailings Project.
In November 2013, we entered into an agreement with Pre-Mix, Inc. of Pullman Washington (“Pre-Mix”) pursuant to which we sold 3,000 tons of sand tailings to Pre-Mix through an arrangement with Pre-Mix of Pullman Washington.
On April 28, 2014, we entered into a new contract with Pre-Mix for the sale of up to 30,000 tons per annum of screened k-spar / quartz sand. Under the terms of the contract, Pre-Mix is solely responsible for the operating costs to process and remove the k-spar / quartz sand. The term of the contract is until December 31, 2018 and may be extended for a further two years through the mutual consent of the parties. To date, we have received revenues of approximately $1,450 from the sale of sand tailings at our WBL Tailings Project.
Acquisition of Helmer-Bovill Property
In January 2013, we acquired a 100% interest in our Helmer-Bovill Property. In order to acquire the Helmer-Bovill Property, we issued a total of 1,800,000 common shares, of which 1,300,000 common shares were issued as the final payment to IIM.
Industrial Minerals
In carrying out our operations at the Bovill Kaolin Project, we are focused the exploration, development and, if feasible, the extraction of the industrial minerals set forth below.
Kaolin
Kaolin is a raw material used in the ceramic industry, especially in fine porcelains. Large quantities of kaolin are used in paper coating, filler, paint, plastics, fiberglass, catalysts, and other specialty applications. It is also used as a key ingredient in natural pesticides that are suitable for organic farming applications. Testing has shown that our kaolin minerals fire white, which makes them attractive to the ceramic industry.
When kaolin is heated to between 600° and 850°, it is transformed into an amorphous phase called "metakaolin." Metakaolin is considered a premium material as it adds strength and durability to cement based products. When metakaolin is added to cement-based mortars, it causes an aggressive reaction with calcium hydroxide (lime) to form compounds with enhanced performance characteristics including increased strength; reduced permeability; greater durability; effective control of efflorescence; and control of degradation caused by Alkali-Silica Reaction. A bridge deck in a northern climate where it is subject to the wear and tear associated with plowing and salting is a prime metakaolin application. We are currently undertaking a long term testing process of a metakaolin product produced from the Bovill Kaolin property to confirm its quality in the metakaolin markets.
Our target market for metakaolin is the North American concrete and infrastructure industry. Metakaolin is currently price at $500 per ton. These prices are in line with historical pricing of metakaolin.
Halloysite
We plan to sell Halloysite on a worldwide basis. Halloysite is used in the manufacture of porcelain, bone china, and fine china due to purity of the clay and the low iron and titanium content resulting in ceramic ware with exceptional whiteness and translucency. Its fine particle size enables halloysite to also be used as a suspension agent in glaze preparations as well as in filters and inkjets, and as an ingredient in special paints applied to ships to prevent barnacles from growing on the ships’ hull. Much of the value of halloysite is generated by its tubular shape which can only be seen through very powerful microscopes.
The largest supplier of commercial halloysite product available at present is located in Maturi Bay, New Zealand. There is limited production in Poland, Turkey and China, and a development stage project in Utah with negligible commercial production. Our halloysite is differentiated from those known halloysite deposits due to the high aspect ratio (the ratio of the length of the tube to the diameter of the tube) and by minimal levels of trace elements such as lead and iron.
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The largest halloysite supplier in the ceramics industry sells halloysite at a price from $135 to $3,000 per ton. The majority of imported halloysite in the United States for the ceramics industry is sold at a price of approximately $700 per ton. In 2003, a large producer of halloysite for ceramics charged between $500 to $600 per ton in the United States.
Halloysite nanotubes (HNTs) are considered a high value product. The high aspect ratio of the tubes allows the tubes to be filled or coated with substances to achieve a wide variety of electrical, chemical and physical properties. The markets interest in filing halloysite hollow tubes with active ingredients include cosmetics, household and personal care products, pesticides, paint, pharmaceuticals and the life sciences market. We anticipate the pricing of HNTs to be in the range of $1 to $3 per pound.
To date, we have received inquiries from the following industries: personal care products, Nano-composites, fire retardants, biocides, plastic fillers, animal feed, paint, ceramics and universities seeking to test other applications for halloysite.
Quartz
Quartz (SiO 2 or silicon dioxide) is crystalline silica, the second most common mineral in the crust of the earth. It is known for its hardness and is well known for its use in glass. However, different types of glass require different SiO 2 purity levels with some types of glass requiring the SiO 2 content in quartz to have purity levels in the 97-99% range to be suitable. Although silicon dioxide is abundant, not all deposits are chemically identical, with the SiO 2 purity and the levels of various trace element impurities varying across different deposits. Contamination of quartz can be from mineral and fluid inclusions and non-silica elements entering atomic sites usually occupied by silicon and oxygen. Our quartz operations at the Bovill Kaolin Project will focus on three levels of purity in excess of 99%, with the highest grade defined as high pure quartz because the chemistry will exceed 99.98% SiO 2 purity.
We plan to market our high quality quartz in North American and Asia to producers of sodium silicate, paint, solar glass, optical glass, art glass, glass bulbs, liquid crystal display (LCD) glass. Currently, prices of high quality quartz range from $100 to $250 per ton for quartz containing 99.90% SiO2 and $500 to $1,000 per ton for quartz containing over 99.94% SiO2.
Potassium-Feldspar (“K-spar”)
K-spar is primarily used in ceramic bodies and glazes. Results indicate that our K-spar has high potassium oxide, low iron and high alumina. As a result, our target market is producers of high clarity glass, ceramics, sanitary ware, tableware, and paint are the primary users of K-feldspar. Industrial and marine paint manufacturers also use an ultra-fine grind variety of feldspar.
The market for our K-spar is North American ceramics and glass industries. We also plan to focus on producers of high clarity glass, ceramics, sanitary ware, tableware, and paint are the primary users of K-feldspar. Industrial and marine paint manufacturers also use an ultra-fine grind variety of feldspar. Pricing of K-spar currently ranges from $170 to $300 per ton.
Competition
We are an exploration stage company. We compete with other mineral resource exploration and development companies for financing. Many of the mineral resource exploration and development companies with whom we compete have greater financial and technical resources than we do. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact our ability to finance further exploration and to achieve the financing necessary for us to develop our mineral properties.
Government Regulations
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Mining operations and exploration activities are subject to various national, state, and local laws and regulations in the United States, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters. We will obtain the licenses, permits or other authorizations currently required to conduct our exploration program. We believe that we are in compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations passed thereunder in Idaho and the United States.
In Idaho, our exploration activities are regulated by the Idaho Department of Lands (“IDL”) pursuant to the Idaho Rules Governing Exploration Surface Mining and Closure of Cyanidation Facilities pursuant to the Idaho Administrative Procedure Act. In order to carry out surface exploration and drilling activities, a company is required to file a Notification of Exploration with the IDL. In 2000, we filed our original Notification of Exploration with the IDL, which has been subsequently amended, for our surface exploration and drilling programs on the Helmer-Bovill Property.
In order to carry out mining activities, we are required to obtain a Mine Plan for Operations and Reclamation Plan (“MPO”). In 2012, we completed a MPO for the extraction of sand tailings on the WBL Tailings Project. The MPO permits us to mine the sand tailings between June to October for a period of 10 years (2012 – 2022). As we are in the process of preparing a feasibility study on the Bovill Kaolin Project, we have not yet applied for an MPO for mining activities on the Bovill Kaolin Project.
All leases are subject to rental fees of US$1.00 per acre each year and a production royalty of 5.0% based on gross proceeds. The production royalty is prepaid at a rate of US$500 per lease for the first five years and increases to US$1,000 per lease for the second five years of the lease.
Mining operations are also regulated by Mine and Safety Health Administration (“MSHA”). MSHA inspectors will periodically visit projects to monitor health and safety for the workers, and to inspect equipment and installations for code requirements. Although we are not engaged in mining operations, we require all of our workers to have completed safety training courses when working on our project.
Other regulatory requirements monitor the following:
(a) | Explosives and explosives handling. |
(b) | Use and occupancy of site structures associated with mining. |
(c) | Hazardous materials and waste disposal. |
(d) | State Historic site preservation. |
(e) | Archaeological and paleontological finds associated with mining. |
We believe that we are in compliance with all laws and plans to continue to comply with the laws in the future. We believe that compliance with the laws will not adversely affect its business operations. There is however no assurance that any change in government regulation in the future will not adversely affect our business operations.
Environmental Liability
We will have to sustain the cost of reclamation and environmental remediation for all exploration work undertaken. Both reclamation and environmental remediation refer to putting disturbed ground back as close to its original state as possible. Other potential pollution or damage must be cleaned up and renewed along standard guidelines outlined in the usual permits. Reclamation is the process of bringing the land back to its natural state after completion of exploration activities. Environmental remediation refers to the physical activity of taking steps to remediate, or remedy, any environmental damage caused. The amount of these costs is not known at this time as we do not know the extent of the exploration program that will be undertaken beyond completion of the recommended work program. Because there is presently no information on the size, tenor, or quality of any resource or reserve at this time, it is impossible to assess the impact of any capital expenditures on earnings, our competitive position or us in the event that a potentially economic deposit is discovered.
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Permits and regulations will control all aspects of the production program if the project continues to that stage. Examples of regulatory requirements include:
(i) | Water discharge will have to meet drinking water standards; |
(ii) | Dust generation will have to be minimal or otherwise re-mediated; |
(iii) | Dumping of material on the surface will have to be re-contoured and re-vegetated with natural vegetation; |
(iv) | An assessment of all material to be left on the surface will need to be environmentally benign; |
(v) | Ground water will have to be monitored for any potential contaminants; |
(vi) | The socio-economic impact of the project will have to be evaluated and if deemed negative, will have to be re-mediated; and |
(vii) | There will have to be an impact report of the work on the local fauna and flora including a study of potentially endangered species. |
A reclamation bond of US$7,600 has been posted to cover the current plan of operations. The Storm Water Pollution Prevention Plan (SWPPP) has been publicly noted without objection as of November 16, 2012.
Employees
As of the date of this registration statement, we have five full time employees, four in Idaho plus our Chief Executive Officer in Utah.
Research and Development
We have not incurred any research and development expenditures since our inception.
Patents and Trademarks
We do not own, either legally or beneficially, any patent or trademark.
RISK FACTORS
An investment in our common shares involves a high degree of risk. You should carefully consider the risks described below and the other information in this registration statement before investing in our common shares. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. The trading price of our common shares could decline due to any of these risks, and you may lose all or part of your investment.
Risks Related To Our Business
We lack an operating history and have losses which we expect to continue into the future. As a result, we may have to suspend or cease exploration activities and if we do not obtain sufficient financing, our business will fail.
To date, we have been involved primarily in the acquisition, exploration and development of our mineral properties. We have no operating history upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability and positive cash flow is dependent upon: (i) our ability to locate a profitable mineral property, and (ii) our ability to generate revenues.
For the next twelve months, management anticipates that the minimum cash requirements to fund our proposed exploration program and our continued operations will be $3,456,000. Accordingly, we will have insufficient funds to meet our planned expenditures over the next twelve months and will be required to raise additional financing.
Obtaining financing would be subject to a number of factors, including the market prices for industry minerals. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. Since our inception, we have relied on equity financings and loans to fund our operations. We have not attained profitable operations and are dependent upon obtaining financing to pursue our plan of operation.
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Because we are an exploration stage company, our business has a high risk of failure.
We are an exploration stage company that has incurred net losses since inception, we have not attained profitable operations and we are dependent upon obtaining adequate financing to complete our exploration activities. The success of our business operations will depend upon our ability to obtain further financing to complete our planned exploration program and to attain profitable operations. If we are not able to complete a successful exploration program and attain sustainable profitable operations, then our business will fail.
Our auditors have expressed substantial doubt about our ability to continue as a going concern; as a result we could have difficulty finding additional financing.
Our financial statements have been prepared assuming that we will continue as a going concern. We have not generated significant revenues from our main operations since inception and have accumulated losses. As a result, our auditors have expressed substantial doubt about our ability to continue as a going concern. Our ability to continue our operations depends on our ability to complete equity or debt financings or generate profitable operations. Such financings may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that could result from the outcome of this uncertainty.
Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure.
You should be aware of the difficulties normally encountered by mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.
Although we have known mineral reserves, there are uncertainties related to mineral reserve and mineralization estimates.
There are numerous uncertainties inherent in estimating proven and probable reserves and mineralization, including many factors beyond our control. The estimation of reserves and mineralization is a subjective process and the accuracy of any such estimates is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, metallurgical testing and production and the evaluation of mine plans subsequent to the date of any estimate may justify revision of such estimates. No assurances can be given that the volume and grade of reserves recovered and rates of production will not be less than anticipated. Assumptions about prices are subject to greater uncertainty and industrial mineral prices have fluctuated widely in the past. Declines in the market price of industrial minerals also may render reserves or mineralization containing relatively lower grades of ore uneconomic to exploit. Changes in operating and capital costs and other factors including, but not limited to, short-term operating factors such as the need for sequential development of ore bodies and the processing of new or different ore grades, may materially and adversely affect reserves
Because we have not commenced business operations, we face a high risk of business failure.
We have not earned any significant revenues from business operations as of the date of this registration statement. Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.
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Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.
The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. At the present time we have no coverage to insure against these hazards. The payment of such liabilities may result in our inability to complete our planned exploration program and/or obtain additional financing to fund our exploration program.
Because the prices of minerals fluctuate, if the price of minerals for which we are exploring decreases below a specified level, it may no longer be profitable to explore for those minerals and we will cease operations.
The profitability of mining operations is directly related to the market price of the industrial minerals being mined. The market price of industrial minerals may fluctuate widely and is affected by numerous factors beyond the control of any mining company. These factors include expectations with respect to the rate of inflation, the exchange rates of the dollar and other currencies, interest rates, global or regional political, economic or banking crises, and a number of other factors. If the market prices of the mineral commodities we plan to explore decline, this will have a negative effect on the availability of financing to us.
We may be required to defend title to the leases that comprise our Helmer-Bovill Property.
Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims, as well as the potential for problems arising from the frequently ambiguous conveyance history characteristic of many mineral properties. Although we have taken steps to verify title to mineral leases in which we have an interest, these procedures do not guarantee our title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. In March 2014, a complaint was filed against us seeking the return of the Helmer-Bovill property. See “Legal Proceedings”.
There are environmental risks associated with mineral exploration.
Environmental risks are inherent with mining operations. The legal framework governing this area is constantly developing, therefore we are unable to fully ascertain any future liability that may arise from the implementation of any new laws or regulations, although such laws and regulations are typically strict and may impose severe penalties (financial or otherwise). Our proposed activities of, as with any exploration, may have an environmental impact which may result in unbudgeted delays, damage, loss and other costs and obligations including, without limitation, rehabilitation and/or compensation. There is also a risk that our operations and financial position may be adversely affected by the actions of environmental groups or any other group or person opposed in general to our activities and, in particular, the proposed exploration and mining by us within the State of Idaho.
We face significant competition in the mineral exploration industry.
We compete with other mining and exploration companies possessing greater financial resources and technical facilities than we do. Due to our weaker competitive position, we may have greater difficulty in hiring and retaining qualified personnel to conduct our planned exploration and development activities, which could cause delays in our exploration programs.
There may be barriers in entering the market as we will be a new supplier of industrial mineral products.
We will be a new supplier of industrial mineral products. Accordingly, we will be competing with more established industrial mineral companies that currently supply the ceramics and glass industries with industry mineral products. Accordingly, the ceramics, glass and other industries may be reluctant to terminate existing supply relationships and retain our company as a supplier of industrial mineral products to them. In the event that we are unable to be retained by these industries, our operations may be negatively impacted.
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Demand for our metakaolin products will be dependent on funding for infrastructure projects.
Metakaolin is significantly more expensive than other kaolin products, such as, fly ash. In the United States, the funding for infrastructure projects is low. As a result, fly ash is commonly used for infrastructure products due to its low cost. Accordingly, our future customers may be unable or unwilling to purchase our metakaolin products unless funding infrastructure projects is increased.
If we are unable to hire and retain key personnel, we may not be able to implement our business plan and our business will fail
Our success will largely depend on our ability to hire highly qualified personnel with experience in geological exploration. These individuals may be in high demand and we may not be able to attract the staff we need. In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or may lose such employees after they are hired. Currently, we have not hired any key personnel. Our failure to hire key personnel when needed could have a significant negative effect on our business.
Our Helmer-Bovill Property is currently the subject of litigation in the State of Idaho. If we are unsuccessful in defending against this action, we could lose our rights to the Helmer-Bovill Property.
We have been named as third party defendants in an action filed by two members of the previous owners of the Helmer-Bovill Property, IIM. Among other things, the third party plaintiffs have claimed that IIM is entitled to have the Helmer-Bovill Property returned to them. We believe that the plaintiffs’ claims are without merit and we intend to vigorously defend the action filed against us. However, if we are unsuccessful in defending this action or in negotiating a settlement with the plaintiffs, we could lose our rights to the Helmer-Bovill Property.
Risks Related To The Ownership of Our Shares
There has been a very limited public trading market for our securities in the United States, and the market for our securities in the United States may continue to be limited and be sporadic and highly volatile. Trading in our shares on the TSX Venture Exchange has sometimes been sporadic.
There is currently a limited public market for our common shares. Our common shares trade in Canada on the TSX Venture Exchange and over the counter in the United States on the OTCQX market place. We cannot assure you that an active market for our shares will be established or maintained in the future. The OTCQX is not a national securities exchange, and many companies have experienced limited liquidity when traded through this quotation system. Trading in our shares on the TSX Venture Exchange has sometimes been sporadic. Holders of our common shares may, therefore, have difficulty selling their shares, should they decide to do so. In addition, there can be no assurances that such markets will continue or that any shares, which may be purchased, may be sold without incurring a loss. The market price of our shares, from time to time, may not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value, and may not be indicative of the market price for the shares in the future.
In addition, the market price of our common stock may be volatile, which could cause the value of our common shares to decline. Securities markets experience significant price and volume fluctuations. This market volatility, as well as general economic conditions, could cause the market price of our common shares to fluctuate substantially. Many factors that are beyond our control may significantly affect the market price of our shares. These factors include:
(a) | price and volume fluctuations in stock markets; |
(b) | changes in our operating results; |
(c) | any increase in losses from levels expected by securities analysts; |
(d) | changes in regulatory policies or law; |
(e) | operating performance of companies comparable to us; and |
(f) | general economic trends and other external factors. |
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Even if an active market for our common shares is established, stockholders may have to sell their shares at prices substantially lower than the price they paid for the shares or might otherwise receive than if an active public market existed.
We will likely conduct further offerings of our equity securities in the future, in which case your proportionate interest may become diluted.
Since our inception, we have relied on such sales of our common shares to fund our operations. We will likely be required to conduct additional equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If common shares are issued in return for additional funds, the price per share could be lower than that paid by our current shareholders. We anticipate continuing to rely on equity sales of our common shares in order to fund our business operations. If we issue additional shares, your percentage interest in us could become diluted.
If we are, or were, a U.S. real property holding corporation, non-U.S. holders of our common stock or other security convertible into our common stock could be subject to U.S. federal income tax on the gain from the sale, exchange or other disposition of such security.
If we are or ever have been a U.S. real property holding corporation (a “USRPHC”) under the Foreign Investment Real Property Tax Act of 1980, as amended (“FIRPTA”) and applicable United States Treasury regulations (collectively, the “FIRPTA Rules”), unless an exception applies, certain non-U.S. investors in our common stock (or options or warrants for our common stock) would be subject to U.S. federal income tax on the gain from the sale, exchange or other disposition of shares of our common stock (or such options or warrants), and such non-U.S. investor would be required to file a United States federal income tax return. In addition, the purchaser of such common stock, option or warrant would be required to withhold from the purchase price an amount equal to 10% of the purchase price and remit such amount to the U.S. Internal Revenue Service.
We have not conducted a formal analysis of whether we are or have ever been a USRPHC. However, we believe that we may be a USRPHC. In general, under the FIRPTA Rules, a company is a USRPHC if its interests in U.S. real property comprise at least 50% of the fair market value of its assets. If we are or were a USRPHC, so long as our common stock is “regularly traded on an established securities market” (as defined under the FIRPTA Rules), a non-U.S. holder who, actually or constructively, holds or held no more than 5% of our common shares not subject to U.S. federal income tax on the gain from the sale, exchange or other disposition of our common shares under FIRPTA. In addition, other interests in equity of a USRPHC may qualify for this exception if, on the date such interest was acquired, such interests had a fair market value no greater than the fair market value on that date of 5% of our common shares. Any of our common shares (or owners of options or warrants for our common shares) that are non-U.S. persons should consult their tax advisors to determine the consequences of investing in our common shares (or options or warrants).
The recently enacted JOBS Act will allow us to postpone the date by which we must comply with certain laws and regulations and to reduce the amount of information provided in reports filed with the SEC. We cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our common stock less attractive to investors.
We are and we will remain an "emerging growth company" until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a "large accelerated filer" (with at least $700 million in public float) under the Exchange Act. For so long as we remain an "emerging growth company" as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" as described in further detail in the risk factors below. We cannot predict if investors will find our common stock less attractive because we will rely on some or all of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. If we avail ourselves of certain exemptions from various reporting requirements, as is currently our plan, our reduced disclosure may make it more difficult for investors and securities analysts to evaluate us and may result in less investor confidence.
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As an “emerging growth company” we are permitted to adopt accounting standards within the same timeframes as private companies. This may make it more difficult to compare our financial statements to the financial statements of other public companies.
Pursuant to the JOBS Act, as an “emerging growth company”, we are permitted to adopt new or revised accounting standards issued by the Public Company Accounting Oversight Board (PCAOB) on the same date as private companies rather than other public companies. The JOBS Act permits us to “opt out” of these extended transition periods, however we have not elected to opt out of these rules. This may make it more difficult to compare of our financial statements with other public companies that are not “emerging growth companies” that have not opted out of using the extended transition periods.
The JOBS Act allows us to postpone the date by which we must comply with certain laws and regulations intended to protect investors and to reduce the amount of information provided in reports filed with the SEC.
We meet the definition of an “emerging growth company” and so long as we continue to qualify as an “emerging growth company,” we will, among other things:
We currently intend to take advantage of all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an “emerging growth company”. We have elected not to opt out of the
extension of time to comply with new or revised financial accounting standards available under Section 102(b)(1) of the JOBS Act. Among other things, this means that our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an “emerging growth company”, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as we qualify as an “emerging growth company”, we may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers, which would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate us. As a result, investor confidence in our company and the market price of our common stock may be adversely affected.
Notwithstanding the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a “smaller reporting company”, at such time we cease being an “emerging growth company”, the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an “emerging growth company” or a “smaller reporting company”. Specifically, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze the Company’s results of operations and financial prospects.
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Our securities are considered a penny stock.
Because our securities are considered a penny stock, shareholders will be more limited in their ability to sell their shares. The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. Because our securities constitute “penny stocks” within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the trading price of our common shares is less than $5.00 per share, the common shares will be subject to Rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:
1. | contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; |
2. | contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws; |
3. | contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; |
4. | contains a toll-free telephone number for inquiries on disciplinary actions; |
5. | defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and |
6. | contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation. |
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such shares; and (d) a monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our shares.
FINANCIAL INFORMATION
Plan of Operation
During the next twelve to eighteen months, our plan of operation to complete a feasibility study on our Bovill Kaolin Project and to continue production at our WBL Tailings Project.
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Feasibility Study of the Bovill Kaolin Project
As recommend in the 2014 PFS, we have commenced the feasibility study of the Bovill Kaolin Project. In order to bring the Bovill Kaolin Project to feasibility, we will be required to undertake additional exploration and drilling, complete mining, tailings and environmental studies and complete additional material testing. We anticipate that a feasibility study will be completed within 12 to 18 months at an estimated cost of US$3,056,000.
Operations at WBL Tailings Project
We plan to continue our continue production of the sand tailings at the WBL Tailings Project. In April 2014, we entered into a new contract with Pre-Mix for the sale of up to 30,000 tons per annum of screened K-spar / quartz sand. Under the terms of the contract, Pre-Mix is solely responsible for the operating costs to process and remove the k-spar / quartz sand. The term of the contract is until December 31, 2018 and may be extended for a further two years through the mutual consent of the parties.
Operating Expenses
We anticipate that we will incur the expenditures set forth below during the next twelve months:
Expenditures | ||||
Category | Months 1 - 3 | Months 4-6 | Months 7 - 9 | Months 10 - 12 |
Feasibility Study on Bovill Kaolin Project | $515,000 | $1,064,000 | $1,202,000 | $275,000 |
Operations at WBL Tailings Project (1) | 0 | 0 | 0 | 0 |
General and Administrative Expenses | 100,000 | 100,000 | 100,000 | 100,000 |
Total | $615,000 | $1,164,000 | $1,302,000 | $375,000 |
Note: |
|
(1) | Under the terms of the contract with Pre-Mix, Pre-Mix is solely responsible for operating expenses to remove and process the K-spar / quartz sand. As a result, we do not anticipate any costs for the extraction of K-spar and quartz sand from the WBL Tailings Project. |
As of October 31, 2014, we had cash on hand of $ 371 ,000. Accordingly, we will not have sufficient cash on hand to pay the anticipated costs of the proposed feasibility study of the Bovill Kaolin Project. Accordingly, we will be required to seek additional financing, of which there is no assurance. If additional financing is not available, the Company will not be able to proceed with the proposed feasibility study.
Results of Operation
Six months ended October 31, 2014
We recorded income of $348,835 ($0.00 per share) for the six months ended October 31, 2014 as compared to a loss of $3,556,444 ($0.05 per share) for the six months ended October 31, 2013. The decrease in the loss recorded in the six months ended October 31, 2014 as compared to the six months ended October 31, 2013 is the net result of changes to a number of expenses. Of note are the following items:
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Three months ended October 31, 2014
We recorded income of $295,931 ($0.00 per share) for the three months ended October 31, 2014 as compared to a loss of $2,286,788 ($0.03 per share) for the three months ended October 31, 2013. The decrease in the loss recorded in the three months ended October 31, 2014 as compared to the three months ended October 31, 2013 is the net result of changes to a number of expenses as outlined in the analysis for the six months ended October 31, 2014.
Year ended April 30, 2014
We recorded a loss of $6,065,681 ($0.09 per share) for the year ended April 30, 2014 as compared to a loss of $2,334,919 ($0.04 per share) for the year ended April 30, 2013. The increase in loss recorded in the year ended April 30, 2014 as compared to the year ended April 30, 2013 is the net result of changes to a number of expenses. Of note are the following items:
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Liquidity and Capital Resources
Our aggregate operating, investing and financing activities during the six months ended October 31, 2014 resulted in a net cash outflow of $233,642 (2013 – inflow of $92,242). As at October 31, 2014, we had a working capital deficiency of $291,054, including cash of $371,294.
During the six months ended October 31, 2014, the Company used $1,136,623 on cash flows from operations (2013 - $994,482). The changes in non-cash operating working capital items explains the increase in cash used for operating activities. During the six months ended October 31, 2014, the Company spent $6,204 on investing activities (2013 - $41,724 cash from investing activities) and the Company received $909,185 from financing activities (2013 - $1,045,000).
Our aggregate operating, investing and financing activities during the year ended April 30, 2014 resulted in a net cash inflow of $561,740 (April 30, 2013 – $33,755). As at April 30, 2014, we had working capital of $106,717 (April 30, 2013 – working capital deficiency of $2,651,848), including cash of $604,936 (2013 – $43,196).
Debentures with a principal amount of $250,000, $192,880 and CAD $225,000 were due on January 29, 2013. On January 31, 2013, they became Demand Loans. On April 18, 2013, CAD $12,500 ($12,094) and $344,000 of the Demand Loans plus accrued interest of $6,668 were settled by the issuance of 3,710,365 shares. CAD $212,500 of the Demand Loans were converted to Loans due April 1, 2014 with no change in other terms. On August 12, 2013, $100,000 of Demand Loans plus accrued interest of $6,411 was repaid. On September 10, 2013, CAD $212,500 of the Loans plus accrued interest of CAD $15,234 were settled by the issuance of 2,277,341 shares. The Company no longer has any outstanding convertible loans, demand loans or loans other than the promissory notes.
The Promissory Notes (October 31, 2014 - $5,454,280; April 30, 2014 - $4,554,280) are due as to $1,000,000 on December 31, 2015, $2,000,000 on June 30, 2016 and the balance due on December 31, 2016. Certain conditions may result in early repayment. Subsequent to October 31, 2014, the maturity dates of the Promissory Notes were amended so that the maturity dates are the later of the original maturity dates and one year after resolution of the litigation involving the IIM Agreement.
We have not as yet put into commercial production any mineral properties and as such have no operating revenues. Accordingly, we are dependent on debt and equity financing as its primary source of operating working capital. Our capital resources are largely determined by the strength of the junior resource markets and by the status of our projects in relation to these markets, and its ability to compete for investor support of its projects.
We remain dependent on additional financing to fund development requirements on the Helmer-Bovill property and for general corporate costs. With respect to funds required for capital cost items once a feasibility study is completed, State-sponsored debt financing instruments may be available on attractive terms, and we intend to pursue such financial instruments to cover portions of the capital costs associated with placing the Bovill Kaolin deposits into production.
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Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.
Critical Accounting Policies
Stock-based Compensation
The Company accounts for all stock-based payments and awards under the fair value based method. Stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable.
The fair value of stock-based payments to non-employees is periodically re-measured until the counterparty performance is complete, and any change therein is recognized over the vesting period of the award and in the same manner as if the Company had paid cash instead of paying with or using equity based instruments. The cost of the stock-based payments to non-employees that are fully vested and non-forfeitable as at the grant date is measured and recognized at that date, unless there is a contractual term for services in which case such compensation would be amortized over the contractual term.
The Company accounts for the granting of stock options to employees using the fair value method whereby all awards to employees will be recorded at fair value on the date of the grant. The fair value of all stock options is expensed over their vesting period with a corresponding increase to additional paid-in capital.
Compensation costs for stock-based payments that do not include performance conditions are recognized on a straight-line basis. Compensation cost associated with a share based award having a performance condition is recognized are on the probable outcome of that performance condition during the requisite service period. Share based awards with a performance condition are accrued on an award by award basis.
The Company uses the Black-Scholes option valuation model to calculate the fair value of stock options at the date of the grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimates.
Derivative Liabilities
The Company evaluates its financial instruments and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market at each balance sheet date and recorded as a liability and the change in fair value is recorded in the consolidated statement of loss. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instruments that become subject to reclassification are reclassified at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not settlement of the derivative instrument is expected within 12 months of the balance sheet date.
The Company uses the Black-Scholes option valuation model to value derivative liabilities. This model uses Level 3 inputs in the fair value hierarchy established by ASC 820 Fair Value Measurement.
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PROPERTIES
We currently do not own any real property. We currently sub lease on a month to month basis an office space located at Suite 880, 580 Hornby Street, Vancouver, BC Canada V6C 3B6, consisting of approximately 256 square feet at a cost of $1,000 per month.
HELMER-BOVILL PROPERTY
We own a 100% interest in our lead mineral project called the Helmer-Bovill Property. Our operations at the Helmer-Bovill Property are focused on developing the Bovill Kaolin Project and the WBL Tailings Project, which are located within the Helmer-Bovill Property.
We acquired the Helmer-Bovill Property from Idaho Industrial Minerals (“IIM”) pursuant to an Assignment Agreement with Contingent Right of Reverter dated August 12, 2002, as amended August 10, 2005, August 10, 2008 and January 21, 2010 (as amended, the “IIM Agreement”), between I-Minerals USA (formerly Alchemy Kaolin Corporation), our wholly owned subsidiary, and IIM. Under the terms of the IIM Agreement, IIM retained a contingent right of reverter with respect to the mineral lease applications (or the mineral leases acquired thereby) underlying the Helmer-Bovill Property if we failed meet our obligation to issue to IIM a total of 1,800,000 shares of our common stock, in tranches, based upon the completion of certain deliverables, and subject to such conditions as imposed by the TSX Venture Exchange. On January 22, 2013, we delivered the final tranche of the shares issuable to IIM. As such, we believe that the contingent right of reverter set out in the IIM Agreement has been extinguished, and that we have fulfilled all of our obligations under the IIM Agreement.
However, shortly after our delivery of the final tranche of shares to IIM, two minority members of IIM attempted to derivatively (and on behalf of IIM) reject our tender of shares. These minority members of IIM claimed that the deliverables were not completed and the right of reverter could be exercised. The majority member of IIM brought suit against the two minority members claiming that no such derivative right exists, that the minority members had no right or authority to reject the shares on behalf of IIM, and that we had fully complied with the terms of the IIM. We have since been brought into that lawsuit and are currently in the midst of litigating that matter. See “Legal Proceedings”.
Description of Property
The Helmer-Bovill Property is a development stage open pit mining operation which will produce quartz sand, K- feldspar sand, kaolinite clay, metakaolin clay and halloysite clay. The area has been mined historically for similar products.
The Helmer-Bovill Property is located at geographical coordinates 46° 53’ 14.7” N. latitude and 116° 28’ 11.7” W longitude in Latah County, Idaho, USA. The Helmer-Bovill Property currently consists of 11 mineral leases totaling 5,140.64 acres. The mineral leases are not contiguous, but are concentrated within three surveyed townships near the town of Bovill, Idaho
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Figure 1. Location of the Helmer-Bovill Property
Figure 2. Location of Mineral Leases
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Figure 3. Location of Deposits
The Helmer-Bovill Property area is located on endowment lands owned and administered by the IDL. These and other IDL holdings across the state of Idaho were granted to the state in 1890 by the federal government on the condition they produce maximum long-term financial returns for public schools and other beneficiaries. Therefore, IDL has a mandate for these lands to produce revenue to support the state’s public school system and other state institutions. To achieve this, IDL manages these properties primarily for profit through the production of timber, livestock grazing, and the extraction of mineable materials.
The State of Idaho endowments lands fall in two categories referred to as Fee Simple (FS) and Minerals Only (MO). The FS lands are where the State owns both mineral and surface rights. The MO lands are where the State owns mineral rights but someone else owns surface rights. The majority of the lands held by us are FS. All mineral resources and mineral reserves described in this report are located on FS lands. By way of our mineral leases, we have surface rights and legal access to the Helmer-Bovill Property provided it meets all permitting and bonding requirements administered by IDL. In the State of Idaho, mineral leases are not required to be physically located in the field. The mineral leases are currently described only on paper by the U.S. Public Land Survey Grid.
In 2002, we acquired from IIM, through our wholly owned subsidiary Alchemy Kaolin Corporation, 16 State of Idaho mineral lease applications in Latah County, Idaho, to cover deposits of feldspar, kaolin, and quartz located near Bovill, Idaho. In 2003, we converted these applications to ten mineral leases and subsequently obtained two more mineral leases. Renewal applications for all 12 leases were filed on April 27, 2012 with a US$3,000 application fee. As part of the renewal process, Idaho converted the 12 mineral leases into 10 revised mineral leases which were issued on February 28, 2013. Subsequently, during 2013 the State of Idaho granted one additional mineral lease to us. At this time, we hold 11 mineral leases totaling 5,140.64 acres. All these are valid until 2023, at which time; they can be renewed for an additional ten years. All leases are subject to rental fees of US$1.00 per acre each year and a production royalty of 5.0% based on gross proceeds. The production royalty is prepaid at a rate of US$500 per lease for the first five years and increases to US$1,000 per lease for the second five years of the lease.
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The details of the mineral leases that comprise the Helmer-Bovill Property are summarized below:
Mineral Lease No. | FS / MO | Acres |
E410005 | FS | 172.00 |
E410006 | FS | 377.75 |
E410007 | FS | 140.00 |
E410007 | FS | 260.00 |
E410008 | FS | 370.80 |
E410008 | FS | 160.00 |
E410008 | FS | 53.17 |
E410009 | MO | 80.00 |
E410009 | MO | 280.00 |
E410009 | MO | 269.50 |
E410010 | FS | 242.44 |
E410010 | FS | 242.52 |
E410010 | FS | 40.00 |
E410010 | FS | 80.00 |
E410011 | FS | 117.19 |
E410011 | FS | 438.73 |
E410012 | MO | 41.41 |
E410012 | MO | 80.00 |
E410013 | FS | 240.00 |
E410013 | FS | 400.00 |
E410014 | FS | 413.78 |
E410014 | FS | 161.35 |
E410015 | FS | 480.00 |
The WBL Tailings Project is located on mineral lease E410013 and covers an area of approximately 650 feet wide by 900 feet long.
Location, Access and Infrastructure
The Helmer-Bovill Property is accessed by road from the town of Bovill by following U.S Highway #12 to State Highway ID-3 S to Deary and then State Highway ID-8 W for 0.4 mi, then turning right on Moose Creek Road/National Forest Road 381 and following for 5.5 miles. ID-3 S/ID-8 W is an improved two lane road, while Moose Creek Road/National Forest Development Road 381 is a dirt/gravel road that provides access to State and Federal lands. In addition, access to specific areas to be mined will require either upgrades to former logging roads or construction of new access roads.
The nearest, large communities are Moscow, Idaho, which lies about 28 miles west-southwest of the Property, and Lewiston, Idaho, which lies about 33 miles to the southwest. Transport to the Helmer-Bovill Property would utilize standard over-highway vehicles.
Electric power would be provided by Avista Corp., but we would be required to construct approximately four miles of power lines.
Natural gas is available to the Helmer-Bovill Property from a natural gas pipeline that extends from Moscow to Bovill and is available to be utilized for this processing facility. Approximately two miles of pipeline would need to be constructed.
Water needed for processing would come from new wells located at the process site. Groundwater from drilled wells is typically used to serve domestic needs within the vicinity of the Property. Additional water is also available in a small reservoir north of the Helmer-Bovill Property. We intend to apply for water rights to this reservoir in the near future.
The region has a long history of clay production, forestry and farming. A labor force skilled in heavy equipment operation, trucking, and general labor exists within the surrounding communities and rural areas.
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There are several suitable locations for potential tailings storage, mining waste disposal, and potential processing plants.
The WBL Tailings Project is mined using a loader and/or excavator or backhoe. If required, on-site power will be supplied by a diesel or gasoline power generator. Fuel supply will generally be provided by pickup truck fuel transfer tanks (typically 90 to 150 gallons). If fuel is temporarily stored on site, secondary containment will be used (either double-walled tanks or a secondary containment wall), and if fuel storage volume exceeds 1320 gallons, a Spill Prevention, Control Countermeasure plan will be developed in accordance with federal regulations. Water will be used only as dust control and will be taken from the WLB pits. Bottled water will be provided, as necessary for drinking water for employees and contractors.
Climate and Physiography
The climate at the Helmer-Bovill Property is characterized by an estimated average annual precipitation of 38.82 inches, with the highest values recorded between October and March (71% of the annual precipitation). The average annual minimum and maximum temperatures are 30.1°F and 55.7°F,respectively; with average monthly minimum and maximum temperatures ranging from 18.5°F to 41.7°F and 41.1°F to 83.3°F, respectively.
The average total snowfall ranges from 0.1 inches in October to 37.3 inches in January, with an annual average of 100.9 inches. Average snow depth ranges from 1.0 inches in November to 23.0 inches in February, with an annual average snow depth of 6.0 inches.
The average elevation is about 3,000 ft. above mean sea level, with a topographic relief of about 200 ft. The area is largely covered with soil, but old workings (pits and trenches) and road cuts provide exposure to the underlying bedrock geology. The Helmer-Bovill Property is located on the west side of the Potlatch River drainage area.
The Helmer-Bovill Property area consists of low foothills and ridges alternating with relatively wide, flat basins. Forested areas occupy the slopes and ridge tops which are managed primarily for timber production. Conifer forest makes up approximately 50% of the overall Helmer-Bovill Property area. Forest stands were observed to be early seral, highly fragmented, and lacking in the ecological functions and values of older, more contiguous forests. Grasslands occur in the basins alongside sinuous intermittent and perennial stream channels. The Helmer-Bovill Property area is currently permitted for livestock grazing. Most of the Helmer-Bovill Property area has been disturbed by previous mining, forestry and grazing activities and, as such, contain predominantly disturbance oriented plant communities. Non-forested meadows or pasture areas are intensively grazed resulting in a proliferation of non-native vegetation and soil compaction and erosion.
Surface waters primarily consist of small, meandering, intermittent stream channels that flow toward the Potlatch River. These channels are typically located in the level “flats” between low hills or ridgelines and dry up by mid or late summer. Most streams are hydrologically altered by high- density road construction, historic mining, and cattle grazing. Grazing has also eliminated much of the woody growth along most stream channels resulting in eroded channels and sedimentation. Other surface waters include several old clay mining pits and small dams that have developed into water catchment basins as well as emergent wetlands flanking the stream channels. Groundwater appears in scattered locations as either springs or seepage discharge along streams or edges of wetlands. Native soils predominate in the area.
History
U.S. Bureau of Mines (“USBM”) and United States Geological Survey (“USGS”) (1942-1947)
During World War II, the clays in eastern Washington and northern Idaho were examined as a possible source of alumina and a substitute for foreign bauxite ores. Domestic bauxite reserves were being depleted, and the importation of foreign bauxites was handicapped by transportation difficulties. Both the USGS and USBM conducted extensive field studies that were followed by the drilling of 650 holes that totaled about 20,252 ft.
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USBM (1953-1963)
In 1953 the USBM continued their search for viable clay deposits. They also investigated the potential of the contained silica sand for the glass industry. The USBM tested the Benson and Olsen clay deposits between Troy and Deary, and then moved on to the Bovill deposits. Ninety-seven samples were collected from 1,325 ft. of drilling over an area covering 750 ft. x 350 ft. that is located 1.5 miles southwest of Bovill near State Highway 8.
A.P. Green Refractories Company (1956-1993)
In 1956, A.P. Green Refractories Company purchased all the remaining assets of Troy Brick and Clay and acquired a lease, being located north of Helmer, from which they produced refractory clay. They processed the clay by air flotation to produce two grades of refractory clay. Production continued until the early 1990’s when Hammond Engineering purchased one pit from A.P. Green. This pit produced transported clay for ceramic applications. Total production from the area during this period is estimated to be 250,000 tons.
J.R. Simplot Company (1956-1974)
In 1956, the J.R. Simplot Company (“Simplot”) of Boise, Idaho, acquired leases covering the Bovill deposits. In a cooperative program, Simplot and USBM drilled 240 holes (99 of which were on 50 ft. centers) and conducted washing, pyrometric, mineralogical, and beneficiation tests. By 1962, Simplot had built a clay plant, the Miclasil facility, for the production of paper fillers and specialty ceramics. Production initially came from pits in the Bovill deposit, which are in transported clay of the Latah formation directly south of the plant. Simplot shifted production to residual clay deposits in the granodiorite, as this source proved more satisfactory for paper filler. The pits exploited by Simplot for residual clays were the WBL north and south pits and the Moose Creek Clay Mine, and the Stanford pit. Simplot operated their plant until 1974, when it was sub-leased to Clayburn Industries of British Columbia. Clayburn operated the property only a few years, calcining clay that was shipped to Canada and processed into super-duty and 70% alumina bricks. In 1994 the plant was dismantled and the property partially reclaimed.
Several Companies (1983-1986)
During the mid-1980’s, a number of companies began exploration work in the Helmer-Bovill area to identify clays suitable for use as paper fillers and coaters. The University of Indiana, Nord Resources, Miles Industrial Mineral Research, and Cominco American conducted work on the Helmer-Bovill area deposits. In 1985-1986, the Erikson- Nisbet Partnership formed a consortium of companies to develop new processes for beneficiation of the clays, but the introduction of precipitated calcium carbonate fillers for paper reduced the demand for kaolin fillers.
Regional Geology
The regional geology is dominated by Precambrian sedimentary rocks of the Belt Supergroup (“Belt”), which have been strongly deformed and intruded with granitic phases of the Idaho Batholith during the Cretaceous age Sevier Orogeny.
During the Middle Proterozoic, the area was dominated by a large intra-cratonic basin that was subsiding along syn-sedimentary faults. The basin sediments comprise the Belt which range in age from about 1,470 to 1,400 Ma. The oldest units consist of the Lower Belt sequence, these are overlain by the Middle Belt Carbonates and the youngest are the Missoula Group.
The Belt sediments are believed to have remained relatively stable until approximately 1,350 Ma when portions of the basin were affected by compressional tectonics of the East Kootenay Orogeny. This orogeny was followed by rifting of the basin during the late Proterozoic-early Paleozoic when large portions of the sediments were transported away and the western margin of North America was developed.
The next major tectonic event occurred during the Cretaceous Sevier Orogeny. Early compressional tectonics dominated the area forming large-scale folds, reverse and thrust faults. During the late Cretaceous, the Bitterroot Lobe of the Idaho Batholith was emplaced in the region. The intrusive rocks described below were formed during this event.
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The most recent, significant, geologic event was the deposition of the Columbia River Basalts (“CRB”). The CRB consist of a large plateau flow sequence of Miocene age (6 to 17 Ma). The lavas are distributed over an extensive area covering portions of Idaho, Oregon, and Washington. Minor extensional block faulting has resulted in much of the present landscape.
Local Geology
Belt Series
The Precambrian metasediments of the Belt series are the oldest rocks in the Bovill-Moscow area and form the basement for the entire area. The Belt series rocks crop out primarily in the northern and eastern sections of the Helmer-Bovill Property. They form a high-grade metamorphic facies assemblage that includes gneiss, schist, and minor meta-quartzite, meta-argillite, and meta-siltite.
Thatuna Granodiorite
Granitoid intrusive rocks of Cretaceous age underlie a large portion of the Helmer-Bovill area and form part of the Thatuna batholith. Thatuna lithologies consist predominantly of granodiorite with subordinate adamellite, tonalite, and granite. The principal mineral constituents are quartz, plagioclase feldspar, K-spar, and biotite with trace to minor amounts of muscovite, garnet, and epidote. The batholith is medium- to coarse-grained granular, and porphyritic textures are common. Erosion of the Thatuna batholith developed a mature topography where it is exposed in Latah County.
Recent geological mapping identified a previously undescribed phase of the Thatuna batholith, referred to as the Kmcp. The Kmcp is interpreted to be a border zone of the intrusion that occurs along the interface between the main-stage, coarse-grained, and porphyritic Thatuna batholith and the Precambrian Belt series roof rocks. Intrusion into cooler roof rocks resulted in a distinctive and texturally diverse unit characterized by dominant granular medium-grained and subordinate coarse-grained and pegmatoid textures, the lack of well-developed porphyritic textures and the presence of Precambrian xenolithic paragneiss, paraschist and metasiltite blocks inherited from the roof rocks. Where unaltered, the Kmcp intrusive rocks contain a primary assemblage of plagioclase, K-spar, quartz, biotite, and muscovite, and are predominantly of granodioritic to granitic composition. The porphyritic main body of the Thatuna batholith does not appear to crop out within the mapped part of the Helmer-Bovill area.
The Kmcp derives its distinctive character from high-level interaction with the Precambrian metasedimentary roof rocks. More rapid cooling in the contact zone produced a dominant medium-grained, non-porphyritic, granodioritic unit in contrast to the coarser-grained, porphyritic granodiorite lithology that characterizes the deeper main stage of the batholith. In the roof zone, hydrous mineral-bearing xenolithic blocks of the Precambrian Belt series metasediments were entrained by the intruding magma and outgassed of their volatile component. The outgassing contributes to the creation of pockets of hydrous granitic liquid proximal to the Precambrian blocks. These pockets crystallized subsequently into coarse-grained to pegmatoid granite pods that are distributed within the larger body of medium-grained granodiorite. Owing to the physicochemical conditions of crystallization within the hydrous pods of granitic liquid, the resultant solidified rocks show a stronger tendency toward higher proportions of K-feldspar relative to plagioclase and higher K2O/Na2O ratios than does the dominant medium-grained granodiorite.
Weathered Thatuna Granitoid
The exposed Thatuna batholith was subjected to intense weathering in a tropical or near-tropical climate during the Miocene epoch, while the Columbia River basalts were erupted and the Latah formation sediments were deposited. In response to the strong weathering, much of the feldspar and at least some of the mica in the igneous body were altered to one or more varieties of clay minerals. The depth limit of weathering may initially have been fairly consistent; however, subsequent erosion has left a variable weathering profile with thickness roughly dependent on topography. At present, the depth of weathering may exceed 100 ft. along ridges and be less than 3 ft. in some valleys.
Of particular importance is the weathering of the feldspar in the granitoids to halloysitic to kaolinitic clays. It was the presence of kaolinitic clay deposits that provided the initial impetus for economic mineral development in north Idaho. Plagioclase feldspar is the least stable phase in the weathering environment, and it alters to form clay well before K-spar and muscovite. K-spar and the micas are relatively resistant to alteration during all but the most intense weathering. Quartz is impervious to alteration throughout the weathering cycle. In the Helmer-Bovill area, pits that were mined for kaolin in residual deposits contained mostly quartz, halloysite, kaolinite, and K-spar. The waste material is primarily quartz and K-feldspar, with plagioclase accounting for only a minor proportion of the total feldspar.
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Potato Hill Volcanics
The Potato Hill volcanic rocks contain silicic to intermediate volcanic rocks and include lava flow and pyroclastic flow units, as well as hypabyssal intrusive rocks. They form much of the rock along the western edge of the Helmer embayment at Potato Hill, and along the southern edge of the Thatuna. Many of the pyroclastic flows contain abundant xenolithic clasts of older granodiorite and Belt metasediments.
The individual flows are 3 to 50 ft. thick and the complete sequence exceeds 900 ft. in thickness. The flow units generally contain 3% to 10% phenocrysts of feldspar and quartz distributed in an aphanitic matrix of devitrified volcanic glass. Accessory minerals include magnetite, hornblende, apatite, and zircon. Some lithic-rich pyroclastic flow units carry up to 20% fragments. The saprolitic weathering that is well-developed in the older rocks has not appreciably affected the Potato Hill volcanics.
Columbia River Basalts
The First Normal member of the Grande Ronde formation, the Priest Rapids member of the Wanapum formation, and the Onaway member of the Saddle Mountain formation (oldest to youngest, respectively) are all Columbia River basalt flows mapped in the Helmer-Bovill area. The Grande Ronde formation flow occurs in the southern portion of the Helmer-Bovill area and consists of fine-grained to very fine-grained aphyric basalt. The Priest Rapids flow is a medium to course-grained basalt with microphenocrysts of plagioclase and olivine in a groundmass of intergranular pyroxene, ilmenite, and devitrified glass. It crops out in increasing abundance to the southwest toward Deary. Saddle Mountain basalts are found much further to the west. The importance of the Columbia River basalts to the genesis of the Latah formation is that the episodic basaltic extrusion dammed streams and formed lakes into which kaolin-rich sediments eroded from weathered granitoid and Precambrian metasediments were deposited.
Latah Formation
The Latah formation can be described as lake bed sediments that, although local in origin and distributed in disconnected basins, occur over an area 175 miles long and 75 miles wide in eastern Washington and northern Idaho. Episodic flows of the Columbia River basalts blocked streams and formed lakes that collected sediments eroded from surrounding rocks. In the Helmer-Bovill area, a major basin termed the Helmer embayment occurs over an area of approximately 25 to 30 square miles. Latah formation sediments are described as clay, silt, sand and minor gravel deposits that are laterally equivalent with and overlie flows of Columbia River basalts. The clays are white, yellow, red and brown in color, kaolinite-rich, and range from a few feet to several tens of feet in thickness.
Palouse Formation
The Palouse Formation comprises mixed loess and flood plain sediments of Pleistocene age. It ranges in thickness from 3 to 35 ft. in thickness and averages 10 ft. thick in the Helmer embayment. The unconsolidated layers also include volcanic ash from the eruption of various Cascade Range volcanoes.
Mineralization
The Helmer-Bovill Property hosts four different deposit types. These include primary plagioclase deposits, residual K-spar-quartz-kaolinite-halloysite deposits, transported clay deposits and K-spar-quartz tailings deposits (which are located at the WBL Tailings Project).
The primary plagioclase deposits are hosted within granitic border phases of the Thatuna granodiorite. The transported clay deposits are hosted primarily within the Latah formation. This formation was deposited primarily in shallow lakes dammed by Columbia River Basalts. Extensive weathering of feldspathic source terrains constitutes the provenance of these clays. The K-spar-quartz tailing deposits are the result of previous mining and washing of the residual deposits. In this case, the majority if the clay has been removed and the tailings are composed primarily of K-spar and quartz. The residual deposits are derived from saprolitic weathering of the Thatuna granodiorite-granitic phases. In general, plagioclase alters to kaolinite and halloysite. These clays are accompanied by residual K-spar and quartz.
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The WBL Tailings Project hosts K-spar and quartz. The tailings were deposited on a gently east-northeast sloping hillside and also with an impoundment structure located at the base of the slope. Exploration tranches indicate the tailings are in excess of 17 ff. deep in most places. In general, the sloping portions of the tailings are composed of coarser material and the flat lying portions at the base of the slope are composed of relatively finder materials. The tailings appears to be continuous based on observations from test from the pits.
Feldspars
The unweathered Thatuna Batholith represents a source carrying a high total feldspar abundance, of which a significant proportion is plagioclase.
In the strongly weathered Thatuna Batholith rocks plagioclase shows nearly complete alteration to a kaolin mineral, but much of the K-spar survives alteration. The tailings contain essential quartz and K-spar, some clay/mica, and only minor amounts of plagioclase.
Quartz
Exploration and drilling results indicate that the quartz in the Thatuna batholithic rocks is relatively free of Fe-bearing mica or oxide inclusions. Accordingly, the area has excellent potential to produce a glass-grade product that might be processed further into feed stocks for the high purity quartz market.
Clay Minerals
The kaolinite group of clay minerals includes four minerals that are similar chemically, but differ with regard to crystal structure. Kaolinite and halloysite are the major clay minerals in the Helmer-Bovill area clay deposits. Crystal structure differences are important and control properties relevant to their commercial applications. Kaolinite occurs as distinct platelets, whereas halloysite forms tubes and spheroids. Although halloysite also has a plate-like crystal form, imperfections in its crystal lattice cause the crystal to “roll up” into the tubular forms. There are two varieties of halloysite, the four-water variety and the two-water variety. The two-water variety is a dehydrated version of the four-water halloysite and is almost impossible to distinguish from poorly crystallized kaolinite. Both varieties of tubular halloysite and poorly crystallized kaolinite exhibit poor viscosity, and their use is limited to fillers and ceramics. Well- crystallized kaolinite generally exhibits good viscosity properties and is suitable for high quality ceramics and paper coaters.
Most of the mineralogical work completed on the Helmer embayment clays indicates that the transported, sedimentary kaolins consist predominantly of kaolinite, but have a significant halloysite component.
Residual clays developed on weathered granitoid in the Helmer-Bovill area are a mixture of halloysite and kaolinite, with the concentration of each dependent upon the degree of weathering. The halloysite content increases with depth as the effects of weathering diminish.
Deposit Type
The residual deposits consist primarily of K-spar, quartz and clays. The mineral deposit is underlain by the Thatuna Batholith, composed mainly of plagioclase, K-spar and quartz. Weathering has created a residual saprolite horizon which directly overlies the bedrock from which it was derived. During the natural processes of weathering, the original plagioclase feldspars have preferentially broken down to produce the clays kaolinite and halloysite. The K-spars have resisted weathering to a degree and much of the original component remains as free grains. Similarly, the quartz component of the host rock remains as free grains in the weathered material.
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Exploration , Drilling and Bulk Sampling/Pilot Testing
Exploration Programs
During the period from 1999 through the end of 2001, the exploration work included the acquisition of over 6,000 acres of mineral lease applications, the compilation of an extensive file on the results of previous operations, and drilling.
During 2002 and 2003, geologic mapping and petrographic studies were performed. An electron microprobe analytical study was conducted on field samples, quartz products and feldspar products from earlier work. Following petrographic and microprobe studies, select intervals of residual deposits from the 2000-2001 drilling program were sent to Mineral Resource Laboratory (MRL) for process testing.
Drilling Programs
During 2000-2001, a 41-hole diamond drill program was completed at the Property, focused on both bedrock feldspar deposits and residual deposits. Approximately 50% of the drill holes penetrated residual deposits at or very near the surface. A total of 4,063 ft. were drilled during this program. All holes were surveyed by Rim Rock Surveying.
In 2003, a 12-hole, diamond drill program was completed at the Project, testing for residual deposits over a broad area. A total of 1,333 ft. were drilled in this program. All holes were surveyed with a hand held GPS with an accuracy of several meters.
In 2007, a 28-hole, diamond drill program was conducted to further evaluate the residual deposits. Six holes were located in the WBL Pit area on 200 to 600 ft spacing. The remaining holes were spread over the entire property to test those areas believed to be underlain by the weathered Thatuna granodiorite, establishing several new prospective areas. A total of 3,529 ft were drilled during this program. The six holes located at WBL Pit were surveyed by Jamar and Associates and all remaining holes were surveyed by handheld GPS with an accuracy of several meters.
In 2010, a 10-hole, diamond drilling program was completed in the WBL Pit and Middle Ridge areas. Five holes were completed in each area, on 400 to 900 ft spacing. A total of 1,195 ft were drilled in this program. All holes were surveyed by Taylor Engineering with a differential GPS to cm accuracy.
In 2011, a 66-hole, diamond drilling program was conducted in the WBL Pit and Middle Ridge areas. At Middle Ridge, 45 holes were drilled and at WBL, 21 holes were drilled. These holes were mostly located on 200 ft spacing with a few on 400 ft. A total of 7,747 ft were drilled during this program. All holes were surveyed by Taylor Engineering with a differential GPS to cm accuracy.
In 2013, a 167-hole, diamond drilling program was conducted in the Middle Ridge deposit and in two new areas referred to as Kelly’s Hump North and South. At Middle Ridge, 21 additional holes were completed to provide a drill pattern on 100 ft spacing in the area hosting higher halloysite grades. In the Kelly’s Hump area, a phase one program was completed with 17 holes spread though out the elevated area of the north south trending ridge. These were generally spaced at approximately 400-800 ft with all but one, located in the northern area. A phase two program was completed with 113 additional holes in the northern area and 16 in the south. The majority of drilling at Kelly’s Hump North is on 100 ft spacing. The drilling at Kelly’s Hump South is all on 200 ft spacing. A total of 17,811 ft. were drilled during this program. The drill hole locations were first laid out by Taylor Engineering with a differential GPS and then once the drill rig was set up any offsets were measured with a tape measure.
The drillhole database supporting the resource estimation of this report consists of 322 diamond core drillholes totaling 35,909 ft. The shallowest hole is 20 ft, the deepest is 260 ft, and the average is 112 ft. All drillholes are oriented vertically and none of the holes have down hole deviation surveys. Since all of the drilling is relatively shallow the lack of down hole deviation survey has no material impact on the sample location. Since many of the older drillholes are located with a hand held GPS their elevations do not match the current, high resolution topographic surface. For this reason, all drillhole supporting the resource estimation of this report, are draped onto the high resolution topography to provide a uniform basis of elevation control. Typically, the sample recovery was very good ranging from 60 to 100%. The average core recovery is 87%.
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Figure 4. Drill Hole Locations
Bulk Samples and Pilot Testing
Since 2005, we have conducted various tests and pilot plant tests on bulk samples collected from the Bovill Kaolin Project. The bulk samples consist of a 1.5 ton sample collected from the WBL pit in 2005, a 3.0 ton sample collected from the WBL pit in 2007 and one sedimentary clay sample from another deposit area. Our analysis of these bulk samples focused on the recovery of clay, and the recovery of feldspar and quartz.
Testing of Primary Clay
In 2005 and 2006, we conducted an initial test of the bulk sample to (i) evaluate the characterization of the clay samples for physical, chemical and mineralogical properties, (ii) determine the responsiveness of the clay to commercial processing technology, (iii) optimize processing parameters, and (iv) determine end uses for the kaolin products as well as potential co-products from the separated material. The results indicated that the samples contained predominately quartz with varying amounts of K-spar, kaolinite and halloysite, and the final clay products produced resulted in a unique combination of kaolinite and halloysite clay. In addition, the clay generated from these samples obtained favorable results of brightness and color and will lend itself applicable to paper, paint and ceramic industries.
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In 2008 and 2010, we completed pilot plant tests of the primary clay material. The 2008 results indicate that a 3 inch cyclone was very efficient at separating and concentrating the grit fraction from the clays. Of importance, the SEM illustrated excellent separation and concentration of the halloysite in the second pass overflow fraction. The underflow fractions contained the highest concentration of kaolinite clay. The 2010 results yielded a lower percentage of grit than the 2008 pilot plant test. However, the concentration of the clay separation was not as pronounced. Accordingly, it was determined that higher percent solid ranges used in this test were detrimental in achieving the results of the previous test. This generated some of the best separations to date and included previously untried differential flotation work
Testing performed in 2011 was primarily performed to generate additional quantities of halloysite product for market development work. The principal company involved in this work is DURTEC GmbH located in Neubrandenburg, Germany and headed by Dr. J. Schomburg. Two major test runs were performed – one completed in September 2011 utilizing approximately 2,000 lb of primary clay and another in December utilizing approximately 6,500 lb of primary clay. One significant equipment modification was incorporated into the clay processing schematic – a solid bowl decanter centrifuge was used in place of the 0.5 inch diameter cyclone for both passes. The halloysite and kaolin product yields and quality closely matched the previous results, and the centrifuge equipment will be utilized in all future work.
Approximately seven tons of primary clay was sampled from a 2013 drill hole location in late 2013 that showed high halloysite contents along with visually better brightness. Several gravity and density separation methods and a novel differential flotation technique were evaluated, with the process selected in 2011 being run at a pilot scale. Scanning Electron Photomicrographs show that the pilot level contains approximately 75% halloysite and the differential flotation method yielding about 90% halloysite. In June 2014, about 38 tons of primary clay was extracted from a series of trenches that will enable I-Minerals to submit three representative bulk samples for pilot scale testing. This work should be completed by the fourth quarter 2014.
Testing of K-spar and Quartz
We have only completed pilot plant testing for K-spar and quartz beneficiation on the WBL tailings in 2009. Since then bench-scale testing of the sand fraction from the pilot plant work of the primary clay has confirmed the high quality of the K-spar in the primary clay to that of the tailings pilot run. We have nearly 4000 lbs of this K-spar that has been fine ground and will be distributed to potential customers. Bench-scale testing of the primary clay sand fraction has also undergone multiple flotations to produce the three grades of quartz that we have targeted to make. Quartz produced from the sample taken in late 2013 has achieved the levels desired where Quartz1 is less than 1000 ppm impurities (439 ppm actual), Quartz2 is less than 600 ppm impurities (233 ppm actual), and Quartz3 is less than 300 ppm impurities (188 ppm actual). From the largest bulk sample mentioned above collected in June 2014, a pilot plant run will be performed on the sand fraction to produce the K-spar and the three grades of quartz before the end of this year.
Density Testing
Subsequent to the 2014 Pre-Feasibility Study, we conducted density testing of the primary clay material at the Bovill Kaolin Project. The purpose was to confirm whether the primary clay material’s density is higher than the amount calculated in 2013 density test. Our 2014 testing shows a mean density of 2.4 g/m 3 for the resources material, which is greater than our 2013 results of 1.7 g/m 3 . Accordingly, we believe that our 2014 density test is more indicative of the density at the Bovill Kaolin Project.
Exploration at the WBL Tailings Project
In 2001, we completed a single exploration trench near the southwest limit of the tailings. This trench was hand excavated over a distance of 10 ft. to a depth of 2 ft.
In 2002, the second phase of exploration was a hand auger sampling program. This work included 17 hand auger holes located on approximately 200 ft. centers. The effective sample depth of the auger was 6.5 ft.
The third phase involved an excavator trenching program in 2005. A total of six trenches were completed on 100 ft. and 300 ft. spacing. The effective sampling depth of the excavator was 17 ft.
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2014 Pre-Feasibility Study
In May 2014, we announced the completion of our updated pre-feasibility study on the Bovill Kaolin Project in accordance with NI 43-101. The 2014 PFS was filed on SEDAR on June 27, 2014, and is titled “NI 43-101 Updated Prefeasibility Technical Report – Bovill Kaolin Project – Latah County, Idaho” dated June 26, 2014 and prepared SRK Consulting (U.S.), Inc. (“SRK”), independent mining consultants.
A summary of the project economics contained in the 2014 PFS is set forth below.
Economic Analysis
The economic analysis results of the Bovill Kaolin Project indicate an NPV 6% of US$330.8 million and an IRR of 38.2% on a pre-tax basis. An after-tax basis analysis indicates an NPV 6% of US$212.7 million with an IRR of 30.5%. Our analysis estimates that payback will be 3 years from the start of production. The economic analysis is based on the following assumptions and estimates:
The results of our economic analysis are set forth in the table below:
Mining Methods
We plan to utilize open pit mining methods to extract material at the four deposits located at the Bovill Kaolin Project. Conventional truck and shovel mining equipment will be used to extract both ore and waste. Due to the nature of the material, there is not expected to be any requirement for drill and blast operations. When operational, the site is expected to operate 7 days per week, 8 hours a day, during daylight hours only.
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Industrial Mineral Pricing
Composite prices utilized for our mineral reserve and resource estimates is summarized in the table below:
Products |
Weighted Average Price
($/t) |
Halloysite | 1,200 |
Halloysite (Incremental) | 300 |
K-spar | 220 |
Quartz | 248 |
Quartz (Incremental) | 87.50 |
Kaolin | 95 |
Metakaolin | 225 |
Industrial mineral pricing is based on thirteen years of data derived from the USGS, books, journals, trade journals, Internet searches, and market reports in the public domain. Additional data is from personal visits and conversations with contacts within the glass, concrete, ceramics, tile, sanitary, paint, tableware, polymers, insulators, plastics, animal feed, toothpaste and cosmetic industries. Due to the highly competitive nature of the industrial sand and clay industry, contract prices are confidential and generally not available in the public domain.
Capital Costs
Capital cost estimates are summarized in the table below:
Description |
Initial
(US$000s) |
Sustaining
(US$000s) |
Life of Mine
(US$000s) |
Mining | 919 | 467 | 1,386 |
Process & Infrastructure | 59,538 | 9,797 | 69,335 |
Tailings Storage Facility | 9,170 | 4,900 | 14,070 |
Owners Costs | 3,056 | 3,000 | 6,056 |
Total | $72,682 | $18,165 | $90,847 |
Operating Costs
Operating cost estimates are summarized in the table below:
Description |
$/t
Product |
Life of Mine
(US$000s) |
Contract Mining | 8.89 | 44,340 |
Mine G&A | 1.00 | 5,000 |
Mine Support | 0.21 | 1,028 |
Processing | 59.18 | 295,090 |
G&A | 1.43 | 7,152 |
Total | $70.72 | $352,610 |
CIM Mineral Resource Estimate
We have prepared a CIM measured and indicated resource estimate on the Bovill Kaolin Project as set out in the table below. The resource estimate does not utilize a cut-off grade as all recovered material in the resource estimation contains sufficient sand, kaolinite or halloysite that can be mined for profit.
Classification | Location | Tons (M) | Quartz & K-Spar Sand (%) | Kaolinite (%) | Halloysite (%) | Quartz & K-Spar Sand Tons (000’s) | Kaolinite Tons (000’s) | Halloysite Tons (000’s) |
Measured | Kellys Hump | 2.3 | 76.7 | 13.0 | 3.9 | 1,761 | 297 | 90 |
Middle Ridge | 1.0 | 74.8 | 12.0 | 5.9 | 745 | 120 | 58 | |
All | 3.3 | 76.1 | 12.7 | 4.5 | 2,505 | 417 | 148 | |
Indicated | Kellys Hump | 3.8 | 72.2 | 18.0 | 2.8 | 2,721 | 680 | 107 |
Middle Ridge | 2.9 | 77.0 | 12.4 | 3.0 | 2,208 | 355 | 86 | |
WBL Pit | 1.3 | 75.0 | 15.8 | 1.7 | 973 | 204 | 22 | |
All | 7.9 | 74.4 | 15.6 | 2.7 | 5,902 | 1,239 | 215 | |
M&I | Kellys Hump | 6.1 | 73.9 | 16.1 | 3.2 | 4,485 | 978 | 196 |
Middle Ridge | 3.9 | 76.4 | 12.3 | 3.7 | 2,952 | 474 | 144 | |
WBL Pit | 1.3 | 75.0 | 15.8 | 1.7 | 973 | 204 | 22 | |
All | 11.2 | 74.9 | 14.8 | 3.2 | 8,407 | 1,656 | 362 |
CIM Mineral Reserve Estimate
A mineral reserves estimate on the Bovill Kaolin Project has been prepared in accordance with CIM guidelines. Cut-off grades were not applied since all weathered Thatuna material in the resource estimation contains sufficient sand, kaolinite or halloysite to be mined for profit. The proven and probable mineral reserves are set forth below:
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Reserve |
Million
Tons |
Halloysite
Grade |
Kaolin
Grade |
Quartz & K-Spar
Sand (%) |
Halloysite
Tons |
Kaolinite
Tons |
Quartz & K-Spar
Sand (t) |
Kelly Hump | |||||||
Proven
Probable |
1.7
1.0 |
4.8%
6.0% |
13.5%
15.4% |
81.7%
78.6% |
82,000
60,000 |
229,000
154,000 |
1,389,000
782,000 |
Kelly South | |||||||
Proven
Probable |
0
1.3 |
0
1.6% |
0
23.2% |
0
75.3% |
0
20,000 |
0
296,000 |
0
959,000 |
Middle Ridge | |||||||
Proven
Probable |
0.7
1.4 |
6.9%
4.6% |
12.8%
13.1% |
80.3%
82.3% |
48,000
66,000 |
90,000
187,000 |
563,000
1,179,000 |
WBL | |||||||
Proven
Probable |
0
0.8 |
0
2.4% |
0
16.5% |
0
81.1% |
0
18,000 |
0
128,000 |
0
629,000 |
The minerals reserves are based on a 100% mine recovery and 0% dilution. This is due to the small equipment being utilized and the selectivity of the material being mined. This will require further review as part of additional studies. The processing recovery for halloysite and kaolinite is 90% of the reported reserve for each. A total of 68% of quartz and feldspar is recovered from the primary clay.
The factors affecting anticipated mining and processing recovery results include methods for transportation and stockpiling of ore, plant performance for separation, grinding and flotation, and whether consumables (electricity, natural gas, process reagents and equipment maintenance parts) are in line with projections.
No cut-off grade has been used for the mineral reserve calculation as all recoverable material in the reserve estimate contains sufficient halloysite, kaolinte, quartz, K-spar and sand to be mined for a profit. All weathered Thatuna material is considered ore. Waste is the clay and sand overburden, roof pendant inclusions of country rock, and basalt dike material.
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Cautionary Note to U.S. Investors : This section and other sections of this Registration Statement on Form 10 contain the terms “measured mineral resources,” “indicated mineral resources,” “inferred mineral resources,” “proven mineral reserves,” and “probable mineral reserves” as defined in accordance with NI 43-101. Please note the following regarding these terms:
Please see “Cautionary Note to U.S. Investors Regarding Estimates of Measured, Indicated and Inferred Resources and Proven and Probable Reserves” for further discussion on the differences between terms under NI 43-101 and SEC Industry Guide 7.
Cautionary Note To All Investors Concerning Economic Assessments That Include Mineral Resources: Mineral resources that are not mineral reserves have no demonstrated economic viability.
Current Activities
Bovill Kaolin Project
As recommend in the 2014 PFS, we have commenced the feasibility study of the Bovill Kaolin Project. In order to bring the Bovill Kaolin Project to feasibility, we will be required to undertake the following:
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We anticipate that a feasibility study will be completed within 12 to 18 months and such study will refine the engineering study contained in the 2014 PFS. The estimated cost for the feasibility study is set forth below:
Study Items | Project Costs |
Project Management | $320,000 |
Marketing | 450,000 |
Production Development | 130,000 |
Environmental and Permits | 325,000 |
Drilling and Resources | 500,000 |
Reserves and Mine Planning | 80,000 |
Metallurgical Testwork | 100,000 |
Process and Infrastructure | 451,000 |
Tailings and Waste Storage | 515,000 |
Hydrogeological Modeling | 130,000 |
Technical Model and Final Report | 55,000 |
Total Feasibility Cost | $3,056,000 |
WBL Tailings Project
We plan to continue our continue production of the sand tailings at the WBL Tailings Project. In April 2014, we entered into a new contract with Pre-Mix for the sale of up to 30,000 tons per annum of screened K-spar / quartz sand. Under the terms of the contract, Pre-Mix is solely responsible for the operating costs to process and remove the k-spar / quartz sand.
In order to excavate the sand tailings at the WBL Tailings Project, Pre-Mix uses its own backhoe, trucks and screen to remove the sand tailings. As a result, production facilities are not required to excavate the sand tailings from the WB Tailings Project.
To date, we have sold a total of 1,456 tons of sand tailings to Pre-Mix for total revenues of $1,456.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the number of common shares owned beneficially as of December 17 , 2014 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors, (iii) each of our named executive officers; and (iv) officers and directors as a group. Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percentage of Common Shares (1) |
Directors and Officers | |||
Common Shares |
THOMAS
M. CONWAY
Chief Executive Officer, President and Director |
670,000
(2)
Common Shares Direct |
* |
Common Shares |
MATTHEW
ANDERSON
Chief Financial Officer |
150,000
(3)
Common Shares Direct |
* |
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(1) | Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of our shares actually outstanding on December 17, 2014. As of December 17, 2014, there were 78,895,161 common shares issued and outstanding. |
(2) | The number of shares listed as beneficially owned by Mr. Conway consists of: (i) 170,000 common shares; (ii) an option to purchase 150,000 common shares at a price of CDN$0.40 per share until December 1, 2015; and (iii) an option to purchase 350,000 common shares at a price of CDN$0.10 per share until July 30, 2018. We have not included Mr. Conway’s the following options that will not vest in the next 60 days including: (i) an option to purchase 50,000 common shares at a price of CDN$0.10 per share until July 30, 2018; (ii) an option to purchase 260,000 common shares at a price of CDN$0.15 per share until July 30, 2018; and (iii) an option to purchase 300,000 common shares at a price of CDN$0.25 per share until July 30, 2018. |
(3) | The number of shares listed as beneficially owned by Mr. Anderson consists of an option to purchase 150,000 common shares at a price of CDN$0.10 per share until July 30, 2018. |
(4) | The number of shares listed as beneficially owned by Mr. Ball consists of: (i) 250,500 shares held directly by Mr. Ball, (ii) 352,500 common shares held by Allen & Connie Ball Family Limited Partnership, (iii) 1,030,000 common shares held by Allen & Connie Ball Living Trust, (iv) 21,117,435 common shares held by BV Naturally Resources LLC; (v) an option to purchase 170,000 common shares at a price of CDN$0.40 per share until January 7, 2015; (vi) an option to purchase 150,000 common shares at a price of CDN$0.10 per share until July 30, 2018 held directly by Mr. Ball; (vii) an option to purchase 170,000 common shares at a price of CDN$0.40 per share until January 15, 2015 held directly by Mr. Ball; (viii) 5,220,000 share purchase warrants exercisable at a price of CDN$0.40 per share until April 29, 2016 held by BV Naturally Resources LLC; (ix) 667,520 share purchase warrants exercisable at a price of CDN$0.14 per share until December 1, 2016 held by BV Lending, LLC; (x) 122,142 share purchase warrants exercisable at a price of CDN$0.14266 per share until December 1, 2016 held by BV Lending, LLC; (xi) 104,119 share purchase warrants exercisable at a price of CDN$0.165 per share until December 1, 2016 held by BV Lending, LLC; (xii) 76,723 share purchase warrants exercisable at a price of CDN$0.17 per share until December 1, 2016 held by BV Lending, LLC; (xiii) 87,818 share purchase warrants exercisable at a price of CDN$0.17223 per share until December 1, 2016 held by BV Lending, LLC; (xiv) 111,762 share purchase warrants exercisable at a price of CDN$0.185 per share until December 1, 2016 held by BV Lending, LLC; (xv) 64,246 share purchase warrants exercisable at a price of CDN$0.217 per share until December 1, 2016 held by BV Lending, LLC (xvi) 58,181 share purchase warrants exercisable at a price of CDN$0.225 per share until December 1, 2016 held by BV Lending, LLC (xvii) 151,738 share purchase warrants exercisable at a price of CDN$0.23 per share until December 1, 2016 held by BV Lending, LLC; (xviii) 51,202 share purchase warrants exercisable at a price of CDN$0.25 per share until December 1, 2016 held by BV Lending, LLC (xix) 92,357 share purchase warrants exercisable at a price of CDN$0.276 per share until December 1, 2016 held by BV Lending, LLC ; (xx) 200,091 share purchase warrants exercisable at a price of CDN$0.28 per share until December 1, 2016 held by BV Lending, LLC; (xxi) 45,439 share purchase warrants exercisable at a price of CDN$0.29 per share until December 1, 2016 held by BV Lending, LLC; (xxii) 96,261 share purchase warrants exercisable at a price of CDN$0.292 per share until December 1, 2016 held by BV Lending, LLC; (xxiii) 52,459 share purchase warrants exercisable at a price of CDN$0.305 per share until December 1, 2016 held by BV Lending, LLC; and (xxiv) 200,000 share purchase warrants exercisable at a price of CDN$0.25 per share until January 31, 2016. |
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(5) | The number of shares listed as beneficially owned by Mr. Girling consists of: (i) 1,237,495 common shares; (ii) an option to purchase 250,000 common shares at a price of CDN$0.40 per share until January 7, 2015 (iii) an option to purchase 150,000 common shares at a price of CDN$0.10 per share until July 30, 2018; and (iv) 574,400 share purchase warrants exercisable at a price of CDN$0.40 per share until January 31, 2016. |
(6) | The number of shares listed as beneficially owned by Mr. Childress consists of an option to purchase 150,000 common shares at a price of CDN$0.25 per share until November 19, 2018 and an option to purchase 150,000 shares at a price of CDN$0.40 per share until December 1, 2015. |
(7) | The number of shares listed as beneficially owned by Mr. Moorhouse consists of an option to purchase 150,000 common shares at a price of CDN$0.25 per share until January 8, 2019. |
Changes in Control
We are not aware of any arrangement, which may result in a change in control in the future.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name and positions of our executive officers and directors as of the date hereof.
Name | Age | Positions |
Thomas M. Conway | 57 | Chief Executive Officer, President, and Director |
Matthew Anderson | 31 | Chief Financial Officer |
Allen L. Ball | 69 | Director |
W. Barry Girling | 54 | Director |
Gary Childress | 66 | Director |
Wayne Moorhouse | 50 | Director |
Set forth below is a brief description of the background and business experience of our executive officers and directors:
Thomas M. Conway has been our Chief Executive Officer and President since January 2011, and a director since October 2010. Mr. Conway holds a B.S.- Mining Engineering (University of Minnesota) and later attended Harvard Business School's Executive MBA program. He has significant expertise in permitting, feasibility and mining. A results-oriented executive, Mr. Conway has 20 years of diverse experience largely with Newmont Mining Corporation ("Newmont") in operations, general management, environmental affairs and risk management. His experience covers domestic and international assignments in open pit and underground operations where he has a record of successfully implementing plans to enhance operations through improved cost control and productivity innovations. His roles at Newmont included Vice President Risk Management, Vice President / General Manager Carlin Operations, Vice President / General Manager Minera Yanacocha.
Matthew Anderson has been our Chief Financial Officer since July 2011. Mr. Anderson holds a Bachelor of Commerce degree from McGill University and obtained his Chartered Accountant designation in 2008 while articling at a large accounting firm. Matt is a Senior Consultant with Malaspina Consultants Inc., a private company that provides accounting and administrative infrastructure to junior public companies. He has worked with Malaspina Consultants Inc. since July 2009. He serves or has served as CFO of several junior public companies including Terra Nova Energy Ltd., Wolfpack Gold Corp., Search Minerals Inc., Dynamic Oil & Gas Exploration Inc., Tigris Uranium Corp. and Explorator Resources Inc.
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Allen L. Ball has been a director since March 2002. Mr. Ball is a successful Idaho business man and has been involved in many business ventures including farming, farm implement sales, vending machines, cosmetics industry, mining, timber, construction and related materials, high tech venture capital, commercial car washes, A/R factoring, septic system sales / installation / servicing, lending, real estate development, hospitality, assisted living, pharmaceutical, firearms manufacturing, fishing lodge/outfitting, and motorsports sales, but he is probably most known for his involvement in forming Melaleuca, Inc, which is a manufacturer of wellness products and based in Idaho.
W. Barry Girling has been a director since March 2002. Mr. Girling has been active in various aspects of mineral exploration since 1977. He couples his geological understanding with a B.Com. (Finance) degree to provide consulting services to a number of TSX Venture Exchange companies. He has strong capital markets experience gained as a founder and director of Foundation Resources Inc. and Search Minerals Inc and was a director of Roxgold Inc. from August 2006 through September 2102 completed the re-organization of Roxgold Inc. and the acquisition of its Burkina Faso gold properties. Aside from I-Minerals Inc., Mr. Girling was from November 2012 President and CEO of Birch Hill Gold Corporation until it amalgamated with Canoe Mining Ventures in June of 2014 and continues as a director of BRS Ventures Ltd.
Gary Childress has been a director since November 2013. Mr. Childress has a BS in Ceramic Engineering from Clemson University and has spent much of the last 40 years in industrial minerals or related industries. He has served as General Manager of Edward Orton Ceramic Foundation since September 2001, the primary focus of which is providing products to assist and enhance high temperature processing of ceramics and other materials. Mr. Childress also served as Vice President of Hecla Mining Company from 1994 to 2001 where he was responsible for Heclas's industrial mineral division including acquisitions and project development.
Wayne Moorhouse has been a director since January 6, 2014. Mr. Moorhouse has extensive experience with public companies and has acted as the CFO, corporate secretary or president of a number of TSX and TSX Venture listed resource companies and their subsidiaries. In particular, Mr. Moorehouse served as CFO and corporate secretary of Genco Resources Ltd., a former TSX company that had a producing silver-gold property in Mexico, from June 2003 to October 2010, and as a special advisor to Silvermex Resources Ltd., a company listed on the TSX that was in process of developing advanced stage silver projects, from November 2010 to December 2011. Between January 2012 and September 2013, Mr. Moorhouse served as CFO of Roxgold Inc, a company listed on the TSX Venture Exchange engaged in the exploration of a gold property in Burkina Faso. Currently, Mr. Moorhouse is CFO of Midnight Sun Mining Corp., a company listed on the TSX Venture Exchange engaged in the exploration of properties in Africa.
Term Of Office
Our directors are elected to hold office until the next annual meeting of the shareholders and until their respective successors have been elected and qualified. Our executive officers are appointed by our board of directors and hold office until removed by our board of directors or until their successors are appointed.
Family Relationships
There are no family relationships between our executive officers and directors.
Other Significant Employees
We have three significant employees as follows:
A. Lamar Long has been our Project Manager since January 26, 2011. Mr. Long coordinates the ongoing Kelly's Basin feasibility study and overseas all geological developments, including the design of the Primary Clay deposits prefeasibility study. Prior to being promoted to Project Manager in January 2011, Mr. Long served as Exploration Manager beginning August 2002. Prior to joining us, Mr. Long spent 13 years as the Exploration Manager, Industrial Minerals for Hecla Mining Corporation where he developed, planned and managed all exploration programs for industrial minerals. Earlier in his career Lamar was a Project Geologist for J.M. Huber Corporation for 7 years where he managed industrial minerals projects including a regional exploration program for kaolin in Georgia and South Carolina.
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Gary L. Nelson (B.S. Metallurgical Engineering) has been our Manager, Metallurgical Operations since September 2007. Mr. Nelson oversees all metallurgical work from both the Kelly's Basin and Primary Clay deposits. He works closely with the engineering consultants in the all economic assessments with a focus on material balances and process facility design. Mr. Nelson has over thirty years of diverse expertise with an emphasis on industrial minerals including economic modeling, project / process development, operations start-up, marketing and market development and environmental reporting. Mr. Nelson is charged with the task of overseeing the completion of the ongoing feasibility study on the Helmer-Bovill property and ultimately the design and procurement of the production facility.
Linda A. Koep has been our Market Development Manager since September 2003. Ms Koep oversees the marketing and sales of all mineral products from both deposits. She has eighteen years experience in the mining industry including mineral markets and mergers and acquisitions. Ms. Koep develops mineral markets and potential sales, analyzes transportation opportunities, and plans strategy for implementing the company's entry as a producer of industrial minerals. In addition, Ms. Koep is a member of Gonzaga University faculty in Spokane, Washington.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the total compensation paid or accrued to our named executive officers, as that term is defined in Item 402(m)(2) of Regulation S-K, during our last two completed fiscal years.
SUMMARY COMPENSATION TABLE | |||||||||
Name & Principal Position | Year |
Salary
($) |
Bonus
($) |
Stock Awards
($) |
Option Awards
($) (3) |
Non-Equity Incentive Plan Compen-sation ($) |
Nonqualified
Deferred Compen-sation Earnings
($) |
All Other
Compen-sation
($) |
Total
($) |
Thomas M. Conway
(1)
President, CEO & Director |
2014
2013 |
$150,000
$150,000 |
$8,000
$0 |
$0
$0 |
$68,079
$0 |
$0
$0 |
$0
$0 |
$8,723
$8,000 |
$234,802
$158,000 |
Matthew Anderson
(2)
CFO |
2014
2013 |
$20,076
$18,214 |
$0
$0 |
$0
$0 |
$11,357
$0 |
$0
$0 |
$0
$0 |
$0
$0 |
$31,433
$18,214 |
Notes: | |
(1) | Mr. Conway was appointed as a member of our Board of Directors in October 2010, and as CEO and President on January 28, 2011. On April 3, 2013, we entered into an amended employment agreement with Mr. Conway, under which we agreed to pay him USD $12,500 per month. In particular, Mr. Conway’s services include overall management and day to day operations. |
(2) | Mr. Anderson was appointed as Chief Financial Officer on July 5, 2011. Since that time, we have paid Mr. Anderson an hourly rate in accordance with his consulting agreement dated October 1, 2011. Mr. Anderson’s services include the review and preparation of our financial statements as well as general corporate service matters. The consulting agreement may be terminated on sixty days written notice. |
(3) | The determination of non-cash value of option awards is based upon the grant date fair value determined using the Black-Scholes Option pricing model, details and assumptions of which are set out in Note 8 the consolidated financial statements for the year ended April 30, 2014 included in this filing. |
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Outstanding Equity Awards At Fiscal Year End
The following table provides information concerning unexercised options for each of our named executive officers, as that term is defined in Item 402(m)(2) of Regulation S-K as of our fiscal year end of April 30, 2014.
Name and Principal Position | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price (CDN$) | Option Expiration Date |
THOMAS
M. CONWAY
(1)
Chief Executive Officer, President and Director |
-
350,000 |
150,000
50,000 |
-
- |
0.40
0.10 |
12/01/2015
07/30/2018 |
- | 260,000 | - | 0.15 | 07/30/2018 | |
- | 300,000 | - | 0.25 | 07/30/2018 | |
MATTHEW
ANDERSON
Chief Financial Officer |
150,000 | - | - | 0.10 | 07/30/2018 |
(1) | During the year ended April 30, 2014, pursuant to an employment agreement, Thomas Conway was granted 810,000 options as follows: 250,000 exercisable at $0.10 upon the completion of certain events in connection with the Helmer-Bovill property including a pre-feasibility study and permitting, 260,000 exercisable at $0.15 upon the completion of events including the completion of a feasibility study, obtaining additional financing or arranging a joint venture partner, 300,000 options exercisable at $0.25 upon the completion of events including completion of a plant and commercial viability. Of the 250,000 options exercisable at $0.10, there were 200,000 that had vested by April 30, 2014. All of the options awarded in connection with this employment agreement expire on July 30, 2018. |
Exercise prices are determined based on the trading price on the TSX Venture Exchange at the date of grant and based on the judgment of the Board of Directors. No options are granted at a discount to the trading price.
Director Compensation
The following table sets forth the compensation paid to our directors during our April 30, 2014 fiscal year, other than directors who were also named executive officers as that term is defined in Item 402(m)(2). Compensation paid to directors who were also named executive officers during our April 30, 2014 fiscal year is set out in the tables above.
Name |
Fees Earned or Paid in
Cash
($) |
Stock Awards
($) |
Option Awards
($) (4) |
Non-Equity Incentive Plan Compensation ($) |
Nonqualified
Deferred Compensation Earnings
($) |
All Other
Compensation
($) |
Total
($) |
Allen L. Ball | - | - | 11,357 | - | - | - | 11,357 |
W. Barry Girling (1) | - | - | 11,357 | - | - | 56,383 | 67,740 |
Gary Childress (2) | - | - | 28,223 | - | - | - | 28,223 |
Wayne Moorhouse (3) | - | - | 24,907 | - | - | - | 24,907 |
:
(1) | Management and consulting fees of $56,383 were charged by RJG Capital Corporation, a wholly-owned company of Mr. Girling. |
(2) | Mr. Childress was appointed as a director in November 2013. |
(3) | Mr. Moorhouse was appointed as a director in January 2014. |
(4) | The determination of non-cash value of option awards is based upon the grant date fair value determined using the Black-Scholes Option pricing model, details and assumptions of which are set out in Note 8 the consolidated financial statements for the year ended April 30, 2014 included in this filing. |
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The following table provides information concerning unexercised options for each of our directors as of our fiscal year end of April 30, 2014.
Name and Principal Position | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price (CDN$) | Option Expiration Date |
Allen L. Ball | 170,000 | - | - | 0.40 | 01/07/2015 |
150,000 | - | - | 0.10 | 07/30/2018 | |
W. Barry Girling |
250,000
150,000 |
-
- |
-
- |
0.40
0.10 |
01/07/2015
07/30/2018 |
Gary Childress |
150,000
150,000 |
-
- |
-
- |
0.40
0.25 |
12/01/2015
11/19/2018 |
Wayne Moorhouse | 150,000 | - | - | 0.25 | 01/08/2019 |
Compensation Committee Interlocks and Insider Participation
We do not have a compensation committee. The Board of Directors conducts reviews with regard to the compensation of the directors and the Chief Executive Officer once a year. To make its recommendations on such compensation, the Board of Directors takes into account the types of compensation and the amounts paid to officers of comparable publicly traded companies.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Transactions
Except as disclosed below, none of the following parties has, during our last two fiscal years, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us, in which the Company is a participant and the amount involved exceeds the lesser of $120,000 or 1% of the average of the Company’s total assets for the last two completed fiscal years:
(i) | Any of our directors or officers; |
(ii) | Any person proposed as a nominee for election as a director; |
(iii) | Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding common shares; |
(iv) | Any of our promoters; and |
(v) | Any relative or spouse of any of the foregoing persons who has the same house as such person. |
Compensation Arrangements
During the year ended April 30, 2014, management and consulting fees of $56,383 (2013 - $59,666) were charged by RJG Capital Corporation, a wholly-owned company of W. Barry Girling, Director. A further $158,000 (2013 - $150,000) in consulting fees were charged by Thomas M. Conway, CEO, and are included with mineral property exploration costs. See “Executive Compensation – Summary Compensation Table” and “Executive Compensation – Director Compensation”.
Indebtedness
As at April 30, 2014, we recorded accounts payable and accrued liabilities of $177,611 (2013 - $205,200) in connection with amounts owed to our directors, an officer and a former director. At April 30, 2014, the Company owed Thomas M. Conway, CEO, $2,611 and Ball Ventures, LLC, a company controlled by Allen L. Ball, $175,000. At April 30, 2013, the Company owed Ball Ventures, LLC, $175,000 and Roger Kauffman, the former CEO, $30,200.
All amounts are non- interest bearing, unsecured, and due on demand.
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On February 13, 2013, we settled accounts payable and accrued liabilities due to our former Chief Executive Officer by making a cash payment of $30,000, issuing 1,188,314 common shares at the fair value of $93,221 and agreeing to pay $30,000 in six monthly payments beginning October 1, 2013.
Loan Agreements with Directors
During the year ended April 30, 2013, we received an aggregate of $1,755,000 and CDN$4,000 ($4,181) of promissory notes from our directors. $1,755,000 was advanced by BV Lending, LLC, a company controlled by Allen L. Ball, (the “Lender”) and CDN$4,000 was advanced by Barry Girling. At April 30, 2013, the advance provided by Barry Girling had been repaid. The total loan outstanding at April 30, 2013, all of which was due to BV Lending, LLC, was $1,905,000.
During the year ended April 30, 2013, we issued $850,000 of promissory notes bearing interest at 9.5% for funds advanced from the Lender. In addition, we issued $905,000 of promissory notes bearing interest at 12% for funds advanced from the Lender. On September 12, 2012, the Lender and us agreed to amend previously issued promissory notes totalling $1,000,000 that included advances totalling $150,000 bearing interest at 12% and $850,000 of advances bearing interest at 9.5% along with accrued interest thereon of $23,088 by way of issuing a new promissory note having a principal balance of $1,023,088 bearing interest at 12%. In addition, as part of the agreement to amend the previously issued promissory notes, we issued 800,000 common shares to the Lender having an aggregate fair value of $146,952 based on their quoted market price. This amendment was accounted for as a debt extinguishment with a corresponding loss on debt extinguishment of $146,952 recorded in the Statement of Loss for the year ended April 30, 2013.
On September 13, 2013, the Lender and us agreed to amend previously issued promissory notes totalling $1,800,000 bearing interest at 12% along with accrued interest thereon of $81,226 by way of issuing a new promissory note having a principal balance of $1,881,226 also bearing interest at 12%. As part of this amendment, we issued 1,058,322 common shares having an aggregate fair value of $121,706 based on their quoted market price and 1,058,322 share purchase warrants having a fair value of $69,664 to the Lender. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: stock price – CDN$0.115; expected life – 3.22 years; strike prices – CDN$0.14 - $CDN 0.1722 volatility – 100.7%, risk free discount rate – 1.13%. This amendment was accounted for as a debt extinguishment with a corresponding loss on debt extinguishment of $191,370 recorded in the Statement of Loss for the year ended April 30, 2014. In addition, the maturities of the promissory notes were established as to $1,000,000 on December 31, 2015, $2,000,000 on June 30, 2016 and the balance due on December 31, 2016. Subsequent to October 31, 2014, the maturity dates of the Promissory Notes were amended so that the maturity dates are the later of the original maturity dates and one year after resolution of the litigation on the IIM Agreement.
Pursuant to the debt amendment agreement dated September 13, 2013, we agreed to issue the Lender bonus shares equal to 6% of each loan tranche advanced divided by our common share market price where, for purposes of calculating the number of shares issuable for each loan tranche, our common share market share price is discounted by 25% as allowed by regulation. The amount of bonus shares issued is subject to a minimum price of $CDN 0.105 and a maximum of 1,720,649 bonus shares. In addition, we will issue the Lender an equal number of share purchase warrants for each loan tranche advanced. Each bonus share purchase warrant will entitle the Lender to purchase one common share of us at a price equal to the greater of (a) the market price of our common shares on the date of the advance and (b) the volume weighted average price of our common shares over the twenty trading days immediately prior to the date of the advance. The bonus share purchase warrants expire on the earlier of (a) December 1, 2016 and (b) the date the advance has been repaid in full, including interest. In addition, we granted a mortgage and charge over our property and assets, including shares of our subsidiary, to secure the advances made by the Lender. We also agreed, if requested by the Lender, to include an individual designated by the Lender as a nominee to our board of directors for our 2013 annual general meeting. In the event that the Lender does not request a board nominee, the Lender will still have the right to appoint an additional director to our board of directors in event that the loans exceed $2,000,000.
On January 27, 2014, the Lender and us executed an agreement whereby the Lender agreed to advance up to $5,787,280 to be advanced to us in tranches, of which $4,554,280 had been advanced as at April 30, 2014. Certain conditions may result in early repayment.
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The promissory notes bear interest at the rate of 12% per annum and during the year, we recorded interest totalling $360,977 (2013 - $100,496) on its promissory notes. Interest is payable semi-annually as calculated on May 31st and November 30th. Interest is to be paid either in cash or in common shares at the option of the Lender.
During the year ended April 30, 2014, we issued additional promissory notes bearing interest at 12% for an aggregate of $2,545,000 of funds advanced from the Lender.
During the year ended April 30, 2014, we issued 280,940 bonus shares to the Lender at the fair value of $62,834 and we were committed to issuing an additional 313,350 bonus shares to the Lender at the fair value of $79,223. The fair value of the bonus shares was determined by reference to the trading price of our common shares on the date the advances were received. We also issued 280,940 bonus share purchase warrants and we were committed to issuing an additional 313,350 bonus share purchase warrants to the Lender. The aggregate of 594,290 bonus share purchase warrants had a weighted average exercise price of $0.19. The fair value of bonus share purchase warrants issued/committed to be issued during the year ended April 30, 2014 of $80,480 was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: stock price – CDN$0.16; exercise price – CDN$0.19; expected risk-free interest rate – 1.13%; expected life – 3.1 years; expected volatility – 102% and expected dividend rate – 0%.
The aggregate finance fees of $232,539, including $10,000 of legal fees, are recorded against the Promissory Notes balance and are being amortized to the Statement of Loss over the life of the Promissory Notes using the effective interest method. The unamortized debt discount as at April 30, 2014 is $207,511 (2013 – $Nil).
In fiscal 2014, we recorded interest totaling $360,977 (2013 - $100,496) on the Promissory Notes, of which $201,414 of interest payable on the Promissory Notes was settled by the issuance of 1,001,112 common shares.
IIM Agreement
Allen L. Ball, a member of our board of director, owns a 25% interest in Idaho Industrial Minerals LLC, which is the property vendor in respect of IIM Agreement whereby we acquired a 100% interest in the Helmer-Bovill property.
Director Independence
Our common shares trade in Canada on the TSX Venture Exchange and in the over-the-counter in the United States on the OTCQX market place. Our securities are not listed in the United States on a national securities exchange or an interdealer quotation system.
When assessing the independence of our Board for corporate governance purposes, we apply the rules of the TSX Venture Exchange. Under the rules of the TSX Venture Exchange, we are required to have a minimum of two independent directors. For purposes of the TSX Venture Exchange rules, a director is considered to be “independent” if he or she has no direct or indirect relationship that could, in the view of our Board of Directors, reasonably interfere with the exercise of his or her independent judgment. Under these rules, any person meeting the following criteria would be deemed to have a “material relationship” to us, and to not be independent:
(a) | Anyone that has been an employee or executive officer within the last 3 years; |
(b) | Any immediate family member of a person that has been an executive officer within the last 3 years; |
(c) | Any person that is a partner or employee of our internal or external auditors, or was a partner or employee of our internal or external auditors within the last 3 years and personally worked on our audit during that time; |
(d) | Any person that has a spouse or a child that shares the person’s home that is a partner of our internal or external auditor; |
(e) | Any person that is or has been, within the last 3 years, or has an immediate family member that is or has been, within the last 3 years, an executive officer of another entity, if any of our current executive officers serve or served at the same time with that person on the other entity’s compensation committee; and |
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(f) | Any person that received more than $75,000 in direct compensation from us during any 12 month period within the last three years. |
However, when assessing the independence of our directors for purposes of this section, we have applied the definition of independence set out in NASDAQ Rule 5605(a)(2). Generally, NASDAQ Rule 5605(a)(2) provides that a director is independent if he or she is not an executive officer or employee, and does not otherwise have a relationship which, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director. The following persons are deemed, for purposes of Rule 5605(a)(2) to not be independent:
(i) | Any person that was employed by us within the last 3 years; |
(ii) | Any person that accepted, or has an immediate family member that accepted, compensation from us in excess of $120,000 during any 12 month period within the last 3 years; |
(iii) | Any person that is an immediate family member of another person that is, or was, at any time during the last 3 years, employed as an executive officer of our Company; |
(iv) | Any person that is, or has an immediate family member that is, a partner, controlling shareholder or executive officer of any organization to which we have made, or from which we have received, payments in excess of the lesser of (A) 5% of the recipients total gross revenues for that year, or (B) $200,000, within the last 3 years; |
(v) | Any person that is, or has an immediate family member that is, an executive officer of another entity where, at any time during the last 3 years, one of our executive officers served on the compensation committee of that other entity; and |
(vi) | Any person that is, or has an immediate family member that is, a current partner of our outside auditors or was a partner or employee of our outside auditors during the last 3 years, and personally worked on our audit during that time. |
We have determined that Gary Childress and Wayne Moorhouse are “independent” when applying both the definition of independence required under the rules of the TSX Venture Exchange, and the definition set out in NASDAQ Rule 5605(a)(2). Thomas Conway is not an independent director because of his position as our Chief Executive Officer and President, W. Barry Girling is not independent as he provides consulting services to us, and Allen L. Ball is not independent due to his being our controlling stockholder.
LEGAL PROCEEDINGS
Derivative Third Party Complaint
We are currently named as a third-party defendant in a third-party complaint filed on June 6, 2014 in the State of Idaho, Case No. CV OC 1401549. The third-party plaintiffs who filed the complaint, Hoodoo Resources, LLC (“Hoodoo”) and Brent Thomson as trustee for the Brent Thomson Family Trust (the “Thomson Family Trust”), have alleged both direct claims and derivative claims on behalf of Idaho Industrial Minerals, LLC (“IIM”). The third party complaint was filed in response to a complaint filed against Hoodoo and the Thomson Family Trust by another IIM member, BV Natural Resources, LLC (“BVNR”), which owns a 25% interest in IIM.
In the initial complaint, BVNR asserts that Hoodoo and the Thomson Family Trust, each owners of a 12.5% interest in IIM, attempted to take action on behalf of IIM without authority and breached fiduciary duties owed to the other members of IIM; and BVNR seeks the judicial dissolution of IIM. In response to BVNR’s initial complaint, Hoodoo and the Thomson Family Trust filed a counterclaim against BVNR and a third-party complaint against us, as well as Barry Girling and Allen Ball, members of our Board of Directors, and an entity Allen Ball owns, Ball Ventures, LLC. The third-party complaint also named Roger Kauffman, our former President and Director, as a third-party defendant, but Hoodoo and the Thomson Family Trust have since dismissed Mr. Kauffman from the lawsuit with prejudice.
The derivative claims alleged by Hoodoo and the Thomson Family Trust against us seek damages for breach of the terms of the IIM Agreement and the return of the Idaho state mineral leases of the Helmer-Bovill Property (the “Leases”) to IIM. Specifically, Hoodoo and the Thomson Family Trust claim that we breached the IIM Agreement by (1) encumbering the Helmer-Bovill Property, (2) failing to provide IIM copies of letters between us and the State of Idaho, and (3) failing to meet the deliverables as required by the IIM Agreement, namely competition of a feasibility study; completion of the permitting process for the Helmer-Bovill Property; completion of a processing plant; and production of commercial products from minerals on the Helmer-Bovill Property. Upon motion made by us, the Court has dismissed Hoodoo and the Thomson Family Trust’s claim that we wrongfully encumbered the Helmer-Bovill Property. The Court has denied our motions to dismiss and for summary judgment on certain other grounds.
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In addition to the derivative breach of contract claims, Hoodoo and the Thomson Family Trust also allege derivative and direct claims that IIM was fraudulently induced to execute the Third and Fourth Amendments to the IIM Agreement.
We categorically deny the claims against us. Under the original terms of the IIM Agreement, which was executed in August 2002 and was to expire 3 years thereafter, we were required to deliver a total of 1.75 million common shares to IIM as follows:
(1) | 100,000 common shares upon execution of the original IIM Agreement; |
(2) | 400,000 common shares upon the completion of a feasibility study; |
(3) | 350,000 common shares upon the State of Idaho issuing leases with respect to the Helmer-Bovill Property; |
(4) | 500,000 common shares upon completion of the permitting process; and |
(5) | 400,000 common shares upon the delivery of commercial product from a production plant on the Helmer-Bovill Property. |
In August 2005, pursuant to the Second Amendment to the IIM Agreement, the term of the IIM Agreement was extended for 3 additional years to August 10, 2008 and IIM agreed that, with the issuance of a total of 1.75 million shares plus an additional Fifty Thousand (50,000) common shares as consideration for [the] Second Amended, IIM releases any and all interest in the Leases and the Helmer-Bovill Property. In August 2008, pursuant to the Third Amendment to the IIM Agreement, the term was further extended for 3 additional years to August 10, 2011. In January 2010, pursuant to the Fourth Amendment to the IIM Agreement, the term was further extended to August 10, 2013. In addition, the Fourth Amendment re-allocated the number of common shares issuable to IIM by delineating the production plant/commercial product delivery milestone and re-allocating the related 400,000 shares by increasing the number of shares issuable upon completion of a feasibility study from 400,000 to 600,000 common shares, and the number of shares issuable upon completion of the permitting process from 500,000 to 700,000 common shares.
100,000 common shares were issued to IIM in fiscal 2003 upon execution of the original IIM Agreement, and an additional 350,000 common shares were issued to IIM in fiscal 2005 upon the State of Idaho issuing leases in respect of the Helmer-Bovill Property. An additional 50,000 shares were issued in fiscal 2006 as consideration for the extension to the term granted under the Second Amendment to the IIM Agreement. In January 2013, we delivered to IIM 1.3 million common shares based upon (i) completion of the feasibility study titled “NI 43-101 Technical WBL Tailings Mineral Production Project, Latah County, Idaho” by B. Stryhas, C.P.G., H. Gatley, P.Eng., V.Obie, RM SME, and C.Hoag, C.P.G. and dated effective November 30, 2012 (the “Feasibility Study”); and (ii) receipt of a letter from the Idaho Department of Lands dated November 7, 2012 confirming that our permitting application had been accepted, along with other supporting documents (collectively, the “Permit”). In addition, we had commenced production and sale of a commercial product prior to delivery of the shares to IIM. The final share issuance was approved by the TSX Venture Exchange.
We believe that we fully performed our obligations under the IIM Agreement and that, upon delivery of the remaining 1.3 million shares required by the IIM Agreement, the contractual release of all IIM interest in the Leases and the Helmer-Bovill Property took effect. Further, we categorically deny any deceit or fraud in connection with entering into the Third Amendment and Fourth Amendment to the IIM Agreement with IIM. We intend to vigorously defend the action brought by Hoodoo and the Thomson Family Trust and to seek costs and damages from Hoodoo and the Thomson Family Trust.
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Temporary Restraining Order
In July, 2014, we announced the engagement of Dr. Thomas Gallo, a former employee of Unimin Corporation (“Unimin”), as a consultant to oversee our ceramic test work and market development. On August 13, 2014, Unimin obtained a Temporary Restraining Order which restrains and enjoins Dr. Gallo from disclosing to us specifications of Unimin’s process in producing high purity quartz. On September 17, 2014, the North Carolina Court of Justice denied Unimin’s Motion for a Preliminary Injunction (the “P.I. Motion”) pursuant to Rule 65 of the North Carolina Rules of Civil Procedure and determined “Unimin has failed to present sufficient evidence to show that it is will succeed on the merits of its claims.”
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Holders of Our Shares
As of the date of this registration statement, there were 139 registered shareholders.
Market Information
Our common shares trade in Canada on the TSX Venture Exchange under the symbol “IMA,” and over-the-counter in the United States on the OTCQX marketplace under the symbol “IMAHF.” The following is the high and low close information for our common stock during each fiscal quarter of our last two fiscal years on the TSX Venture Exchange and the OTCQX.
TSXV | OTCQX** | |||||||||||
High | Low | High | Low | |||||||||
CAD | USD* | CAD | USD* | USD | USD | |||||||
Q1 ended Jul. 31, 2012 | $ | 0.16 | $ | 0.16 | $ | 0.12 | $ | 0.12 | $ | 0.17 | $ | 0.12 |
Q2 ended Oct. 31, 2012 | $ | 0.195 | $ | 0.20 | $ | 0.08 | $ | 0.08 | $ | 0.12 | $ | 0.11 |
Q3 ended Jan. 31, 2013 | $ | 0.17 | $ | 0.17 | $ | 0.10 | $ | 0.10 | $ | 0.12 | $ | 0.1 |
Q4 ended Apr. 30, 2013 | $ | 0.15 | $ | 0.15 | $ | 0.05 | $ | 0.05 | $ | 0.12 | $ | 0.06 |
Q1 ended Jul. 31, 2013 | $ | 0.165 | $ | 0.16 | $ | 0.055 | $ | 0.05 | $ | 0.14 | $ | 0.06 |
Q2 ended Oct. 31, 2013 | $ | 0.235 | $ | 0.23 | $ | 0.095 | $ | 0.09 | $ | 0.22 | $ | 0.14 |
Q3 ended Jan. 31, 2014 | $ | 0.28 | $ | 0.27 | $ | 0.20 | $ | 0.19 | $ | 0.27 | $ | 0.19 |
Q4 ended Apr. 30, 2014 | $ | 0.31 | $ | 0.28 | $ | 0.215 | $ | 0.19 | $ | 0.29 | $ | 0.19 |
* Converted from
CAD to USD at the Bank of Canada noon rate for the particular closing date.
** High and low
bid information for the OTCQX was not available for the above periods. For the
periods presented, prices represent high and low closing prices during the
period.
The last reported sale price of our common stock as of the close of business on December 17, 2014 was CAD $0.225 on the TSX Venture Exchange and USD $0.17 on the OTCQX.
Bid quotations entered on the OTCQX reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.
Dividend Rights
We have never declared, nor paid, any dividend since our incorporation and we do not foresee paying any dividend in the near future since all available funds will be used to conduct exploration activities. Any future payment of dividends will depend on our financing requirements and financial condition and other factors which the board of directors, in its sole discretion, may consider appropriate.
Under the Canada Business Corporations Act, we are prohibited from declaring or paying dividends if there are reasonable grounds for believing that:
Page 53 of 60
(a) | We are, or after the payment of the dividend, we would be, unable to pay our liabilities as they become due; or |
(b) | The realizable value of our assets would, after giving effect to the dividend, be less than the aggregate of our liabilities and the stated capital of all classes. |
Equity Compensation Plan Information
The following table sets forth details of all our equity compensation plans as of April 30, 2014. As at April 30, 2014, our equity compensation plans consisted solely of our Stock Option Plan, which was approved by our shareholders on November 6, 2014.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
Equity compensation plans approved by security holders | 4,160,000 | CDN$0.26 | 3,441,970 |
Equity compensation plans not approved by security holders | - | - | - |
Total | 4,160,000 | CDN$0.26 | 3,441,970 |
Stock Option Plan
We received shareholder approval, on November 6, 2014 , of our “rolling” stock option plan (the “Stock Option Plan”) whereby 10% of the number of our issued and outstanding shares at any given time may be reserved for issuance pursuant to the exercise of options. The TSX Venture Exchange requires that listed companies that have “rolling” stock option plans in place receive shareholder approval of such plans on a yearly basis at the Company’s annual general meeting.
The Stock Option Plan was established to provide incentive to directors, officers, employees, management company employees and consultants who are eligible to participate in the Stock Option Plan.
Terms of the Stock Option Plan
Options may be granted under the Stock Option Plan to such service providers of us and our affiliates, if any, as the Board of Directors may from time to time designate. The exercise price of option grants will be determined by the Board of Directors, but cannot be lower than the price permitted by the TSX Venture Exchange. The Stock Option Plan provides that the number of common shares that may be reserved for issuance to any one individual upon exercise of all stock options held by such individual may not exceed 5% of the issued common shares, if the individual is a director or officer, or 2% of the issued common shares, if the individual is a consultant or engaged in providing investor relations services, on a yearly basis. Subject to earlier termination, all options granted under the Stock Option Plan will expire not later than the date that is five years from the date that such options are granted. In the event that an optionee ceases to be a director, officer, employee or consultant, the option will terminate within ninety days. In the event of the death of an optionee, the options will only be exercisable within 12 months of such death. Options granted under the Stock Option Plan are not transferable or assignable other than by will or other testamentary instrument or pursuant to the laws of succession.
Page 54 of 60
RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, we completed the following sales of unregistered securities:
On December 17, 2014, we issued 1,622,029 of our common shares in order to settle $356,846 of interest payable on certain promissory notes for the period from June 1, 2014 to November 30, 2014. The securities were issued pursuant to the provisions of Rule 506 of Regulation D of the Securities Act as the creditor represented that it was an accredited investor as defined in Rule 501 of Regulation D.
On August 12, 2014, we issued 741,233 of our common shares in order to settle $211,937 of interest payable on certain promissory notes for the period from January 1, 2014 to May 31, 2014. The securities were issued pursuant to the provisions of Rule 506 of Regulation D of the Securities Act as the creditor represented that it was an accredited investor as defined in Rule 501 of Regulation D.
On July 31, 2014, we issued 412,193 of our common shares at a fair value of $96,000 and 412,193 non-transferable warrants, exercisable at a price of CDN$0.276 to CDN$0.305, all of which have an expiry date of December 1, 2016. The securities were issued in accordance with the terms of a loan agreement. The securities were issued pursuant to the provisions of Rule 506 of Regulation D of the Securities Act as the creditor represented that it was an accredited investor as defined in Rule 501 of Regulation D.
On March 3, 2014, we issued 1,001,112 of our common shares in order to settle $201,414 of interest payable on the promissory notes for the period up to December 31, 2013. The shares were issued pursuant to were issued pursuant to the provisions of Rule 506 of Regulation D of the Securities Act as the creditor represented that it was an accredited investor as defined in Rule 501 of Regulation D.
On January 31, 2014, we issued 3,100,000 units (each a “Unit”) at a price of CDN$0.20 ($0.18) per Unit for total proceeds of CDN$620,000 ($557,628). Each unit consisted of one common share and one-half share purchase warrant with each whole warrant entitling the holder to purchase one additional common share at a price of CDN$0.40 until January 31, 2017. In connection with this issuance, we paid a finder’s fee in cash of $16,747 and issued 200,000 finder warrants, with each finder warrant entitling the holder to purchase one common share at a price of CDN$0.25 until January 31, 2016. All of the securities issued in connection with this private placement were issued to U.S. Persons in reliance on section 4(a)(2) of the Securities Act.
On January 27, 2014, we issued 169,178 common shares at a fair value of $42,158 and 169,178 non-transferable warrants, of which 94,764 are exercisable at a price of CDN$0.23 and 74,414 are exercisable at a price of CDN$0.28, all of which have an expiry date of December 1, 2016. The securities were issued in accordance with the terms of a loan agreement. The securities were issued pursuant to the provisions of Rule 506 of Regulation D of the Securities Act as the creditor represented that it was an accredited investor as defined in Rule 501 of Regulation D.
On October 23, 2013, we issued 1,170,084 of our common shares at a fair value of $142,382 and an additional 1,170,084 non-transferable warrants of which 667,520 are exercisable at a price of CDN$0.14 to CDN$0.185 per share, all of which have an expiry date of December 1, 2016. The securities were issued in accordance with the terms of a loan agreement. The securities were issued pursuant to the provisions of Rule 506 of Regulation D of the Securities Act as the creditor represented that it was an accredited investor as defined in Rule 501 of Regulation D.
On September 30, 2013, we issued 2,277,341 of our common shares at a fair value of CDN$0.10 ($0.097) per share to settle outstanding indebtedness of CDN$227,734 ($221,426). The shares were issued in connection with this private placement were issued to non-US Persons pursuant to the provisions of Regulation S promulgated under the Securities Act.
On April 18, 2013, we issued 3,710,365 of our common shares to settle outstanding indebtedness of CDN$371,036.50 ($362,762). The shares were issued to U.S. Persons pursuant to the provisions of Rule 506 of Regulation D of the Securities Act and to non-U.S. Persons pursuant to Regulation S of the Securities Act.
On April 8, 2013, we issued 1,188,314 of our common shares at a fair value of CDN$0.08 ($0.078) per share to settle outstanding indebtedness of CDN$95,085 ($93,221). The shares were issued pursuant to the provisions of Rule 506 of Regulation D of the Securities Act as the creditor represented that it was an accredited investor as defined in Rule 501 of Regulation D.
Page 55 of 60
On March 22, 2013, we issued 284,129 of our common shares to satisfy semi-annual interest obligations of $39,274 with respect to convertible loans. The shares were issued to U.S. Persons pursuant to the provisions of Rule 506 of Regulation D of the Securities Act and to non-U.S. Persons pursuant to Regulation S of the Securities Act.
On January 21, 2013, we issued 1,300,000 of our common shares at a fair value of CDN$0.135 ($0.136) per share in accordance with the terms of a mineral property agreement. The shares were issued pursuant to the provisions of Rule 506 of Regulation D of the Securities Act as the subscriber represented that it was an accredited investor as defined in Rule 501 of Regulation D.
December 10, 2012 we issued 800,000 of our common shares at a fair value of CDN$0.18 ($0.184) per share, pursuant to the terms of a loan agreement. The shares were issued pursuant to the provisions of Rule 506 of Regulation D of the Securities Act as the creditor represented that it was an accredited investor as defined in Rule 501 of Regulation D.
On September 27, 2012, we issued 199,640 of our common shares to satisfy semi-annual interest obligations of $26,612 with respect to convertible loans. The shares were issued to U.S. Persons pursuant to the provisions of Rule 506 of Regulation D of the Securities Act and to non-U.S. Persons pursuant to Regulation S of the Securities Act.
On May 4, 2012, we issued 133,967 of our common shares to satisfy semi-annual interest obligations of $26,662 with respect to convertible loans. The shares were issued to U.S. Persons pursuant to the provisions of Rule 506 of Regulation D of the Securities Act and to non-U.S. Persons pursuant to Regulation S of the Securities Act.
On October 7, 2011, we issued 54,787 of our common shares satisfy semi-annual interest obligations of $11,683 with respect to convertible loans. The shares were issued to U.S. Persons pursuant to the provisions of Rule 506 of Regulation D of the Securities Act and to non-U.S. Persons pursuant to Regulation S of the Securities Act.
DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED
General
Our authorized capital consists of unlimited number of common shares, without par value. As of the date of this registration statement, we had 77,273,132 common shares issued and outstanding.
Common Shares
The following is a summary of the material rights and restrictions associated with our common shares. This description does not purport to be a complete description of all of the rights of our shareholders and is subject to, and qualified in its entirety by, the provisions of our most current Articles and Bylaws, which are included as exhibits to this Registration Statement.
The holders of our common shares are entitled to receive notice of and to attend and vote at all meetings of the shareholders and each common share shall confer the right to one vote in person or by proxy at all meetings of the shareholders. One shareholder, whether present in person or by proxy, constitute a quorum for all meetings of the shareholders. Except as otherwise provided by the Canada Business Corporations Act, our Articles or our Bylaws, all action taken by the holders of a majority of the votes cast, excluding abstentions, at any meeting at which a quorum is present shall be valid and binding. In the case of certain fundamental changes such as liquidation, amalgamation or changes to our Notice of Articles, a “special resolution”, being a vote approved by two-thirds of the votes cast at a shareholders’ meeting, is required. Where a separate vote of a class, classes or series is required, a vote of a majority, for ordinary matters, or special majority, for fundamental changes, is required. Currently, our common shares are the only authorized class of shares in our capital stock. Our Articles do not provide for cumulative voting in the election of directors.
Page 56 of 60
Holders of our common shares are, subject to the prior rights, if any, of any other class of shares, are entitled to receive such dividends in any financial year as the board of directors may determine by resolution, provided that dividends may not be declared or paid if there would be reasonable grounds for believe that (i) we would be unable to pay or liabilities as they become due after payment of the dividend, or (ii) if the realizable value of our assets would be less than the total of all of our liabilities and the stated capital of all classes of our shares. In the event of our liquidation, dissolution or winding-up, whether voluntary or involuntary, the holders of our common shares are entitled to receive, subject to the prior rights, if any, of the holders of any other class of shares, the remaining property and assets of the Company. The common shares do not carry any pre-emptive, subscription, redemption or conversion rights, nor do they contain any sinking fund provisions.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification
Under the provisions of the Canada Business Corporations Act (the “CBCA”) and our Bylaws, we are permitted to indemnify our directors and officers in respect of all costs, charges and expenses (including settlement amounts) reasonably incurred by them in connection with any civil, criminal, investigative or other proceeding to which the director or officer is involved as a result of being one of our directors or officers, or in connection with being a director or officer of any other entity at our request. However, our ability to indemnify such persons is limited to situations in which he or she:
(1) | Acted honestly and in good faith with a view towards our best interests (or to the best interests of the other entity for whom he or she acted as a director or officer at our request); and |
(2) | If the proceeding is a criminal or administrative proceeding enforced by a monetary penalty, he or she had reasonable grounds for believing that his or her conduct was lawful. |
With respect to actions brought by or on behalf of our Company, we may only indemnify directors or officers with the approval of a court.
However, if, in any proceeding, the director or officer is not judged to have committed any fault or omitted to do anything that he or she ought to have done, and conditions (1) and (2) above apply, then we are required (instead of merely being permitted) to indemnify that person.
Advance of Expenses
Under the CBCA, we are permitted to advance costs to our directors and officers for any actions referred to above. However, if, the director or officer is found not to have satisfied the conditions to act honestly and in good faith, or to not have had reasonable grounds for believing that his or her conduct was lawful, then that director or officer will be required to repay such advances.
Insurance
Under the CBCA and our Bylaws, we are permitted to purchase and maintain insurance for the benefit of our directors and officers and for any person acting as director or officer or other similar capacity for any other entity at our request.
Page 57 of 60
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
1. Audited financial statements for the fiscal years ended April 30, 2014 and 2013, including: | |
(a) | Report of Independent Registered Accounting Firm; |
(b) | Balance Sheets as of April 30, 2014 and 2013; |
(c) | Statements of Loss for the years ended April 30, 2014 and 2013; |
(d) | Statements of Cash Flows for the years ended April 30, 2014 and 2013; and |
(e) | Statement of Capital Deficit from April 30, 2012 to April 30, 2014; |
(f) | Notes to the Financial Statements. |
2. Interim financial statements for the six months ended October 31, 2014 and 2013, including: | |
(a) | Balance Sheets as of October 31, 2014 and April 30, 2014; |
(b) | Statements of Loss for the three and six months ended October 31, 2014 and 2013; |
(c) | Statements of Cash Flows for the six months ended October 31, 2014 and 2013; |
(d) | Statements of Capital Deficit from April 30, 2014 to October 31, 2014; |
(e) | Notes to the Financial Statements. |
Page 58 of 60
I-Minerals Inc.
Consolidated
Financial Statements
April
30, 2014 and 2013
(Expressed
in US dollars)
|
Tel: 604 688 5421
Fax: 604 688 5132 www.bdo.ca |
BDO Canada LLP
600 Cathedral Place 925 West Georgia Street Vancouver BC V6C 3L2 Canada |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Directors and Stockholders,
I-Minerals
Inc.
We have audited the accompanying consolidated balance sheets of I-Minerals Inc. (the “Company”) as of April 30, 2014 and 2013, and the related consolidated statements of loss, cash flows and capital deficit for the years 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 audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 presentation of the financial statements. 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 I-Minerals Inc. as at April 30, 2014 and 2013, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company had an accumulated deficit of $24,748,829 since inception and expects to incur further losses in the development of its business. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ BDO CANADA LLP | |
Chartered Accountants | |
Vancouver, Canada | |
November 17, 2014
I-Minerals Inc.
Consolidated Balance Sheets April 30, 2014 and 2013 |
(Expressed in US dollars) |
Notes |
2014
$ |
2013
$ |
|||||
ASSETS | |||||||
Current assets | |||||||
Cash | 604,936 | 43,196 | |||||
Receivables and prepaids | 109,007 | 49,369 | |||||
713,943 | 92,565 | ||||||
Equipment | 19,547 | 19,648 | |||||
Mineral property interest | 3 | 305,850 | 305,850 | ||||
Deposits | 8,728 | 58,728 | |||||
TOTAL ASSETS | 1,048,068 | 476,791 | |||||
LIABILITIES | |||||||
Current liabilities | |||||||
Accounts payable and accrued liabilities | 4,10 | 607,226 | 505,334 | ||||
Demand loans | 5 | - | 100,000 | ||||
Loans | 5 | - | 210,991 | ||||
Promissory notes | 6 | - | 1,928,088 | ||||
607,226 | 2,744,413 | ||||||
Promissory notes | 6 | 4,346,769 | - | ||||
Derivative liabilities | 2,7 | 3,280,245 | 236,203 | ||||
TOTAL LIABILITIES | 8,234,240 | 2,980,616 | |||||
CAPITAL DEFICIT | |||||||
Capital Stock | |||||||
Authorized: | |||||||
Unlimited common shares with no par value | |||||||
Issued and fully paid: 76,019,706 (2013 – 68,301,991) common shares | 8 | 15,935,039 | 14,756,503 | ||||
Commitment to issue shares | 6 | 79,223 | - | ||||
Additional paid-in capital | 1,548,395 | 1,422,820 | |||||
Deficit | (24,748,829 | ) | (18,683,148 | ) | |||
TOTAL STOCKHOLDERS’ EQUITY (CAPITAL DEFICIT) | (7,186,172 | ) | (2,503,825 | ) | |||
TOTAL LIABILITIES AND CAPITAL DEFICIT | 1,048,068 | 476,791 |
On behalf of the Board
“Thomas M. Conway” Director | “W. Barry Girling” Director |
The accompanying notes are an integral part of these consolidated financial statements.
I-Minerals Inc.
Consolidated Statements of Loss For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars) |
The accompanying notes are an integral part of these consolidated financial statements.
I-Minerals Inc.
Consolidated Statements of Cash Flows For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars) |
2014
$ |
2013
$ |
|||||
OPERATING ACTIVITIES | ||||||
Loss for the year | (6,065,681 | ) | (2,334,919 | ) | ||
Items not involving cash: | ||||||
Amortization | 8,377 | 8,338 | ||||
Stock-based compensation | 155,847 | - | ||||
Modification of share purchase warrants | - | 233,385 | ||||
Loss on extinguishment of debt | 400,626 | 171,657 | ||||
Unrealized foreign exchange | (4,420 | ) | 5,166 | |||
Accretion expense | 25,026 | 41,954 | ||||
Change in fair value of derivative liabilities | 2,692,112 | (156,975 | ) | |||
Change in non-cash operating working capital items: | ||||||
Receivables and prepaids | (59,638 | ) | 90,214 | |||
Accounts payable and accrued liabilities | 399,353 | 237,915 | ||||
Cash flows used in operating activities | (2,448,398 | ) | (1,703,265 | ) | ||
INVESTING ACTIVITIES | ||||||
Deposits recovered (paid) | 50,000 | (7,620 | ) | |||
Purchase of equipment | (8,276 | ) | (770 | ) | ||
Cash flows provided by (used in) investing activities | 41,724 | (8,390 | ) | |||
FINANCING ACTIVITIES | ||||||
Proceeds from private placement, net of cash issuance costs | 533,414 | - | ||||
Debt issue costs | (10,000 | ) | - | |||
Promissory notes received | 2,545,000 | 1,759,181 | ||||
Promissory notes repaid | - | (13,771 | ) | |||
Demand loans repaid | (100,000 | ) | - | |||
Cash flows provided by financing activities | 2,968,414 | 1,745,410 | ||||
INCREASE IN CASH | 561,740 | 33,755 | ||||
CASH, BEGINNING OF THE YEAR | 43,196 | 9,441 | ||||
CASH, END OF THE YEAR | 604,936 | 43,196 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||
Interest paid | 7,211 | 13,845 | ||||
Taxes paid | - | - |
The accompanying notes are an integral part of these consolidated financial statements.
I-Minerals Inc.
Consolidated Statements of Capital Deficit For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars) |
Number of Shares
# |
Amount
$ |
Commitment to Issue
Shares
$ |
Additional Paid-in
Capital
$ |
Accumulated Deficit
$ |
Capital
Deficit $ |
|||||||
Balance at April 30, 2012 | 60,685,576 | 13,884,344 | - | 1,422,820 | (16,348,229 | ) | (1,041,065 | ) | ||||
Issued during the year: | ||||||||||||
Shares issued to settle accounts payable and accrued liabilities | 1,806,050 | 185,769 | - | - | - | 185,769 | ||||||
Shares issued to settle convertible notes | 3,710,365 | 362,762 | - | - | - | 362,762 | ||||||
Shares issued pursuant to mineral property agreement | 1,300,000 | 176,676 | - | - | - | 176,676 | ||||||
Shares issued as a debt discount | 800,000 | 146,952 | - | - | - | 146,952 | ||||||
Loss for the year | - | - | - | - | (2,334,919 | ) | (2,334,919 | ) | ||||
Balance at April 30, 2013 | 68,301,991 | 14,756,503 | - | 1,422,820 | (18,683,148 | ) | (2,503,825 | ) | ||||
Issued during the year: | ||||||||||||
Shares issued pursuant to private placement of units | 3,100,000 | 409,505 | - | - | - | 409,505 | ||||||
Less: issue costs – cash | - | (24,214 | ) | - | - | - | (24,214 | ) | ||||
Less: issue costs – finder’s warrants | - | (23,391 | ) | - | - | - | (23,391 | ) | ||||
Shares issued to settle accounts payable and accrued liabilities | 1,001,112 | 266,743 | - | - | - | 266,743 | ||||||
Shares issuable as a debt discount | - | - | 79,223 | - | - | 79,223 | ||||||
Shares issued to settle loans payable | 2,277,341 | 365,353 | - | - | - | 365,353 | ||||||
Shares issued as a debt discount | 1,339,262 | 184,540 | - | - | - | 184,540 | ||||||
Share-based payments | - | - | - | 125,575 | - | 125,575 | ||||||
Loss for the year | - | - | - | - | (6,065,681 | ) | (6,065,681 | ) | ||||
Balance at April 30, 2014 | 76,019,706 | 15,935,039 | 79,223 | 1,548,395 | (24,748,829 | ) | (7,186,172 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
1. | NATURE OF BUSINESS AND BASIS OF PRESENTATION AND LIQUIDITY: |
I-Minerals Inc. (the “Company”) was incorporated under the laws of British Columbia, Canada, in 1984. The Company is listed for trading on the TSX Venture Exchange under the symbol “IMA” and the OTCQX marketplace under the symbol “IMAHF”. |
The Company’s principal business is the development of the Helmer-Bovill industrial mineral property (“the property”) located in Latah County, Idaho. The Helmer-Bovill property is comprised of twelve mineral leases that that host potentially economic deposits of feldspar, quartz and kaolinitic clays, primarily kaolinite and halloysite. |
Basis of Presentation and Liquidity |
These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) on the basis that the Company will continue as a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At April 30, 2014, the Company had not yet achieved profitable operations, had an accumulated deficit of $24,748,829 since inception and expects to incur further losses in the development of its business, all of which casts substantial doubt upon the Company’s ability to continue as a going concern and, therefore, that it may be unable to realize its assets and discharge its liabilities in the normal course of business. |
The Company’s ability to continue as a going concern is dependent upon its ability to complete a feasibility study, to obtain the necessary financing to develop the property and to meet its obligations and repay its liabilities arising from normal business operations when they come due. Although the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company. The Company is currently receiving funds from a company controlled by a director of the Company through promissory notes (Notes 6 and 14). |
2. | SIGNIFICANT ACCOUNTING POLICIES: |
Basis of Presentation and Principles of Consolidation |
The consolidated financial statements include the accounts of the Company and its subsidiaries, i-Minerals USA, Inc. and CKD Ventures Ltd. All inter-company accounts and transactions have been eliminated. The Company’s fiscal year-end is April 30. |
Use of Estimates |
The preparation of these consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long lived assets, stock-based compensation, valuation of convertible debentures and derivative liabilities, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
7
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
Cash and Cash Equivalents |
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. As at April 30, 2014 and 2013, the Company had no cash equivalents. |
Equipment |
Equipment is carried at cost and is amortized over the estimated useful economic lives using the declining balance method at an annual rate of 30%. |
Mineral Property Acquisition Costs |
Mineral property acquisition costs are capitalized when incurred and will be amortized using the units-of-production method following the commencement of production. If a mineral property is subsequently abandoned or impaired, any capitalized costs will be expensed in the period of abandonment or impairment. The Company’s property has yet to reach the production stage. |
Acquisition costs include cash consideration and the fair market value of shares issued on the acquisition of mineral property claims. |
Mineral Property Exploration Costs |
Mineral property exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated useful life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations. |
Impairment of Long-Lived Assets |
Management tests long-lived assets to be held and used for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Impairment is considered to exist if the future cash flows on an undiscounted basis are less than the carrying amount of the long-lived asset. An impairment loss is measured and recorded based on the difference between book value and fair value of the asset group, as determined through the application of a present value technique using expected future cash flows to estimate fair value in the absence of a market price. In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of cash flows from other asset groups. |
Debt Issuance Costs |
Debt issue costs paid to third parties in connection with debt financings are capitalized as an asset and amortized over the term of the debt using the effective interest method. |
Debt issuance costs paid to the purchaser of the debt are considered to be a reduction of the debt proceeds and a component of debt discount. Subsequently, the costs comprising this debt discount are amortized as financing fees over the term of the promissory notes using the effective interest method. During the year ended April 30, 2014, the Company amortized financing fees totaling $25,026 (2013 – $41,954). |
8
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
Financial Instruments and Fair Value Measures |
The book value of cash, accounts receivable, accounts payable and accrued liabilities, demand loans and loans approximate their fair values due to the immediate or short-term maturity of those instruments. The fair value hierarchy under GAAP is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: |
Level 1 - | quoted prices (unadjusted) in active markets for identical assets or liabilities; |
Level 2 - | observable inputs other than Level I, quoted prices for similar assets or liabilities in active prices whose inputs are observable or whose significant value drivers are observable; and, |
Level 3 - | assets and liabilities whose significant value drivers are unobservable by little or no market activity and that are significant to the fair value of the assets or liabilities. |
The Company’s promissory notes are based on Level 2 inputs in the ASC 820 fair value hierarchy. The Company calculated the fair value of these instruments by discounting future cash flows using rates representative of current borrowing rates. At April 30, 2014, the promissory notes had a fair value of $4,368,045 (2013 – $1,905,000). |
The Company had certain Level 3 liabilities required to be recorded at fair value on a recurring basis in accordance with US GAAP as at April 30, 2014 and April 30, 2013. As at April 30, 2014 and April 30, 2013 the Company’s Level 3 liabilities consisted of the warrants issued in connection with the Company’s offering of equity units in a private placement and warrants issued as financing fees as well as the grant of share purchase options to non-employees. As at April 30, 2012, the Company’s Level 3 liabilities included a derivative liability in respect of the bifurcated embedded converision features of the Company’s convertible notes payable. |
The resulting Level 3 liabilities have no active market and are required to be measured at their fair value each reporting period based on information that is unobservable. |
A summary of the Company’s Level 3 liabilities for the years ended April 30, 2014 and 2013 is as follows: |
9
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
During the year ended April 30, 2013, the Company modified the terms associated with its outstanding share purchase warrants originally issued in connection with a private placement (Note 7). The incremental fair value of this warrant modification in the amount of $233,385 has been included in financing fees in the Statement of Loss for the year ended April 30, 2013 (Note 8(d)). |
Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). There were no assets or liabilities measured at fair value on a nonrecurring basis during the year ended April 30, 2014 and, as noted above, during the year ended April 30, 2013, the Company re-measured the fair value of its outstanding warrants upon a modification of their terms (Note 7). |
Earnings (Loss) Per Share |
The basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. For the year ended April 30, 2014, loss per share excludes 27,875,962 (2013 – 22,450,000) potentially dilutive common shares (related to outstanding options and warrants and a commitment to issue shares and warrants) as their effect was anti-dilutive. |
Foreign Currency Translation |
The Company’s functional and reporting currency is the US dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date and non-monetary items are translated at exchange rates prevailing when the assets were acquired or obligations incurred. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. |
Income Taxes |
The Company accounts for income taxes using the asset and liability method. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. |
The Company has adopted the provisions of FASB ASC 740 "Income Taxes" regarding accounting for uncertainty in income taxes. The Company initially recognizes tax positions in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority, assuming full knowledge of the position and all relevant facts. Application requires numerous estimates based on available information. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, and its recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As additional information is obtained, there may be a need to periodically adjust the recognized tax positions and tax benefits. These periodic adjustments may have a material impact on the consolidated statements of operations. When applicable, the Company classifies penalties and interest associated with uncertain tax positions as a component of income tax expense in its consolidated Statement of Income (Loss). |
10
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
Stock-Based Compensation |
The Company accounts for all stock-based payments and awards under the fair value based method. Stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. |
The fair value of stock-based payments to non-employees is periodically re-measured until the counterparty performance is complete, and any change therein is recognized over the vesting period of the award and in the same manner as if the Company had paid cash instead of paying with or using equity based instruments. The cost of the stock-based payments to non-employees that are fully vested and non-forfeitable as at the grant date is measured and recognized at that date, unless there is a contractual term for services in which case such compensation would be amortized over the contractual term. |
The Company accounts for the granting of stock options to employees using the fair value method whereby all awards to employees will be recorded at fair value on the date of the grant. The fair value of all stock options is expensed over their vesting period with a corresponding increase to additional paid-in capital. |
Compensation costs for stock-based payments that do not include performance conditions are recognized on a straight-line basis. Compensation cost associated with a share based award having a performance condition is recognized are on the probable outcome of that performance condition during the requisite service period. Share based awards with a performance condition are accrued on an award by award basis. |
The Company uses the Black-Scholes option valuation model to calculate the fair value of stock options at the date of the grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimates. |
Derivative Liabilities |
The Company evaluates its financial instruments and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market at each balance sheet date and recorded as a liability and the change in fair value is recorded in the consolidated statement of loss. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. |
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instruments that become subject to reclassification are reclassified at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not settlement of the derivative instrument is expected within 12 months of the balance sheet date. |
The Company uses the Black-Scholes option valuation model to value derivative liabilities. This model uses Level 3 inputs in the fair value hierarchy established by ASC 820 Fair Value Measurement. |
11
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
Recent Accounting Pronouncements |
In June 2014, the FASB issued ASU No. 2014-10, "Development Stage Entities" (“ASU 2014-10”) which removes the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the update eliminates the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. ASU No. 2014-10 is effective for fiscal years and interim periods beginning after December 15, 2014, with early adoption permissible. The Company has elected to early adopt ASU 2014-10 allowing the Company to cast financial statements without the inception to date information and without references to exploration stage. |
In June 2014, FASB issued an Accounting Standards Update No, 2014-12 (“ASU 2014-12”) on the Accounting for Share-Based Payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period, be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. ASU 2014-12 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015 with early adoption permitted. The Company has early adopted ASU 2014-12 without material effect on the Company’s consolidated financial statements. |
3. MINERAL PROPERTY INTEREST: |
Helmer-Bovill Property – Latah County, Idaho |
The Company entered into a purchase and sale agreement with Idaho Industrial Minerals LLC (“IIM”), a company in which one of the Company’s directors has a 25% interest, under which the Company had the right to acquire a 100% interest in 10 lease applications that comprise the Helmer-Bovill property by issuing to IIM a total of 1,750,000 shares of the Company. During fiscal 2009, 50,000 shares were issued in return for an extension of the agreement. During fiscal 2010, the terms of the agreement were further amended and the agreement was extended until August 2013. Under the terms of the amended agreement, the shares were to be issued based on certain development-based benchmarks being attained as follows: |
|
12
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
On January 21, 2013, the Company issued the final 1,300,000 shares to IIM at a fair value of $176,676, determined by reference to the trading price of the Company’s shares on the transaction date. With the issuances of the final tranches of shares, the Company believes it has now fulfilled all its obligations under the purchase and sale agreement with IIM (Note 12). |
During the year ended April 30, 2012, the Company acquired an undivided 100% interest in two State of Idaho mineral leases contiguous to the Helmer-Bovill Property. The Company paid $10,000 and issued 50,000 shares at the fair value of $15,170. The two State of Idaho mineral leases are subject to a 3% production royalty on gross sales. |
4. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES: |
April 30,
2014 $ |
April 30,
2013 $ |
||
Trade payables | 272,436 | 211,996 | |
Amounts due to related parties (Note 10) | 177,611 | 205,200 | |
Interest payable on demand loans | - | 3,000 | |
Interest payable on loans | - | 6,330 | |
Interest payable on promissory notes | 157,179 | 78,808 | |
Total accounts payable and accrued liabilities | 607,226 | 505,334 |
5. | DEMAND LOANS AND LOANS: |
Summary of demand loans and loans are as follows: |
April 30,
2014 $ |
April 30,
2013 $ |
||
Demand loans | - | 100,000 | |
Loans | - | 210,991 | |
Total loans | - | 310,991 |
On June 30, 2009, the Company completed the first tranche of a non-brokered unsecured convertible loan financing, raising $250,000. On September 15, 2009, the Company completed the second tranche, raising $192,880. On January 29, 2010, the Company completed Series B, raising $422,550 (CDN$ 450,000) (collectively the “Convertible Loans”). |
Interest was at 12 per cent per year, calculated semi-annually and paid semi-annually in either cash or shares, at the election of the Company. The Convertible Loans had a term of two years and were convertible into shares of the Company at the rate of one share per CDN$0.35 of principal outstanding, with exchange rates fixed at the dates of issuance. Accordingly, the first tranche, second tranche and Series B Convertible Loans were convertible into 830,565 shares, 599,006 shares and 1,285,714 shares, respectively. |
13
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
During the year ended April 30, 2012, the Company extended the term of the Convertible Loans to January 29, 2013. Of the $222,075 (CDN$225,000) in Series B convertible loans extended, the conversion price was reduced to CDN$0.25 per share (900,000 shares). The remaining $222,075 (CDN$225,000) in Series B Convertible Loans were repaid in full. The conversion feature of the convertible loans expired on January 29, 2013 and the Convertible Loans became due on demand loans (the “Demand Loans”). The conversion features of the Convertible Loans were bifurcated as a derivative liability given that the conversion prices were denominated in CDN$ whereas the Company’s functional currency has been determined to be US$. In accordance with the guidance of ASC 815, the derivative liability was measured at its respective fair value each reporting period with the change in fair value thereon recorded in the Statement of Loss each fiscal reporting period. At April 30, 2012, the fair value of the derivative laibilty associated with the embedded conversion feature of the Company’s convertible notes payable was determined to be $30,362 using the Black-Scholes model with the following assumptions: stock price – CDN$0.16; expected life – 0.75 years; strike prices – CDN$0.25 - $CDN 0.35; volatility – 79.58%, risk free discount rate – 1.34%. |
The remaining debt discount related to the issuance of convertible debt in the amount of $41,954 as at April 30, 2012 was recorded as accretion expense during the year ended April 30, 2013. |
On April 18, 2013, CDN$12,500 ($12,094) and $319,295 of the Demand Loans plus accrued interest of $6,668 were settled by the issuance of 3,710,365 shares at the aggregate fair value of $362,762. The Company recorded a loss on debt extinguishment of $24,705 in respect of this transaction. |
Demand Loans totaling $210,991 were converted to Loans due April 1, 2014 with no change in other terms. |
During the year ended April 30, 2014, the Company repaid the Demand Loans totalling $100,000 plus accrued interest thereon of $6,411. |
During the year ended April 30, 2014, the Company issued 2,277,341 shares having a fair value of $365,353 to settle Loans totaling $221,426 including accrued interest thereon of $14,855 resulting in a loss on extinguishment of debt in the amount of $143,927. |
During the year ended April 30, 2014, the Company recorded interest totalling $11,991 (2013 - $76,176) on its demand loans and loans. |
6. | PROMISSORY NOTES: |
April 30,
2014 $ |
April 30,
2013 $ |
||
Promissory notes | 4,346,769 | 1,928,088 | |
Total promissory notes | 4,346,769 | 1,928,088 |
During the year ended April 30, 2012, the Company issued a $150,000 promissory note bearing interest at 12% for funds advanced from a director of the Company (the “Lender”). |
During the year ended April 30, 2013, the Company issued $850,000 of promissory notes bearing interest at 9.5% for funds advanced from the Lender. In addition the Company issued $905,000 of promissory notes bearing interest at 12% for funds advanced from the Lender. On September 12, 2012, the Company and the Lender agreed to amend previously issued promissory notes totalling $1,000,000 that included advances totalling $150,000 bearing interest at 12% and $850,000 of advances bearing interest at 9.5% along with accrued interest thereon of $23,088 by way of issuing a new promissory note having a principal balance of $1,023,088 bearing interest at 12%. |
14
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
In addition, as part of the agreement to amend the previously issued promissory notes, the Company issued 800,000 common shares to the Lender having an aggregate fair value of $146,952 based on their quoted market price. This amendment was accounted for as a debt extinguishment with a corresponding loss on debt extinguishment of $146,952 recorded in the Statement of Loss for the year ended April 30, 2013. |
On September 13, 2013, the Company and the Lender agreed to amend previously issued promissory notes totalling $1,800,000 bearing interest at 12% along with accrued interest thereon of $81,226 by way of issuing a new promissory note having a principal balance of $1,881,226 also bearing interest at 12%. As part of this amendment, the Company issued 1,058,322 common shares having an aggregate fair value of $121,706 based on their quoted market price and 1,058,322 share purchase warrants having a fair value of $69,664 to the Lender. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: stock price – CDN$0.115; expected life – 3.22 years; strike prices – CDN$0.14 - $CDN 0.1722 volatility – 100.7%, risk free discount rate – 1.13%. This amendment was accounted for as a debt extinguishment with a corresponding loss on debt extinguishment of $191,370 recorded in the Statement of Loss for the year ended April 30, 2014. In addition, the maturities of the promissory notes were established as to $1,000,000 on December 31, 2015, $2,000,000 on June 30, 2016 and the balance due on December 31, 2016. |
Pursuant to the debt amendment agreement dated September 13, 2013, the Company agreed to issue the Lender bonus shares equal to 6% of each loan tranche advanced divided by the Company’s common share market price where, for purposes of calculating the number of shares issuable for each loan tranche, the Company’s common share market share price is discounted by 25% as allowed by regulation. The amount of bonus shares issued is subject to a minimum price of $CDN 0.105 and a maximum of 1,720,649 bonus shares. In addition, the Company will issue the Lender an equal number of share purchase warrants for each loan tranche advanced. Each bonus share purchase warrant will entitle the Lender to purchase one common share of the Company at a price equal to the greater of (a) the market price of the Company’s common shares on the date of the advance and (b) the volume weighted average price of the Company’s common shares over the twenty trading days immediately prior to the date of the advance. The bonus share purchase warrants expire on the earlier of (a) December 1, 2016 and (b) the date the advance has been repaid in full, including interest. |
On January 27, 2014, the Company and the Lender executed an agreement whereby the Lender agreed to advance up to $5,787,280 to be advanced to the Company in tranches, of which $4,554,280 had been advanced as at April 30, 2014. Certain conditions may result in early repayment. |
The promissory notes bear interest at the rate of 12% per annum and during the year, the Company recorded interest totalling $360,977 (2013 - $100,496) on its promissory notes. Interest is payable semi-annually as calculated on May 31st and November 30th. Interest is to be paid either in cash or in common shares at the option of the Lender. |
During the year ended April 30, 2014, the Company issued additional promissory notes bearing interest at 12% for an aggregate of $2,545,000 of funds advanced from the Lender. |
During the year ended April 30, 2014, the Company issued 280,940 bonus shares to the Lender at the fair value of $62,834 and the Company was committed to issuing an additional 313,350 bonus shares to the Lender at the fair value of $79,223. The fair value of the bonus shares was determined by reference to the trading price of the Company’s common shares on the date the advances were received. The Company also issued 280,940 bonus share purchase warrants and the Company was committed to issuing an additional 313,350 bonus share purchase warrants to the Lender. The aggregate of 594,290 bonus share purchase warrants had a weighted average exercise price of $0.19. The fair value of bonus share purchase warrants issued/committed to be issued during the year ended April 30, 2014 of $80,480 was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: stock price – CDN$0.16; exercise price – CDN$0.19; expected risk-free interest rate – 1.13%; expected life – 3.1 years; expected volatility – 102% and expected dividend rate – 0%. |
15
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
During the year ended April 30, 2014, the Company settled $201,414 of interest payable on the promissory notes by the issuance of 1,001,112 common shares at the fair value of $266,743 (Note 10). Accordingly, the Company recorded a loss on settlement of debt of $65,329. |
The aggregate finance fees of $232,539, including $10,000 of legal fees, are recorded against the Promissory Notes balance and are being amortized to the Statement of Loss over the life of the Promissory Notes using the effective interest method. The unamortized debt discount as at April 30, 2014 is $207,511 (2013 – $Nil). |
The Promissory Notes are collateralized by the Company’s Helmer-Bovill Property. |
7. | WARRANT LIABILITY: |
The Company has share purchase warrants exercisable into common shares at an exercise price denominated in Canadian dollars. As a variable amount of US dollars are exercisable into a fixed number of common shares, the share purchase warrants are classified as derivative liabilities. |
The Company records the fair value of the share purchase warrants in accordance with ASC 815, “Derivatives and Hedging”. The Company uses the Black-Scholes option pricing model to calculate the fair values of the derivative liabilities. The fair value of the derivative liability is revalued on each balance sheet date with corresponding gains and losses recorded in the Statement of Loss. |
$ | ||
Balance, April 30, 2012 | 107,325 | |
Financing fees resulting from modification of the terms of warrants | 233,385 | |
Change in fair value of warrant derivatives | (106,114) | |
Balance, April 30, 2013 | 234,596 | |
Bonus warrants issued pursuant to promissory notes (Note 6) | 150,144 | |
Warrants issued pursuant to private placement of units (Note 8) | 148,123 | |
Warrants issued as private placement finders’ fees (Note 8) | 23,391 | |
Change in fair value of warrant derivatives | 2,655,132 | |
Balance, April 30, 2014 | 3,211,386 |
Warrant Derivative Liabilities |
At April 30, 2014, the Company determined the fair value of Warrant Derivative Liabilities to be $3,211,386 (2013 - $234,596) as estimated using the Black-Scholes option pricing model with the following weighted average assumptions: |
16
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
8. | SHARE CAPITAL: |
Common shares |
a) | Authorized: |
Unlimited number of common shares, without par value. |
The holders of common shares are entitled to receive dividends which are declared from time to time, and are entitled to one vote per share at meetings of the Company. All shares are ranked equally with regards to the Company’s residual assets. |
b) | Stock transactions: |
During the year ended April 30, 2014, the Company completed the following stock transactions: |
i) | On September 30, 2013, the Company issued 2,277,341 common shares with a fair value of $365,353 to settle CDN$212,500 ($206,571) of Loans plus accrued interest of CDN$15,234 ($14,855) (Note 5). |
ii) | On October 23, 2013, the Company issued 1,170,084 common shares with a fair value of $142,382 as a debt discount. |
iii) | On January 27, 2014, the Company issued 169,178 common shares with a fair value of $42,158 as a debt discount. |
iv) | On January 31, 2014, the Company completed a private placement of 3,100,000 units at CDN$0.20 per unit for gross proceeds of $557,628 (CDN$620,000). Each unit is comprised of one common share and one-half of one share purchase warrant. Each whole warrant entitles the holder to purchase one additional common share at a price of CDN$0.40 per share until January 31, 2016. A value of $148,123 has been attributed to these warrants using the Black-Scholes option pricing model and has been recorded as a derivative liability (Note 7). |
The Company paid commissions consisting of $16,747 and 200,000 finder’s warrants. A value of $23,391 has been attributed to these warrants using the Black-Scholes option pricing model and has been recorded as a derivative liability (Note 7). Each finder’s warrant entitles the holder to purchase one common share at a price of CDN$0.25 per share until January 31, 2016. In addition, the Company incurred legal and other out-of-pocket expenses related to the private placement in the amount of $7,467. |
The fair value for the warrants issued in connection with this private placement was estimated using the Black-Scholes option pricing model with the following assumptions: stock price – CDN$0.23; exercise price – CDN$0.25; expected risk-free interest rate – 1.13%; expected life – 2.0 years; expected volatility – 114% and expected dividend rate – 0%. |
v) | On March 4, 2014, the Company issued 1,001,112 common shares with a fair value of $266,743 as settlement of accrued interest payable on promissory notes (Note 6). |
During the year ended April 30, 2013, the Company completed the following stock transactions: |
i) | On May 4, 2012, the Company issued 133,967 common shares with a fair value of $26,662 as settlement of accrued interest payable on Convertible Loans. |
ii) | On September 27, 2012, the Company issued 199,640 common shares with a fair value of $26,612 as settlement of accrued interest payable on Convertible Loans. |
17
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
iii) | On December 10, 2012, the Company issued 800,000 common shares with a fair value of $146,952 as a debt discount. |
iv) | On January 21, 2013, the Company issued 1,300,000 common shares with a fair value of $176,676 pursuant to a mineral property agreement (Note 3). |
v) | On March 22, 2013, the Company issued 284,129 common shares with a fair value of $39,274 as settlement of accrued interest pursuant to the Convertible Loans. |
vi) | On April 8, 2013, the Company issued 1,188,314 common shares with a fair value of $93,221 as settlement of accounts payable and accrued liabilities. |
vii) | On April 18, 2013, the Company issued 3,710,365 common shares with a fair value of $362,762 as settlement of Demand Loans (Note 5). |
c) | Stock options: |
The Company has granted stock options under the terms of its Stock Option Plan (the “Plan”). The Plan provides that the directors of the Company may grant options to purchase common shares to directors, officers, employees and service providers of the Company on terms that the directors of the Company may determine are within the limitations set forth in the Plan. The maximum number of shares available under the Plan is limited to 10% of the issued common shares. The maximum term of stock options is ten years. All stock options vest on the date of grant, unless otherwise stated. As at April 30, 2014, the Company had 3,441,971 (2013 – 4,380,199) stock options available for grant pursuant to the Plan. |
The Company’s stock options outstanding as at April 30, 2014 and 2013 and the changes for the years then ended are as follows: |
Number Outstanding | Weighted Average Exercise Price |
Aggregate
Intrinsic Value
$ |
|||
Balance at April 30, 2012 | 2,920,000 | CDN$ | 0.42 | - | |
Expired | (470,000) | CDN$ | 0.44 | ||
Balance at April 30, 2013 | 2,450,000 | CDN$ | 0.42 | - | |
Granted | 2,410,000 | CDN$ | 0.15 | ||
Cancelled | (700,000) (1) | CDN$ | 0.46 | ||
Balance outstanding at April 30, 2014 | 4,160,000 | CDN$ | 0.26 | - | |
Balance exercisable at April 30, 2014 | 3,450,000 | CDN$ | 0.27 |
Notes: |
(1) | During the year ended April 1, 2014, the Company cancelled 700,000 options that had performance conditions associated with its Kelly Basin Project and concurrently awarded 810,000 options with performance conditions associated with its Bovill Kaolin Project. The cancellation and subsequent granting of options was considered to be a modification of a share-based award. The incremental fair value of this award was determined to be $141,772 using the Black Scholes option pricing model with the following inputs: exercise prices- 250,000 at CDN$0.10, 260,000 at CDN$0.15, 300,000 at CDN$0.25; share price - CDN$0.23; expected volatility – 106%; risk free interest rate – 1.42%; expected life – 5 years. Subsequent to this award modification, the Company recorded compensation cost in respect of this award totaling $15,143. |
18
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
Summary of stock options outstanding at April 30, 2014: |
Security | Number Outstanding | Exercise Price | Expiry Date | Remaining Contractual Life (years) | |
Stock options | 1,150,000 | CDN$ 0.40 | January 7, 2015 | 0.69 | |
Stock options | 100,000 | CDN$ 0.40 | February 15, 2015 | 0.80 | |
Stock options | 500,000 | CDN$ 0.40 | December 1, 2015 | 1.59 | |
Stock options | 1,400,000 | CDN$ 0.10 | July 30, 2018 | 4.25 | |
Stock options | 260,000 | CDN$ 0.15 | July 30, 2018 | 4.25 | |
Stock options | 300,000 | CDN$ 0.25 | July 30, 2018 | 4.25 | |
Stock options | 200,000 | CDN$ 0.25 | November 19, 2018 | 4.56 | |
Stock options | 150,000 | CDN$ 0.25 | January 8, 2019 | 4.70 | |
Stock options | 100,000 | CDN$ 0.25 | April 25, 2019 | 4.99 |
The stock options vest on the date of grant, based on the completion of certain performance milestones or based on the passage of time. |
The weighted average grant date fair value of stock options granted during the year ended April 30, 2014 of $0.09 was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: stock price – CDN$0.13; exercise price – CDN$0.15; expected risk-free interest rate – 1.65%; expected life – 5.0 years; expected volatility – 107% and expected dividend rate – 0%. Expected volatility was determined by reference to the historical volatility of the Company’s common shares trading on the TSX Venture Exchange. |
Non-Employee Stock Options |
In accordance with the guidance of ASC 815-40-15, stock options awarded to non-employees that are fully vested and exercisable in Canadian dollars are required to be accounted for as derivative liabilities because they are considered not to be indexed to the Company’s stock due to their exercise price being denominated in a currency other than the Company’s functional currency. Stock options awarded to non-employees that are not vested are accounted for as equity awards until the terms associated with their vesting requirements have been met. As at April 30, 2014 and 2013, there are no non-employee stock option awards that have not vested. |
The non-employee stock options are accounted for at their respective fair values and are summarized as follows for the years ended April 30, 2014 and 2013: |
2014
$ |
2013
$ |
||
Fair value of non-employee options, beginning of the year | 1,607 | 22,106 | |
Fair value of non-employee options, at issuance | 30,272 | - | |
Change in fair value of non-employee stock options during the year | 36,980 | (20,499) | |
Fair value of non-employee options, end of the year | 68,859 | 1,607 |
19
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
The Company determined the fair value of its non-employee stock options as at April 30, 2014 and 2013 using the Black Scholes option pricing model with the following weighted average assumptions: |
The non-employee options are required to be re-valued with the change in fair value of the liability recorded as a gain or loss on the change of fair value of derivative liability and included in other items in the Company’s Consolidated Statements of Loss at the end of each reporting period. The fair value of the options will continue to be classified as a liability until such time as they are exercised, expire or there is an amendment to the respective agreements that renders these financial instruments to be no longer classified as a liability. |
As at April 30, 2014, the unamortized compensation cost expected to be recognized by the fiscal year ended April 30, 2016 is $126,629 and the intrinsic value of options expected to vest is $79,863 (CDN$87,800). |
Share-based payments are classified in the Company’s Statement of Loss as follows: |
2014
$ |
2013
$ |
||
Management and consulting fees | 155,847 | - | |
155,847 | - |
d) | Share purchase warrants: |
A summary of fully-exercisable share purchase warrants as at April 30, 2014 and 2013 and the changes for the years then ended are as follows: |
Number
Outstanding |
Weighted
Average
Exercise Price |
|||
Balance at April 30, 2012 | 23,722,428 | CDN$ | 0.39 | |
Expired | (3,722,428) | CDN$ | 0.36 | |
Balance at April 30, 2013 | (1) 20,000,000 | CDN$ | 0.40 | |
Issued | 3,402,612 | CDN$ | 0.29 | |
Balance at April 30, 2014 | 23,402,612 | CDN$ | 0.39 |
Notes: |
(1) | On April 29, 2013, the Company extended the life of 20,000,000 warrants from April 29, 2013 to April 29, 2016. This resulted in warrant modification expense of $233,385, crediting derivative liabilities, using the following assumptions: stock price – CDN$0.30; expected risk-free interest rate – 1.13%; expected life –3.00 years; expected volatility – 93%; and expected dividend rate – 0%. |
20
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
Summary of warrants outstanding at April 30, 2014: |
Security | Number Outstanding | Exercise Price | Expiry Date | |
Warrants | 1,550,000 | CDN$ 0.40 | January 31, 2016 | |
Warrants | 200,000 | CDN$ 0.25 | January 31, 2016 | |
Warrants | 20,000,000 | CDN$ 0.40 | April 29, 2016 | |
Warrants | 667,520 | CDN$ 0.14 | December 1, 2016 (1) | |
Warrants | 122,142 | CDN$ 0.14266 | December 1, 2016 (1) | |
Warrants | 104,119 | CDN$ 0.165 | December 1, 2016 (1) | |
Warrants | 76,723 | CDN$ 0.17 | December 1, 2016 (1) | |
Warrants | 87,818 | CDN$ 0.17223 | December 1, 2016 (1) | |
Warrants | 111,762 | CDN$ 0.185 | December 1, 2016 (1) | |
Warrants | 74,414 | CDN$ 0.28 | December 1, 2016 (1) | |
Warrants | 94,764 | CDN$ 0.23 | December 1, 2016 (1) | |
Warrants | 92,357 | CDN$ 0.276 | December 1, 2016 (1) | |
Warrants | 96,261 | CDN$ 0.292 | December 1, 2016 (1) | |
Warrants | 79,293 | CDN$ 0.28 | December 1, 2016 (1) | |
Warrants | 45,439 | CDN$ 0.29 | December 1, 2016 (1) |
Notes: |
(1) | The warrants are exercisable until the earlier of December 1, 2016 or the date that the promissory note advance is repaid (Note 6). |
9. | INCOME TAXES: |
A reconciliation of the income tax provision computed at statutory rates to the reported income tax provision for the years ended April 30, 2014 and 2013 is as follows: |
2014
$ |
2013
$ |
||
Statutory tax rate | 26.00% | 25.00% | |
Loss before income taxes | (6,065,681) | (2,334,919) | |
Expected income tax recovery | (1,577,000) | (584,000) | |
Increase (decrease) in income tax recovery resulting from: | |||
Derivative liability | 700,000 | (39,000) | |
Other permanent differences | 48,000 | 17,000 | |
Loss on debt extinguishment | 104,000 | - | |
Non-deductible financing fees | - | 58,000 | |
Share issue costs | (71,000) | - | |
Effect of change in statutory rate | (40,000) | - | |
Foreign income taxed at foreign rate | (181,000) | (135,000) | |
Impact of over-provision in previous year | (59,000) | ||
Increase in valuation allowance | 1,076,000 | 683,000 | |
Income tax expense | - | - |
21
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
The significant components of the Company’s deferred income tax assets and liabilities after applying enacted corporate tax rates at April 30, 2014 and 2013 are as follows: |
2014
$ |
2013
$ |
||
Deferred income tax assets (liabilities) | |||
Operating losses carried forward | 4,919,000 | 3,882,000 | |
Resource property | 1,037,000 | 1,005,000 | |
Capital assets | - | 5,000 | |
Share issuance costs | 103,000 | 92,000 | |
Other | 1,000 | - | |
Valuation | (6,060,000) | (4,984,000) | |
Net deferred income tax asset | - | - |
At April 30, 2014, the Company has accumulated non-capital losses totalling $4,620,000 (2013 - $4,004,000) in Canada and net operating losses of $10,622,000 (2013 - $8,354,000) in the USA, which are available to carryforward and offset future years’ taxable income. The losses expire in various amounts from 2015 to 2034. |
Uncertain Tax Positions |
The Company has adopted certain provisions of ASC 740, “Income Taxes”, which prescribes a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken or expected to be taken in income tax returns. The provisions also provide guidance on the de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions. |
The Company files income tax returns in the U.S. federal jurisdiction, various state and foreign jurisdictions. The Company’s tax returns are subject to tax examinations by U.S. federal and state tax authorities, or examinations by foreign tax authorities until respective statute of limitation. The Company currently has no tax years under examination. The Company is subject to tax examinations by tax authorities for all taxation years commencing after 2003. |
At April 30, 2014, the Company does not have an accrual relating to uncertain tax positions. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date. |
Provision has not been made for U.S. or additional foreign taxes on undistributed earnings of foreign subsidiaries. Such earnings have been and will continue to be reinvested but could become subject to additional tax if they were remitted as dividends, or were loaned to the Company affiliate. It is not practicable to determine the amount of additional tax, if any, that might be payable on the undistributed foreign earnings. |
10. | RELATED PARTY TRANSACTIONS: |
During the year ended April 30, 2014, management and consulting fees of $56,383 (2013 – $59,666) were charged by directors or officers or companies controlled by them. A further $158,000 (2013 – $150,000) in consulting fees were charged by directors and are included with mineral property exploration costs. |
During the year ended April 30, 2014, the Company settled $201,414 of interest payable on the Promissory Notes owed to a company controlled by a Director by issuing 1,001,112 common shares at the fair value of $266,743 (Note 6). |
Included in accounts payable and accrued liabilities are amounts owed to directors or officers or companies controlled by them. As at April 30, 2014, the amount was $177,611 (2013 – $205,200). All amounts are non-interest bearing, unsecured, and due on demand. |
22
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
The promissory notes received from a company controlled by a director during the years ended April 30, 2014 and 2013 (Note 6) are related party transactions. |
On February 13, 2013, the Company settled accounts payable and accrued liabilities due to the former Chief Executive Officer by making a cash payment of $30,000, issuing 1,188,314 common shares at the fair value of $93,221 and agreeing to pay $30,000 in six monthly payments beginning October 1, 2013 (paid). |
11. | SEGMENT DISCLOSURES: |
The Company considers its business to comprise a single operating segment being the exploration of its resource property. Substantially all of the Company’s long-term assets and operations are located in Latah County, Idaho. |
12. | CONTINGENT LIABILITY: |
On March 20, 2014, the Company announced that it had been served with a complaint by Robert Lemke (carrying on business as Hoodoo Resources, LLC) and the Brent Thomson Family Trust, each minority partners as to a 12.5% interest in Idaho Industrial Minerals, LLC (“IIM”). Following preliminary review of the complaint by management and legal counsel, in addition to a separate declaratory action pending amongst the members of IIM, management believes that Thomson and Lemke are attempting to exercise derivative rights without the consent of the majority of the members of IIM and reject consideration paid to IIM with respect to the Company’s Helmer-Bovill Property in January 2013 pursuant to an August 10, 2001 agreement, as amended, between the Company and IIM (the “IIM Agreement”). |
The IIM Agreement required the Company to deliver a total of 1.8 million shares to IIM for the Company to earn outright title to the mineral leases which comprise the Helmer-Bovill Property. The final tranche of 1.3 million shares was delivered to IIM on January 22, 2013. Thomson and Lemke allege they were deceitfully induced into signing the fourth amendment to the IIM Agreement. Thomson and Lemke are seeking specific performance in the return of the Helmer-Bovill Property. Preliminary review by the Company’s legal counsel can find no basis for a derivative rights action. The Company believes the probability of an economic outlay for this contingent liability is remote. |
13. | NON-CASH TRANSACTIONS: |
Investing and financing activities that affect recognized assets or liabilities but that do not result in cash receipts or cash payments are excluded from the consolidated statements of cash flows. During the year ended April 30, 2014, the following transactions were excluded from the consolidated statement of cash flows: |
a) | The issuance by the Company of 1,001,112 common shares at the fair value of $266,743 as payment of interest on the Promissory Notes; |
b) | The issuance by the Company of 1,339,262 common shares at the fair value of $184,540 pursuant to the Promissory Notes; and, |
c) | The issuance by the Company of 2,277,341 common shares at the fair value of $365,353 pursuant to the settlement of Loans. |
During the year ended April 30, 2013, the following transactions were excluded from the consolidated statement of cash flows: |
a) | The issuance by the Company of 617,736 common shares at the fair value of $92,548 as payment of interest on the Convertible Loans; |
b) | The issuance by the Company of 1,300,000 common shares at the fair value of $176,676 pursuant to a mineral property agreement; |
23
I-Minerals Inc.
Notes to the Consolidated Financial Statements For the years ended April 30, 2014 and 2013 |
(Expressed in US dollars except where otherwise indicated) |
c) | The issuance by the Company of 3,710,365 common shares at the fair value of $362,762 pursuant to the settlement of Demand Loans; |
d) | The issuance by the Company of 1,188,314 common shares at the fair value of $93,221 pursuant to the settlement of accounts payable and accrued liabilities; and, |
e) | The Company issued 800,000 common shares at a fair value of $146,952 pursuant to the terms of the Promissory Notes. |
14. | SUBSEQUENT EVENTS: |
The Company has reviewed events occurring up to November 17, 2014 representing the date the financial statements were available to be issued. |
Subsequent to April 30, 2014: |
a) | The Company received an aggregate of $900,000 of Promissory Notes (Note 6). |
b) | On May 23, 2014, the Company granted 300,000 options to a consultant of the Company at an exercise price of CDN$0.25 per share up to May 23, 2019. These options vested on the date of grant. |
c) | On July 31, 2014, the Company issued 412,193 bonus shares and bonus share purchase warrants to the Lender of the Promissory Notes (Note 6) covering advances from January 1, 2014 to June 30, 2014. At April 30, 2014, the Company had recorded $79,223 as a commitment to issue 313,350 bonus shares covering advances from January 1, 2014 to April 30, 2014. The July 31, 2014 share issuance settled the commitment to issue shares. |
d) | On August 12, 2014, the Company settled $211,937 of interest payable on the Promissory Notes by the issuance of 741,233 common shares. The interest settled was for the period from January 1, 2014 to May 31, 2014. |
e) | 100,000 stock options were exercised for gross proceeds of $9,185. |
24
I-Minerals Inc.
Condensed
Consolidated Financial Statements
For
the six months ended October 31, 2014
(Unaudited
- Expressed in US dollars)
I-Minerals Inc.
Condensed Consolidated Balance Sheets |
(Unaudited - Expressed in US dollars) |
Notes |
October 31, 2014
$ |
April 30,
2014 $ |
|||||
ASSETS | |||||||
Current assets | |||||||
Cash | 371,294 | 604,936 | |||||
Receivables and prepaids | 160,132 | 109,007 | |||||
531,426 | 713,943 | ||||||
Equipment | 16,725 | 19,547 | |||||
Mineral property interest | 305,850 | 305,850 | |||||
Deposits | 14,932 | 8,728 | |||||
TOTAL ASSETS | 868,933 | 1,048,068 | |||||
LIABILITIES | |||||||
Current liabilities | |||||||
Accounts payable and accrued liabilities | 3,7 | 822,480 | 607,226 | ||||
822,480 | 607,226 | ||||||
Promissory notes | 4 | 5,186,133 | 4,346,769 | ||||
Derivative liabilities | 2,5 | 1,400,950 | 3,280,245 | ||||
TOTAL LIABILITIES | 7,409,563 | 8,234,240 | |||||
CAPITAL DEFICIT | |||||||
Capital Stock | |||||||
Authorized: | |||||||
Unlimited common shares with no par value | |||||||
Issued and fully paid: 77,273,132 (April 30, 2014 - 76,019,706) | 6 | 16,200,496 | 15,935,039 | ||||
Additional paid-in capital | 1,610,868 | 1,548,395 | |||||
Commitment to issue shares | 4 | 48,000 | 79,223 | ||||
Deficit | (24,399,994 | ) | (24,748,829 | ) | |||
TOTAL STOCKHOLDERS’ EQUITY (CAPITAL DEFICIT) | (6,540,630 | ) | (7,186,172 | ) | |||
TOTAL LIABILITIES AND CAPITAL DEFICIT | 868,933 | 1,048,068 |
On behalf of the Board
“Thomas M. Conway” | Director | “W. Barry Girling” | Director |
The accompanying notes are an integral part of these consolidated financial statements.
I-Minerals Inc.
Condensed Consolidated Statements of Loss |
(Unaudited - Expressed in US dollars) |
The accompanying notes are an integral part of these consolidated financial statements.
I-Minerals Inc.
Condensed Consolidated Statements of Cash Flows For the six months ended October 31, 2014 and 2013 |
(Unaudited - Expressed in US dollars) |
2014
$ |
2013
$ |
|||||
OPERATING ACTIVITIES | ||||||
Income (loss) for the period | 348,835 | (3,556,444 | ) | |||
Items not involving cash: | ||||||
Amortization | 2,822 | 4,189 | ||||
Stock-based compensation | 62,617 | 97,420 | ||||
Unrealized foreign exchange | - | (4,420 | ) | |||
Loss on extinguishment of debt | - | 335,297 | ||||
Accretion expense | 48,742 | 816 | ||||
Change in fair value of derivative liabilities | (1,975,705 | ) | 1,780,734 | |||
Change in non-cash operating working capital items: | ||||||
Receivables and prepaids | (51,125 | ) | (27,375 | ) | ||
Accounts payable and accrued liabilities | 427,191 | 375,301 | ||||
Cash flows used in operating activities | (1,136,623 | ) | (994,482 | ) | ||
INVESTING ACTIVITIES | ||||||
Deposits recovered (paid) | (6,204 | ) | 50,000 | |||
Purchase of equipment | - | (8,276 | ) | |||
Cash flows (used in) provided by investing activities | (6,204 | ) | 41,724 | |||
FINANCING ACTIVITIES | ||||||
Proceeds from exercise of stock options | 9,185 | - | ||||
Promissory notes received | 900,000 | 1,145,000 | ||||
Demand loans repaid | - | (100,000 | ) | |||
Cash flows from financing activities | 909,185 | 1,045,000 | ||||
(DECREASE) INCREASE IN CASH | (233,642 | ) | 92,242 | |||
CASH, BEGINNING OF THE PERIOD | 604,936 | 43,196 | ||||
CASH, END OF THE PERIOD | 371,294 | 135,438 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION | ||||||
Interest paid | - | 6,611 | ||||
Taxes paid | - | - |
The accompanying notes are an integral part of these consolidated financial statements.
I-Minerals Inc.
Condensed Consolidated Statements of Capital Deficit For the six months ended October 31, 2014 |
(Unaudited - Expressed in US dollars) |
Number of Shares
# |
Amount
$ |
Commitment to Issue Shares
$ |
Additional Paid-in Capital
$ |
Accumulated Deficit
$ |
Total Capital
Deficit
$ |
|
Balance at April 30, 2014 | 76,019,706 | 15,935,039 | 79,223 | 1,548,395 | (24,748,829) | (7,186,172) |
Issued during the period: | ||||||
Shares issued pursuant to the exercise of stock options | 100,000 | 9,185 | - | - | - | 9,185 |
Shares issued as a debt discount | 412,193 | 96,000 | (79,223) | - | - | 16,777 |
Shares issuable as a debt discount | - | - | 48,000 | - | - | 48,000 |
Shares issued to settle accounts payable and accrued liabilities | 741,233 | 152,701 | - | 59,236 | - | 211,937 |
Transfer of value on exercise of stock options | - | 7,571 | - | (7,571) | - | - |
Share-based payments | - | - | - | 10,808 | - | 10,808 |
Income for the period | - | - | - | - | 348,835 | 348,835 |
Balance at October 31, 2014 | 77,273,132 | 16,200,496 | 48,000 | 1,610,868 | (24,399,994) | (6,540,630) |
The accompanying notes are an integral part of these consolidated financial statements.
I-Minerals Inc.
Notes to the Condensed Consolidated Financial Statements For the six months ended October 31, 2014 |
(Unaudited - Expressed in US dollars except where otherwise indicated) |
1. | NATURE OF BUSINESS AND BASIS OF PRESENTATION AND LIQUIDITY: |
I-Minerals Inc. (the “Company”) was incorporated under the laws of British Columbia, Canada, in 1984. The Company is listed for trading on the TSX Venture Exchange under the symbol “IMA” and the OTCQX marketplace under the symbol “IMAHF”. |
The Company’s principal business is the development of the Helmer-Bovill industrial mineral property (“the property”) located in Latah County, Idaho. The Helmer-Bovill property is comprised of twelve mineral leases that host potentially economic deposits of feldspar, quartz and kaolinitic clays, primarily kaolinite and halloysite. |
Basis of Presentation and Liquidity |
The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information as well as Article 10 of Regulation S-X on the basis that the Company will continue as a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At October 31, 2014, the Company had not yet achieved profitable operations, had an accumulated deficit of $24,399,994 since inception and expects to incur further losses in the development of its business, all of which casts substantial doubt upon the Company’s ability to continue as a going concern and, therefore, that it may be unable to realize its assets and discharge its liabilities in the normal course of business. |
Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of our management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the six months ended October 31, 2014 are not necessarily indicative of the results that may be expected for the full year ending April 30, 2015. All amounts presented are in US dollars except where otherwise indicated. For further information refer to the financial statements and footnotes thereto for the year ended April 30, 2014 included elsewhere in this filing. |
The Company’s ability to continue as a going concern is dependent upon its ability to complete a feasibility study, to obtain the necessary financing to develop the property and to meet its obligations and repay its liabilities arising from normal business operations when they come due. Although the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company. The Company is currently receiving funds from a company controlled by a director of the Company through promissory notes (Notes 4 and 10). |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: |
Financial Instruments and Fair Value Measures |
The book value of cash, accounts receivable, and accounts payable and accrued liabilities approximate their fair values due to the immediate or short-term maturity of those instruments. The fair value hierarchy under US GAAP is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: |
Level 1 - | quoted prices (unadjusted) in active markets for identical assets or liabilities; |
Level 2 - | observable inputs other than Level I, quoted prices for similar assets or liabilities in active prices whose inputs are observable or whose significant value drivers are observable; and |
Level 3 - | assets and liabilities whose significant value drivers are unobservable by little or no market activity and that are significant to the fair value of the assets or liabilities. |
7
I-Minerals Inc.
Notes to the Condensed Consolidated Financial Statements For the six months ended October 31, 2014 |
(Unaudited - Expressed in US dollars except where otherwise indicated) |
The Company’s promissory notes are based on Level 2 inputs in the ASC 820 fair value hierarchy. The Company calculated the fair value of these instruments by discounting future cash flows using rates representative of current borrowing rates. At October 31, 2014, the promissory notes had a fair value of $4,931,108 (April 30, 2014 - $4,368,045). |
The Company had certain Level 3 liabilities required to be recorded at fair value on a recurring basis in accordance with US GAAP as at October 31, 2014 and April 30, 2014. As at October 31, 2014, the Company’s Level 3 liabilities consisted of the warrants issued in connection with the Company’s offering of equity units in a private placement and warrants issued as financing fees as well as the grant of share purchase options granted to non-employees. |
The resulting Level 3 liabilities have no active market and are required to be measured at their fair value each reporting period based on information that is unobservable. |
A summary of the Company’s Level 3 liabilities for the six months ended October 31, 2014 and October 31, 2013 is as follows: |
October 31,
2014 $ |
October 31,
2013 $ |
||||||
Warrants (Note 5) | |||||||
Beginning fair value | 3,211,386 | 234,596 | |||||
Issuance | 44,601 | 80,780 | |||||
Change in fair value | (1,947,458 | ) | 1,678,631 | ||||
Ending fair value | 1,308,529 | 1,994,007 | |||||
Non-employee options (Note 6(c)) | |||||||
Beginning fair value | 68,859 | 1,607 | |||||
Issuance | 51,809 | 30,272 | |||||
Change in fair value | (28,247 | ) | 102,103 | ||||
Ending fair value | 92,421 | 133,982 | |||||
Total Level 3 liabilities | 1,400,950 | 2,127,989 |
Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). There were no assets or liabilities measured at fair value on a nonrecurring basis during the periods ended October 31, 2014 and April 30, 2014. |
Loss Per Share |
The basic loss per common share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. For the six months ended October 31, 2014, loss per share excludes 28,322,661 (2013 – 24,410,000) potentially dilutive common shares (related to outstanding options and warrants and a commitment to issue shares and warrants) as their effect was anti-dilutive. |
8
I-Minerals Inc.
Notes to the Condensed Consolidated Financial Statements For the six months ended October 31, 2014 |
(Unaudited - Expressed in US dollars except where otherwise indicated) |
3. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES: |
October 31,
2014 $ |
April 30,
2014 $ |
||||||
Trade payables | 382,036 | 272,436 | |||||
Amounts due to related parties (Note 7) | 183,100 | 177,611 | |||||
Interest payable on promissory notes | 257,344 | 157,179 | |||||
Total accounts payable and accrued liabilities | 822,480 | 607,226 |
4. | PROMISSORY NOTES: |
October 31,
2014 $ |
April 30,
2014 $ |
||||||
Promissory notes | 5,186,133 | 4,346,769 | |||||
Total promissory notes | 5,186,133 | 4,346,769 |
On September 13, 2013 and January 27, 2014, the Company entered into additional agreements with a company controlled by a director of the Company (the “Lender”) pursuant to which up to $5,787,280 will be advanced to the Company in tranches, of which $5,454,280 had been advanced as at October 31, 2014 (the “Promissory Notes”). The Promissory Notes mature as to $1,000,000 on December 31, 2015, $2,000,000 on June 30, 2016 and the balance due on December 31, 2016. Certain conditions may result in early repayment. Subsequent to October 31, 2014, the maturity dates of the Promissory Notes were amended so that the maturity dates are the later of the original maturity dates and one year after resolution of the IIM litigation (Note 8). |
The Promissory Notes bear interest at the rate of 12% per annum and during the six months ended October 31, 2014, the Company recorded interest of $312,102 (2013 - $131,375). Interest is payable semi-annually as calculated on May 31st and November 30th. Interest is to be paid either in cash or in common shares at the option of the Lender. During the six months ended October 31, 2014, the Company settled $211,937 of interest payable on the Promissory Notes by the issuance of 741,223 common shares at the fair value of $152,701 based on their quoted market price at the date of issuance. Accordingly, the Company recorded an increase in additional paid-in capital on extinguishment of debt of $59,236. Subsequent to October 31, 2014, the Company settled $311,929 of interest payable on the Promissory Notes by the issuance of 1,622,029 common shares. The interest settled was for the period from June 1, 2014 to November 30, 2014. |
The Company and the Lender have agreed that the Lender is to receive bonus shares equal to 6% of each loan tranche advanced divided by the Company’s common share market price where, for purposes of calculating the number of shares issuable for each loan tranche, the Company’s common share market share price is discounted by 25% as allowed by regulation. The amount of bonus shares issued is subject to a minimum price of CDN$0.105 and a maximum of 1,720,649 bonus shares. In addition, the Company will issue the Lender an equal number of share purchase warrants for each loan tranche advanced. Each bonus share purchase warrant will entitle the Lender to purchase one common share of the Company at a price equal to the greater of (a) the market price of the Company’s common shares on the date of the advance and (b) the volume weighted average price of the Company’s common shares over the twenty trading days immediately prior to the date of the advance. The bonus share purchase warrants expire on the earlier of (a) December 1, 2016 and (b) the date the advance has been repaid in full, including interest. |
During the six months ended October 31, 2014, the Company issued 412,193 bonus shares to the Lender at the fair value of $96,000, based on their quoted market price at the date the shares were committed to being issued, including 313,350 shares having a fair value of $79,223 that the Company had previously committed to issue. The Company was committed to issuing an additional 230,603 bonus shares to the Lender at the fair value of $48,000. The fair value of the bonus shares was determined by reference to the trading price of the Company’s common shares on the date the advances were received. |
9
I-Minerals Inc.
Notes to the Condensed Consolidated Financial Statements For the six months ended October 31, 2014 |
(Unaudited - Expressed in US dollars except where otherwise indicated) |
The Company also committed to issue 230,603 bonus share purchase warrants to the Lender with a weighted average exercise price of CDN$0.23 per share. During the six months ended October 31, 2014, the Company issued 98,843 bonus share purchase warrants to the Lender with a weighted average exercise price of CDN$0.286 as well as 313,350 bonus share purchase warrants the Company had previously committed to issue. At October 31, 2014, the Company was committed to issuing an aggregate of 230,603 bonus share purchase warrants. The fair value of bonus share purchase warrants committed to be issued during the six months ended October 31, 2014 of $44,601 was estimated using the Black-Scholes option pricing model with the following weighted average assumptions: stock price – CDN$0.24; exercise price – CDN$0.25; expected risk-free interest rate – 1.19%; expected life – 2.3 years; expected volatility – 112% and expected dividend rate – 0%. |
The aggregate finance fees are recorded against the Promissory Notes balance and are being amortized to the Statement of Loss over the life of the Promissory Notes using the effective interest method. The unamortized debt discount as at October 31, 2014 is $268,147 (April 30, 2014 – $207,511). |
The Promissory Notes are collateralized by the Company’s Helmer-Bovill Property. |
5. | WARRANT LIABILITIES: |
The Company has share purchase warrants exercisable into common shares at an exercise price denominated in Canadian dollars. As a variable amount of US dollars are exercisable into a fixed number of common shares, the share purchase warrants are classified as derivative liabilities. |
The Company records the fair value of the share purchase warrants in accordance with ASC 815, “Derivatives and Hedging”. The Company uses the Black-Scholes option pricing model to calculate the fair values of the derivative liabilities. The fair value of the derivative liability is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of loss. |
$ | ||||
Balance, April 30, 2014 | 3,211,386 | |||
Bonus warrants issuable pursuant to promissory notes (Note 4) | 44,601 | |||
Change in fair value of warrant derivatives | (1,947,458 | ) | ||
Balance, October 31, 2014 | 1,308,529 |
Warrant Derivative Liabilities |
At October 31, 2014, the Company determined the fair value of Warrant Derivative Liabilities to be $1,308,529 (April 30, 2014 - $3,211,386) as estimated using the Black-Scholes option pricing model with the following weighted average assumptions: |
October 31,
2014 |
April 30,
2014 |
||
Stock price (CDN$) | 0.21 | 0.28 | |
Exercise price (CDN$) | 0.38 | 0.38 | |
Risk-free interest rate (%) | 1.30 | 1.13 | |
Expected life (years) | 1.53 | 3.10 | |
Expected volatility (%) | 99 | 101 | |
Expected dividends ($) | Nil | Nil |
10
I-Minerals Inc.
Notes to the Condensed Consolidated Financial Statements For the six months ended October 31, 2014 |
(Unaudited - Expressed in US dollars except where otherwise indicated) |
6. | SHARE CAPITAL: |
Common shares
a) | Authorized: |
Unlimited number of common shares, without par value. |
The holders of common shares are entitled to receive dividends which are declared from time to time, and are entitled to one vote per share at meetings of the Company. All shares are ranked equally with regards to the Company’s residual assets. |
b) | Stock transactions: |
During the six months ended October 31, 2014, the Company completed the following stock transactions: |
i) | On May 7, 2014, the Company issued 100,000 common shares on the exercise of stock options with an exercise price of CDN$0.10 per common share resulting in gross proceeds of CDN$10,000 ($9,185). |
ii) | On July 31, 2014, the Company issued 412,193 common shares with a fair value of $96,000 including 313,350 shares having a fair value of $79,223 for which the Company had committed to issue at April 30, 2014. The common shares were issued as a debt discount pursuant to the Promissory Notes. |
iii) | On August 12, the Company issued 741,233 common shares with a fair value of $152,701 as settlement of accrued interest payable on Promissory Notes (Note 4). |
c) | Stock options: |
The Company has granted stock options under the terms of its Stock Option Plan (the “Plan”). The Plan provides that the directors of the Company may grant options to purchase common shares to directors, officers, employees and service providers of the Company on terms that the directors of the Company may determine are within the limitations set forth in the Plan. The maximum number of shares available under the Plan is limited to 10% of the issued common shares. The maximum term of stock options is ten years. All stock options vest on the date of grant, unless otherwise stated. As at October 31, 2014, the Company had 3,367,313 stock options available for grant pursuant to the Plan (April 30, 2014 - 3,441,971). |
The Company’s stock options outstanding as at October 31, 2014 and April 30, 2014 and the changes for the periods then ended are as follows: |
Number
Outstanding |
Weighted
Average Exercise Price |
||||
Balance outstanding at April 30, 2014 | 4,160,000 | CDN$ | 0.26 | ||
Granted | 300,000 | CDN$ | 0.25 | ||
Exercised | (100,000) | CDN$ | 0.10 | ||
Balance outstanding at October 31, 2014 | 4,360,000 | CDN$ | 0.26 | ||
Balance exercisable at October 31, 2014 | 3,675,000 | CDN$ | 0.27 |
11
I-Minerals Inc.
Notes to the Condensed Consolidated Financial Statements For the six months ended October 31, 2014 |
(Unaudited - Expressed in US dollars except where otherwise indicated) |
Summary of stock options outstanding at October 31, 2014: |
Security | Number Outstanding | Exercise Price | Expiry Date | Remaining Contractual Life (years) | |
Stock options | 1,150,000 | CDN$ 0.40 | January 7, 2015 | 0.19 | |
Stock options | 100,000 | CDN$ 0.40 | February 15, 2015 | 0.29 | |
Stock options | 500,000 | CDN$ 0.40 | December 1, 2015 | 1.08 | |
Stock options | 1,300,000 | CDN$ 0.10 | July 30, 2018 | 3.75 | |
Stock options | 260,000 | CDN$ 0.15 | July 30, 2018 | 3.75 | |
Stock options | 300,000 | CDN$ 0.25 | July 30, 2018 | 3.75 | |
Stock options | 200,000 | CDN$ 0.25 | November 19, 2018 | 4.05 | |
Stock options | 150,000 | CDN$ 0.25 | January 8, 2019 | 4.19 | |
Stock options | 100,000 | CDN$ 0.25 | April 25, 2019 | 4.48 | |
Stock options | 300,000 | CDN$ 0.25 | May 23, 2019 | 4.56 |
The stock options vest on the date of grant, based on the completion of certain performance milestones or based on the passage of time. |
The weighted average grant date fair value of stock options granted during the six months ended October 31, 2014 of CDN$0.17 was estimated using the Black-Scholes option pricing model with the following assumptions: stock price – CDN$0.25; exercise price – CDN$0.25; expected risk-free interest rate – 2.0%; expected life – 5.0 years; expected volatility – 100% and expected dividend rate – 0%. Expected volatility was determined by reference to the historical volatility of the Company’s common shares trading on the TSX Venture Exchange. |
Non-Employee Stock Options |
In accordance with the guidance of ASC 815-40-15, stock options awarded to non-employees that are fully vested and exercisable in Canadian dollars are required to be accounted for as derivative liabilities because they are considered not to be indexed to the Company’s stock due to their exercise price being denominated in a currency other than the Company’s functional currency. Stock options awarded to non-employees that are not vested are accounted for as equity awards until the terms associated with their vesting requirements have been met. As at October 31, 2014 and April 30, 2014, there are no non-employee stock option awards that have not vested. |
The non-employee stock options are accounted for at their respective fair values and are summarized as follows for the six months ended October 31, 2014 and 2013: |
2014
$ |
2013
$ |
|||||||
Fair value of non-employee options, beginning of the period | 68,859 | 1,607 | ||||||
Fair value of non-employee options, at issuance | 51,809 | 30,272 | ||||||
Change in fair value of non-employee stock options during the period | (28,247 | ) | 102,103 | |||||
Fair value of non-employee options, end of the period | 92,421 | 133,982 |
12
I-Minerals Inc.
Notes to the Condensed Consolidated Financial Statements For the six months ended October 31, 2014 |
(Unaudited - Expressed in US dollars except where otherwise indicated) |
The Company determined the fair value of its non-employee stock options as at October 31, 2014 and 2013 using the Black Scholes option pricing model with the following weighted average assumptions: |
The non-employee options are required to be re-valued with the change in fair value of the liability recorded as a gain or loss on the change of fair value of derivative liability and included in other items in the Company’s Consolidated Statements of Loss at the end of each reporting period. The fair value of the options will continue to be classified as a liability until such time as they are exercised, expire or there is an amendment to the respective agreements that renders these financial instruments to be no longer classified as a liability. |
As at October 31, 2014, the unamortized compensation cost of options is $44,190 and the intrinsic value of options expected to vest is $116,445 (CDN$131,250). |
Share-based payments are classified in the Company’s Statement of Loss as follows for the six months ended October 31, 2014 and 2013: |
2014
$ |
2013
$ |
|||||||
Management and consulting fees | 62,617 | 97,420 | ||||||
62,617 | 97,420 |
d) | Share purchase warrants: |
A summary of fully-exercisable share purchase warrants as at October 31, 2014 and April 30, 2014 and the changes for the periods then ended are as follows: |
Number
Outstanding |
Weighted Average
Exercise Price |
|||||||||
Balance at April 30, 2014 | 23,402,612 | CDN$ | 0.39 | |||||||
Issued | 329,446 | CDN$ | 0.25 | |||||||
Balance at October 31, 2014 | 23,732,058 | CDN$ | 0.38 |
13
I-Minerals Inc.
Notes to the Condensed Consolidated Financial Statements For the six months ended October 31, 2014 |
(Unaudited - Expressed in US dollars except where otherwise indicated) |
Summary of warrants outstanding at October 31, 2014: |
Security | Number Outstanding | Exercise Price | Expiry Date | |
Warrants | 1,550,000 | CDN$ 0.40 | January 31, 2016 | |
Warrants | 200,000 | CDN$ 0.25 | January 31, 2016 | |
Warrants | 20,000,000 | CDN$ 0.40 | April 29, 2016 | |
Warrants | 667,520 | CDN$ 0.14 | December 1, 2016 (1) | |
Warrants | 122,142 | CDN$ 0.14266 | December 1, 2016 (1) | |
Warrants | 104,119 | CDN$ 0.165 | December 1, 2016 (1) | |
Warrants | 76,723 | CDN$ 0.17 | December 1, 2016 (1) | |
Warrants | 87,818 | CDN$ 0.17223 | December 1, 2016 (1) | |
Warrants | 111,762 | CDN$ 0.185 | December 1, 2016 (1) | |
Warrants | 64,246 | CDN$ 0.217 | December 1, 2016 (1) | |
Warrants | 58,181 | CDN$ 0.225 | December 1, 2016 (1) | |
Warrants | 151,738 | CDN$ 0.23 | December 1, 2016 (1) | |
Warrants | 51,202 | CDN$ 0.25 | December 1, 2016 (1) | |
Warrants | 92,357 | CDN$ 0.276 | December 1, 2016 (1) | |
Warrants | 200,091 | CDN$ 0.28 | December 1, 2016 (1) | |
Warrants | 45,439 | CDN$ 0.29 | December 1, 2016 (1) | |
Warrants | 96,261 | CDN$ 0.292 | December 1, 2016 (1) | |
Warrants | 52,459 | CDN$ 0.305 | December 1, 2016 (1) |
Notes: |
(1) The warrants are exercisable until the earlier of December 1, 2016 or the date that the promissory note advance is repaid (Note 4). |
7. | RELATED PARTY TRANSACTIONS: |
Included in accounts payable and accrued liabilities are amounts owed to directors or officers or companies controlled by them. As at October 31, 2014, the amount was $183,100 (April 30, 2014 – $177,611). All amounts are non-interest bearing, unsecured, and due on demand. |
The promissory notes received from a company controlled by a director (Notes 4 and 10) are related party transactions. |
8. | CONTIGENT LIABILITY: |
On March 20, 2014, the Company announced that it had been served with a complaint by Robert Lemke (carrying on business as Hoodoo Resources, LLC) and the Brent Thomson Family Trust, each minority partners as to a 12.5% interest in Idaho Industrial Minerals, LLC (“IIM”). Following preliminary review of the complaint by management and legal counsel, in addition to a separate declaratory action pending amongst the members of IIM, management believes that Thomson and Lemke are attempting to exercise derivative rights without the consent of the majority of the members of IIM and reject consideration paid to IIM with respect to the Company’s Helmer-Bovill Property in January 2013 pursuant to an August 10, 2001 agreement, as amended, between the Company and IIM (the “IIM Agreement”). |
The IIM Agreement required the Company to deliver a total of 1.8 million shares to IIM for the Company to earn outright title to the mineral leases which comprise the Helmer-Bovill Property. The final tranche of 1.3 million shares was delivered to IIM on January 22, 2013. Thomson and Lemke allege they were deceitfully induced into signing the fourth amendment to the IIM Agreement. Thomson and Lemke are seeking specific performance in the return of the Helmer-Bovill Property. Preliminary review by the Company’s legal counsel can find no basis for a derivative rights action. The Company believes the probability of an economic outlay for this contingent liability is remote. |
14
I-Minerals Inc.
Notes to the Condensed Consolidated Financial Statements For the six months ended October 31, 2014 |
(Unaudited - Expressed in US dollars except where otherwise indicated) |
9. | NON-CASH TRANSACTIONS: |
Investing and financing activities that affect recognized assets or liabilities but that do not result in cash receipts or cash payments are excluded from the consolidated statements of cash flows. During the six months ended October 31, 2014, the following transactions were excluded from the condensed consolidated statement of cash flows: |
a) | The issuance by the Company of 741,233 common shares at the fair value of $152,701 as payment of interest on the Promissory Notes; |
b) | The commitment to issue of 329,446 common shares at the fair value of $72,000 and 329,446 warrants at the fair value of $44,601 pursuant to the Promissory Notes (Note 4). |
During the six months ended October 31, 2013, the following transaction was excluded from the condensed consolidated statement of cash flows: |
a) | The issuance by the Company of 2,277,341 common shares at the fair value of $365,353 pursuant to the settlement of loans. |
10. | SUBSEQUENT EVENTS: |
The Company’s financial statements were available to be issued on December ●, 2014, the date through which subsequent events have been evaluated. |
Subsequent to October 31, 2014: |
a) | The Company received an aggregate of $300,000 of Promissory Notes (Note 4). |
b) | On December 17, 2014, the Company settled $311,929 of interest payable on the Promissory Notes by the issuance of 1,622,029 common shares. The interest settled was for the period from June 1, 2014 to November 30, 2014. |
c) | On December 4, 2014, the maturity dates of the Promissory Notes (Note 4) were amended so that the maturity dates are the later of the original maturity dates and one year after resolution of the IIM litigation (Note 8). |
15
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
FINANCIAL STATEMENTS AND EXHIBITS
Note: |
||
(1) | Previously filed as an exhibit to our Registration Statement on Form 10 filed on November 17, 2014. |
Page 59 of 60
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
I-MINERALS INC. | |||
Date: | December 23, 2014 | By: | /s/ Thomas M. Conway |
THOMAS M. CONWAY | |||
Chief Executive Officer and President | |||
(Principal Executive Officer) | |||
Date: | December 23, 2014 | By: | /s/ Matthew Anderson |
MATTHEW ANDERSON | |||
Chief Financial Officer | |||
(Principal Financial Officer and Principal Accounting Officer) |
Page 60 of 60
|
Industry Canada Industrie Canada |
Certificate
Canada Business
|
Certificat
Loi canadienne sur
|
i-minerals inc. | 421629-6 | |
____________________________________________ | ____________________________________________ | |
Name of corporation-Denomination de la société | Corporation number-Numéro de la société | |
I hereby certify that the above-named corporation was continued under section 187 of the Canada Business Corporations Act, as set out in the attached articles of continuance. | Je certifie que la société susmentionnée a été prorogée en vertu de I'article 187 de la Loi canadienne sur les sociétés par actions, tel qu'il est indiqué dans les clauses de prorogation ci-jointes. | |
|
January 22, 2004 I le 22 janvier 2004 | |
Director - Directeur | ||
Date of Continuance - Date de la prorogation | ||
Canada
Canada Business Corporations Act |
Industrie Canada
Loi canadienne sur les Sociétés par actions |
FORM 11
ARTICLES OF CONTINUANCE (SECTION 187) |
FORMULAIRE
11
CLAUSES DE PROROGATION (ARTICLE I 87) |
1 •• Name of the Corporation | Denomination sociale de la société |
2 •• Taxation Year end
Fin do l' année d'Imposition |
i-minerals inc. | M D - J | |
04 30 | ||
3 •• The: province or territory in Canada where the registered office is to be situated | La province oú le terrltolre au Canada ou se situera le siége social |
British Columbia | |
4 •• The classes and the maximum number of shares that the corporation is authorized to Issue | Catégories et le nombre maximal d'actions que Ia société est autorisée á émettre |
100,000,000 common shares without par value | |
5 •• Restrictions, if any, on share transfers | Restrictions sur le transfert des actions, s'il y a lieu |
None | |
6 •• Number {or minimum and maximum number) of directors | Nombre (ou nombre minimel et maximal) d'administrateurs |
Minimum number 3, maximum number 10 | |
7 •• Restrictions, if any, on business the corporation may carry on | Limites imposées a l’activité commercial de Ia société, s'il y a lieu |
None | |
9 •• Other provisions, if any | Autres dispositions, s'il y a lieu |
The directors may appoint one or more additional directors, who shall hold office for a term expiring not later than the close of the next annual general meeting of shareholders provided that the total number of directors so appointed may not exceed one-third of the number of directors elected at the previous annual meeting of shareholders. |
Signature | Printed Name • Nom en lettres moulées | 10 •• Capacity of • En Qualié de | 11 •• Tel. No. • No de tél. |
|
David J. McCue | Authorized Agent | (604) 633-4363 |
FOR DEPARMENT USE ONLY • AL USAGE DU MINISTÈRE SEULEMENT |
421629-6 | JAN 22 2004 |
Canada
|
Industry lndustrie
Canada Canada |
Canada
|
Industry lndustrie
Canada Canada |
Form 4
Articles of Amendment Canada Business Corporations Act (CBCA) (s. 27 or 177) |
Formulaire 4
Clauses modificatrices Loi canadienne sur les sociétés par actions (LCSA) (art. 27 ou 177) |
Corporate name
Denomination sociale i-minerals inc. |
2 |
Corporation number
Numéro de la société 421629-6 |
3 |
The articles are amended as follows
The corporation amends the description of classes of shares as follows:
|
4 |
Declaration: I certify that I am a director or an officer of the corporation.
|
Original signed by / Original signé par
Glenn Yeadon |
|
Glenn Yeadon
604-640-6355 |
Note: Misrepresentation constitutes an offence and, on summary conviction, a person is liable to a fine not exceeding $5000 or to imprisonment for a term not exceeding six months or both (subsection 250(1) of the CBCA).
Nota: Faire une fausse déclaration constitue une infraction et son auteur, sur déclataration de culpabililté par procédure sommaire, est passible d’une amende maximale de 5 000$ ou d’un emprisonnement maximal de six mois, ou de ces deux peines (paragraphe 250(1) de la LCSA). |
Canada | IC 3069 (2008/04) |
Schedule / Annexe
Description of Classes of Shares / Description des categories d'actions
The classes and the maximum number of shares that the Company is authorized to issue is as follows:
Unlimited Number of Common Shares without par value
Schedule
BY-LAW NO.1
A by-law relating generally to the conduct of the affairs of i-minerals inc. (the "Corporation").
BE IT ENACTED AND IT IS HEREBY ENACTED as a by-law of the Corporation that those paragraphs ("by-laws") described in Schedule "A" attached hereto shall be the by-laws of the Corporation that shall regulate the general conduct of the affairs of the Corporation, unless otherwise amended by the directors or shareholders of the Corporation.
This by-law No. 1 shall come into force when confirmed by the shareholders in accordance with the Canada Business Corporation Act (R.S.C. 1985, c. C-44 as amended).
This by-law No. 1 is hereby consented to and passed as evidenced by the signatures of all the directors of the Corporation pursuant to the Canada Business Corporation Act (R.S.C. 1985, c. C-44 as amended).
ENACTED this 22 nd day of January 2004.
/s/ Roger A. Kauffman
/s/
Barry Girling
Roger A. Kauffman Barry
Girling
/s/ Allen L. Ball
Allen L. Ball
The foregoing by-law no. 1 is hereby consented to and confirmed as evidenced of the signature of the Chairman of the meeting of the shareholders of the Corporation held on October 30,
/s/ Roger A. Kauffman
Roger A. Kauffman
BY-LAW NO.1
TABLE OF CONTENTS
- 1 -
SCHEDULE "A" TO BY-LAW NO.1
SECTION ONE – INTERPRETATION
1.01 DEFINITIONS
In this by-law and all other by-laws of the Corporation, unless the context otherwise requires:
"Act" means the Canada Business Corporations Act (R.S.C. 1985, c. C-44) as amended, and any statute that may be substituted therefor, as from time to time amended; |
"appoint" includes "elect" and vice versa; |
"articles" means the articles of incorporation (Form 1) filed with Industry Canada as from time to time amended or restated; |
"board" means the board of directors of the Corporation; |
"by-laws" means this by-law and all other by-laws of the Corporation from time to time in force and effect; |
"Corporation" means Alchemy Ventures Ltd. incorporated under the Company Act British Columbia by Certificate of Incorporation number 278239 and continued under the Canada Business Corporations Act on the 22"d day of January 2004 under the name "i minerals inc." |
"meeting of shareholders" includes an annual meeting of shareholders and a special meeting of shareholders; "special meeting of shareholders" means a special meeting of all shareholders entitled to vote at an annual meeting of shareholders; |
"non-business day" means Saturday, Sunday and any other day that is a holiday as defined in the Interpretation Act (Canada); |
"recorded address" means in the case of a shareholder his address as recorded in the securities register; and in the case of joint shareholders the address appearing in the securities register in respect of such joint holdings or the first address so appearing if there are more than one; and in the case of a director, officer, auditor or member of a committee of the board, his latest address as recorded in the records of the Corporation; |
"signing officer" means, in relation to any instrument, any person authorized to sign the same on behalf of the Corporation by section 2.04 or by a resolution passed pursuant thereto; |
"unanimous shareholders agreement" has the same meaning as described in the Act. |
1.02 | Save as aforesaid, words and expression defined in the Act have the same meanings when used herein; and |
- 2 -
1.03 | Words importing the singular number include the plural and vice versa; words importing gender include the masculine, feminine and neuter genders; and words importing persons include individuals, bodies corporation, partnerships, trusts and unincorporated organizations. |
1.04 | The insertion of headings in this by-law is for convenience of reference only and shall not affect the construction of interpretation thereof. |
SECTION TWO - BUSINESS OF THE CORPORATION
2.01 | Registered Office |
Until changed in accordance with the Act, the registered office of the Corporation shall be at the City of Vancouver, in the Province of British Columbia or at such location therein as the board may from time to time determine. |
2.02 | Corporate Seal |
The corporate seals of the Corporation shall be in such form as the board may from time to time approve. |
2.03 | Execution of Instruments |
Deeds, transfers, assignments, contracts, obligations, certificates and other instruments may be signed on behalf of the Corporation by two persons, one of whom holds the office of chairman of the board, president, managing director, vice-president or director and the other of whom holds one of the said offices or the office of secretary, treasurer, assistant secretary or assistant treasurer or any other office created by by-law or by resolution of the board. In addition, the board may from time to time direct the manner in which and the person or persons by whom any particular instrument or class of instruments may or shall be signed. Any signing officer may affix the corporate seal to any instrument requiring the same. |
2.04 | Certifications |
A certificate issued on behalf of the Corporation stating any fact set out in, or any of the contents of, the articles, the by-laws, a unanimous shareholder agreement, the minutes of a meeting of the board, a committee of the board, or shareholders, or a trust indenture or other contract to which the Corporation is a party, may be signed by any one director or officer or by a transfer agent of the Corporation. |
2.05 | Signing in Counterparts |
Any resolution in writing signed by all the directors or by all the shareholders of the Corporation may be signed by the said directors or shareholders or on behalf of the Corporation in as many counterparts as may be convenient or desirable. Each such counterpart when signed shall be deemed to be an original document and such signed counterparts together shall be deemed to constitute one instrument, which instrument shall be deemed to bear the date of the counterpart last executed. |
- 3 -
2.06 | Banking Arrangements |
The banking business of the Corporation including, without limitation, the borrowing of money and the giving of security therefor, shall be transacted with such banks, trust companies or other bodies corporate or organizations as may from time to time be designated by or under the authority of the board. Such banking business or any part thereof shall be transacted under such agreements, instructions and delegations of powers as the board may from time to time prescribe or authorize. |
2.07 | Voting Shares and Securities in Other Companies |
All of the shares or other securities carrying voting rights of any other body corporate held from time to time by the Corporation may be voted at any and all meetings of shareholders, bondholders, debenture holders or holders of other securities (as the case may be) of such other body corporate and in such manner and by such person or persons as the board of directors of the Corporation shall from time to time determine. The proper signing officers of the Corporation may also from time to time execute and deliver for and on behalf of the Corporation proxies and/or arrange for the issuance of voting certificates and/or other evidence of the right to vote in such names as they may determine without the necessity of a resolution or other action by the board of directors. |
SECTION THREE - BORROWING AND SECURITIES
3.01 | Borrowing Powers |
Without limiting the borrowing powers of the Corporation as set forth in the Act, the board may from time to time: |
(a) | borrow money upon the credit of the Corporation; |
(b) | issue, reissue, sell or pledge bonds, debentures, notes or other evidence of indebtedness or guarantee of the Corporation, whether secured or unsecured; and |
(c) | mortgage, hypothecate, pledge or otherwise create an interest in or charge upon all or any property (including the undertaking and rights) of the Corporation, owned or subsequently acquired, by way of mortgage, hypothecation, pledge or otherwise, to secure payment of any such evidence of indebtedness or guarantee of the Corporation. |
Nothing in this section limits or restricts the borrowing of money by the Corporation on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the Corporation. |
3.02 | Delegation |
The board may from time to time delegate to such one or more of the directors and officers of the Corporation as may be designated by the board all or any of the powers conferred on the board by section 3.01 or by the Act to such extent and in such manner as the board shall determine at the time of each such delegation. |
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SECTION FOUR - DIRECTORS
4.01 | Powers |
Subject to the Act, Articles, any unanimous shareholders agreement, any special resolution of the Corporation or the by-laws, the business and affairs of the Corporation shall be managed by a board of directors of the Corporation consisting of not less than one and no more than 15, a majority of which shall be resident Canadians. |
4.02 | Qualification |
No person shall be qualified for election as a director if he is less than 18 years of age; if he is of unsound mind and has been so found by a court in Canada or elsewhere; if he is not an individual; or if he has the status of a bankrupt. A director need not be a shareholder. A minimum of twenty-five percent of the directors shall be resident Canadians. If any of the issued securities of the Corporation are or were a part of a distribution to the public, at least two shall not be officers or employees of the Corporation or any affiliate of the Corporation. |
4.03 | Election and Term |
The election of directors shall take place at the first meeting of shareholders and at each annual meeting of shareholders and all the directors then in office shall retire but, if qualified, shall he eligible for re-election. The number of directors to be elected at any such meeting shall be the number of directors then in office unless the directors or the shareholders otherwise determine. The election shall be by ordinary resolution. If an election of directors is not held at the proper time the incumbent directors shall continue in office until their successors are elected. |
4.04 | Removal of Directors |
Subject to the provisions of the Act, the shareholders may by ordinary resolution passed at a special meeting remove any director from office and the vacancy created by such removal may be filled at the same meeting failing which it may be filled by the directors. |
4.05 | Vacancies |
Subject to the Act, a quorum of the board may fill a vacancy in the board, except a vacancy resulting from an increase in the minimum number of directors or from a failure of the shareholders to elect the minimum number of directors. In the absence of a quorum of the board, or if the vacancy has arisen from a failure of the shareholders to elect the minimum number of directors the board shall forthwith call a special meeting of shareholders to fill the vacancy. If the board fails to call such meeting or if there are no such directors then in office, any shareholder may call the meeting. |
4.06 | Alternate Directors |
Any director, other than an alternate director, may, by an instrument in writing signed by him and delivered to the registered office of the Corporation or to any officer of the Corporation who is a director, or by communication addressed to the Corporation at its registered office and sent by means of any electronic communication device producing legibly recorded messages, appoint from time to time another director, or any person who would qualify for election as a director, as his alternate director and may, in the |
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same manner, at any time remove from office any alternate director so appointed by him, except that a director who is resident Canadian may only appoint a resident Canadian as his alternate director. The appointment of any alternate director shall terminate if the director appointing him ceases for any reason to be a director. |
4.07 | DELEGATION TO COMMITTEE |
The directors may from time to time appoint from their number a committee of directors and may delegate to such committee any of the powers of the directors, except that no such committee shall have the authority to: |
(a) | submit to the shareholders any question or matter requiring the approval of the shareholders; |
(b) | fill a vacancy among the directors or in the office of auditor; |
(c) | subject to subsection 189(2) of the Act, issue securities except in the manner and on the terms authorized by the directors; |
(d) | declare dividends; |
(e) | purchase, redeem or otherwise acquire shares issued by the Corporation; (f) pay any commission referred to in section 41 of the Act; |
(g) | approve a management proxy circular; |
(h) | approve a take-over bid circular or directors' circular; |
(i) | approve any annual financial statements to be placed before the shareholders of the Corporation; or |
(j) | adopt, amend or repeal by-laws of the Corporation. |
4.8 | Audit Committee |
If any of the issued securities of the Corporation are part of a distribution to the public, the board of directors shall elect annually from among their number an audit committee to be composed of not fewer than three directors, a majority of whom are not officers or employees of the Corporation or any of its affiliates. |
Each member of the audit committee shall serve during the pleasure of the board of directors and, in any event, only so long as he shall be a director. The directors may fill vacancies in the audit committee by election from among their number. |
The audit committee shall have the power to fix its quorum at not less than a majority of its members and to determine its own rules of procedures subject to any regulations imposed by the board of directors from time to time and to the following paragraph. |
The auditor of the Corporation is entitled to receive notice of every meeting of the audit committee and, at the expense of the Corporation, to attend and be heard thereat; and, if so requested by a member of the audit committee, shall attend every meeting of the committee held during the term of office of the auditor. The auditor of the Corporation or any member of the audit committee may call a meeting of the committee. |
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The audit committee shall review the financial statements of the Corporation prior to approval thereof by the board of directors and shall have such other powers and duties as may from time to time by resolution be assigned to it by the board. |
4.9 | Place of Meeting |
Meetings of the board of directors and of the committee of directors (if any) may be held within or outside Canada. |
4.10 | Notice of Meeting |
A meeting of directors may be convened by the Chairman of the Board, the Vice Chairman of the Board, the Managing Director, the President if he is a director, a Vice President who is a director or any two directors at any time and the Secretary, when directed or authorized by any of such officers or any two directors, shall convene a meeting of directors. Subject to subsection 114(5) of the Act the notice of any such meeting need not specify the purpose of or the business to be transacted at the meeting. Notice of any such meeting shall be served in the manner specified in paragraph 51 of this by-law not less than two days (exclusive of the day on which the notice is delivered or sent but inclusive of the day for which notice is given) before the meeting is to take place; provided always that a director may in any manner waive notice of a meeting of directors and attendance of a director at a meeting of directors shall constitute a waiver of notice of the meeting except where a directors attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. |
A notice of a meeting of directors need not specify the purpose of or the business to be transacted at the meeting except where the Act requires such purpose or business to be specified, and there shal l be included within such exception any proposal to: |
(a) | submit to the shareholders any question or matter requiring approval of the shareholders; |
(b) | fill a vacancy among the directors or in the office of auditor; (c) issue securities; |
(d) | declare dividends; |
(e) | purchase, redeem or otherwise acquire shares of the Corporation; (f) pay a commission for the sale of shares; |
(g) | approve a management proxy circular; |
(h) | approve a takeover bid circular or directors' circular; (i) approve any annual financial statements; or |
(j) | adopt, amend or repeal by-laws. |
A director may in any manner waive notice of or otherwise consent to a meeting of the board. |
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4.11 | Quorum |
A majority of the directors shall form a quorum for the transaction of business and, notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of directors. No business shall be transacted at a meeting of directors unless a quorum of the board is present and at least twenty-five percent of directors present are resident Canadians. If the Corporation has only one director, that director may constitute a meeting. |
A director may, if all the directors of the Corporation consent, participate in a meeting of directors or of the committee of directors (if any) by means of such telephone or other communications facilities as permit all persons participating in the meeting to hear each other and a director participating in such a meeting by such means is deemed to be present at that meeting. |
4.12 | Canadian Directors Present at Meeting |
The board shall not transact business at a meeting, other than filling vacancy in the board, unless at least twenty-five percent of the directors present are resident Canadians, except where: |
(a) | a resident Canadian director who is unable to be present approves in writing or by telephone or other communications facilities the business transacted at the meeting; and |
(b) | a majority of resident Canadians would have been present had the director been present at the meeting. |
4.13 | Voting |
Questions arising at any meeting of the board of directors shall be decided by a majority of votes. In case of an equality of votes, the chairman of the meeting, in addition to his original vote, shall have a second or casting vote. |
4.14 | Resolution in Lieu of Meeting |
Notwithstanding any of the foregoing provisions of this by-law, a resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of the directors or the committee of directors (if any) is as valid as if it had been passed at a meeting of the directors or the committee of directors (if any). |
4.15 | Action by the Board |
The board shall manage the business and affairs of the Corporation. Subject to sections |
4.18 and 4.19, the powers of the board may be exercised by resolution passed at a meeting at which a quorum is present or by resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of the board. Where there is a vacancy on the board, the remaining directors may exercise all the powers of the board so long as a quorum remains in office. |
4.16 | Meetings by Telephone or Other Electronic Means |
If all the directors consent, a director may participate in a meeting of the board or of a committee of the board by means of such telephone or other electronic communications |
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facilities as permit all persons participating in the meeting to communicate adequately with each other, and a director participating in such a meeting by such means is deemed to be present at the meeting. Any such consent shall be effective whether given before or after the meeting to which it relates and may be given with respect to all meetings of the board and of committees of the board held while a director holds office. |
4.17 | First Meeting of New Board |
For the first meeting of the board of directors to be held immediately following the election of directors by the shareholders or for a meeting of the board of directors at which a director is appointed to fill a vacancy in the board, no notice of such meeting shall be necessary to the newly elected or appointed director or directors in order to legally constitute the meeting, provided that a quorum of the directors is present. |
4.18 | Adjourned Meeting |
Notice of an adjourned meeting of the board is not required if the time and place of the adjourned meeting is announced at the original meeting. |
4.19 | Regular Meetings |
The board may appoint a day or days in any month or months for regular meetings of the board at a place and hour to be named. A copy of any resolution of the board fixing the place and time of such regular meeting shall be sent to each director forthwith after being passed, but no other notice shall be required for any such regular meeting except where the Act requires the purpose thereof or the business to be transacted thereat to be specified. |
4.20 | Chairman |
The chairman of any meeting of the board shall be the first mentioned of such of the following officers as have been appointed and who is a director and is present at the meeting: chairman of the board, managing director, president, or a vice-president who is a director. If no such officer is present, the directors present shall choose one of their number to be chairman. |
4.21 | Votes to Govern |
At all meetings of the board every question shall be decided by a majority of the votes cast on the question. In case of an equality of votes the chairman of the meeting shall not be entitled to a second or casting vote. |
4.22 | Conflict of Interest |
A director or officer who is a party to, or who is a director or officer of or has a material interest in any person who is a party to, a material contract or proposed material contract with the Corporation shall disclose the nature and extent of his interest at the time and in the manner provided by the Act and shall otherwise act or refrain from acting as regards such material contract or proposed material contract as the Act may provide. |
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4.23 | Irregularities |
No act or proceeding of directors shall be invalid or ineffective by reason of the subsequent ascertainment of any irregularity in regard to such act or proceeding or the qualification of such director or directors. |
4.24 | Submission of contracts or Transactions to Shareholders for Approval |
The board of directors in its discretion may submit any contract, act or transaction for approval or ratification at any annual meeting of the shareholders or at any special meeting of the shareholders called for the purpose of considering the same and, subject to the provisions of section 115 of the Act, any such contract, act or transaction that shall be approved or ratified or confirmed by a resolution passed by a majority of the votes cast at any such meeting (unless any different or additional requirement is imposed by the Act or by the Corporation's articles or any other by-law) shall be as valid and as binding upon the Corporation and upon all the shareholders as though it had been approved, ratified or confirmed by every shareholder of the Corporation. |
4.25 | Remuneration of Directors |
The remuneration to be paid to the directors shall be such as the board of directors shall from time to time determine and such remuneration shall be in addition to the salary paid to any officer or employee of the Corporation who is also a member of the board of directors. The directors may also reward special remuneration to any director undertaking any special services on the Corporation's behalf other than the routine work ordinarily required of a director by the Corporation and the confirmation of any such resolution or resolutions by the shareholders shall not be required. The directors shall also be entitled to be paid their travelling and other expenses properly incurred by them in connection with the affairs of the Corporation. |
SECTION FIVE - OFFICERS
5.01 | Appointment |
The board of directors shall annually or oftener as may be required appoint a President and a Secretary and, if deemed advisable, may annually or oftener as may be required appoint a Chairman of the Board, a Vice-Chairman of the Board, a Managing Director, one or more Vice-Presidents, a Treasurer, one or more Assistant Secretaries and/or one or more Assistant Treasurers. A director may be appointed to any office of the Corporation but none of the officers except the Chairman of the Board, the Vice Chairman of the Board and the Managing Director need be a member of the board of directors. Two or more of the aforesaid offices may be held by the same person. In case and whenever the same person holds the offices of Secretary and Treasurer he may but need not be known as the Secretary-Treasurer. The board may from time to time appoint such other officers and agents as it shall deem necessary who shall have such authority and shall perform such duties as may from time to time be prescribed by the board of directors. |
5.02 | Remuneration and Removal |
The remuneration of all officers appointed by the board of directors shall be determined from time to time by resolution of the board of directors. The fact that any officer or employee is a director or shareholder of the Corporation shall not disqualify him from |
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receiving such remuneration as may be determined. All officers, in the absence of agreement to the contrary, shall be subject to removal by resolution of the board of directors at any time, with or without cause. |
5.03 | Powers and Duties |
All officers shall sign such contracts, documents or instruments in writing as require their respective signatures and shall respectively have and perform all powers and duties incident to their respective offices and such other powers and duties respectively as may from time to time be assigned to them by the board. |
5.04 | Duties May Be Delegated |
In case of the absence or inability to act of any officer of the Corporation except the Managing Director or for any other reason that the board of directors may deem sufficient the board of directors may delegate all or any of the powers of such officer to any other officer or to any director for the time being. |
5.05 | Chairman of the Board |
The Chairman of the "Board (if any) shall, when present, preside at all meetings of the board of directors, the committee of directors (if any) and the shareholders. |
5.06 | Vice-Chairman of the Board |
If the Chairman of the Board is absent or is unable or refused to act, the Vice-Chairman of the Board (if any) shall, when present, preside at all meetings of the board of directors, the committee of directors (if any) and the shareholders. |
5.07 | Managing Director |
The Managing Director (if any) shall be a resident Canadian and shall exercise such powers and have such authority as may be delegated to him by the board of directors in accordance with the provisions of section 115 of the Act. |
5.08 | President |
The President shall be the chief executive officer of the Corporation. He shall be vested with and may exercise all the powers and shall perform all the duties of the Chairman of the Board and/or Vice-Chairman of the Board if none be appointed or if the Chairman of the Board and the Vice-Chairman of the Board are absent or are unable or refuse to act; provided, however, that unless he is a director he shall not preside as chairman at any meeting of directors or of the committee of directors (if any) or, subject to paragraph 7.10 of this by-law, at any meeting of shareholders. |
5.09 | Vice-President |
The Vice-President (if any) or, if more than one, the Vice-Presidents, in order of seniority, shall be vested with all the powers and shall perform all the duties of the President in the absence or inability or refusal to act of the President; provided, however, that a Vice-President who is not a director shall not preside as chairman at any meeting of directors or of the committee of directors (if any) or, subject to paragraph 7.10 of this by-law, at any meeting of shareholders. |
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5.10 | Secretary |
The Secretary shall give or cause to be given notices for all meetings of the board of directors, the committee of directors (if any) and the shareholders when directed to do so and shall have charge of the minute books of the Corporation and, subject to the provisions of paragraph 10.11 of this by-law, of the records (other than accounting records) referred to in section 20 of the Act. |
5.11 | Treasurer |
Subject to the provisions of any resolution of the board of directors, the Treasurer shall have the care and custody of all the funds and securities of the Corporation and shall deposit the same in the name of the Corporation in such bank or banks or with such other depository or depositories as the board of directors may direct. He shall keep or cause to be kept the accounting records referred to in section 20 of the Act. He may be required to give such bond for the faithful performance of his duties as the board of directors in its uncontrolled discretion may require but no director shall be liable for failure to require any such bond or for the insufficiency of any such bond or for any loss by reason of the failure of the Corporation to receive any indemnity thereby provided. |
5.12 | Assistant Secretary and Assistant Treasurer |
Assistant Secretary, or if more than one, the Assistant Secretaries in order of seniority, and the Assistant Treasurer or, if more than one, the Assistant Treasurers in order of seniority, shall respectively perform all the duties of the Secretary and Treasurer, respectively, in the absence or inability or refusal to act of the Secretary or the Treasurer, as the case may be. |
5.13 | General Manager or Manager |
The board of directors may from time to time appoint one or more General Managers or Managers and may delegate to him or them full power to manage and direct the business and affairs of the Corporation (except such matters and duties as by law must be transacted or performed by the board of directors and/or by the shareholders) and to employ and discharge agents and employees of the Corporation or may delegate to him or them any lesser authority. A General Manager or Manager shall conform to all lawful orders given to him by the board of directors of the Corporation and shall at all reasonable times give to the directors or any of them all information they may require regarding the affairs of the Corporation. Any agent or employee appointed by a General Manager or Manager shall be subject to discharge by the board of directors. |
5.14 | Vacancies |
If the office of any officer of the Corporation shall be or become vacant by reason of death, resignation, disqualification or otherwise, the directors by resolution shall, in the case of the President or the Secretary, and may, in the case of any other office, appoint a person to fill such vacancy. |
5.15 | Powers and Duties of Other Officers |
The powers and duties of all other officers shall be such as the terms of their engagement call for or as the board or the chief executive officer may specify. Any of the powers and duties of an officer to whom an assistant has been appointed may be |
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exercised and performed by such assistant, unless the board or the chief executive officer otherwise directs. |
5.16 | Variation of Powers and Duties |
The board may from time to time and subject to the provisions of the Act, vary, add to or limit the powers and duties of any officer. |
5.17 | Term of Office |
The board, in its discretion, may remove any officer of the Corporation without prejudice to such officer's rights under any employment contract. Otherwise each officer appointed by the board shall hold office until his successor is appointed. |
5.18 | Terms of Employment and Remuneration |
The terms of employment and the remuneration of officers appointed by the board shall be settled by it from time to time. |
5.19 | Conflict of Interest |
An officer shall disclose his interest in any material contract or proposed material contract with the Corporation in accordance with section 4.23. |
5.20 | Agents and Attorneys |
The board shall have power from time to time to appoint agents or attorneys for the Corporation in or outside Canada with such powers of management or otherwise (including the power to sub-delegate) as may be thought fit. |
5.21 | Fidelity Bonds |
The board may require such officers, employees and agents of the Corporation as the board deems advisable to furnish bonds for the faithful discharge of their powers and duties, in such form and with such surety as the board may from time to time determine. |
SECTION SIX - PROTECTION OF DIRECTORS,
OFFICERS AND OTHERS
6.01 | Limitation of Liability |
Except as otherwise provided in the Act, no director or officer for the time being of the Corporation shall be liable for the acts, receipts, neglects or defaults of any other director or officer or employee or for joining in any receipt or act for conformity or for any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired by the Corporation or for or on behalf of the Corporation or for the insufficiency or deficiency of any security in or upon which any of the monies of or belonging to the Corporation shall be placed out or invested or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person, firm or corporation including any person, firm or corporation with whom or which any monies, securities or effects shall be lodged or deposited or for any loss, conversion, misapplication or misappropriation of or any damage resulting from any dealings with any monies, securities or other assets belonging to the Corporation or for any other loss, |
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damage or misfortune whatever which may happen in the execution of the duties of his respective office or trust or in relation thereto unless the same shall happen by or through his failure to exercise the powers and to discharge the duties of his office honestly and in good faith with a view to the best interests of the Corporation and in connection therewith to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. The directors for the time being of the Corporation shall not be under any duty or responsibility in respect of any contract, act or transaction whether or not made, done or entered into in the name or on behalf of the Corporation, except such as shall have been submitted to and authorized or approved by the board of directors. If any director or officer of the Corporation shall be employed by or shall perform services for the Corporation otherwise than as a director or officer or shall be a member of a firm or a shareholder, director or officer of a company which is employed by or performs services for the Corporation, the fact of his being a director or officer of the Corporation shall not disentitle such director or officer or such firm or company, as the case may be, from receiving proper remuneration for such services. |
6.02 | Directors Disclosure of Interest |
In supplement of and not by way of limitation upon any rights conferred upon directors by section 120 of the Act, it is declared that no director shall be disqualified by his office from, or vacate his office by reason of, holding any office or place of profit under the Corporation or under any body corporate in which the Corporation shall be a shareholder or by reason of being otherwise in any way directly or indirectly interested or contracting with the Corporation either as vendor, purchaser or otherwise or being concerned in any contract or arrangement made or proposed to be entered into with the Corporation in which he is in any way directly or indirectly interested either as vendor, purchaser or otherwise nor shall any director be liable to account to the Corporation or any of its shareholders or creditors for any profit arising from any such office or place of profit; and, subject to the provisions of section 120 of the Act, no contract or arrangement entered into by or on behalf of the Corporation in which any director shall be in any way directly or indirectly interested shall be avoided or voidable and no director shall be liable to account to the Corporation or any of its shareholders or creditors for any profit realized by or from any such contract or arrangement by reason of any fiduciary relationship. Subject to the provisions of section 120 of the Act, no director or officer shall be obliged to make any declaration of interest in respect of a contract or proposed contract with the Corporation in which such director or officer is in any way directly or indirectly interested nor shall any director be obliged to refrain from voting in respect of any such contract. |
6.03 | Indemnity of Directors and Officers |
Subject to the limitations contained in the Act, the Corporation shall indemnify a director or officer, a former director or officer, or a person who acts or acted at the Corporation's request as a director or officer of a body corporate of which the Corporation is or was a shareholder or creditor, and his heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been a director or officer of the Corporation or such body corporate, if |
(a) | he acted honestly and in good faith with a view to the best interests of the Corporation; and |
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(b) | in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful. |
The Corporation shall also indemnify such person in such other circumstances as the Act permits or requires. |
6.04 | Insurance |
Subject to the limitations contained in the Act, the Corporation may purchase and maintain such insurance for the benefit of its directors and officers as such, as the board may from time to time determine. |
SECTION SEVEN - MEETINGS OF SHAREHOLDERS
7.01 | Annual Meetings |
The annual meeting of shareholders shall be held at such time in each year not more than 15 months after the holding of the last preceding annual meeting, and, subject to section 7.03, at such place as the board, the chairman of the board, the managing director or the president may from time to time determine, for the purpose of considering the financial statements and reports required by the Act to be placed before the annual meeting, electing directors, appointing auditors, and for the transaction of such other business as may properly be brought before the meeting. |
7.02 | Special Meetings |
The board, the chairman of the board, the managing director or the president shall have the power to call a special meeting of shareholders at any time. Any special meeting of shareholders may be held in conjunction with an annual meeting of shareholders. |
7.03 | Place of Meetings |
Meetings of shareholders shall be held at the registered office of the Corporation or elsewhere in the municipality in which the registered office is situate or, if the board shall so determine, at some other place in Canada, or, if all the shareholders entitled to vote at the meeting so agree, at some place outside Canada. |
7.04 | Notice of Meetings |
Notice of the time and place of each meeting of shareholders shall be given in the manner provided in section 10.01 not less than 21 nor more than 60 days before the date of the meeting to each director, to the auditor and to each shareholder who at the close of business on the record date, if any, for notice is entered in the securities register as the holder of one or more shares carrying the right to vote at the meeting. Notice of a meeting of shareholders called for any purpose other than consideration of the financial statements and auditor's report, election of directors and reappointment of the incumbent auditor shall state the nature of such business in sufficient detail to permit the shareholder to form a reasoned judgment thereon and shall state the text of any special resolution to be submitted to the meeting. A shareholder may in any manner waive notice of or otherwise consent to a meeting of shareholders. |
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7.05 | List of Shareholders Entitled to Notice |
For every meeting of shareholders, the Corporation shall prepare a list of shareholders entitled to receive notice of the meeting, arranged in alphabetical order and showing the number of shares entitled to vote at the meeting held by each shareholder. If a record date for the meeting is fixed pursuant to section 7.06, the shareholders listed shall be those registered at the close of business on a day not later than 10 days after such record date. If no record date is fixed, the shareholders listed shall be those registered at the close of business an the day immediately preceding the day on which notice of the meeting is given, or where no such notice is given, the day an which the meeting is held. The list shall be available far examination by any shareholder during usual business hours at the registered office of the Corporation or at the place where the securities register is kept and at the place where the meeting is held. |
7.06 | Record Date For Notice |
The board may fix in advance a record date, preceding the date of any meeting of shareholders by not more than 60 days and not less than 21 days, for the determination of the shareholders entitled to notice of the meeting, provided that notice of any such record date is given, not less than 14 days before such record date, by newspaper advertisement in the manner provided in the Act and by written notice to each stock exchange in Canada on which the shares of the Corporation are listed for trading. If no record date is so fixed, the record date for the determination of the shareholders entitled to notice of the meeting shall be the close of business on the day immediately preceding the day on which the notice is given. |
7.07 | Meetings Without Notice |
A meeting of shareholders may be held without notice at any time and place permitted by the Act if: |
(a) | all the shareholders entitled to vote thereat are present in person or represented by proxy or if, before or after such meeting, those not present or represented by proxy waive notice of or otherwise consent to such meeting being held, and |
(b) | the auditors and the directors are present or, before or after such meeting, waive notice of or otherwise consent to such meeting being held. At such a meeting any business may be transacted which the Corporation at a meeting of shareholders may transact. If the meeting is held at a place outside Canada, shareholders not present or represented by proxy, but who have waived notice of or otherwise consented to such meeting, shall also be deemed to have consented to the meeting being held at such place. |
7.08 | Waiver of Notice |
A shareholder and any other person entitled to attend a meeting of shareholders may in any manner, and either before or after the meeting waive notice of a meeting of shareholders, and attendance of any such person at a meeting of shareholders is a waiver of notice of the meeting, except where he attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. |
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7.09 | Omission of Notice |
The accidental omission to give notice of any meeting or any irregularity in the notice of any meeting or the non-receipt of any notice by any shareholder or shareholders, director or directors or the auditor of the Corporation shall not invalidate any resolution passed or any proceedings taken at any meeting of shareholders. |
7. 10 | Chairman, Secretary and Scrutineers |
The chairman of any meeting of shareholders shall be the first mentioned of such of the following officers as have been appointed and who is present at the meeting: chairman of the board, president, managing director, or a vice-president who is a shareholder. If no such officer is present within 15 minutes from the time fixed for holding the meeting the persons present and entitled to vote shall choose one of their number to be chairman. If the secretary of the Corporation is absent the chairman shall appoint some person, who need not be a shareholder, to act as secretary of the meeting. If desired, one or more scrutineers, who need not be shareholders, may be appointed by a resolution or by the chairman with the consent of the meeting. |
7.11 | Persons Entitled to be Present |
The only persons entitled to be present at a meeting of shareholders shall be those entitled to vote thereat, the directors and auditors of the Corporation and others who, although not entitled to vote, are entitled or required under any provision of the Act or the articles or by-laws to be present at the meeting. Any other person may be admitted only on the invitation of the chairman of the meeting or with the consent of the meeting. |
7.12 | Quorum |
A quorum for the transaction of business at any meeting of shareholders shall be one person present in person, being a shareholder entitled to vote thereat or a duly appointed proxyholder for an absent shareholder so entitled. If a quorum is present at the opening of a meeting of shareholders, the shareholders present or represented by proxy may proceed with the business of the meeting notwithstanding that a quorum is not present throughout the meeting. If a quorum is not present at the opening of any meeting of shareholders, the shareholders present or represented by proxy may adjourn the meeting to a fixed time and place but not transact any other business. |
7.13 | One Shareholder Meeting |
If the Corporation has only one shareholder, or only one holder of any class or series of shares, the shareholder person in person or by proxy constitutes a meeting. |
7.14 | Right to Vote |
Subject to the provisions of the Act as to authorized representatives of any other body corporate, at any meeting of shareholders every person who is named in the list referred to in section 7.05 shall be entitled to vote the shares shown therein opposite his name except as provided in the Act in cases where the Corporation has fixed a record date in respect of such meeting pursuant to section 7.06. |
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7.15 | Proxies |
Votes at meetings of shareholders may be given either personally or by proxy or, in the case of a shareholder who is a body corporate or association, by an individual authorized by a resolution of the board of directors or governing body of the body corporate or association to represent it at meetings of shareholders of the Corporation. At every meeting at which he is entitled to vote, every shareholder and/or person appointed by proxy and/or individual so authorized to represent a shareholder who is present in person shall have one vote on a show of hands. Upon a ballot at which he is entitled to vote, every shareholder present in person or represented by proxy or by an individual so authorized shall (subject to the provisions, if any, of the articles of the Corporation) have one vote for every share held by him. |
A proxy shall be executed by the shareholder or his attorney authorized in writing and is valid only at the meeting in respect of which it is given or any adjournment thereof. |
A person appointed by proxy need not be a shareholder. |
Subject to the provisions of Part IV of the Regulations, a proxy may be in the following form: |
The undersigned shareholder of ______________ hereby appoints_____________, of _______________________, or failing him, _______________, of __________________, as the nominee of the undersigned to attend and act for the undersigned and on behalf of the undersigned at the __________________________ meeting of the shareholders of the said Corporation to be held on the ___________ day of _____________________________, 19_____ and at any adjournment or adjournments thereof in the same manner, to the same extent and with the same powers as if the undersigned were present at the said meeting or such adjournment or adjournments thereof |
DATED this ____ day of _______________, 20___. |
Signature of Shareholder |
The directors may from time to time make regulations regarding the lodging of proxies at some place or places other than the place at which a meeting or adjourned meting of shareholders is to be held and for particulars of such proxies to be cabled or telegraphed or sent by telex or facsimile or in writing before the meeting or adjourned meeting to the Corporation or any agent of the Corporation for the purpose of receiving such particulars and providing that proxies so lodged may be voted upon as though the proxies themselves were produced at the meeting or adjourned meeting and votes given in accordance with such regulations shall be valid and shall be counted. The chairman of any meeting of shareholders may, subject to any regulations made as aforesaid, in his discretion accept telegraphic or cable or telex or telefax or written communication as to the authority of any person claiming to vote on behalf of and to represent a shareholder notwithstanding that no proxy conferring such authority has been lodged with the Corporation, and any votes given in accordance with such telegraphic or cable or telex or facsimile or written communication accepted by the chairman of the meeting shall be valid and shall be counted.OC |
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7. 16 | Time for Deposit of Proxies |
The board may specify in a notice calling a meeting of shareholders a time, preceding the time of such meeting by not more than 48 hours exclusive of non-business days, before which time proxies to be used at such meeting must be deposited. A proxy shall be acted upon only if, prior to the time so specified, it shall have been deposited with the Corporation or an agent thereof specified in such notice or, if no such time is specified in such notice, unless it has been received by the secretary of the Corporation or by the chairman of the meeting or any adjournment thereof prior to the time of voting. |
7.17 | Joint Shareholders |
If two or more persons hold shares jointly, any one of them present in person or represented by proxy at a meeting of shareholders may, in the absence of the other or others, vote the shares; but if two or more of those persons are present in person or represented by proxy and vote, they shall vote as one on the shares jointly held by them. |
7.18 | Votes to Govern |
At any meeting of shareholders every question shall, unless otherwise required by the articles or by-law or by law, be determined by the majority of the votes cast on the question. In case of an equality of votes either upon a show of hands or upon a poll, the chairman of the meeting shall be entitled to a second or casting vote. |
7.19 | Show of Hands |
Subject to the provisions of the Act, any question at a meeting of shareholders shall be decided by a show of hands unless a ballot thereon is required or demanded as hereinafter provided. Upon a show of hands every person who is present and entitled to vote shall have one vote. Whenever a vote by show of hands shall have been taken upon a question, unless a ballot thereon is so required or demanded, a declaration by the chairman of the meeting that the vote upon the question has been carried or carried by a particular majority or not carried and an entry to that effect in the minutes of the meeting shall be prima facie evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against any resolution or other preceding in respect of the said question and the result to the vote so taken shall be the decision of the shareholders upon the said question. |
7.20 | Ballots |
On any question proposed for consideration at a meeting of shareholders, and whether or not a show of hands has been taken thereon, any shareholder or proxyholder entitled to vote at the meeting may require or demand a ballot. A ballot so required or demanded shall be taken in such manner as the chairman at any time prior to the taking of the ballot. If a ballot is taken each person present shall be entitled, in respect of the shares which he is entitled to vote at the meeting upon the question, to that number of votes provided by the Act or the articles, and the result of the ballot so taken shall be the decision of the shareholders upon the said question. |
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7.21 | Adjournment |
If a meeting of shareholders is adjourned for less than 30 days, it shall not be necessary to give notice of the adjourned meeting, other than by announcement at the earlier meeting that is adjourned. If a meeting of shareholders is adjourned by one or more adjournments for an aggregate of 30 days or more, notice of the adjourned meeting shall be given for an original meeting. |
7.22 | Resolution in Writing |
A resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders unless a written statement with respect to the subject matter of the resolution is submitted by a director or the auditors in accordance with the Act. |
SECTION EIGHT - SHARES
8.01 | Allotment and Issue |
Subject to the Articles, the by-laws and to any preemptive rights provided by the Articles, unissued shares of the Corporation may be allotted and issued by resolution of the board at such times and to such persons or class of persons and for such consideration as the board shall determine, provided that no share shall be issued until it is fully paid as prescribed by the Act. Shares issued by the Corporation are non-assessable and the holders thereof are not liable to the Corporation or its creditors in respect thereof. |
8.02 | Commissions |
The board may from time to time authorize the Corporation to pay a commission to any person in consideration of his purchasing or agreeing to purchase shares of the Corporation, whether from the Corporation or from any other person, or procuring or agreeing to procure purchasers for any such shares. |
8.03 | Registration of Transfer |
Subject to the provisions of the Act, no transfer of shares shall be registered in a securities register except upon presentation of the certificate representing such shares with a transfer endorsed thereon or delivered therewith duly executed by the registered holder or by his attorney or successor duly appointed, together with such reasonable assurance or evidence of signature, identification and authority to transfer as the board may from time to time prescribe, upon payment of all applicable taxes and any fees prescribed by the board, and upon compliance with such restrictions on transfer as are authorized by the articles. |
8.04 | Share Certificates |
Every holder of one or more shares of the Corporation shall be entitled, at his option, to a share certificate, or to a non-transferable written acknowledgement of his right to obtain a share certificate, stating the number and class or series of shares held by him as shown on any securities register of the Corporation. Share certificates shall be in such form as the board shall from time to time approve. Any share certificate shall be signed in accordance with section 2.04 and need not be under the corporate seal, except that, unless the board otherwise determines, certificates representing shares in |
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respect of which a transfer agent and/or registrar has been appointed for the Corporation shall not be valid unless counter-signed by or on behalf of such transfer agent and/or registrar. The signature of one of the signing officers or, in the case of share certificates which are not valid unless countersigned by or on behalf of a transfer agent and/or registrar for the Corporation, the signatures of both signing officers, may be printed or mechanically reproduced in facsimile upon share certificates and every such facsimile signature shall for all purposes be deemed to be the signature of the officer whose signature it reproduces and shall be binding upon the Corporation. A share certificate executed as aforesaid shall be valid notwithstanding that one or both of the officers whose facsimile signature appears thereon no longer holds office at the date of issue of the certificate. |
8.05 | Transfer Agents and Registrars |
The board may from time to time appoint a registrar to maintain the securities register and a transfer agent to maintain the register of transfers and may also appoint one or more branch registrars to maintain branch securities registers and one or more branch transfer agents to maintain branch registers of transfers, but one person may be appointed both registrar and transfer agent. The board may at any time terminate any such appointment. |
8.06 | Non-Recognition of Trusts |
Subject to the provisions of the Act, the Corporation shall treat as absolute owner of any share the person in whose name the share is registered in the securities register as if that person had full legal capacity and authority to exercise all rights of ownership, irrespective of any indication to the contrary through knowledge or notice or description in the Corporation's records or on the share certificate. |
8.07 | Replacement of Share Certificates |
The board or any officer or agent designated by the board may in its or his discretion direct the issue of a new share certificate in lieu of and upon cancellation of a share certificate that has been mutilated or in substitution of share certificate claimed to have been lost, destroyed or wrongfully taken on payment of such fee, not exceeding $5.00, and on such terms as to indemnity, reimbursement of expenses and evidence of loss and of title as the board may from time to time prescribe, whether generally or in any particular case. |
8.08 | Defaced, Destroyed, Stolen or Lost Security Certificates |
In case of the defacement, destruction, theft or loss of a security certificate, the fact of such defacement, destruction, theft or loss shall be reported by the owner to the Corporation or to an agent of the Corporation (if any) acting on behalf of the Corporation, with a statement verified by oath or statutory declaration as to the defacement, destruction, theft or loss and the circumstances concerning the same and with a request for the issuance of a new security certificate to replace the one so defaced, destroyed, stolen or lost. Upon the giving to the Corporation (or, if there be an agent, hereinafter in this paragraph referred to as the "Corporation's agent", then to the Corporation and the Corporation's agent) of an indemnity bond of a surety company in such form as is approved by the directors or by the Chairman of the Board (if any), the President, a Vice-President, the Secretary or the Treasurer of the Corporation, indemnifying the Corporation (and the Corporation's agent if any) against all loss, |
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damage and expense, which the Corporation and/or the Corporation's agent may suffer or be liable for by reason of the issuance of a new security certificate to such shareholder, and provided the Corporation or the Corporation's agent does not have notice that the security has been acquired by a bona fide purchaser, a new security certificate may be issued in replacement of the one defaced, destroyed, stolen or lost, if such issuance is ordered and authorized by any one of the Chairman of the Board (if any), the President, a Vice-President, the Secretary or the Treasurer of the Corporation or by resolution of the directors. |
8.09 | Joint Shareholders |
If two or more persons are registered as joint holders of any share, the corporation shall not be bound to issue more than one certificate in respect thereof, and delivery of such certificate to one of such persons shall be sufficient delivery to all of them. Any one of such persons may give effectual receipts for the certificate issued in respect thereof or for any dividend, bonus, return of capital or other money payable or warrant issuable in respect of such share. |
8.10 | Deceased Shareholders |
In the event of the death of a holder, or of one of the joint holders, of any share, the Corporation shall not be required to make any entry in the securities register in respect thereof or to make payment of any dividends thereon except upon production of all such documents as may be required by law and upon compliance with the reasonable requirements of the Corporation and its transfer agent. |
8.11 | Securities Registers |
A central securities register of the Corporation shall be kept at the registered office of the Corporation or at such other office or place in Canada as may from time to time be designated by resolution of the board of directors and a branch securities register or registers may be kept at such office or offices of the Corporation or other place or places, either in or outside Canada, as may from time to time be designated by resolution of the directors. |
8.12 | Surrender of Certificates |
No transfer of shares shall be recorded or registered unless or until the certificate representing the shares to be transferred has been surrendered and cancelled. |
8.13 | Shareholder Indebted to the Corporation |
If so provided in the articles of the Corporation, the Corporation has a lien on a share registered in the name of a shareholder or his legal representative for a debt of that shareholder to the Corporation. By way of enforcement of such lien the directors may refuse to permit the registration of a transfer of such share. |
8.14 | Surrender of Certificates |
No transfer of shares shall be recorded or registered unless or until the certificate representing the shares to be transferred has been surrendered and cancelled. |
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SECTION NINE - DIVIDENDS AND RIGHTS
9.01 | Dividends |
Subject to the provisions of the Act, the board may from time to time declare dividends payable to the shareholders according to their respective rights and interest in the Corporation. Dividends may be paid in money or property or by issuing fully paid shares of the corporation. |
9.02 | Dividend Cheques |
A dividend payable in cash shall be paid by cheque drawn on the Corporation's bankers or one of them to the order of each registered holder of shares of the class or series in respect of which it has been declared and mailed by pre-paid ordinary mail to such registered holder at his recorded address, unless such holder otherwise directs. In the case of joint holder the cheque shall, unless such joint holder otherwise direct, be made payable to the order of all such joint holders and mailed to them at their recorded address. The mailing of such cheque as aforesaid, unless the same is not paid on due presentation, shall satisfy and discharge the liability for the dividend to the extent of the sum represented thereby plus the amount of any tax which the Corporation is required to and does withhold. |
9.03 | Non-Receipt of Cheques |
In the event of non-receipt of any dividend cheque by the person to whom it is sent as aforesaid, the Corporation shall issue to such person a replacement cheque for a like amount on such terms as to indemnity, reimbursement of expenses and evidence of non-receipt and of title as the board may from time to time prescribe, whether generally or in any particular case. |
9.04 | Record Date for Dividends and Rights |
The board may fix in advance a date, preceding by not more than 50 days the date for the payment of any dividend or the date for the issue of any warrant or other evidence of right to subscribe for securities of the Corporation, as a record date for the determination of the persons entitled to receive payment of such dividend or to exercise the right to subscribe for such securities, provided that notice of any such record date is given, not less than 14 days before such record date, by newspaper advertisement in the manner provided in the Act and by written notice to each stock exchange in Canada on which shares of the Corporation are listed for trading. Where no record date is fixed in advance as aforesaid, the record date for the determination of the persons entitled to receive payment of any dividend or to exercise the right to subscribe for securities of the Corporation shall be at the close of business on the day on which the resolution relating to such dividend or right to subscribe is passed by the board. |
9.05 | Unclaimed Dividends |
Any dividend unclaimed after a period of 6 years from the date on which the same has been declared to be payable shall be forfeited and shall revert to the Corporation. |
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9.06 | Information Available to Shareholders |
Except as provided by the Act, no shareholder shall be entitled to discovery of any information respecting any details or conduct of the Corporation's business which in the opinion of the directors it would be inexpedient in the interests of the Corporation to communicate to the public. |
9.07 | Records Books |
The directors may, from time to time, subject to rights conferred by the Act, determine whether and to what extent and at what time and place and under what conditions or regulations the documents, books and registers and accounting records of the Corporation or any of them shall be open to the inspection of shareholders and no shareholder shall have any right to inspect any document or book or register or accounting record of the Corporation except as conferred by statute or authorized by the board of directors or by a resolution of the shareholders. |
SECTION TEN - NOTICES AND AUTHORITY TO EXECUTE
10.01 | Method of Giving Notices |
Any notice (which term includes any communication or document) to be given (which term includes sent, delivered or served) pursuant to the Act, the regulations thereunder, the articles, the by-laws or otherwise to a shareholder, director, officer, auditor or member of a committee of the board shall be sufficiently given if delivered personally to the person to whom it is to be given or if delivered to his recorded address or if mailed to him at his recorded address by prepaid ordinary or air mail or if sent to him at his recorded address by any means of prepaid transmitted or recorded communication. |
A notice so delivered shall be deemed to have been given when it is delivered personally or to the recorded address as aforesaid; a Notice so mailed shall be deemed to have been given when deposited in a post office or public letter box; and a notice so sent by any means of transmitted or recorded communication shall be deemed to have been given when dispatched or delivered to the appropriate communication company or agency or its representative for dispatch. The secretary may change or cause to be changed the recorded address of any shareholder, director, officer, auditor or member of a committee of the board in accordance with any information believed by him to be reliable. |
10.02 | Notice to Joint Shareholders |
If two or more persons are registered as joint holders of any share, any notice shall be addressed to all of such joint holders but notice to one of such persons shall be sufficient notice to all of them. |
10.03 | Computation of Time |
In computing the date when notice must be given under any provision requiring a specified number of days' notice of any meeting or other event, the date of giving the notice shall be excluded and the date of the meeting or other event shall be included.
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10.04 | Undelivered Notices |
If any notice given to a shareholder pursuant to section 10.01 is returned on three consecutive occasions because he cannot be found, the Corporation shall not be required to give any further notices to such shareholder until he informs the Corporation in writing of his new address. |
10.05 | Omissions and Errors |
The accidental omission to give any notice to any shareholder, director, officer, auditor or member of a committee of the board or the non-receipt of any notice by any person or any error in any notice not affecting the substance thereof shall not invalidate any action taken at any meeting held pursuant to such notice or otherwise founded thereon. |
10.06 | Persons Entitled by Death or Operation of Law |
Every person who, by operation of law, transfer, death or a shareholder or any other means whatsoever, shall become entitled to any share, shall be bound by every notice in respect of such share which shall have been duly given to the shareholder from whom he derives his title to such share prior to his name and address being entered on the securities register (whether such notice was given before or after the happening of the event upon which he became so entitled) and prior to his furnishing to the Corporation the proof of authority or evidence of his entitlement prescribed by the Act. |
10.07 | Waiver of Notice |
Any shareholder (or his duly appointed proxyholder), director, officer, auditor, or member of a committee of the board may at any time waive any notice, or waive or abridge the time for any notice, required to be given to him under any provision of the Act, the regulations thereunder, the articles, the by-laws or otherwise and such waiver or abridgement shall cure any default in the giving or in the time of such notice, as the case may be. Any such waiver or abridgement shall be in writing except a waiver of notice of a meeting of shareholders or of the board which may be given in any manner. |
10.08 | Signature to Notices |
The signature of any director or officer of the Corporation to any notice or document to be given by the Corporation may be written, stamped, typewritten or printed or partly written, stamped, typewritten or printed. |
10.09 | Proof of Service |
With respect to every notice or other document sent by post it shall be sufficient to prove that the envelopes or wrapper containing the notice or other document was properly addressed as provided in paragraph 51 of this by-law and put into a post office or into a letter box. A certificate of an officer of the Corporation in office at the time of the making of the certificate or of a transfer officer of any transfer agent or branch transfer agent of shares of any class of the Corporation as to facts in relation to the sending of delivery of any notice or other document to any shareholder, director, officer or auditor or publication of any notice or other document shall be conclusive evidence thereof and shall be binding on every shareholder, director, officer or auditor of the Corporation as the case may be. |
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10.10 | Cheques, Drafts and Notes |
All cheques, drafts or orders for the payment of money and all notes and acceptances and bills of exchange shall be signed by such officer or officers or person or persons, whether or not officers of the Corporation, and in such manner as the board of directors may from time to time designate by resolution. |
10.11 | Custody of Securities |
All shares and securities owned by the Corporation shall be lodged (in the name of the Corporation) with a chartered bank or a trust company or in a safety deposit box or, if so authorized by resolution of the board of directors, with such other depositories or in such manner as may be determined from time to time by the board of directors. |
All share certificates, bond, debentures, notes or other obligations belonging to the Corporation may be issued or held in the name of a nominee or nominees of the Corporation (and if issued or held in the name of a nominee shall be held in the names of the nominees jointly with the right of survivorship) and shall be endorsed in blank with endorsement guaranteed in order to enable transfer to be completed and registration to be effected. |
10.12 | Execution of Instruments |
Contracts, documents or instruments in writing requiring the signature of the |
Corporation may be signed by: |
(a) | the Chairman of the Board, the Vice-Chairman of the Board, the Managing Director, the President or a Vice-President together with the Secretary or the Treasurer, or |
(b) | any two directors |
and all contracts, documents and instruments in writing so signed shall be binding upon the Corporation without any further authorization or formality. The board of directors shall have power from time to time by resolution to appoint any officer or officers, or any person or persons, on behalf of the Corporation either to sign contracts, documents and instruments in writing generally or to sign specific contracts, documents or instruments in writing. |
The corporate seal (if any) of the Corporation may be affixed to contracts, documents and instruments in writing signed as aforesaid or by any officer or officers, person or persons, appointed as aforesaid by resolution of the board of directors, but any such contract, document or instrument is not invalid merely because the corporate seal is not affixed thereto. |
The term "contracts, documents or instruments in writing" as used in this by-law shall include deeds, mortgages, hypothecs, charges, conveyances, transfers and assignments of property real or personal, immovable or movable, agreements, releases, receipts and discharges for the payment of money or other obligations, conveyances, transfers and assignments of shares, share warrants, stocks, bonds, debentures or other securities and all paper writings. |
In particular, without limiting the generality of the foregoing, |
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(a) | the Chairman of the Board, the Vice-Chairman of the Board, the Managing Director, the President or a Vice-President together with the Secretary or the Treasurer, or |
(b) | any two directors |
shall have authority to sell, assign, transfer, exchange, convert or convey any and all shares, stocks, bonds, debentures, rights, warrants or other securities owned by or registered in the name of the Corporation and to sign and execute (under the seal of the Corporation or otherwise) all assignments, transfers, conveyances, powers of attorney and other instruments that may be necessary for the purpose of selling, assigning, transferring, exchanging, converting or conveying any such shares, stocks, bonds, debentures, rights, warrants or other securities. |
The signature or signatures of the Chairman of the Board, the Vice-Chairman of the Board, the Managing Director, the President, a Vice-President, the Secretary, the Treasurer, an Assistant Secretary or an Assistant Treasurer or any director of the Corporation and/or of any other officer or officers, person or persons, appointed as aforesaid by resolution of the board of directors may, if specifically authorized by resolution of the directors, be printed, engraved, lithographed or otherwise mechanically reproduced upon any contracts, documents or instruments in writing or bonds, debentures or other securities of the Corporation executed or issued by or on behalf of the Corporation and all contracts, documents or instruments in writing or bonds, debentures or other securities of the Corporation on which the signature or signatures of any of the foregoing officers or persons authorized as aforesaid shall be so reproduced pursuant to special authorization by resolution of the directors shall be deemed to have been manually signed by such officers or persons whose signature or signatures is or are so reproduced and shall be as valid to all intents and purposes as if they had been signed manually and notwithstanding that the officers or persons whose signature or signatures is or are so reproduced may have ceased to hold office at the date of the delivery or issue of such contracts, documents or instruments in writing or bonds, debentures or other securities of the Corporation. |
SECTION ELEVEN - FINANCIAL YEAR
11.01 | Financial Year |
The financial year of the Corporation shall terminate on such date in each year as the directors may from time to time by resolution determine. |
SECTION TWELVE- UNANIMOUS SHAREHOLDERS AGREEMENTS
12.01 | Unanimous Shareholders Agreements |
The by-laws of the Corporation are subject to all unanimous shareholders agreement and if any by-laws are inconsistent with any provisions of any unanimous shareholders agreement then the provisions of the unanimous shareholders agreement shall prevail. |
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BY-LAW NO.2
A by-law respecting the borrowing of money by i-minerals inc.
BE IT ENACTED AND IT IS HEREBY ENACTED as a by-law of i-minerals inc. (hereinafter called the "Corporation") as follows:
1. | the directors may from time to time: |
(a) | borrow money upon the credit of the Corporation; and |
(b) | issue, reissue, sell or pledge debt obligations of the Corporation; and |
(c) | mortgage, hypothecate, pledge or otherwise create a Security interest in all or any property of the Corporation, owned or subsequently acquired, to secure any debt obligations of the Corporation, whether secured or unsecured. |
The words "debt obligations" as used in this paragraph mean bonds, debentures, notes or other evidence of indebtedness or guarantees of the Corporation, whether secured or unsecured. |
2. | The directors may from time to time by resolution delegate to the President and the Secretary or to any two individuals (including the President or the Secretary) each of whom is an officer of the Corporation all or any of the powers conferred on the directors by paragraph 1 of this by-law to the full extent thereof or such lesser extent as the directors may in any such resolution provide. |
3. | The powers hereby conferred shall be deemed to be in supplement of and not in substitution for any powers to borrow money for the purposes of the Corporation possessed by its directors or officers independently of a borrowing by-law. |
The foregoing by-law No. 2 hereby consented to and passed as evidenced by the signature of the Chairman of the meeting of the shareholders of the Corporation held on October 30, 2002.
ENACTED this 22 nd day of January 2004.
/s/ Roger A. Kauffman
Roger A. Kauffman, Chairman
ASSIGNMENT AGREEMENT WITH CONTINGENT RIGHT OF REVERTER
This Assignment Agreement with Contingent Right of Reverter (hereafter the “Agreement”) is made effective as of August 10, 2002 (the “Effective Date”) by and between Alchemy Ventures, Ltd., a British Columbia, Canada corporation (“ALY”), and Idaho Industrial Minerals, LLC., and Idaho limited liability company (“IIM”), Northwest Kaolin, Inc., an Idaho corporation (“NWK”). (Collectively, referred to hereinafter as the “Parties.”)
RECITALS
Whereas, on November 1, 1999, Phillip C. Nisbet (“Nisbet”) submitted fourteen lease applications, Nos. 9264-9269, 9272-9279 (the “Fourteen Applications”), covering certain State of Idaho (“State”) lands in Latah County, Idaho, to the Idaho Department of Lands (“IDL”) for processing into State mineral leases are provided for under Idaho Code §47-704;
Whereas, on November 15, 1999, Nisbet and Northwest Kaolin entered into an Agreement in Principle by which, for the consideration stated therein, Nisbet agreed to sell his rights, title and Interest “in the Helmar-Bovill properties located in Latah County, Idaho, comprising 7840 acres of kaolin clay deposits” [actually, the Parties understand that it is approximately 6,301 acres, more or less];
Whereas, on December 7, 1999, ALY entered into an Agreement with Northwest Kaolin, Inc. (“NWK”) to purchase certain properties “comprised of approximately seven (7) square miles of claims lawfully registered to [NWK] in the State of Idaho for the purpose of gathering, processing and marketing the kaolin clay deposits thereon” (hereafter “Agreement #1”);
Whereas, on December 11, 1999, Nisbet executed, under notary, and assignment of leases to Northwest Kaolin; however, his spouse did not join in the original execution;
Whereas, on June 15, 2000, Nisbet and NWK entered into a second Agreement in Principle that replaced the previous Agreement in Principle and required Nisbet to relinquish “all rights, title or interest held by [Nisbet] in the Helmar-Bovill properties and the leases from the State of Idaho for said properties...”
Whereas, on July 1, 2000, NWK submitted two lease applications, Nos. 9292 and 9293 (the “Two Applications”) covering certain State lands in Latah County, Idaho to the IDL for processing into state mineral leases as provided for under Idaho Code §47-704;
Whereas, on August 24, 2000, NWK and ALY entered into an Agreement that provided the option in ALY to acquire 51% of certain “Mineral Claims”, as defined in the Agreement, from NWK upon completing certain exploration expenditures, making payments and issuing shares within certain time parameters, and further provided the option in Aly to enter in to 51/49 joint venture with NWK or to acquire the additional 49% within a set time period (“Agreement #2”);
Whereas, disputes existed between ALY and NWK regarding their respective rights and obligations under the various above-described Agreements, and regarding the enforceability of said Agreements;
Whereas, on May 15, 2001, NWK submitted to the IDL the original of the Assignment of Clay Lease Applications executed by Nisbet to NWK for fourteen clay lease application along with a filing fee of $700;
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Whereas, on May 25, 2001, Scott Nicols, Chief, Bureau of Minerals, wrote to NWK, c/o Lois Van Hoover, regarding “State of Idaho Mineral Lease Application Nos. 9264-69, 9272-9279” stating:
This correspondence is notification we are unable to transfer the subject mineral lease applications from Phil Nisbet to Northwest Kaolin at this time. In order to assign the lease applications, Phil Nisbet’s wife, Marian Nisbet, must also sign the assignment form, have her signature notarized, and submit the original assignment document bearing her signature to this office. As we discussed, since we have the assignment form with Mr. Nisbet’s signature on file, we will accept a second assignment document with Mrs. Nisbet’s signature and the completed notary statement.
Whereas, by Assignment of Mineral, Oil and Gas, and/or Geothermal Resource Lease(s), dated July 9, 2001, Phillip and Marian Nisbet, did “sell, assign and transfer unto Alchemy Kaolin Corporation …100% of our rights, title and interest” in certain described lease applications;
Whereas, on July 17, 2001, Sharon A. Murray, Mineral Leasing Specialist, Bureau of Minerals, returned the above-referenced assignment form to Phillip C. Nisbet stating that the IDL:
will not take any action to assign any of the 14 mineral lease applications held in your name, or the two applications filed by Northwest Kaolin, until all issues regarding community property laws in Idaho as they relate to said applications are resolved…[and] until all issues as to who holds an interest in applications has been resolved in writing between you, Northwest Kaolin, Inc., and Alchemy Ventures, Ltd., and its subsidiaries;
Whereas, no additional documentation exists in the official IDL files regarding a resolution of the assignment of fourteen clay lease applications from Phil Nisbet to Northwest Kaolin, Inc.;
Whereas, a dispute existed between and/or among the Parties as to their respective rights in and to lease applications Nos. 9264-9269, 9272-9279 and Nos. 9292, 9293, (hereafter collectively referred to as the “Lease Applications”);
Whereas, NWK and certain individuals as principals of NWK or as interested parties in association with NWK have resolved their disputes with ALY and desire to transfer and assign any and all of their right, title and interest that they possess in the Lease Applications to ALY and to forever release and assign any claims they may have with respect to ownership of said Lease Applications and the dispute(s) arising there form to ALY;
Whereas, by that certain “Contribution Agreement by and among Idaho Industrial Minerals and Phillip C. Nisbet,” dated October 16, 2001, Nisbet contributed, among other things, “all right title and interest in and to…[certain] Applications for State of Idaho Mineral Leases” to IIM;
Whereas, ALY, IIM and Nisbet executed a Letter of Understanding, dated January 23, 2002, that laid a foundation for resolving disputes between the Parties and for a deal that would transfer the Properties to ALY (hereafter “Agreement #3”);
Whereas, by that Conditional purchase and Sale Agreement, dated March 18, 2002 (hereafter “Agreement #4”), ALY, IIM and Nisbet agreed to certain terms to be incorporated into an “Agreement in Full” as the basis for the transfer of the Lease Applications to ALY.
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Whereas, ALY desires to acquire the Lease Applications from NWK and certain individuals as principals of NWK or as interested parties in association with NWK, and IIM, NWK and certain individuals as principals of NWK or as interested parties in association with NWK, desire to convey the Lease Applications to ALY subject to the terms and conditions set forth herein.
AGREEMENT
Now Therefore, in consideration of, and subject to, the covenants, terms and conditions made herein, and intending to be legally bound, the Parties hereto agree as follows:
DEFINITIONS
Definitions. For the purposes of this Agreement, the following items shall have the meanings set forth below:
“ Agreement ” means this “Assignment Agreement with Contingent Right of Reverter,” including all exhibits and schedules, all of which are incorporated by this reference.
“ ALY ” shall have the meaning set forth in the introduction to this Agreement and includes its U.S. subsidiary, AlchemyKaolin Inc.
“ Effective Date ” shall have the meaning set forth in the introduction to this Agreement.
“ Feasibility Study ” means a comprehensive description of the construction, development, mining, processing, and marketing plan for the commercial products produced from the Mineral(s) extracted from the Properties. The Study must be in such form and substance as would reasonably be required by an experienced investment banker in making an arms-length investment decision to place such a mine into production. The Feasibility Study shall include the confirmation of reserves based upon reasonable drilling works, hydrological and geotechnical works, environmental studies, and, if deemed necessary by ALY, the mining of one or more bulk samples of ore for metallurgical studies which may require the construction of one or more shafts or pits, the construction of an incline, or works associated with a trial mine. The Feasibility Study shall contain estimates of both capital and operating costs and shall analyze how to proceed with mining operations to economically and commercially extract the target Mineral(s), identify the optimum structure for the mining venture, and include reference to relevant marketing and financial aspects.
“ IIM ” shall have the meaning set forth in the introduction to this Agreement and includes, as appropriate for context, its wholly owned subsidiary, Northwest Kaolin Inc., an Idaho corporation. (For purposes of improving the clarity of the granting language, the first reference to IIM and Northwest kaolin Inc. specifically identifies both companies, instead just using the collective term “IIM” to describe both entities.)
“ Lease Applications ” shall mean the sixteen (16) mineral lease applications in the Helmar-Bovill region of Latah County, Idaho on file with the IDL in the names of Phillip C. Nisbet and Northwest Kaolin Inc as more fully described in Exhibits A, parts 1 and 2.
“ Lease ” and “ Leases ” shall mean the form of instrument issued by the IDL pursuant to a Lease Application that provides for a vested right to mine the Minerals applied for in the Lease Application and any intervening grant of right by the IDL that may be less than a vested right to mine whether for all or part of the Properties.
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“ Mineral ” means kaolinite, clays of any type and all other minerals, including, without limitation, feldspar, quartz, and micas, subject only to the limitations that may be imposed by the State.
“ Permitting Process ” shall have the meaning ascribed in subsection 2.1.3 herein.
“ Person ” means any legal person, including, without limitation, an individual, a partnership, a joint venture, a corporation, a trust, limited liability company, other business entity, an unincorporated organization or a government or any department or agency thereof.
“ Production Plant ” shall mean any plant that is capable of producing Mineral products in commercial quantities and quality.
“ Properties ” means those lands covered by the Lease Applications (or Leases granted thereby).
SECTION 1
GRANT OF RIGHTS; TERM
1.1 Grant of Rights. Subject to the paramount title of the State and the Contingent Right as Reverter as provided for in Section 3, IIM and Northwest Kaolin Inc. hereby assign to ALY one Hundred Percent (100%) of its undivided interest in the Lease Applications described in Parts 1 and 2 of Exhibit A and grants to ALY, without limitation, the following rights:
1.1.1 the exclusive right to enter, take possession and use the Properties covered by the Lease Applications;
1.1.2 the exclusive right to convert the Lease Applications to a Lease(s); however, ALY shall notify IIM promptly of any action by the State to issue a Lease. If necessary, IIM shall cooperate with ALY in the process of converting the Lease Applications to a Lease(s) subject to the terms and conditions provided herein.
1.2 Accord and Satisfaction. The parties agree that with the issuance of a total of 1,750,000 common shares of ALY to IIM, IIM releases any and all interest in the Lease Applications and that IIM acknowledges that it has received full and final consideration of the transfer of the rights to the Lease Applications to ALY.
1.3 Execution of Instruments. The Parties shall execute such instruments and provide such correspondence as is reasonably necessary to effect the assignment of the Lease Applications described in the Paragraph 1.1; however, it is anticipated by the Parties that:
(1) the assignment of the Fourteen Lease Applications will be effected in the IDL records by resubmitted the State “Assignment of Mineral, Oil and Gas, And/Or Geothermal Resources Lease(s),” executed by Phillip C. and Marian Nisbet, dated July 9, 2001 (Exhibit B); and
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(2) the assignment of the Two Lease Applications will be effected in the IDL records by NWK’s execution, simultaneously with this Agreement, of the attached State “Assignment of Mineral, Oil and Gas, And/Or Geothermal Resources lease(s)” (Exhibit C) form for delivery by ALY to the IDL.
1.4 Term. The Term of this Agreement shall commence on the Effective Date and shall continue for a period of three (3) years (the “Term”), unless sooner terminated as provided in this Agreement.
1.5 Supercedes and Replaces. This Agreement is the “Agreement in Full” contemplated by Agreement 4; however, this Agreement supercedes and replaces all prior agreements between the Parties and their predecessors in interest relating to the Lease Applications and Properties including, but not limited to, the agreements in principle and Agreements #1, 2, 3 and 4, described in the Recitals.
1.6 IIM’s Representations Regarding the Lease Applications. IIM makes no representations or warranties regarding the likelihood that all or any of the Lease Applications will become Leases; however, during the Term of this Agreement, IIM shall indemnify and holds harmless ALY from any claims, demands and legal actions by Nisbet and/or NWK, any individuals as past or present principals of NWK or as interested parties in association with NWK arising out of or related to the Lease Applications or Properties. Both during and subsequent to the Term of this Agreement, IIM shall cooperate with ALY in any action of ALY in defense of any claims, demands and legal actions by Nisbet and NWK and certain individuals as principals of NWK or as interested parties in association with NWK arising out of or related to the Lease Applications or Properties.
SECTION 2
ALY’S DELIVERABLES
2.1 Consideration. The purchase price (the “Purchase Price”) for the assignment of Lease Applications shall be One Million Seven Hundred Fifty Thousand (1,750,000) common shares of ALY, subject to such timing, terms, conditions, and restrictions as may be imposed by the Canadian Venture Exchange (“CDNX”), to be delivered by ALY to IIM on the following schedule. Not later than thirty (30) calendar days after the occurrence of each of the following described events, ALY shall deliver to IIM common shares of ALY in the amounts specified below:
2.1.1 Upon Execution. Upon receipt of the assignment of Lease Applications described in Paragraph 1.1, ALY shall deliver to IIM, One Hundred Thousand (100,000) common shares of ALY.
2.1.2 Upon Completion of a Feasibility Study. Upon completion of a Feasibility Study, ALY shall deliver to IIM, Four Hundred Thousand (400,000) common shares of ALY.
2.1.3 Upon Lease Issuance. Upon the State of Idaho issuing Leases to ALY for all acreage subject to the Lease Application, ALY shall deliver to IIM, Three Hundred Fifty Thousand (350,000) common shares of ALY. In the event that the State issues Leases on less than all of the Lease Applications, then the number of shares issued shall be proportionate to the percent of the acreage converted to Lease relative to the amount of acres covered by the Lease Applications; the remaining shares of this 350,000 shall be paid upon the occurrence of Paragraph 2.1.5 below, as additional shares to the 400,000 shares already provided for in Paragraph 2.1.5. In the event that ALY, in its sole discretion, voluntarily agrees to accept Leases from the State for less than all of the acreage subject to the Lease Applications, then ALY shall either pay the additional shares to IIM pursuant to this Paragraph 2.1.3 or ALY shall reassign such Lease Applications per Paragraph 3.4 below.
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2.1.4 Upon Completion of a Permitting Process. Upon completion of the Permitting Process, ALY shall deliver to IIM, Five Hundred Thousand (500,000) common shares of ALY. The “Permitting Process” means the activities and time period required to obtain all federal, state or local government permits, licenses or other approvals (including water rights) necessary for ALY (or its subsidiaries or affiliates), to construct and operate commercial mining and beneficiation facilities on the Properties, including, if required, through the development of a Production Plant.
2.1.5 Upon Completion of a Production Plant and First Delivery of Commercial Product. Upon completion of the first delivery of a Commercial Product from a Production Plant, ALY shall deliver to IIM, Four Hundred Thousand (400,000) common shares of ALY. The “first delivery of Commercial Product” shall be when ALY sells the product from beneficiating Mineral(s) in its Production Plant to a third-party end user or agent or broker for end users in commercially reasonable quantities at a cash amount representing the fair market value for the product so delivered.
2.2 Acceptance and Performance. By accepting the shares when tendered by ALY, IIM unconditionally accepts that ALY has completed the performance requirement associated with each block of shares being delivered as provided in Section 2.1 above. IIM shall have fourteen (14) calendar days from the delivery of the shares to provide Notice objecting to the completion ALY’s deliverable and returning the tendered shares. If IIM has not tendered a return of the shares within said fourteen (14) calendar days, then the associated deliverable for ALY will be deemed accepted. In the event of an alleged default by ALY, IIM shall describe with reasonable specificity the alleged default in ALY’s performance that gives rise to any declaration of nonperfomance, and the procedures described in Section 10 hereof shall be applicable. Failure to declare a default at such time shall be deemed a waiver of IIM’s rights to declare a default at a later date.
2.3 Verification of Authorization. With each tendered delivery of shares as provided in Subsections 2.1.1 through 2.1.4, ALY shall provide IIM with certified copies of the resolutions of ALY’s board of directors and its shareholders, if applicable, authorizing the issuance of common shares, subject to the parameters imposed by the CDNX. Similarly, with each tendered delivery of shares as provided in Subsections 2.1.1 through 2.1.4, IIM shall provide ALY with certified copies of the resolutions of IIM’s board of directors and IIM’s shareholders, if applicable, authorizing the acceptance of common shares of ALY.
2.4 Other Items. ALY shall also deliver such other documents as IIM may reasonable request in connection with the transaction contemplated by this Agreement. IIM shall also deliver such other documents as ALY shall reasonably request in connection with the transactions contemplated by this Agreement.
2.5 Adjustments. The Purchase Price is for an undivided One Hundred Percent (100%) interest in the Lease Applications, subject to paramount title held by the State. In the event that there is an outstanding right, title or interest including, without limitation, an outstanding lien or encumbrance on the title, or if the IIM holds less than an undivided One Hundred Percent (100%) interest in the Lease Applications, subject to the paramount interest held by the State, then the purchase price shall be adjusted in accordance with the provisions of Section 7.4 ( Lesser Interest ). Such adjustment may be made by offset from future issues of ALY common, if ALY so chooses.
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SECTION 3
CONTINGENT RIGHT OF REVERTER
3.1 Retention of Revisionary Interest. By the assignment and grant provided for in Paragraph 1.1, IIM reserves a right of reverter of the Lease Applications (or leases acquired thereby), upon failure of ALY to complete all of its deliverables described in Section 2 by the end of the Term or upon ALY terminating work on development of the Properties. This Contingent Right of Reverter may be enforced in equity; the Parties recognize that an adequate remedy at law might not exist. The governing jurisdiction for equitable and legal remedies shall be as provided in Paragraph 14.1.
3.2 Allegation of Failure to Complete Deliverables. ALY shall have the entire Term to complete the deliverables provided for in Paragraph 2.1, which may be extended by Force Majeure. If ALY has tendered all of the common shares in association with the performance deliverables described in Subparagraphs 2.1.1 through 2.1.4, then IIM must have rejected or re-tendered, as provided for in Paragraph 2.2, at least one block of shares in order to preserve a claim of default and its Contingent Right of Reverter.
3.3 Resolution of Contingent Right of Reverter. The procedure for claiming a default, as provided in Section 10, shall govern the initiation and enforcement of the Contingent Right of Reverter by IIM. If ALY does not dispute the claim that it has failed to complete the deliverables described in Paragraph 2.1 within the Term, or that it cannot so complete such deliverables within the time period allowed under Subparagraph 10.1.2, then ALY shall promptly reconvey to NWK or to IIM, as designated by IIM, the Lease Applications covered thereby in a format recognizable and acceptable to the IDL office. IF IIM has accepted all of the shares as provided for in Paragraph 2.2, then the Contingent Right of Reverter shall automatically expire upon the expiration of the Term of this Agreement and shall not survive the expiration of this Agreement.
3.4 Reassignment. It is agreed that if ALY should choose to abandon any of the Lease Applications (or Leases derived from such Lease Applications) listed on Exhibit A, then ALY shall provide IIM with Notice of such intent, and IIM shall have the option for fourteen (14) days from receipt of such Notice to cause ALY to execute a reassignment instrument. In addition, ALY will execute an appropriate State assignment form, and shall generally cooperate with IIM and the State to implement the intent of such reassignment; however, ALY does not represent or warrant that the State will accept such reassignment, nor shall ALY bear any of the costs associated with reassignment.
3.5 Notice. In the event that the State of Idaho provides notice to ALY that any Lease Application or Lease is deemed invalid, out of compliance or otherwise subject to termination of rights, ALY shall provide IIM with this is same information within 48 hours of ALY receiving actual notice.
SECTION 4
RELEASE
4.1 Release of Claims. As of the Effective Date, each party to this Agreement releases and discharges the other as well as any of its officers, directors, shareholders, agents, employees, attorneys, successors, heirs, devisees, assigns, affiliates, related organizations, if any, and any other persons, firms or corporations in interest with them, or any of them, of and from all contracts, agreements, understandings, claims, liabilities, demands, liens, debts, loans, obligations, accounts, causes of action and/or suit of any and every nature, known or unknown, for damages or otherwise, at law or in equity (“Claims”), which each party may have or claim to have had against the other including without limitation: Claims related to ownership of the Lease Applications; Claims related to any previous agreements or alleged agreements between or among any of the Parties hereto; Claims of breach of any understanding or agreement related to the Lease Applications and the proposed mining of Mineral(s) by predecessors in interest of the Parties, and Claims of compensation owing or due in the form of fees, wages, royalties or and any other obligation for sums due and owing from any of the Parties that arose from or may arise from actions or omissions of the Parties or their predecessors in interest prior to the Effective Date.
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SECTION 5
Performance Obligations
5.1 Operational Performance of ALY. ALY shall conduct all activities on the Properties in a good and workmanlike manner and in compliance with all applicable laws and regulations and permits, including those related to environment and reclamation. ALY shall promptly pay all outstanding debts. ALY shall use its good faith effort to obtain all governmental approvals required to exercise its rights granted hereunder; however, and IIM agrees to cooperate with ALY in the Permitting Process, including granting and documenting any required consent. ALY shall owe no duties to IIM except as provided in this Agreement.
5.2. Obligation to Maintain the Lease Applications (or Leases acquired thereby). ALY shall use its good faith efforts to cause the Lease Applications to be converted to Leases and ALY shall seek to do so as promptly as reasonably possible under the entirety of circumstances, and to keep any Leases acquired in good standing under the laws of the State while this Agreement is in effect, including the payment of fees and the filing of necessary reports. The Parties recognize that converting the Lease Applications to Leases potentially involves a discretionary decision by the State; the Parties shall use their good faith efforts to obtain Leases for all of the Lease Applications. It is understood by the Parties that if the State fails to issue Leases covering sufficient lands to support ALY’s anticipated production operations, this may be deemed Force Majeure pursuant to Section 6 hereunder, so long as the terms and conditions in Section 6 are satisfied.
5.3 Claims and Liens. ALY shall pay and satisfy all claims and liens for materials, supplies and labor used in connection with ALY’s operations on the Properties, and shall keep the Lease Application (or Lease acquired thereby) free and clear from any and all liens and encumbrances, except any such lien or encumbrance that may result from the actions of parties other than ALY, its agents, employees, and contractors, and excepting any such lien or encumbrance that is in good faith being subject to active challenge or appeal during the pendency of such challenge or appeal.
5.4 Coordinating with the State. ALY shall maintain close contact with the State at all reasonable times to keep the relevant agencies informed of current and planned activities relating to the Properties regardless of whether or not such communication may be required by law. ALY shall provide IIM with copies of any correspondence sent to, or received from, the State of Idaho and its various agencies.
5.5 Inspection. IIM, or IIM’s authorized representative may at any reasonable time, inspect ALY’s activities, but such representative shall do so at his or her own risk, and shall conduct such inspections so as not to hinder unreasonably the activities of ALY. IIM and its representatives, shall indemnify and hold ALY harmless from any costs, loss, or damage by reason of injury to IIM, or its representative in making such an inspection. ALY may refuse access to the Properties for all representatives of IIM that refuse to execute a waiver of liability in the favor of ALY before entering the Properties. IIM and/or IIM’s representative shall not disclose any of the information collected under this Agreement, except to ALY, nor shall IIM use such information to identify and/or capture corporate opportunities of ALY, or in any way compete with ALY, unless and until IIM and ALY enter into a commercially reasonable confidentiality/nondisclosure agreement, which shall include an “area of interest” clause that precludes IIM or owners of IIM from acquiring an interest in mineral property within 25 miles of the Properties without promptly offering any such interest to ALY at IIM’s cost.
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SECTION 6
FORCE MAJEURE
6.1 Force Majeure.
6.1.1 Force Majeure means any cause or condition beyond the reasonable control of, and without the fault or negligence of, the party claiming Force Majeure which causes the party to be unable to perform its obligations, which by exercise of due foresight such party could not reasonably have been expected to avoid and which the party is unable to overcome by the exercise of due diligence.
6.1.2 The obligations of ALY under this Agreement shall be suspended if ALY is delayed or interrupted in or prevented from conducting any operations on the Properties, or significant portion thereof, as the result of an Act of God, fire, earthquake, hurricane, unreasonably heavy precipitation or floods, shortage of fuel supply, raw materials, or other supplies or equipment, changes in governmental laws, rules, regulations or orders adversely affecting any operations on part or all of the Properties; inability to obtain on reasonably acceptable terms any public or private license, permit or other authorization that may be required to conduct operations; any extraordinary restrictions upon, unusual delays in receiving, or failures to receive any permits, licenses, or approvals from any governmental agency; or any other cause beyond ALY’s reasonable control.
6.1.3 In such event ALY shall notify IIM in writing of the particulars of the delays or interruptions and the term of this Agreement shall be extended for a period of time equal to the period during which ALY operations are so delayed, interrupted, or prevented
6.2 Adverse Claims. If at any time during the Term of this Agreement it appears that one or more private third parties may have a claim of economic interest or ownership in the Properties or the Lease Applications (or Leases acquired thereby), ALY may claim Force Majeure for a period of time equal to the time necessary to resolve such claim(s) of economic interest or ownership in the Properties or the Lease Applications (or Leases acquired thereby).
SECTION 7
IIM’S WARRANTIES, REPRESENTATIONS
& COVENANTS
7.1 IIM’s Warranties, Representations, and Covenants. Excepting only the paramount title of the State, its participating interest and production royalties, if any, IIM represents and warrants to ALY that:
7.1.1 IIM and Nisbet own or control the Lease Applications.
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7.1.2 IIM knows of no other person claiming any interest in the Lease Applications; and the Lease Applications are free from all liens and encumbrances, except liens for property taxes not yet due and payable.
7.1.3 No royalties, fees or monies (or claims therefore) are payable or required to be paid to any person having or claiming an interest in the Lease Applications other than the State.
7.1.4 IIM has full power and authority to execute this Agreement and this Agreement is valid and binding upon it in accordance with its terms.
7.1.5 IIM knows of no violation of any applicable law or regulation relating to land use, environmental protection or otherwise with respect to the Lease Applications or activities relating thereto; and IIM represents that there is no judgment outstanding and no litigation, proceeding or governmental investigation pending or threatened against the Lease Applications or IIM in connection with the Lease Applications except as described below:
NONE
7.2 Defects In Title. In the event that any cloud or defect may arise in IIM’s title to the Lease Applications (or Leases granted thereby), except matters involving the title and rights of the State (including, without limitation, discretionary lease issuance), then at ALY’s request pursuant to Notice, IIM will take all action necessary, including judicial proceedings, to remove any cloud from and cure any defect in ALY’s title to the Lease Applications (or Lease granted thereby). If IIM fails or refuses to take such action, ALY may take such action in IIM’s name. IIM shall cooperate with ALY in any such action taken. ALY may recover from IIM, or from any payments in stock thereafter to become due to IIM under this Agreement, all costs and expenses, including reasonable attorney’s fees, incurred by ALY in such action.
7.3 Challenge to Title by State If the State attacks the validity of the Lease Applications for any reason, except ALY’s failure to comply with its obligation to maintain the Lease Applications (or Leases granted thereby) in good standing, ALY, in its sole discretion, may prosecute/defend an action in mandamus to issue lease, damages, or such other action as it may choose. However, in the event that ALY does not choose to defend/prosecute such claim, then ALY, in its sole discretion, shall provide Notice to IIM, who then may take such action in ALY’s name.
7.4 Lesser Interest. The total number of common shares deliverable to IIM pursuant to the terms of this Agreement are premised on the fact that ALY is acquiring an undivided One Hundred Percent (100%) interest in the Lease Applications subject to the paramount interest held by the State, and that ALY’s rights in the Properties are as herein set forth and are subject to no covenants, conditions, restrictions, or encumbrances other than those created by this Agreement. In the event that at any time during the term of this Agreement there is any outstanding right, title or interest in the Properties not created or caused by ALY such that for any reason ALY is not possessed of the entire interest which this Agreement purports to grant, then the number of shares deliverable to IIM under this Agreement shall be reduced by the proportion which any outstanding interest or encumbrance bears to the full unencumbered interest contracted for by ALY hereunder.
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SECTION 8
DAMAGES, INSURANCE & GAURANTEE
8.1 Damages. In no event shall any Party be liable to the other Party for any consequential, special or incidental loss or damage.
8.2 Insurance. Within Ninety (90) days of the Effective Date, ALY shall obtain and maintain such insurance coverage as required by law, and such other insurance coverage as might be deemed reasonable and prudent, including, but not limited to the following types of insurance: (1) worker compensation; (2) general liability; (3) automobile; (4) fire; and (5) directors and officers (however, if directors and officers coverage cannot be obtained on commercially reasonable terms, as determined by the Alchemy Board of Directors, then no such insurance will be required.
SECTION 9
TAXES
9.1 Payment Obligation. Except as hereinafter set forth, ALY shall pay all taxes levied during the Term of this Agreement against all improvements, structures, equipment, personal property, and fixtures placed upon the Properties by ALY and all taxes levied against ALY as an employer of labor. All taxes shall be paid before delinquent, but ALY shall be under no obligation to pay any tax, so long as the tax is being contested in good faith and by appropriate legal proceedings and the nonpayment thereof does not adversely affect ALY’s right, title, or interest in or to the Premises.
SECTION 10
DEFAULT, TERMINATION &
SURRENDER
10.1 Default.
10.1.1 ALY shall not be deemed to be in default hereunder until IIM shall first have given to ALY written notice of the alleged default, specifying with particularity the circumstances of the default and, if applicable, the amount of shares, which IIM claims is due and payable by ALY.
10.1.2 Such notice shall be given in accordance with Section 12 (NOTICES). ALY shall have a period of sixty (60) days from and after receipt of such notice in which to cure the default, or in the event that such default cannot be cured within sixty (60) days to initiate and diligently pursue steps to correct the default, failing which this Agreement shall terminate and all liabilities and obligations of ALY, except those liabilities existing on the date of termination, shall terminate. Any default claimed with respect to the issuance of shares may be cured by the deposit in escrow of the number and class of shares in controversy and the giving of notice of the deposit to IIM. The amount to remain in escrow until the controversy is resolved or until there has been a final disposition of the controversy by a court of competent jurisdiction.
10.1.3 Should ALY dispute the existence of the default, then this AGREEMENT shall not terminate unless ALY does not initiate and diligently pursue steps to cure the default within sixty (60) days after the default has been determined by a final decision of a court of competent jurisdiction.
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10.2 Early Termination.
10.2.1 ALY may, at any time and from time to time, terminate this Agreement, as to all or any portion of the Lease Applications (or Leases granted thereby) and Properties, by notifying IIM of its intent to file for record in the IDL office (with a copy to IIM) a good and sufficient surrender or notice of termination of all or a portion of the Lease Applications (or Leases granted thereby). Upon receipt of such notification of intent to surrender or terminate, IIM, or its designated subsidiary, will have fourteen (14) calendar days to elect to receive a reassignment of such Lease Applications (or Leases granted thereby) from ALY free and clear of all liens and encumbrances or instruct ALY to proceed with filing such notice of surrender with the IDL office. In the event IIM elects to receive reassignment, ALY will execute an appropriate State assignment form, and generally shall cooperate with IIM and the State to implement the intent of such reassignment; however, ALY does not represent or warrant that the State will accept such reassignment, nor shall ALY bear any of the costs associated with reassignment. This Agreement shall terminate with respect to that portion of the Properties described in the surrender or termination notice to the IDL office, and all rights, liabilities and obligations of ALY under this Agreement with respect to that portion of the Properties described in such notice shall terminate on the date specified in the notice, except those rights which survive termination and those liabilities and obligations existing on the date of termination. If IIM elects not to re-acquire the surrendered Lease Applications (or Leases granted thereby) and Properties, then either IIM or ALY, or their subsidiaries, may apply to the IDL office for the lease to such surrendered Properties at any time thereafter, and such after-acquired Properties shall not be subject to the terms of this Agreement.
10.2.2 In the event of such termination, all equipment, machinery and supplies that have been brought upon such portion of the Properties by ALY shall be removed by ALY from the portion of the Properties so surrendered within twelve months of providing such notice except such facilities on the Properties that IIM elects to retain.
10.2.3 In the event IIM does not make an election within said fourteen (14) days or elects that ALY should surrender its interest, then ALY shall promptly file a notice of termination of interest with the IDL for the portion of the Properties so surrendered.
10.3 Continued Access. Subject to the paramount title and authorities of the State, for as long as ALY requires after termination of the Agreement, ALY shall have the right of continued access to the Properties and across the Properties for purposes of reclamation and remediation, if applicable. This grant of rights shall survive termination of this Agreement.
SECTION 11
DATA
11.1 ALY’s Data. ALY shall upon termination of this Agreement provide to IIM, upon IIM’s request, copies of all available non-interpretative information relating to ALY’s activities on the Properties. This information shall include copies of all ALY’s maps, drill logs and reports, assays, surveys, reports of records submitted to governmental agencies, and geological, geophysical, geochemical or similar data with respect to the Properties, and shall be provided to IIM, or its designated subsidiary, without any warranty or representation as to the accuracy, completeness, reliability or usefulness thereof.
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SECTION 12
NOTICES
12.1 All notices and other communications under this Agreement (“Notices”) to the Parties shall be in writing, and shall be addressed respectively as follows:
ALY: |
Barry Girling
Malespina, Ltd. 900 – 580 Hornby Street Vancouver, B.C. V6C 3B6 Ph: (877) 688-2321 |
with a copy to: |
Baird Hanson Quinn, LLP
2117 Hillway Drive Boise, Idaho 83702 Attn: Joe Baird Ph: (208) 388-0110 Fax (208) 345-4930 |
IIM: |
IDAHO INDUSTRIAL MINERALS, INC.
C/O Sacajawea Motor Inn 1874 Main Street Lewiston, Idaho 83501 USA Attn: Brent Thompson Ph: (208) 746-1393 Fax (208) 743-3620 |
A Party may change its address by Notice to the other Party.
12.2 All Notices shall be given:
12.2.1 by personal delivery (including courier); or
12.2.2 by registered mail, charges prepaid; or
12.2.3 by electronic facsimile communication, with a confirmation sent by registered mail or courier.
12.3 All Notices shall be effective and shall be deemed received:
12.3.1 if by personal delivery or by registered mail, on the date of delivery if delivered during normal business hours, and if not delivered during normal business hours, on the next business day following delivery; or
12.3.2 if by electronic communication, on the next business day following receipt of the electronic communication.
13
SECTION 13
ASSIGNMENT
13.1 ALY may not assign the Lease Applications (or Leases granted thereby) to a corporation or other entity that is not a subsidiary or affiliated corporation of ALY without the prior written approval of IIM
13.2 ALY may, subject to any applicable law, assign this Agreement or ALY’s rights hereunder or any portion thereof, or may otherwise convey, assign or transfer its interest hereunder or in the Lease Applications or subsequent Leases, once acquired from IIM, to a subsidiary or affiliated corporation of ALY, or to any successor by way of a merger, consolidation or reorganization without prior notice to IIM. The term “subsidiary or affiliated corporation” as used herein means any corporation that directly or indirectly controls, is controlled by, or is under common control with, ALY.
SECTION 14
MISCELLANEOUS PROVISIONS
14.1 Choice of Law; Survival. The formation, interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Idaho, USA; except that, if the primary dispute concerns a question of securities law, then the interpretation and enforcement of this Agreement shall be governed by the laws of British Columbia, Canada. Any terms or agreements herein which by their nature may or must be performed or occur after termination of this Agreement shall survive such termination.
14.3 Additional Documents. IIM shall provide ALY with such additional documents as may be necessary to carry out the purposes of this Agreement. If conditions change by reason of acquisition, conveyances, assignments, or other matters relating to the [unreadable] or description of the Properties, IIM and ALY shall execute amendments of this Agreement and any other documents which may be necessary to reflect such changed conditions.
14.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.
14.5 Finders and Brokers. Each party represents to the other that it has not dealt with anyone who is or may be entitled to a broker’s commission, finder’s fee or other compensation for introducing the parties or for advising or assisting in connection with this Agreement or the transactions contemplated by it. Each party shall indemnify and hold the other harmless from any cost or expense, including attorneys’ fees and court costs, arising out of such a claim by such a person, including costs incurred in response to discovery and related proceedings in connection with such a claim.
14.6 Inurement. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of IIM and ALY.
14.7 Severability. In the event any provision of this Agreement is held to be invalid or void, it shall not affect the validity of the remaining provisions.
14
14.8 Waiver. No waiver of any breach of this Agreement shall be deemed to be a waiver of any other subsequent breach.
14.9 Headings. Headings to the various Sections herein are for reference only and are not to be used for the purpose of construing the provisions herein.
14.10 Entire Agreement. Except as provided in Section 1.3, this Agreement constitutes the entire agreement of the Parties. No modification, variation, or amendment of this Agreement shall be effective unless it is in writing and signed by all the Parties to this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year first above written.
IIM: ALY:
IDAHO INDUSTRIAL MINERALS LLC. ALCHEMY VENTURES, LTD.
By /s/ W. Robert Lemke By /s/ Barry Girling
8-12-2002 President 8-12-2002 Director & Secretary
NWK:
Northwest Kaolin, INC.
By /s/ W. Robert Lemke
8-12-2002 President
15
AMENDMENT AND RATIFICATION OF ASSIGNMENT AGREEMENT WITH CONTINGENT RIGHT OF REVERTER
KNOW ALL MEN BY THESE PRESENTS THAT:
WHEREAS, by that certain Assignment Agreement with Contingent Right of Reverter (hereafter the “Agreement”) made effective as of August 10, 2002 (the “Effective Date”), i-minerals inc. (formerly Alchemy Ventures, Ltd. “ALY”) a company incorporated pursuant to the Canada Business Corporations Act (“IMA”), received certain state mineral lease applications from Idaho Industrial Minerals, LLC., an Idaho limited liability company (“IIM”) and Northwest Kaolin, Inc., an Idaho corporation (“NWK”), collectively, referred to hereinafter as the “Parties”.
WHEREAS, a Memorandum of Assignment Agreement with Contingent Right of Reverter was recorded for notice purposes in the Latah County Recorder’s office at Moscow, ID covering the lease applications as more completely described on Exhibit A, attached hereto and incorporated herein.
WHEREAS, ALY changed its name to i-minerals inc. and was continued from the jurisdiction of the Company Act (British Columbia) to the jurisdiction of the Canada Business Corporation Act on January 22, 2004 and its wholly owned subsidiary, AlchemyKaolin, Inc., an Idaho incorporated company, changed its name to i-minerals, USA inc. in February 2005. (“IMI”); and
WHEREAS, the undersigned desire to ratify the Agreement in all its terms except as modified, amended and changed to the extent and in the manner hereinafter provided.
NOW THEREFORE, in consideration of the premises and the sum of Ten dollars ($10.00) and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, we, the undersigned, and each for itself, himself and herself, as the case may be, do hereby:
1. Replace all references to Alchemy Ventures, Ltd. (“ALY”) with i-minerals inc. (“IMA”), respectively, throughout the Agreement, except as herein amended.
2. Replace in their entirety the sections of the Agreement corresponding to the subsequent numbered sections such that the wording at each such replaced section of the Agreement will read:
1.2 Accord and Satisfaction . The Parties agree that with the issuance of a total of 1,750,000 common shares, plus such additional shares as represented by the interest accumulation calculated pursuant to Section 2.6 (Additional Consideration), of IMA to IIM, IIM releases any and all interest in the Lease Applications, Leases and Properties, as those capitalized terms are defined in the Agreement, and that IIM acknowledges that it has received full and final consideration of the transfer of the rights to the Lease Applications to IMI.
1.4 Term. The Term of this Agreement shall commence on the Effective Date and shall continue for a period of six (6) years (the “Term”), unless sooner terminated as provided in this Agreement.
2.1.2 Upon Completion of a Feasibility Study . Not later than thirty (30) days after completion of a Feasibility Study, IMA shall deliver to IIM, Four Hundred Thousand (400,000) common shares of IMA and such additional shares as calculated according to Section 2.6 (Additional Consideration), subject to any hold periods and all other restrictions as may be imposed by the TSX Venture Exchange (the “TSX.V”).
2.1.4 Upon Completion of a Permitting Process . Not later than thirty (30) days after completion of the Permitting Process, IMA shall deliver to IIM, Five Hundred Thousand (500,000) common shares of IMA such additional shares as calculated according to Section 2.6 (Additional Consideration) subject to any hold periods and all other restrictions as may be imposed by the TSX.V. The “Permitting Process” means the activities and time period required to obtain all federal, state or local government permits, licenses or other approvals (including water rights) necessary for IMI (or its successors, subsidiaries or affiliates), to construct and operate commercial mining and beneficiation facilities on the Properties, including, if required, through the development of a Production Plant.
2.1.5 On Completion of a Production Plant and First Delivery of Commercial Product . Not later than thirty (30) days after completion of the first delivery of a Commercial Product from a Production Plant, IMA shall deliver to IIM, Four Hundred Thousand (400,000) common shares of IMA such additional shares as calculated according to Section 2.6 (Additional Consideration) subject to any hold periods and all other restrictions as may be imposed by the TSX.V. The “first delivery of Commercial Product” shall be when IMI (or its successors, subsidiaries or affiliates),sells the product from beneficiating Mineral(s) in its Production Plant to a third-party end user or agent or broker for end users in commercially reasonable quantities at a cash amount representing the fair market value for the product so delivered.
3. Add to the Agreement Section 2.6 Additional Consideration to read as follows:
2.6 Additional Consideration . IIM shall receive compensation for time delays in IMI (or its successors, subsidiaries or affiliates) meeting the performance objectives as described in the Agreement, independent of whether such delays are within or outside of IMI’s control. Such compensation shall be calculated by attributing interest to such delays based on an interest rate calculated by equal weightings of the Prime Bank Lending Rate and the 10 year United States Treasury Bill as quoted daily in The Wall Street Journal as of the third anniversary date of this Agreement (the “Interest Rate”). The Interest Rate shall be applied against the value of the 1,300,000 un-issued shares (the “Un-issued Shares”) as of the third anniversary date of this Agreement. The Un-issued Shares shall each have a deemed value equal to the closing price of IMA’s shares on the TSX Venture Exchange as of the third anniversary date of this Agreement (the “Deemed Share Value”). The value of such interest accumulation shall be calculated by multiplying the portion of the Un-issued shares due on achievement of the milestone by the Deemed Share Value by the Interest Rate by the period of time from the third anniversary of this Agreement to the achievement of the milestone (the “Interest Accumulation”). For purposes on an example only, if the Interest Rate is 6%, the Deemed Share Value $0.25 and the 400,000 shares due on completion of a feasibility study were delivered 15 months after the third anniversary of the agreement, the related Interest Accumulation would be 400,000 * 0.25 *0.06 * 15/12 = $7,500. The interest accumulation shall be paid to IIM in additional common shares of IMA. The number of shares to be issued shall be determined by dividing the Interest Accumulation by the market price of IMA shares as of the date IMA declares the performance benchmark achieved where the market price is defined by the policies of the TSX.V Upon each performance achievement date thereafter the value of Interest Accumulation related to all remaining Un-issed Shares shall be calculated and paid to IIM in the same manner; provided, the “Un-issued Shares” and “Deemed Share Value” shall be recalculated and reset, respectively, in similar manner at each subsequently achieved milestone.
4. Ratify, adopt and confirm the Agreement in all its terms and provisions as modified, amended and changed herein, and do hereby grant, convey and assign said Lease Applications, Leases and Properties, as more fully described in Exhibit A attached hereto and incorporated by this reference, which description supercedes and replaces all previous descriptions of the Lease Applications, Leases and Properties, unto i-minerals, Inc., its successors, subsidiaries, affiliates and assigns in interest, as fully and completely as if it had originally been named as assignee in said Agreement.
5. This Amendment and Ratification and all share issuances contemplated herein are subject to the approval of the TSX Venture Exchange.
We, the undersigned, hereby declare that said Assignment Agreement with Contingent Right of Reverter in all its terms and provisions, as herein amended, is binding on us and each of us and is a valid and subsisting Assignment Agreement with Contingent Right of Reverter, which is binding, as amended, on the respective heirs, executors, administrators, successors or assigns of the undersigned.
IN WITNESS WHEREOF, this Amendment and Ratification has been executed as of the day and year first above written.
IIM: | IMA: |
IDAHO INDUSTRIAL MINERALS LLC. | i-minerals, Inc. |
By /s/ Robert Lemke | By /s/ Roger Kauffman |
_______ President | _______ President |
NWK : | IMI: |
Northwest Kaolin, Inc. | i-minerals USA, Inc. |
By /s/ Robert Lemke | By /s/ Roger Kauffman |
_______ President | _______ President |
EXHIBIT A
TO THAT CERTAIN
AMENDMENT AND RATIFICATION OF
ASSIGNMENT AGREEMENT WITH CONTINGENT RIGHT OF REVERTER
Dated
August 10, 2005
By and between i-minerals, Inc.
and Idaho Industrial Minerals, LLC
MINERAL
LEASES HELD BY I-MINERALS USA, INC.
AS
OF AUGUST 10, 2005
LEASE No. | Township | Range | Section | Legal Description | Acres |
9266 | 41 North | 1 East | 18 |
Lot 2 (SW¼NW¼),
NE¼, E½NW¼, W½SE¼, W½SE¼SE¼ |
381 |
9267 | 41 North | 1 East | 17 | NW¼, N½SW¼, S½SW¼SE¼, SE¼SE¼, W½NE¼, W½NE¼NE¼ | 400 |
9268 | 40 North | 1 West | 6 |
Lot 9 (SW¼NW¼),
Lot 10 (NW¼SW¼), Lot 11 (SW¼SW¼), SE¼NW¼, E½SW¼, SE¼, SW¼NE¼ |
451 |
9269 | 40 North | 1 West | 8 | S½, NE¼NE¼, S½NE¼ | 440 |
9272 | 41 North | 1 West | 23 |
Lot 1 (NE¼NE¼)
Lot 2 (NW¼NW¼) Lot 3 (SW¼NW¼) Lot 4 (SE¼NE¼) Lot 5 (NE¼SE¼) Lot 6 (NW¼SW¼) Lot 7 (SW¼SW¼) Lot 8 (SE¼SE¼) E½SW¼, W½SE¼ |
485 |
9273 | 41 North | 1 West |
22
27 |
NE¼SW¼
Lot 1 (SE¼SE¼) Lot 2 (SW¼SE¼) Lot 3 (SE¼SW¼) Lot 4 (SW¼SW¼) W½NW¼, SE¼NW¼, S½NE¼, N½S½ |
556 |
SECOND
AMENDMENT AND RATIFICATION OF ASSIGNMENT
AGREEMENT
WITH CONTINGENT RIGHT OF REVERTER
Effective
August 10, 2005
KNOWN ALL MEN BY THESE PRESENTS THAT:
WHEREAS, by that certain Assignment Agreement with Contingent Right of Reverter (hereafter the “Agreement”) made effective as of August 10, 2002 (the “Effective Date”), i-minerals inc. (formerly Alchemy Ventures Ltd. “ALY”) a company incorporated pursuant to the Canada Business Corporations Act (“IMA”), received certain state mineral lease applications from Idaho Industrial Minerals, LLC., an Idaho limited liability company (“IIM”) and Northwest Kaolin, Inc., an Idaho Corporation (“NWK”), collectively, referred to hereinafter as the “Parties”.
WHEREAS, a Memorandum of Assignment Agreement with Contingent Right of Reverter was recorded for notice purposes in the Latah County Recorder’s office at Moscow, ID covering the then lease applications which became mineral leases as more completely described on Exhibit A, attached hereto and incorporated herein.
WHEREAS, ALY changed its name to i-minerals inc. and was continued from jurisdiction of the Company Act (British Columbia) to the jurisdiction of the Canada Business Corporations Act on January 22, 2004 and its wholly owned subsidiary, AlchemyKaolin, Inc., an Idaho incorporated company, changed its name to i-minerals, USA inc. in February 2005. (“IMI”);
WHREAS, IMA, IMI, IIM and NWK amended the Agreement effective August 10, 2005 (“First Amendment”) to extend the term of the Agreement and arrange for additional consideration to IIM and NWK;
WHEREAS, the First Amendment proved difficult for the TSX Venture Exchange (the “TSX.V”) to quickly approve due to the complexity of evaluating the future share consideration, and the parties prefer to avoid such a delay; and.
WHEREAS, the parties now desire to rescind the First Amendment and ratify the Agreement in all its terms except as modified, amended and changed to the extent and in the manner hereinafter provided, effective as of August 10, 2005.
NOW THEREFORE, in consideration of Fifty Thousand (50,000) common shares of IMA to be issued to IIM, as soon as practicable after approval of this amendment by the TSX V, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, we, the undersigned, and each for itself, himself and herself, as the case may be, do hereby:
1. Revoke the First Amendment and replace it in its entirety with this Second Amendment and Ratification of Assignment Agreement with Contingent Right of Reverter (the “Second Amendment”) effective as of August 10, 2005.
2. Replace all references to Alchemy Ventures, Ltd. (“ALY”) with i-minerals inc. (“IMA”), respectively, throughout the Agreement, except as herein amended.
3. Replace in their entirety the sections of the Agreement corresponding to the subsequent numbered sections such that the wording at each such replaced section of the Agreement will read
1.2 Accord and Satisfaction. The Parties agree that with the issuance of a total of 1,750,000 common shares, plus an additional Fifty Thousand (50,000) common shares as consideration for this Second Amendment, of IMA to IIM, IIM releases any and all interest in the Lease Applications, Leases and Properties, as those capitalized terms are defined in the Agreement, and that IIM acknowledges that it has received full and final consideration of the transfer of the rights to the Lease Applications to IMI.
1.4 Term. The Term of this Agreement shall commence on the Effective Date and shall continue for a period of six (6) years (the “Term”), unless sooner terminated as provided in this Agreement.
4. Ratify, adopt and confirm the Agreement in all its terms and provisions as modified, amended and changed herein, and do hereby grant, convey and assign said Lease Applications, Leases and Properties, as more fully described in Exhibit A attached hereto and incorporated by this reference, which description supercedes and replaces all previous descriptions of the Lease Applications, Leases and Properties, unto IMA, its successors, subsidiaries, affiliates and assigns in interest, as fully and completely as if it had originally been named as assignee in said Agreement.
5. This Second Amendment and all share issuances contemplated herein are subject to the approval of the TSX V.
We, the undersigned, hereby declare that said Assignment Agreement with Contingent Right of Reverter in all its terms and provisions, as herein amended, is binding on us and each of us and is a valid and subsisting Assignment Agreement with Contingent Right of Reverter, which is binding, as herein amended, on the respective heirs, executors, administrators, successors or assigns of the undersigned.
This Second Amendment may be executed in counterparts and a facsimile of the executed signature page shall constitute an original for all purposes.
IN WITNESS WHEREOF, this Second Amendment has been executed as of the day and year first above written.
IIM: | IMA: |
IDAHO INDUSTRIAL MINERALS LLC. | i-minerals, inc. |
By /s/ W. Robert Lemke | By /s/ Roger Kauffman |
____________President | _____________President |
NWK: | IMI: |
Northwest Kaolin, INC. | i-minerals USA, inc. |
By /s/ W. Robert Lemke | By /s/ Roger Kauffman |
____________President | ____________President |
EXHIBIT
A
TO
THAT CERTAIN
SECOND
AMENDMENT AND RATIFICATION OF ASSIGNMENT
AGREEMENT
WITH CONTINGENT RIGHT OF REVERTER
Dated
Effective August 10, 2005
By
and between i-minerals, inc. and Idaho Industrial Minerals, LLC
MINERAL
LEASES HELD BY I-MINERALS USA, INC.
AS
OF AUGUST 10, 2005
LEASE No. | Township | Range | Section | Legal Description | Acres |
9266 | 41 North | 1 East | 18 | Lot 2 (SW1/4NW1/4), NE1/4, E1/2NW1/4, W1/2SE1/4, W1/2SE1/4SE1/4 | 381 |
9267 | 41 North | 1 East | 17 | NW1/4, N1/2SW1/4, S2/2SW1/4SE1/2, SE1/4SE1/4, W1/2NE1/4, W1/2NE1/4NE1/4 | 400 |
9268 | 40 North | 1 West | 6 |
Lot 9
(SW1/4NW1/4),
Lot 10 (NW1/4SW1/4), Lot 11 (SW1/4SW1/4), SE1/4NW1/4, E1/2SW1/4, SE1/4, SW1/4NE1/4 |
451 |
9269 | 40 North | 1 West | 8 | S1/2, NE1/4NE1/4, S1/2NE1/4 | 440 |
9272 | 41 North | 1 West | 23 |
Lot 1
(NE1/4NE1/4)
Lot 2 (NW1/4NW1/4) Lot 3 (SW1/4NW1/4) Lot 4 (SE1/4NE1/4) Lot 5 (NE1/4SE1/4) Lot 6 (NW1/4SW1/4) Lot 7 (SW1/4SW1/4) Lot 8 (SE1/4SE1/4) E1/2SW1/4, W1/2SE1/4 |
485 |
9273 | 41 North | 1 West |
22
27 |
NE1/4SW1/4
Lot 1 (SE1/4SE1/3) Lot 2 (SW1/4SE1/4) Lot 3 (SE1/4SW1/4) Lot 4 (SW1/4SW1/4) W1/3NW1/4, SE1/4NW1/4, S1/2NE1/4, N1/2S1/2 |
556 |
9275 | 41 North | 1 West |
20
24 36 |
W1/2NE1/4,
NE1/4NE1/4, W1/2SE1/4, SE1/4 SE1/4
Lot 2 (NW1/4NW1/4), Lot 3 (SW1/4NE1/4), E1/2NW1/4, NW1/4NE1/4 SW1/4SE1/4, E1/2SW1/4 |
562 |
9276 | 41 North | 1 West |
21
22 |
N1/2
N1/2 |
640 |
9279 | 41 North | 1 West | 16 |
Lot 3
(SE1/4SW1/4),
Lot 4 (SW1/4SW1/4), NW1/4, N1/3SW1/4, S1/2NE1/4 |
414 |
9293 | 40 North | 1 West | 17 | NW1/4, N1/2NE1/4, SE1/4NE1/4, NW1/4SE1/4 | 320 |
THIRD AMENDMENT
AND RATIFICATION OF
ASSIGNMENT
AGREEMENT
WITH CONTINGENT RIGHT OF REVERTER
Effective
August 10, 2008
KNOW ALL MEN BY THESE PRESENTS THAT:
WHEREAS, by that certain Assignment Agreement with Contingent Right of Reverter (hereafter the “Agreement”) made effective as of August 10, 2002 (the “Effective Date”), i-minerals inc. (formerly Alchemy Ventures, Ltd. “ALY”) a company incorporated pursuant to the Canada Business Corporations Act (“IMA”), received certain state mineral lease applications from Idaho Industrial Minerals, LLC., an Idaho limited liability company (“IIM”) and Northwest Kaolin, Inc., an Idaho corporation (“NWK”), collectively, referred to hereinafter as the “Parties”.
WHEREAS, a Memorandum of Assignment Agreement with Contingent Right of Reverter was recorded for notice purposes in the Latah County Recorder’s office at Moscow, ID covering the then lease applications which became mineral leases as more completely described on Exhibit A, attached hereto and incorporated herein.
WHEREAS, ALY changed its name to i-minerals inc. and was continued from the jurisdiction of the Company Act (British Columbia) to the jurisdiction of the Canada Business Corporation Act on January 22, 2004 and its wholly owned subsidiary, AlchemyKaolin, Inc., an Idaho incorporated company, changed its name to i-minerals, USA inc. in February 2005. (“IMI”);
WHEREAS, IMA, IMI, IIM and NWK amended the Agreement effective August 10, 2005 (“First Amendment”) to extend the term of the Agreement and arrange for additional consideration to IIM and NWK;
WHEREAS, the First Amendment proved difficult for the TSX Venture Exchange (the “TSX.V”) to quickly approve due to the complexity of evaluating the future share consideration, and the parties rescinded the First Amendment and ratified the Agreement in all its terms, except as modified, amended and changed by the Second Amendment And Ratification Of Assignment Agreement With Contingent Right Of Reverter effective as of August 10, 2005 (“Second Amendment”), which included an extension of the Term.
NOW THEREFORE, in consideration of Fifty Thousand (50,000) warrants of IMA exercisable by IIM at a cost of C$0.70/common share within two years, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, we, the undersigned, and each for itself, himself and herself, as the case may be, do hereby:
Second Amendment and Ratification | 1 |
1. Replace in its entirety Section 1.4 of the Agreement such that the new Section 1.4 of the Agreement will read:
1.4 Term. The Term of this Agreement shall commence on the Effective Date and shall continue for a period of nine (9) years (the “Term”), unless sooner terminated as provided in this Agreement.
2. Ratify, adopt and confirm the Agreement in all its terms and provisions as previously modified, amended and changed and as modified, amended and changed herein, and do hereby grant, convey and assign said Lease Applications, Leases and Properties, as more fully described in Exhibit A attached hereto and incorporated by this reference, which description supercedes and replaces all previous descriptions of the Lease Applications, Leases and Properties, unto IMA, its successors, subsidiaries, affiliates and assigns in interest, as fully and completely as if it had originally been named as assignee in said Agreement.
3. This Third Amendment And Ratification Of Assignment Agreement With Contingent Right Of Reverter (“Third Amendment”) is subject to the approval of the TSX V.
We, the undersigned, hereby declare that said Assignment Agreement with Contingent Right of Reverter in all its terms and provisions, as herein and previously amended, is binding on each of us and on the respective heirs, executors, administrators, successors or assigns of the undersigned.
This Third Amendment may be executed in counterparts and a facsimile of the executed signature page shall constitute an original for all purposes.
IN WITNESS WHEREOF, this Third Amendment has been executed effective as of the 10 th Day of August, 2008.
IIM: | IMA: |
IDAHO INDUSTRIAL MINERALS LLC. | i-minerals, inc. |
By /s/ W. Robert Lemke | By /s/ Roger Kauffman |
_____________President | _____________President |
NWK: | IMI: |
Northwest Kaolin, INC. | i-minerals USA, inc. |
By /s/ W. Robert Lemke | By /s/ Roger Kauffman |
_____________President | _____________President |
Second Amendment and Ratification | 2 |
EXHIBIT A
TO THAT CERTAIN
THIRD AMENDMENT AND RATIFICATION
OF ASSIGNMENT AGREEMENT WITH CONTINGENT RIGHT OF REVERTER
Dated Effective August 10, 2008
By and between i-minerals, inc.
and Idaho Industrial Minerals, LLC
MINERAL
LEASES HELD BY I-MINERALS USA, INC.
AS
OF AUGUST 10, 2008
LEASE No. | Township | Range | Section | Legal Description | Acres |
9266 | 41 North | 1 East | 18 |
Lot 2 (SW¼NW¼),
NE¼, E½NW¼, W½SE¼, W½SE¼SE¼ |
381 |
9267 | 41 North | 1 East | 17 | NW¼, N½SW¼, S½SW¼SE¼, SE¼SE¼, W½NE¼, W½NE¼NE¼ | 400 |
9268 | 40 North | 1 West | 6 |
Lot 9 (SW¼NW¼),
Lot 10 (NW¼SW¼), Lot 11 (SW¼SW¼), SE¼NW¼, E½SW¼, SE¼, SW¼NE¼ |
451 |
9269 | 40 North | 1 West | 8 | S½, NE¼NE¼, S½NE¼ | 440 |
9272 | 41 North | 1 West | 23 |
Lot 1 (NE¼NE¼)
Lot 2 (NW¼NW¼) Lot 3 (SW¼NW¼) Lot 4 (SE¼NE¼) Lot 5 (NE¼SE¼) Lot 6 (NW¼SW¼) Lot 7 (SW¼SW¼) Lot 8 (SE¼SE¼) E½SW¼, W½SE¼ |
485 |
9273 | 41 North | 1 West |
22
27 |
NE¼SW¼
Lot 1 (SE¼SE¼) Lot 2 (SW¼SE¼) Lot 3 (SE¼SW¼) Lot 4 (SW¼SW¼) W½NW¼, SE¼NW¼, S½NE¼, N½S½ |
556 |
Second Amendment and Ratification | 3 |
Second Amendment and Ratification | 4 |
FOURTH AMENDMENT AND
RATIFICATION OF THE ASSIGNEMENT AGREEMENT
WITH A CONTINGENT
RIGHT OF REVERTER
Effective January 21,
2010
KNOW ALL MEN BY THESE PRESENTS THAT:
WHERESAS, by that certain Assignment Agreement with Contingent Right of Reverter (hereafter the “Agreement”) made effective as of August 10, 2002 (the “Effective Date”), i-minerals inc. (formerly Alchemy Ventures Ltd. “ALY”) a company continued to the Canada Business Corporations Act (“IMA”), received certain state mineral lease applications from Idaho Industrial Minerals LLC an Idaho limited liability company (“IIM”) and Northwest Kaolin, a Idaho corporation (“NWK”), collectively, referred to herein after as the “Parties”; and
WHEREAS , the sixteen lease applications were modified and consolidated, which became ten Mineral Leases as more completely described on Exhibit A, attached hereto and incorporated herein (the “Leases”), and the Idaho Department of Lands issued the Leases to AlchemyKaolin, inc., which later assigned the Leases to a partnership, i-minerals Helmer-Bovill, L.L.P.; and
WHEREAS , ALY changed its name to i-minerals inc and was continued from the jurisdiction of the Company Act (British Columbia) to the jurisdiction of the Canada Business Corporation Act on January 24, 2004 and its wholly owned subsidiary AlchemyKaolin Inc., an Idaho incorporated company, changed its name to i-minerals USA inc. in February 2005 (“IMI”); and
WHEREAS , IMA, IMI, IIM and NWK amended the Agreement effective August 10, 2005 (the “First Amendment”) to extend the term of the Agreement to six years from the Effective Date of the Agreement and arrange for additional consideration to IIM and NWK; and
WHEREAS , the First Amendment proved difficult for the TSX Venture Exchange (the “TSX.V”) to quickly approve due to the complexity of evaluating the future share consideration, and the parties rescinded the First Amendment and ratified the Agreement in all of its terms, except as modified, amended and changed by the Second Amendment And Ratification of Assignment Agreement With Contingent Right of Reverter effective as of August 10, 2005 (the “Second Amendment”), which included the same extension of the term of the Agreement to six years from its Effective Date; and
WHEREAS , the term of the Agreement as agreed to and extended by the Parties in the Second Amendment was of insufficient length for IMA to meet the share issuance milestones as set forth in the Agreement; therefore, IMA, IMI, IIM and NWK amended the Agreement effective August 10, 2008 (the “Third Amendment”) to extend the term of the Agreement to nine years from the Effective Date of the Agreement and arrange for additional consideration to IIM and NWK; and
WHEREAS , by that certain Plan of Merger filed with the Idaho Secretary of State’s Office on January 20, 2010 and made effective on the date of filing, i-minerals Helmer-Bovill, L.L.P. merged with i-minerals USA, inc., and the sole surviving entity is was i-minerals USA, inc., which automatically transferred the Leases to i-minerals USA, inc. by State law I.C. 30-18-206 (the Idaho Entities Transaction Act).
Fourth Amendment and Ratification 1.22.10 | Page 1 of 8 |
NOW THEREFORE , in consideration of the sum of $500 and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, we, the undersigned, and each for itself, himself or herself as the case may be, do hereby:
1. Replace in its entirety Section 1.4 of the Agreement such that the new Section 1.4 of the Agreement will read:
1.4 Term . The term of this Agreement shall commence on the Effective Date and shall continue for a period of eleven (11) years (the “Term”), unless sooner terminated as provided in this Agreement.
2. Replace in its entirety Section 2.1.2 of the Agreement such that the new Section 2.1.2 of the Agreement will read:
2.1.2 Upon Completion of a Feasibility Study . Upon completion of a Feasibility Study, IMA shall deliver to IIM, Six Hundred Thousand (600,000) common shares of IMA.
3. Replace in its entirety Section 2.1.4 of the Agreement such that the new Section 2.1.4 of the Agreement will read:
2.1.4 Upon Completion of the Permitting Process . Upon completion of the Permitting Process, IMA shall deliver to IIM Seven Hundred Thousand (700,000) common shares of IMA. The “Permitting Process” means the activities and time period required to obtain all federal, state or local government permits, licenses or other approval (including water rights) necessary for IMA (or its subsidiaries or affiliates), to construct and operate commercial mining and beneficiation facilities on the Properties, including, if required through the development of a Production Plant.
4. Strike from the Agreement Section 2.1.5 in its entirety eliminating any and all obligation of IMA to issue any shares on the Completion of a Production Plant and First Delivery of Commercial Product.
5. Ratify, adopt and confirm the Agreement in all its terms and provisions as previously modified, amended and changed and as modified amended and changed herein, and do hereby grant convey and assign said Lease Applications, Leases and Properties, as more fully described in Exhibit A attached hereto and incorporated by this reference, which description supersedes and replaces all previous descriptions of Lease Applications, Leases and Properties unto IMA, its successors, subsidiaries, affiliates and assigns in interest, as fully and completely as if it had originally been named as assignee in said Agreement.
Fourth Amendment and Ratification 1.22.10 | Page 2 of 8 |
6. This Fourth Amendment and Ratification of Assignment Agreement and Contingent Right of Reverter (the “Fourth Amendment”) is subject to the acceptance of the TSX.V.
We, the undersigned, hereby declare that the Agreement in all its terms and provisions, as herein and previously amended, is binding on each of us and our respective heirs, executors, administrators, successors of the undersigned.
This Fourth Amendment may be executed in two or more counterparts and a facsimile of the executed signature page shall constitute an original for all purposes, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Fourth Amendment has been executed effective as of the 21 st day of January 2010.
IIM:
IDAHO INDUSTRIAL MINERALS LLC |
IMA
i-minerals inc. |
|
By /s/ Robb Lemke | By /s/ Barry Girling | |
President | Director | |
NWK
Northwest Kaolin, Inc. |
IMI
i-minerals USA inc. |
|
By /s/ Robb Lemke | By /s/ Roger Kauffman | |
President | President |
THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK.
Fourth Amendment and Ratification 1.22.10 | Page 3 of 8 |
PROVINCE OF BRITISH COLUMBIA )
: ss.
CITY OF VANCOUVER )
On this _____ day of January, 2010, before me, ______________, a notary public in and for said State, personally appeared W. Barry Girling, known or identified to me to be the Director of i-minerals inc., a British Columbia corporation, the corporation that executed the instrument, and acknowledged to me that said corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.
_______________________________________________ Notary Public Residing at Comm. Expires |
STATE OF IDAHO )
: ss.
COUNTY OF )
On this _____ day of January, 2010, before me, ______________, a notary public in and for said State, personally appeared Robb Lemke, known or identified to me to be the President of IDAHO INDUSTRIAL MINERALS, LLC., an Idaho limited liability company, the corporation that executed the instrument, and acknowledged to me that said corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.
_______________________________________________ Notary Public Residing at Comm. Expires |
Fourth Amendment and Ratification 1.22.10 | Page 4 of 8 |
STATE OF IDAHO )
: ss.
COUNTY OF ADA )
On this _____ day of January, 2010, before me, ______________, a notary public in and for said State, personally appeared Robb Lemke, known or identified to me to be the President of NORTHWEST KAOLIN, INC., an Idaho corporation, the corporation that executed the instrument, and acknowledged to me that said corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.
_______________________________________________ Notary Public Residing at |
Comm. Expires
STATE OF IDAHO )
: ss.
COUNTY OF )
On this _____ day of January, 2010, before me, ______________, a notary public in and for said State, personally appeared Roger A. Kauffman, known or identified to me to be the _____________ of I-MINERALS USA, INC., an Idaho limited liability company, the corporation that executed the instrument, and acknowledged to me that said corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written.
_______________________________________________ Notary Public Residing at Comm. Expires |
Fourth Amendment and Ratification 1.22.10 | Page 5 of 8 |
EXHIBIT A
TO THAT CERTAIN
FOURTH AMENDMENT AND RATIFICATION OF THE ASSIGNMENT AGREEMENT WITH A
CONTINGENT RIGHT OF REVERTER
Dated Effective January 21, 2010
By and between Idaho Industrial Minerals, LLC and i-minerals, inc.
MINERAL LEASES HELD BY I-MINERALS USA, INC.
AS OF JANUARY 20, 2010
Fourth Amendment and Ratification 1.22.10 | Page 6 of 8 |
LEASE No. | Township | Range | Section | Legal Description | Acres |
9266 | 41 North | 1 East | 18 |
Lot 2 (SW¼NW¼),
NE¼, E½NW¼, W½SE¼, W½SE¼SE¼ |
381 |
9267 | 41 North | 1 East | 17 | NW¼, N½SW¼, S½SW¼SE¼, SE¼SE¼, W½NE¼, W½NE¼NE¼ | 400 |
9268 | 40 North | 1 West | 6 |
Lot 9 (SW¼NW¼),
Lot 10 (NW¼SW¼), Lot 11 (SW¼SW¼), SE¼NW¼, E½SW¼, SE¼, SW¼NE¼ |
451 |
9269 | 40 North | 1 West | 8 | S½, NE¼NE¼, S½NE¼ | 440 |
9272 | 41 North | 1 West | 23 |
Lot 1 (NE¼NE¼)
Lot 2 (NW¼NW¼) Lot 3 (SW¼NW¼) Lot 4 (SE¼NE¼) Lot 5 (NE¼SE¼) Lot 6 (NW¼SW¼) Lot 7 (SW¼SW¼) Lot 8 (SE¼SE¼) E½SW¼, W½SE¼ |
485 |
9273 | 41 North | 1 West |
22
27 |
NE¼SW¼
Lot 1 (SE¼SE¼) Lot 2 (SW¼SE¼) Lot 3 (SE¼SW¼) Lot 4 (SW¼SW¼) W½NW¼, SE¼NW¼, S½NE¼, N½S½ |
556 |
Fourth Amendment and Ratification 1.22.10 | Page 7 of 8 |
Fourth Amendment and Ratification 1.22.10 | Page 1 of 8 |
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of and to have effect from the 1st day of April 2013
BETWEEN:
I-Minerals Inc. a company duly registered under the Canada Business Corporations Act, and having its office at 880 - 580 Hornby Street, Vancouver, British Columbia, V6C 3B6 and
i-minerals USA Inc., an Idaho Corporation
880 - 580 Hornby Street, Vancouver, British Columbia, V6C 3B6(hereinafter collectively called the "Company")
OF THE FIRST PART
AND:
THOMAS M. CONWAY
of 3136 West 8565 Street, West Jordan, Utah, 84088, USA(hereinafter called the "Employee")
OF THE SECOND PART
WHEREAS:
A. The Company is a reporting company whose shares are posted and listed for trading on The TSX Venture Exchange and is engaged in the business of natural resource exploration and development;
B. The Company wishes to retain the services of the Employee in the position of President and Chief Executive Officer of the Company to provide certain, corporate, management, professional and business development services to the Company and the Employee has agreed to be employed by the Company and is qualified to render the aforesaid services;
C. The Company and the Employee had previously entered into a three year employment agreement dated May 11, 2011, vesting of options and bonus payments from which were based on the development of the Kelly's Basin deposit, a mineral project the Company is no longer developing and this amended contract resets option prices to reflect current market conditions and tie the options and bonus payments to the successful development of the Bovill Kaolin Project
C. The parties have agreed that the terms and conditions of such employment will be as hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the payment of $10 and of the covenants and agreements hereinafter contained, the parties hereto have agreed as follows:
(2)
1. | DUTIES AND DEVOTION OF TIME |
1.01 | It is acknowledged and agreed by the Employee that the work of the Employee is and will be of such a nature that regular hours may be impossible and there may be occasions in which the Employee will not be required to work a full eight hours per day and/or a full five days per week. It is also anticipated that there will be certain evenings, Saturdays, Sundays and holidays during which the Employee will be required to work. The work of the Employee is in part of a supervisory nature and accordingly the Employee agrees that the consideration herein set forth will be in full and complete satisfaction for the Employee's work and services, no matter how or when performed, and the Employee hereby releases the Company from any claims for overtime pay or compensation whatsoever which the Employee might have by reason of any existing or future legislation or otherwise. |
1.02 | During the term of this Agreement the Employee will be responsible for the overall management and operation of the Company, will provide engineering, consulting and marketing services and will have the obligations, duties, authority and power as President and Chief Executive Officer to do all acts and things as are reasonably necessary for the efficient and proper execution and discharge of such responsibilities, including but not limited to oversight of feasibility, permitting interaction with the capital markets including financing of the business plan, assuming one or more of the deposits demonstrates economic viability through the feasibility study and the company secures all necessary permits and funding, the construction of a mining operation. |
1.03 | The Employee will, during the term of this Agreement, obtain the consent of the directors of the Company before becoming a director or senior officer of any corporation other than the Company, such consent not to be unreasonably withheld. |
1.04 | In conducting his duties under this Agreement, the Employee will report to the Company's board of directors and will act consistently with their directives and policies. |
1.05 | The Employee will perform the services set out in paragraph 1.02. The Employee shall also perform such other duties that are not inconsistent with the duties set out above, as may be requested by the board of directors of the Company from time to time. |
2. | TERM |
2.01 | The employment term shall be for an initial period of 2 years, commencing on April 1, 2013 and terminating three years from commencement of the term (which period is hereinafter called the "Term"). The Term may be extended only by resolution duly authorized by the board of directors of the Company and consented to in writing by the Employee. |
2.02 | Within 90 days prior to the end of the Term, the Employee shall have the right to request the compensation committee of the Company to negotiate in good faith a renewal of the Term, with the intent that if possible, the terms of renewal be agreed upon prior to the initial expiry of the Term. |
(3)
3. | REMUNERATION |
3.01 | With the best interests of the Company in mind, the Employee will faithfully, honestly and diligently serve the Company in the capacity as provided for herein and in consideration of which the Company will pay to the Employee a salary ofUS$12,500 per month. |
3.02 | At the option of the Employee, but subject to the polices and acceptance of the TSX Venture Exchange, up to 25% of the Employee's US$12,500 salary may be paid each month in common shares of the Company. Should the Employee elect to take a portion of his salary in common shares, he shall notify the Company seven business days prior to month end of the desire to take a portion in common shares and the portion of his salary he desires to take in common shares. The number and deemed price of any such shares shall be calculated by using the average trading price of the Company's shares for the 10 days prior to the end of the particular month. Any shares to be issued to the employee pursuant to the terns of this Agreement shall be grouped together and issued in one block every three months (i.e the optional shares shall accumulate over a three month period and one share certificate shall be issued at the end of the third month) |
3.03 | The salary of the Employee shall be paid once per month at the end of each month during the Term.] |
3.04 | Without the prior written consent of the Employee, no deductions from the salary payable hereunder shall be made unless on account of normal payroll deductions as required under Federal, Idaho State or Utah State Income Tax law, or otherwise, as required by law or court order. |
3.05 | The Company and the Employee agree to meet not less than once per year to assess the success in meeting the milestones as set forth in section 7.01 and may adjust the base salary amount as appropriate, subject to the approval of the TSX Venture Exchange at these meetings, |
4 . | EXPENSE ACCOUNT |
4.01 | The Employee shall be entitled to be reimbursed by the Company for all reasonable out of pocket expenses incurred by him in carrying out his duties as provided for herein, provided that the Employee shall receive prior approval of a majority of the board of directors of the Company prior to incurring or committing himself or the Company to incur, any expense (or series of expenses reasonably relating to one matter) exceeding $10,000 in value. |
4.02 | Expenses shall be summarized monthly in a written report prepared by the Employee and submitted to the Company. The expense summary shall contain such detail reasonably as may be requested by the Company to verify the same was incurred in the furtherance of the business of the Company. |
4.03 | Unless otherwise agreed to by the Employee, expenses submitted and approved by the Company shall be paid to the Employee within seven days of submission of the foregoing expense report and any requested underlying data. |
5. | MEDICALPLAN |
5.01 | During the Term, the Company shall reimburse the Employee for medical insurance premiums up to $3,000 for each calendar quarter. |
(4)
6. | VACATION |
6.01 | The Employee will be entitled to an annual vacation with full pay to the Employee of four weeks (consecutive or otherwise as the Employee will see fit) which will be taken at a time, or times, to be arranged in advance with the Company so that it does not unduly affect the operations of the Company. |
7. | BONUS AND GRANT OF OPTION |
7.01 | In addition to the 230,000 options previously granted to the Employee for his role as a director of the Company, the Company agrees to pay the bonuses and provide incentive stock options based on the attainment of milestones as set forth below. Options shall be granted upon TSX Venture Exchange approval of this contract and vest on the attainment of the milestones. |
Item | expected year of completion | number of options | option price | cash bonus | ||
1 | Compete feasibility of Tailings | 2012 | 50,000 | 0.10 | $ | |
2 | Completion of Permitting on Tailings | 2012 | 50,000 | 0.10 | ||
3 | Complete pre-feasibility study on Bovill Kaolin | 2013 | 50,000 | 0.10 | ||
4 | Complete Market Analysis on all minerals | 2013 | 50,000 | 0.10 | ||
5 | Completion of items 1-4 above | 2013 | $20,000 | |||
6 | 2nd tranche financing | 2013 | 50,000 | 250,000 | 0.10 | |
7 | Compete feasibility study on Bovill Kaolin | 2014 | 65,000 | 0.15 | ||
8 | Completion of Permitting on KB | 2014 | 65,000 | 0.15 | ||
9 | 3rd tranche of financing (equity) or JV Partner | 2014 | 65,000 | 0.15 | ||
10 | Complete Debt Financing project or JV Partner | 2014 | 65,000 | 260,000 | 0.15 | |
11 | Completion of items 7-10 above or JV Partner | 2014 | $100,00 | |||
12 | Complete Construction | 2015 | 75,000 | 0.25 | ||
13 | Plant Fully Operational | 2015 | 75,000 | 0.25 | ||
14 | Sales of Product | 2015 | 75,000 | 0.25 | ||
15 | Profitability | 2015 | 75,000 | 0.25 | ||
16 | Completion of items 12-15 above with or without JV Partner | $75,000 | ||||
17 | Completion of Property wide EIS (as applicable) | 2016 | 75,000 | 300,00 | 0.25 |
8. | CONFIDENTIAL INFORMATION |
8.01 | The parties hereto acknowledge and agree that the Employee by virtue of employment with the Company will have access to confidential and secret information and therefore the Employee agrees that during the term of this Agreement and on termination or expiry of the same, for any reason whatsoever, he will not divulge or utilize to the detriment of the Company any of such confidential or secret information so obtained. |
9. | TERMINATION OF AGREEMENT |
9.01 | Notwithstanding any other provision herein, it is understood and agreed by and between the parties hereto that the Employee may terminate his employment by giving the Company: |
(5)
(a) | not less than 120 days' written notice of such intention to terminate, and in which event the Company shall have no liability to pay the Employee any remuneration following the effective date of termination; |
(b) | written notice of termination at any time within 60 to 365 days following a "change of control" (as that term is defined in paragraph 9.03 hereof), in which event the Company shall pay to the Employee twenty-four months' salary as well as payment of medical benefits as set forth in section 5.01 for a period of 24 months after termination. |
9.02 | If there is no change of control or it has been more than 365 days since a change of control, then the Company may terminate this Agreement in its entirety: |
(a) | without cause and after 24 months of employment upon notice to the Employee and by payment to the Employee of one month's salary for each consecutive twelve months of employment with the Company (calculated from the Start Date), plus all accrued and unpaid wages, expenses and holiday pay to the effective date of termination; and |
(b) | upon notice to the Employee in the event of the Employee's willful misconduct or gross negligence, and in which event, the Company shall have no liability to pay the Employee any remuneration following the giving of such notice, other than accrued and unpaid wages, expenses and holiday pay to the effective date of termination; |
and the Employee does hereby agree that, in the case of subparagraphs 9.02(a) and 9.02(b), such termination allowance will be payment in full for any discharge by the Company, whether unlawful or unwarranted. |
9.03 | In the event of a change of control of the Company, the Employee, subject to his rights under subparagraph 9.01 (b) hereof, shall continue to serve the Company in the same capacity and have the same authority, responsibilities and status as he had as of the date immediately prior to the change of control. For the purposes of this Agreement, a "change of control" shall be deemed to have occurred when: |
(a) | a person becomes a control person (as that term is defined in the Securities Act of British Columbia) of the Company; or |
(b) | a majority of the directors elected at any annual or special general meeting of shareholders of the Company are not individuals nominated by the Company's then• incumbent board of directors. |
9.04 | In the event of the termination of the Employee's employment pursuant to subparagraph 9.0l(b) hereof, the Company shall cause to remain in full force and effect for the remainder of the term(s) all vested incentive stock option(s) granted to the Employee and in effect on the effective date of termination. |
9.05 | In the event of the termination of the Employee's employment pursuant to subparagraph 9.02 (a) hereof, the Employee will be entitled to exercise all stock options which would have been exercisable during the remainder of the respective terms of such stock options. |
10. | ARBITRATION |
(6)
10.01 | Any controversy or claim arising out of or relating to this Agreement or any breach of this Agreement will be finally settled by arbitration in accordance with the provisions of the Commercial Arbitration Act (British Columbia). |
11 . | MISCELL A NEOUS |
11.01 | Each notice, demand or other communication required or permitted to be given under this Agreement shall be in writing and shall be delivered to a party hereto ("Party"), at the address for such Party specified above. The date of receipt of such notice, demand or other communication shall be the date of delivery. Each notice, demand or other communication required or permitted to be given under this Agreement may be delivered by facsimile and shall be deemed to have been received at the time the facsimile is transmitted. Facsimile numbers for the Parties are: |
Thomas M. Conway
3136 West 8565 Street West Jordan, Utah 84088, USA |
I-
Minerals inc.
880 - 580 Hornby Street Vancouver, BC V6C 3B6, Canada (604) 684-0642 |
11.02 | The Parties may at any time and from time to time notify the other Party in writing of a new address or facsimile number to which notice shall be given to it thereafter until further change. |
11.03 | Each of the Parties hereto agree to pay their own costs, expenses and fees (including, without limitation, legal counsel fees) incurred in connection with the preparation, execution and consummation of this Agreement. |
11.04 | This Agreement 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. |
11.05 | Each of the Parties covenants and agrees, from time to time and at all times, to do all such further acts and execute and deliver all such further deeds and documents as shall be reasonably required in order to fully perform and carry out the terms and intent of this Agreement. |
11.06 | Time shall be of the essence in the performance of this Agreement. |
11.07 | If any one or more of the provisions contained herein should be invalid, illegal or unenforceable in any respect in any jurisdiction, the validity, legality and enforceability of such provisions shall not in any way be affected or impaired thereby in any other jurisdiction and the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affect or impaired thereby. |
11.08 | This Agreement and all provisions hereof shall be governed by and construed in accordance with the laws of the Province of British Columbia, and in this regard, the courts of the Province of British Columbia shall have exclusive jurisdiction. |
11.09 | No consent or waiver expressed or implied by any Party in respect of any breach or default by any other Party shall be deemed or construed to be a consent to or a waiver of any other breach or default whatsoever. |
(7)
11.10 | This Agreement shall enure to the benefit of and be binding upon the Parties hereto and their respective heirs, successors and permitted assigns. |
11.11 | This Agreement may be executed in counterparts and if so, the collective counterpart signatures shall be evidence of the signature of this Agreement by all Parties. |
11.12 | Signature of this Agreement may be made by facsimile and if so, the facsimile signature shall be deemed to be an original signature of that Party. |
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.
The Corporate
Seal of
I-Minerals
Inc.
was
hereunto affixed in the presence of:
/s/ Barry Girling
Auth
o
r
i
zed
Si
g
n
a
tory
/s/ Matthew Anderson
Auth
o
r
i
zed
Si
g
n
a
tory
SIGNED, SEALED AND DELIVERED
by
TH
OM
A
S M.
CONWAY
in the presence
of:
Rossanol Conway | /s/ Thomas Conway | |
Name | Signatur e | |
3136 W 8565 S | ||
Address | Thomas Conway | |
W Jordan, Utah | ||
Housewife | Name - Please Print | |
Occupation |
THIS AGREEMENT is made as of September 13, 2013 (the "Effective Date").
AMONG:
I-M i nerals Inc. , a body corporate, continued under the laws of Canada, having its head office at Suite 880 - 580 Hornby Street, Vancouver, British Columbia, Canada V6C 3B6
(hereinafter called the "Company")
OF THE FIRST PART
AND:
i-minerals USA Inc., an Idaho limited liability company, having an office c/o the Company, at Suite 880 - 580 Hornby Street, Vancouver, British Columbia, Canada V6C 3B6
(hereinafter called the "Subsidiary")
OF THE SECO N D PART
AND:
BV Lending, LLC, an Idaho limited liability company, having its head office at Suite 201 - 901 Pier View Drive, Idaho Falls, Idaho, U.S.A. 83402
(hereinafter called "BV")
OF THE THIRD PART
WHEREAS:
A. | Pursuant to an agreement among the Company, BV and Ball Ventures LLC dated September 19,2012 (the "Initial Agreement"), BV agreed to advance up to $1,000,000 to the Company in tranches, with each advance thereunder having been considered an unsecured loan accruing interest at the rate of 9.5% per annum compounded semi annually from the date of each advance; |
B. | BV has advanced the $1,000,000 to the Company provided for under the Initial Agreement, together with the additional advances listed in paragraph 2 herein; |
C. | The Company continues to require additional funding to advance its Bovill Kaolin Project in the State of ldaho, U.S.A.; |
D. | BV has agreed to advance additional funds to the Company on the terms and conditions hereinafter set forth; and |
E. | The Subsidiary is a wholly-owned subsidiary of the Company and is the legal owner of the Helmer-Bovill Property hosting the Bovill Kaolin Project in the State of Idaho, U.S.A. referred to in Recital C. herein; |
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of these presents and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each of the parties, the parties hereby agree as follows:
2
1. | Additional Advances to be made |
1.01 | BV hereby agrees to advance up to an additional $3,133,000 to the Company in tranches, in addition to the advances listed in paragraph 2.01 herein (individually an "Advance" and collectively "Advances"), with each Advance to be considered a secured loan accruing interest at the rate of 12% per annum calculated and paid semi-annually from the date of each Advance, with the Company to repay to BV the principal amount of each Advance as provided for in paragraph 6.01 hereof. Advances hereunder subsequent to be Effective Date will be to a maximum of $250,000 per month in accordance with Schedule A attached hereto. Advances are to be made on the first business day of each month subsequent to the Effective Date. |
1.02 | At BV's election and in its sole discretion, it may direct that the Company pay the interest owing on the Advances as provided for in paragraph 1.01 herein either in cash or in common shares in its capital stock ("Shares"). If interest is paid in Shares, the Shares will be issued at a deemed price per share equal to the volume weighted average trading price ("VWAP") of the Company's common shares over the twenty (20) trading days prior to the date such interest becomes payable, calculated by dividing the total value of common shares of the Company as traded on the TSX Venture Exchange (or such other stock exchange where the majority of the Company's trading takes place) by the total volume of shares traded. |
1.03 | The Company shall pay to BV a late charge equal to five percent (5%) of each payment due under this Agreement, or under any other instrument evidencing or securing this Agreement, that is not paid in full within ten (10) days after the applicable due date as provided for in paragraph 6.01 herein. Such late charge shall accrue and be due as of the due date for such payment and represents a reasonable estimate of fair compensation for the loss that may be sustained by BV for the failure of the Company to make timely payment. Such late charge shall be paid without prejudice to the right of BV to collect any other amounts provided for hereunder or to pursue any other rights and remedies available to BV under this Agreement, under any documents securing and/or guaranteeing this Agreement, at law or in equity. |
1.04 | All past due principal (whether in due course or by acceleration), past due interest and past due late charges shall, both before and after judgment, bear interest at the default rate of eighteen percent (18%) per annum compounded monthly from and after the applicable due date, as provided for in paragraph 6.01 herein, until paid in full. |
1.05 | The Company agrees to pay any and all reasonable costs and expenses (regardless of theparticular nature thereof and whether incurred before or after the initiation of suit or before or after judgment) which may be incurred by BV in connection with the enforcement of any of its rights under this Agreement and/or any instrument securing or guaranteeing this Agreement, including but not limited to attorney fees and all costs and expenses of collection. |
1.06 | The Company, and all sureties, guarantors, and endorsers hereof, severally waive presentment for payment, demand, and notice of dishonor and nonpayment of this Agreement, and consent to any and all extensions of time, renewals, waivers, or modifications that may be granted by BV with respect to the payment or other provisions |
3
of this Agreement, and to the release of any security, or any part thereof, with or without substitution. |
1.07 | Notwithstanding any other provision contained in this Agreement or in any instrument given to evidence or secure the obligations evidenced hereby: (i) the rates of interest and charges provided for herein and therein shall in no event exceed the rates and charges which result in interest being charged at a rate equaling the maximum allowed by law; and (ii) if for any reason whatsoever BV ever receives as interest in connection with the transaction of which this Agreement is a part an amount which would result in interest being charged at a rate exceeding the maximum allowed by law, such amount or portion thereof as would otherwise be excessive interest shall automatically be applied toward reduction of the unpaid principal balance then outstanding hereunder and not toward payment of interest. |
2. | Previous Advances |
2.01 | The parties agree that the following principal amounts previously advanced by BV to the Company are to be considered Advances pursuant to the terms and conditions of this Agreement, and will entitle BV to receive bonus shares and bonus warrants as contemplated in paragraph 3.01 hereof: |
(a) | $200,000 was advanced to the Company on November 5, 2012, of which $50,000 was applied to the loans under the Initial Agreement, with the balance of $150,000, together with interest thereon at the rate of 12% per annum accrued through the Effective Date in the amount of $15,386, is to be considered an Advance in the combined amount of$165,386; |
(b) | $150,000 advanced to the Company on December 3, 2012, together with interest thereon at the rate of 12% per annum accrued through the Effective Date in the amount of $14,005, is to be considered an Advance in the combined amount of $164,005; |
(c) | $200,000 advanced to the Company on January 23, 2013, together with interest thereon at the rate of 12% per annum accrued through the Effective Date in the amount of $15,321, is to be considered an Advance in the combined amount of $215,321; |
(d) | $30,000 advanced to the Company on February 26, 2013, together with interest thereon at the rate of 12% per annum accrued through the Effective Date in the amount of $1,963, is to be considered an Advance in the combined amount of $31,963; |
(e) | $250,000 advanced to the Company on March 15, 2013, together with interest thereon at the rate of 12% per annum accrued through the Effective Date in the amount of $14,959, is to be considered an Advance in the combined amount of $264,959; |
(f) | $125,000 advanced to the Company on April 24, 2013, together with interest thereon at the rate of 12% per annum accrued through the Effective Date in the |
4
amount of $5,836, is to be considered an Advance in the combined amount of $130,836; |
(g) | $145,000 advanced to the Company on June 13, 2013, together with interest thereon at the rate of 12% per annum accrued through the Effective Date in the amount of $4,386, is to be considered an Advance in the combined amount of $149,386; |
(h) | $200,000 advanced to the Company on July ·11, 2013, together with interest thereon at the rate of 12% per annum accrued through the Effective Date in the amount of $4,208, is to be considered an Advance in the combined amount of $204,208; and |
(i) | $300,000 advanced to the Company on July 31, 2013, together with interest at the rate of 12% per annum accrued through the Effective Date in the amount of $4,340, is to be considered an Advance in the combined amount of $304,340; and |
(j) | $250,000 advanced to the Company on September 3, 2013, together with interest at the rate of 12% per annum accrued through the Effective Date in the amount of $822, is to be considered ad Advance in the combined amount of $250,822. |
3 . | Bonus Shares and Bonus Warrants |
3.01 | As additional consideration for each Advance by BV to the Company hereunder, the Company agrees to issue to or as directed by BV the following securities: |
(a) | that number of common shares in its capital equal to 6% of the amount of the Advance, divided by the "Discounted Market Price" of the Company’s common shares, as defined in TSX Venture Exchange (the "Exchange") Policy 5.1, as of the close of business on the date of the Advance, for each $100,000 advanced hereunder, as adjusted by the Canadian/U.S. dollar exchange rate on the date of the Advance, and as also adjusted on a pro rata basis for Advances of a portion of $100,000, such shares to be considered "bonus shares" ("Bonus Shares") pursuant to the provisions of Exchange Policy 5.1; and |
(b) | non-transferable share purchase warrants in the form attached as Schedule B, entitling the holder to purchase up to that number of common shares in the capital stock of the Company equal to 6% of the amount of the Advance, divided by the "Discounted Market Price" of the Company’s common shares, as defined in Exchange Policy 1.1, as of the close of business on the date of the Advance, for each $100,000 advanced hereunder, as adjusted by the Canadian/U.S. dollar exchange rate on the date of the Advance, and as also adjusted on a pro rata basis for Advances of a portion of $100,000, such share purchase warrants to be considered "bonus warrants" ("Bonus Warrants") pursuant to the provisions of Exchange Policy 5.1; |
p rovided that: |
5
(c) | the issuance of Bonus Shares and Bonus Warrants hereunder is subject to the Company receiving acceptance from the Exchange therefor; |
(d) | each Bonus Warrant will entitle the holder to purchase one common share in the capital stock of the Company at a price equal to the greater of: |
(i) | the "Market Price" of the Company's common shares, as defined in Exchange Policy 1.1, as of the close of business on the date of the Advance; and |
(ii) | the VWAP of the Company's common shares over the twenty (20) trading days immediately prior to the date of the Advance; |
for a period expiring on the earlier of: |
(A) | December 1, 2016; and |
(B) | the date the amount of the Advance, together with all accrued interest thereon, has been repaid in full; and |
(e) | pursuant to the provisions of subsection 2.2(c) of Exchange Policy 5.1, the number of Bonus Warrants will be reduced or cancelled on a pro rata basis in the event the Advance in respect of which the Bonus Warrants were issued is reduced or paid out in the first year before those specific Bonus Warrants expire, such reduction or cancellation to take place within thirty (30) days after the reduction or paying out of such Advance. |
4. | Security for Advances |
4.01 | As security for the repayment of the Advances, together with all accrued and unpaid interest thereon, the Company hereby grants, mortgages and charges in favour of BV, by way of a floating charge, its undertaking and all of its other property and assets for the time being, real and personal, movable and immovable, of whatsoever nature and kind, both present and in the future (the "Property"), including all of the issued and outstanding shares of the Subsidiary. The parties acknowledge that the charges hereby created in favour of BV constitute a first charge and are in priority to any and all specific or floating charges created by the Company in favour of any other creditors. The Company and the Subsidiary each agree to take all steps and actions as are reasonably necessary to assist BV with the registration of its interest in the Property in any provincial, state or federal property or title registries. It is also acknowledged by the parties that the Company shall be at liberty to, in the future, create or suffer to be created mortgages, charges, liens or encumbrances, by other specific charges or floating charges, ranking subsequent to the floating charges hereby created, and shall not be at liberty to, and shall not create or suffer to be created, any mortgage, charge, lien or encumbrance upon the Property ranking in priority to or pari passu with the charges hereby created, or to sell or dispose of the same otherwise than in the ordinary course of its business as at present conducted. |
4.02 | The parties also agree that the security provided for in paragraph 4.01 herein will be cancelled and of no further force or effect in the event of any of the following: |
6
(a) | the Company making each of the payments provided for in sub-paragraph 6.01(a) herein; or |
(b) | the Company entering into a JV Agreement (as defined in sub-paragraph 6.0l(b) herein) and by receiving the payments provided for in the JV Agreement that are sufficient to extinguish the Indebtedness in full; or |
(c) | the Company receiving the requisite financing for the capital expenditures required to put the Bovill Kaolin Project into full commercial production and the extinguishment in full of the Indebtedness as provided for in sub-paragraph 6.01(c) herein occurring; or |
(d) | the Company extinguishing the Indebtedness following a Change of Control as provided for in sub-paragraph 6.01(d) herein; or |
(e) | the Company extinguishing the Indebtedness as a result of completing one or more equity financings as provided for in sub-paragraph 6.01(e) herein. |
5. | Board Representation |
5.01 | The Company, if requested to do so by BV, agrees to include an individual designated by BV as one of management's nominees for director in the notice of meeting and information circular to be distributed to the shareholders of the Company in connection with its next annual general meeting of shareholders, to be held on or before December 31, 2013. |
5.02 | In the event BV does not request the Company to include an individual designated by BV as one of management's nominees for director as contemplated in paragraph 5.01 herein, in the event the Indebtedness hereunder (as defined in paragraph 6.01 herei n) at any time exceeds $2,000,000 and for as long as the Indebtedness exceeds that amount, the Company, if requested to do so by BV, also agrees to appoint an individual designated by BV as an additional director of the Company if the constating documents of the Company so provide, and, if they do not so provide, to include such individual as one of management's nominees for director in the notice of meeting and information circular to be distributed to the shareholders of the Company in connection with the next atmual general meeting of shareholders subsequent to the date of such request. |
6. | Repayment Provisions |
6.01 | The Company agrees to repay the principal amount of each Advance hereunder, together with all accrued and unpaid interest thereon, together with all advances under the Initial Agreement, together with all accrued and unpaid interest thereon (collectively, the "Indebtedness"), as follows: |
(a) | subject to the provisions of sub-paragraphs (b), (c), (d) and (e) of this paragraph 6.01: |
7
(i) | on the date that is twelve (12) months after the date of the last Advance hereunder, $1,000,000 will become due and payable; |
(ii) | on the date that is eighteen (18) months after the date of the last Advance hereunder, an additional $2,000,000 will become due and payable; and |
(iii) | on the date that is twenty-four (24) months after the date of the last Advance hereunder, the balance of the Indebtedness will become due and payable; |
(b) | in the event the Company enters into a joint venture agreement with a joint venture partner for the continued development of the Bovill Kaolin Project (a "JV Agreement"), all payments received pursuant to the JV Agreement will be applied to reduce the Indebtedness, provided that in the event such payments are insufficient to extinguish the Indebtedness in full, the balance of the Indebtedness will become due and payable as follows: |
(i) | one-third on the date that is six (6) months after the date the Company enters into the JV Agreement; |
(ii) | an additional one-third on the date that is twelve (12) months after the date the Company enters into the JV Agreement; and |
(iii) | the final one-third on the date that is eighteen (18) months after the date the Company enters into the JV Agreement; |
provided that no JV Agreement that does not provide for payments to fully extinguish the Indebtedness will be entered into by the Company without the Company first having obtained the written consent of BV for the Company entering into such a JV Agreement, which written consent may be withheld by BV in its sole discretion; |
(c) | in the event the Company receives the requisite financing for the capital expenditures required to put the Bovill Kaolin Project into full commercial production, the Indebtedness will become due and payable five (5) business days from the closing of such financing; |
(d) | in the event a person currently not related to the Company acquires more than 40% of the then issued and outstanding common shares of the Company (a Change of Control"), the Indebtedness will, at BV's election and in its sole discretion, become immediately due and payable upon the effective date of the Change of Control; |
(e) | in the event the Company completes any equity financing with a person or persons not currently related to the Company, the following minimum net proceeds received by the Company from any such financing will be applied against the Indebtedness three (3) business days from the closing of any such financing: |
8
(i) | up to $500,000, no portion need be applied against the Indebtedness; |
(ii) | from $500,000 to $1,000,000, 15% of the net proceeds would be applied against the Indebtedness; |
(iii) | from $1,000,000 to $2,000,000, 25% of the net proceeds would be applied against the Indebtedness; |
(iv) | from $2,000,000 to $6,000,000, 50% of the net proceeds would be applied against the Indebtedness; and |
(v) | in excess of $6,000,000, 50% of the initial $6,000,000 and 100% of the balance in excess of $6,000,000 of the net proceeds would be applied against the Indebtedness. |
7. | Participation Right |
7.01 | If at any time after the Effective Date and for so long as any Advance is outstanding, the Company proposes to issue or sell any common shares or convertible securities ("Additional Securities") other than: |
(a) | pursuant to the exercise of any stock options granted under the Company's stock option plan; or |
(b) | pursuant to the exercise of any share purchase warrants issued pursuant to previously-completed private placements; or |
(c) | for property interests other than money; |
BV shall have the right to subscribe for and purchase (directly or through an affiliate) Additional Securities, at the price at which such Additional Securities are offered for sale to other purchasers, up to its then pro rata interest in the issued and outstanding common shares of the Company, in each case, prior to giving effect to the issuance or sale of such Additional Securities (the "Maximum Additional Securities"). |
7.02 | If the Company intends to authorize and/or issue Additional Securities that give rise to BV's rights pursuant to paragraph 7.01, the Company shall provide notice to BV (the "Rights Notice") no less than six business days before the date on which the Company intends to issue Additional Securities giving rise to BV's rights pursuant to paragraph 7.01. |
7.03 | The Rights Notice shall provide the same information to BV regarding the particulars of the issuance or sale of the Additional Securities as is provided to other persons proposing to participate in the subscription for Additional Securities. BV shall give notice (an "Acceptance Notice") to the Company not later than 5:00p.m. (Vancouver time) on the fifth business day following the receipt of any Rights Notice, setting out the number of Additional Securities, if any, up to the Maximum Additional Securities, which BV intends to subscribe for and purchase. Following receipt of an Acceptance Notice, BV shall be entitled to participate in the subscription for Additional Securities in the same |
9
manner as other persons subscribing for Additional Securities and shall be entitled to subscribe for the number of Additional Securities specified in the Acceptance Notice under such subscription. |
8. | Acceptances and Approvals |
8.01 | The Company agrees to make application to the Exchange for its acceptance of the issuance of the Bonus Shares and Bonus Warrants pursuant to paragraph 3.01 hereof, which application will include all required supporting documents and information and the applicable filing fees, forthwith upon the execution and delivery of this Agreement by all parties. |
8.02 | In the event the provisions of Exchange Policy 5.9 and Multilateral Instrument 61-101 (each entitled "Protection of Minority Security Holders in Special Transactions") apply to any of the provisions of this Agreement, the Company also agrees to seek the required approval of its shareholders thereunder at its next annual general meeting of its shareholders, to be held on or before December 31, 2013, in order to seek the requisite approval from its shareholders for the provisions hereof requiring such approval. |
9. | Notices |
9.01 | All notices, payments and other communications given in connection with this Agreement shall be in writing, and the respective addresses of the parties for the service of any notice, payment or other communication shall be as follows: |
(a) | if to the Company: |
1-Minerals
Inc.
Suite 880- 580 Hornby Street Vancouver, British Columbia, Canada V6C 3B6 |
Attention
:
Barry
Girling, Director
Email: wbg@imineralsinc.com |
10
(b) | if to the Subsidiary: |
i-minerals USA Inc.
Suite 880 - 580 Hornby Street Vancouver, British Columbia, Canada V6C 3B6 |
Attention: Barry Girling, Director
Email: wbg@imineralsinc.com |
(c) | if to BV: |
BV Lending, LLC
Suite 201 -901 Pier View Drive Idaho Falls, Idaho, U.S.A. 83402 |
Attention: Cortney Liddiard, Chief Executive Officer
Email: flyfish@ballventures.com |
with a copy to: |
Thel W. Casper, Esq.
General Counsel to Ball Ventures, LLC P. 0. Box 51298 Idaho Falls, Idaho, U.S.A. 83402 |
Email: tcasper@ballventures.com |
Any notice, payment or other communication shall be sufficiently given if delivered by email or by hand or by reputable courier service, or, absent postal disruption, if sent by registered mail, postage prepaid, posted within either Canada or the United States of America, to the parties at their respective addresses for service as set forth above. Any notice, payment or other communication shall be deemed to have been given and received on the first business day on which it is presented during normal business hours at the address for service of the addressee. Any party may change its address for service by notice in writing to the other parties. |
10. | Time of the Essence |
10.01 | Time shall be of the essence of this Agreement. |
11 . | U.S. Dollars |
11.01 | All references herein to dollar amounts are to lawful currency of the United States of America. |
12. | Headings |
11
12.01 | The headings contained herein are for convenience only and shall not affect the meaning or interpretation hereof. |
13 . | S i ngu l ar and Plural, etc. |
13.01 | Where the context so requires, words importi ng the singular number include the plural and vice versa, and words importing gender shall include the masculine, feminine and neuter genders. |
14. | Entire Agreement |
14.01 | This Agreement constitutes the only agreement among the parties with respect to the subject matter hereof and shall supersede any and all prior negotiations and understandings. This Agreement may be amended or modified in any respect by written instrument only. |
14.02 | Without limiting the generality of paragraph 14.01 herein, the parties also specifically agree that the provisions of paragraph 1.1 of the Initial Agreement, dealing with repayment provisions in respect of advances under the Initial Agreement, together with all accrued and unpaid interest thereon, are hereby cancelled and of no further force or effect. |
1 5 . | Seve r ability |
15.01 | The invalidity or unenforceability of any particular provision of this Agreement shall not effect or limit the validity or enforceability of the remaining provisions of this Agreement. |
16 . | Gove rn ing L aw |
16.01 | This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein. The parties irrevocably attorn to the jurisdiction of the courts of British Columbia, which will have non-exclusive jurisdiction over any matter arising out of this Agreement. |
17 . | Dispute Resolution |
17.01 | If any dispute arises between any of the Parties (the Parties in dispute being the "Participants") concerning this Agreement or its interpretation or the respective rights, duties or liabilities of the Parties, then a Participant may give to the other Participants notice in writing of the existence of such dispute, specifying its nature and the point at issue and the Participants agree: |
(a) | to try to resolve the dispute by participating in a structured negotiation with a mediator under the Commercial Mediation Rules of British Columbia International Commercial Arbitration Centre ("BCICAC"); |
12
(b) | where a dispute is not resolved by mediation within a period of 30 days after the appointment of a mediator or within such further period of time to which the Participants agree, any Participant may refer the dispute to be finally resolved by arbitration under the BCICAC Rules. The appointing authority will be the BCICAC, the case shall be administered by the BCICAC in accordance with its "Procedures for Cases under the BCICAC Rules" and the place of arbitration shall be Vancouver, British Columbia. The appointment by the BCICAC is binding upon all of the Participants; |
(c) | the arbitrator will give his decision in writing within three weeks of his being appointed and the decision, both on the dispute and on the costs of the arbitration will be final and binding upon the Participants; |
(d) | the arbitrator will have full authority to rule on any question of law in the same manner as any Judge in any Court of the Province of British Columbia and the ruling of the arbitrator on any question of law will be final and binding upon the Participants; and |
(e) | the failure of any Participant to abide by the decision of the arbitrator is considered a material breach of this Agreement. |
This Paragraph shall survive any termination of this Agreement and continues in full force and effect notwithstanding any determination by a court or the Parties that one or more other provisions of this Agreement are invalid, contrary to law or unenforceable. |
18 . | Successors and Assigns |
18.01 | The terms and provisions of this Agreement shall be binding upon and enure to the benefit of each of the parties and their respective successors and permitted assigns; provided that this Agreement shall not be assignable by any party without the written consent of each of the other parties hereto. |
19. | Further Assurances |
19.01 | Each of the parties hereto shall do or cause to be done all such acts and things and execute or cause to be executed all such documents, agreements and other instruments as may reasonably be necessary or desirable for the purpose of carrying out the provisions and intent of this Agreement. |
20 . | Effect i ve Date |
20.01 | This Agreement is intended to and shall take effect as of the date first set forth above, notwithstanding its actual date of execution or delivery. |
21. | Counterparts and Facsimile |
21.01 | This Agreement may be executed in any number of counterparts by original, facsimile or other form of electronic signature, each of which so executed shall constitute an original and all of which taken together shall form one and the same agreement. |
13
IN WITNESS WHEREOF the parties have executed and delivered this Agreement as of the day and year first above written.
Executed by
I-Minerals Inc.
/s/ Thomas L. Conway
Authorized Signatory
Executed by
i-minerals USA
Inc.
in the presence of:.
/s/ Barry Girling
Authorized Signatory
Executed by
B
V
Lending, LLC
By: Ball Ventures, LLC, an Idaho limited liability
company, the Member
Per
:
/s/
Courtney Liddiard
Courtney Liddiard, CEO
A1
SCHEDULE A
2013 | ||||
September | October | November | Decembe r | |
Budget | 250,000 | 250,000 | 250,000 | 250,000 |
Contingency | 0 | 0 | 0 | 0 |
Total | 250,000 | 250,000 | 250,000 | 250,000 |
2014 | ||||||
Janua r y | Fe b ruary | March | Ap r il | May | J une | |
Budget | 250,000 | 250,000 | 250,000 | 250,000 | 174,000 | 129,000 |
Contingency | 0 | 0 | 0 | 0 | 17,400 | 12.900 |
Total | 250.000 | 250,000 | 250,000 | 250,000 | 191,400 | 141,900 |
B1
SCHEDULEB
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE ♦ ♦, ♦.
WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL ♦ ♦, ♦
THIS
WARRANT CERTIFICATE IS VOID IF
NOT EXERCISED ON
OR BEFORE
5:00 P.M. (VANCOUVER TIME) ON ♦ ♦, ♦
WARRANT CERTIFICATE
I-Minerals Inc.
(Continued under the laws of Canada)
WARRANT
CERTIFICATE NO. «war no» |
«war» WARRANTS entitling the holder to acquire, subject to adjustment, one Common Share for each Warrant represented hereby. |
THIS IS TO CERTIFY THAT
«Name»
(hereinafter referred to as the "holder" or the "Warrantholder") is entitled to acquire for each Warrant represented hereby, in the manner and subject to the restrictions and adjustments set forth herein, at any time and from time to
time until5:00 p.m. (Vancouver time) (the "Expiry Time") on♦ ♦, ♦,one fully paid and non-assessable common share ("Common Share") in the capital of I - Minerals Inc. (the "Company").
The Warrants may only be exercised a t the head office of the Company at 1-Minerals Inc., Suite 880-580 Hornby Street, Vancouver, B.C. V6C 3B6. The Warrants are issued subject to the terms and conditions appended hereto as Schedule "A".
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be executed by a duly authorized officer.
DATED this ♦ day of ♦,♦.
I-Minerals Inc. | |
Per: ______________________________________ | |
Authorized Signing Officer |
(See t er ms and con d it io ns attached hereto )
B2
S
C
H
EDUL
E
"
A"
TERMS AN D CON DITI O N S FO R WARRANTS
Terms and Conditions attached to the Warrants issued by I-Mi n er a l s I nc . and dated ♦♦, ♦.
ARTIC
LE
1
IN
T
E
R
P
RET
A
TION
1.1 D e f i n i tions
In these Terms and Conditions, unless there is something in the subject matter or context inconsistent therewith:
(a) | "Com m o n Sh ar es" means the common shares in the capital of the Company to be issued pursuant to the exercise of Warrants; |
(b) | "Co m pany" means 1-Minerals Inc. unless and until a successor corporation shall have become such in the manner prescribed in Article 6, and thereafter "Company" shall mean such successor corporation; |
(c) | " Compa ny' s Au d i t or s " means an independent firm of accountants duly appointed as auditors of the Company; |
(d) | "Exc h a ng e" means the TSX Venture Exchange or such other stock exchange on which the Company's Common Shares are listed and posted for trading; |
(e) | "E x erci se P rice" means the price of $ ♦ per sh a re i f e x e r ci s ed by 5:00 p.m. ( Vanc ouver ti m e ) on ♦♦,♦ ; |
(f) | " E x pi r y T i me " means 5:00p.m. (Vancouver time) on ♦♦,♦; |
(g) | " h erei n " , "h er eby" and similar expressions refer to these Terms and Conditions as the same ma y be amended or modified from time to time; and the expression "Article" and "Section" followed by a number refer to the specified Article or Section of these Terms a nd Conditions; |
(h) | " Issu e Da te" means the issue date of the Warrants shown on the face page of this Warrant Certificate; |
(i) | "pe rso n" means an individual, corporation, partnership, trustee or any unincorporated orga nization and words importing persons have a similar meaning; |
(j) | " Wa r r a nt s " means the share purchase warrants to acquire Common Shares evidenced by this Warrant Certificate; and |
(k) | " War r ant Ce r tificat e" means the certificate to which these Terms and Conditions are attached. |
1. 2 Int e rpreta t ion Not Af f e cte d by H ea d i ng s
(a) | The division of these Terms and Conditions into Articles and Sections, and the insertion of headings, are for convenience of reference only and shall not affect the construction or interpretation thereof. |
(b) | Words importing the singular number include the plural and vice versa and words importing the masculine gender include the feminine and neuter genders. |
1.3 | A ppli c ab l e L a w |
The terms hereof and of the Warrants shall be construed in accordance with the laws of the Pro v in ce of B ritish Colu m bi a and the laws of Canada.
B3
ARTICLE 2
ISSUE
OF
WARRANTS
2.1 Issue of Warrants
That number of Warrants set out on this Warrant Certificate are hereby created and authorized to issued.
2.2 Additional Warrants
Subject to any other written agreement between the Company and the Warrantholder, the Company may at any time and from time to time undertake further equity or debt financing and may issue additional Common Shares, warrants or grant options or similar rights to purchase Common Shares to any person.
2.3 Issue in Subst i tution for Lost Warrants
If this Warrant Certificate becomes mutilated, lost, destroyed or stolen:
(a) | the Company shall issue and deliver a new Warrant Certificate of like date and tenor as the one mutilated, lost, destroyed or stolen, in exchange for and in place of and upon cancellation of such mutilated, lost, destroyed or stolen Warrant Certificate; and |
(b) | the holder shall bear the cost of the issue of a new Warrant Certificate hereunder and in the case of the loss, destruction or theft of the Warrant Certificate, shall furnish to the Company such evidence of loss, destruction, or theft as shall be satisfactory to the Company in its discretion and the Company may also require the holder to furnish indemnity in an amount and form satisfactory to the Company in its discretion, and shall pay the reasonable charges of the Company in connection therewith. |
2.4 Warrantholder Not a Shareholder
The Warrants shall not constitute the holder a shareholder of the Company, nor entitle it to any right or interest in respect thereof except as may be expressly provided in this Warrant Certificate.
AR
T
I
CLE3
EXERCISE
O
F
THE
W
ARRANTS
3.1 Method of Exercise of the Warrants
The right to purchase Common Shares conferred by this Warrant Certificate may be exercised, prior to the Expiry Time, by the holder surrendering it, with a duly completed and executed exercise form substantially in the form attached hereto as Schedule " B " and cash or a certified cheq ue payable to or to the order of the Company, at par in Vancouver, B . C . for the Exercise Price applicable at the time of surrender in respect of the Common Shares subscribed for in lawful money of Canada, to the Company.
3 . 2 Effect of Exercise of the Warrants
(a) | Upon su rrender and payment as aforesaid the Common Shares so subscribed for shall be issued as fully paid and non-assessable shares and the holder shall become the holder of record of such Common Shares on the date of such su rrender and payment; and |
(b) | within three business days after surrender and payment as aforesaid, the Company shall forthwith cause the issuance to the holder a certificate for the Common Sha res purchased as aforesaid. |
3.3 Subs c ription for Less than Entitlement
The holder may subscribe for and purchase a number of Common Shares less than the number which it is entitled to purchase pursuant to the surrendered Warrant Certificate. In the event of any purchase of a
B4
number of Common Shares less than the number which can be purchased pursuant to this Warrant Certificate, the holder shall be entitled to the return of this Warrant Certificate with a notation on the Grid attached hereto as Sc h edule "C" showing the balance of the Common Shares which it is entitled to purchase pursuant to this Warrant Certificate which were not then purchased.
3.4 Expiration of t he Warrants
After the Expiry Time all rights hereunder shall wholly cease and terminate and the Warrants shall be void and of no effect.
3 . 5 Hold Periods and Legending of Sha r e Certificate
If any of the Warrants are exercised prior to ♦ ♦, ♦, the certificates representing the Common
Shares to be issued pursuant to such exercise shall bear the following legends:
"Unless permitted under securities legislation, the holder of this security must not trade the secur i ty before♦ ♦,♦."
"Without prior w ritte n approval of the TSX Ventu r e Exchange an d compliance with a ll app li ca b le securit ie s legislation, the securities represented by this certificate may not be sold, transferred , hypothecated or otherwise traded on or thr o ugh the f acilities of the T SX Venture Exchange or otherwise in Canada or to or f or the benefit of a Canadia n r e s i d e n t until ♦ ♦, ♦."
ARTICLE4
ADJUSTMENTS
4. 1 Adjustments
The number of Common Shares purchasable upon the exercise of each Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) | in the event the Company shall: |
(i) | pay a dividend in Common Shares or make a distribution in Common Shares; |
(ii) | subdivide its outstanding Common Shares; |
(iii) | combine its outstanding Common Shares into a smaller number of Common Shares; or |
(iv) | issue by reclassification of its Common Shares other securities of the Company (including any such reclassification in connection with a consolidation, merger, amalgamation or other combination in which the Company is the surviving corporation); |
the number of Common Shares (or other securities) purchasable upon exercise of each Warrant immediately prior thereto shall be adjusted so that the Warrantholder shall be entitled to receive the kind and number of Common Shares or other securities of the Company which it would have owned or have been entitled to receive after the happening of any of the events described above, had such Warrant been exercised immediately prior to the happening of such event or any record date with respect thereto. An adjustment made pursuant to this subsection (a) shall become effective immediately after the effective da te of such event retroactive to the record date, if any, for such event. |
(b) | In case the Company shall issue rights, options or warrants to all or substantially all holders of its outstanding Common Shares, without any charge to such holders, entitling them (for a period within 45 days after the record date mentioned below) to subscribe for or purchase Common Shares a t a price per share which is lower than 95% of the current market price at the record date mentioned below than the then current market price per Common Share (as determined in accordance with subsection (d) below), the number of Common Shares thereafter purchasable upon the exercise of each Warrant shall be determined |
B5
by multiplying the number of Common Shares theretofore purchasable upon exercise of each Warrant by a fraction, of which the numerator shall be the number of Common Shares outstanding on the date of issuance of such rights, options or warrants plus the number of additional Common Shares offered for subscription or purchase, and of which the denominator shall be the number of Common Shares outstanding on the date of issuance of such rights, options or warrants plus the number of shares which the aggregate offering price of the total number of Common Shares so offered would purchase at the current market price per Common Share at such record date. Such adjustment shall be made whenever such rights, options or warrants a re issued, and shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights, options or warrants. |
(c) | In case the Company shall distribute to all or substantially all holders of its Common Shares evidences of its indebtedness or assets (excluding cash dividends or distributions payable out of consolidated earnings or earned surplus and dividends or distributions referred to in subsection (a) above or in subsection (d) below or rights, options or warrants, or convertible or exchangeable securities containing the right to subscribe for or purchase Common Shares (excluding those referred to in subsection (b) above)), then in each case the number of Common Shares thereafter purchasable upon the exercise of each Warrant shall be determined by multiplying the number of Common Shares theretofore purchasable upon the exercise of each Warrant by a fraction, of which the numerator shall be the then current market price per Common Share (as determined in accordance with subsection (d) below) on the date of such distribution, and of which the denominator shall be the then current market price per Common Share less the then fair value (as determined by the board of directors of the Company, acting reasonably) of the portion of the assets or evidences of indebtedness so distributed or of such subscription rights, options or warrants, or of such convertible or exchangeable securities applicable to one Common Share. Such adjustment shall be made whenever any such distribution is made, and shall become effective on the date of distribution retroactive to the record da te for the determination of shareholders entitled to receive such distribution. |
In the event of the distribution by the Company to all or substantially all of the holders of its Common Shares of shares of a subsidiary or securities convertible or exercisable for such shares, then in lieu of an adjustment in the number of Common Shares purchasable upon the exercise of each Warrant, the Warrantholder of each Warrant, upon the exercise thereof, shall receive from the Company, such subsidiary or both, as the Company shall reasonably determine, the shares or other securities to which such Warrantholder would have been entitled if such Warrantholder had exercised such Warrant immediately prior thereto, all subject to further adjustment as provided in this section 4.1 provided, however, that no adjustment in respect of dividends or interest on such shares or other securities shall be made during the term of a Warrant or upon the exercise of a Warrant. |
(d) | For the purpose of any computation under subsections (b) and (c) of this section 4.1, the current market price per Common Share at any date shall be the weighted average price per Common Share for 25 consecutive trading days, commencing not more than 45 trading days before such date on the stock exchange on which the Common Shares are then traded; provided if the Common Shares are then traded on more than one stock exchange, then on the stock exchange on which the largest volume of Common Shares were traded during such 25 consecutive trading day period. The weighted average price per Common Share shall be determined by dividing the aggregate sale price of all Common Shares sold on such exchange or market, as the case may be, during the said 25 consecutive trading days by the total number of shares so sold. For purposes of this subsection (d), trading day means, with respect to a stock exchange, a day on which such exchange is open for the transaction of business. Should the Common Shares not be listed on any stock exchange the current market price per Common Share at any date shall be determined by the board of directors of the Company, acting reasonably. |
(e) | In any case in which this Article 4 shall require that any adjustment in the Exercise Price be made effective immediately after a record date for a specified event, the Company may elect to defer until the occurrence of the event the issuance, to the holder of any Warrant exercised after that record date, of the Common Shares and other shares of the Company, if any, issuable upon the exercise of the Warrant over and above the Common Shares and other shares of the Company; provided, however, that the Company shall deliver to the holder an appropriate instrument evidencing the holder's right to receive such additional shares upon the occurrence of the event requiring such adjustment. |
B6
(f) | No adjustment in the number of Common Shares purchasable hereunder shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in the number of Common Shares purchasable upon the exercise of each Warrant; provided, however, that any adjustments which by reason of this subsection (f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest one-hundredth of a share. |
(g) | Wherever the number of Common Shares purchasable upon the exercise of each Warrant is adjusted, as herein provided, the Exercise Price payable upon exercise of each Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Common Shares purchasable upon the exercise of such Warrant immediately prior to such adjustment, and of which the denominator shall be the number of Common Shares purchasable immediately thereafter. |
(h) | No adjustment in the number of Common Shares purchasable upon the exercise of each Warrant need be made under subsections (b) and (c) if, the Company issues or distributes to the Warrantholder the rights, options, warrants, or convertible or exchangeable securities, or evidences of indebtedness or assets referred to in those subsections which the Warrantholder would have been entitled to receive had the Warrants been exercised prior to the happening of such event or the record date with respect thereto. |
(i) | In the event that a t any time, as a result of an adjustment made pursuant to subsection (a) above, the Warrantholder shall become entitled to purchase any securities of the Company other than Common Shares, thereafter the number of such other shares so purchasable upon exercise of each Warrant and the Exercise Price of such shares shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Shares contained in subsections (a) through (h), inclusive, above, and the provisions of sections 4.2 through 4.4, inclusive, of this Article 4 with respect to the Common Shares, shall apply on like terms to any such other securities. |
(j) | Upon the expiration of any rights, options, warrants or conversion or exchange privileges, if any thereof shall not have been exercised, the Exercise Price and the number of Common Shares purchasable upon the exercise of each Warrant shall, upon such expiration, be readjusted and shall thereafter be such as it would have been had it been originally adjusted (or had the original adjustment not been required, as the case may be) as if: |
(i) | the only Common Shares so issued were the Common Shares, if any, actually issued or sold upon the exercise of such rights, options, warrants or conversion or exchange rights; and |
(ii) | such Common Shares, if any, were issued or sold for the consideration actually received by the Company upon such exercise plus the aggregate consideration, if any, actually received by the Company for the issuance, sale or grant of all such rights, options, warrants or conversion or exchange rights whether or not exercised; |
provided further, that no such readjustment shall have the effect of increasing the Exercise Price or decreasing the number of Common Shares purchasable upon the exercise of each Warrant by an amount in excess of the amount of the adjustment initially made with respect to the issuance, sale or grant of such rights, options, warrants or conversion or exchange rights. |
4.2 Vol unt ary Adjustment by the Company
Subject to requisite Exchange acceptance, the Company may, at its option, at any time during the term of the Warrants, reduce the then current Exercise Price to any amount deemed appropriate by the Board of Directors of the Company.
4 .3 Notice of Adjustment
Whenever the number of Common Shares purchasable upon the exercise of each Warrant or the Exercise Price of such Common Shares is adjusted, as herein provided, the Company shall promptly send to the Warrantholder by first class mail, postage prepaid, notice of such adjustment or adjustments.
B7
4.4 No Adjustment for Dividends
Except as provided in section 4.1 of this Article 4, no adjustment in respect of any dividends shall be made during the term of a Warrant or upon the exercise of a Warrant.
4.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc.
In connection with any consolidation of the Company with, or amalgamation or merger of the Company with or into, another corporation (including, without limitation, pursuant to a "takeover bid", "tender offer" or other acquisition of all or substantially all of the outstanding Common Shares) or in case of any sale, transfer or lease to another corporation of all or substantially all the property of the Company, the Company or such successor or purchasing corporation, as the case may be, shall execute with the Warrantholder an agreement that the Warrantholder shall have the right thereafter, upon payment of the Exercise Price in effect immediately prior to such action, to purchase upon exercise of each Warrant the kind and amount of shares and other securities and property which it would have owned or have been entitled to receive after the happening of such consolidation, amalgamation, merger, sale, transfer or lease had such Warrant been exercised immediately prior to such action, and the Warrantholder shall be bound to accept such shares and other securities and property in lieu of the Common Shares to which it was previously entitled; provided, however, that no adjustment in respect of dividends, interest or other income on or from such shares or other securities and property shall be made during the term of a Warrant or upon the exercise of a Warrant. Any such agreement shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Schedule "A". The provisions of this Article 4 shall similarly apply to successive consolidations, mergers, amalgamation, sales, transfers or leases.
4.6 Determination of Adjustments
If any questions shall at any time arise with respect to the Exercise Price, such question shall be conclusively determined, absent manifest error, by the Company's Auditors, or, if they decline to so act, any other firm of Chartered Accountants, in Vancouver, British Columbia, that the Company may designate and the Warrantholder, acting reasonably, may approve, and who shall have access all appropriate records and such determination shall be binding upon the Company and the holder.
ARTICLES COVENANTS BY THE
COMPANY
5.1 Reservation of Common Shares
The Company will reserve and there will remain unissued out of its authorized capital a sufficient number of Common Shares to satisfy the rights of acquisition provided for in this Warrant Certificate.
ARTICLE6
MERGER AND SUCCESSORS
6.1 Company May Consolidate, etc. on Certain Terms
Nothing herein contained shall prevent any consolidation, amalgamation or merger of the Company with or into any other corporation or corporations, or a conveyance or transfer of all or substantially all the properties and estates of the Company as an entirety to any corporation lawfully entitled to acquire and operate same, provided, however, that the corporation formed by such consolidation, amalgamation or merger or which acquires by conveyance or transfer all or substantially all the properties and estates of the Company as an entirety shall, simultaneously with such amalgamation, merger, conveyance or transfer, assume the due and punctual performance and observance of all the covenants and conditions hereof to be performed or observed by the Company.
6.2 Successor Company Substituted
In case the Company, pursuant to section 6.1 shall be consolidated, amalgamated or merged with or into any other corporation or corporations or shall convey or transfer all or substantially all of its properties and
B8
estates as an entirety to any ot her corporation, the successor corporation formed by such consolidation or amalgamation, or into which the Company shall have been consolidated, amalgamated or merged or which shall have received a conveyance or tra nsfer as aforesaid, shall succeed to and be substituted for the Company hereunder and such changes in phraseology and form (but not in substance) may be made in this Warrant Certifica te and herein as may be appropriate in view of such amalgamation, merger or transfer.
ARTICLE7
AMENDMENTS
7 .1 Amendm e nt, etc.
This Warrant Certificate may only be amended by a written instrument signed by the parties.
ARTICLES
MISCELLANEOUS
8.1 Time
Time is of the essence of the terms of this Wa rrant Certificate.
8.2 Noti c e
Any notice or other communication to be given in connection with this Warrant Certificate must be in writing and given by personal delivery or by fax or email to the following addresses:
To the Company:
I-Minerals Inc. Suite 880 - 580 Hornby Street Vancouver, British Columbia Canada V6C 3B6 |
Attention: Barry
Girling,
Dire
c
to
r
Fax: 604-684-0642 Email: wbg@imineralsinc.com |
To the Warrantholder: |
♦
♦ ♦ |
Attention
:
♦
Fax:♦ Email:♦ |
B9
8.3 Non-transf e ra b ility of Warrants
The Warrants evidenced hereby (or any portion thereof) may not be assigned or transferred by the holder except as permitted under the Secu riti es Ac t (British Columbia), together wit h all regulations and rules promulgated thereunder and all administrative policy statements, instruments, blanket orders and rulings, notices and administrative directions issued by the British Columbia Securities Commission and any order granted by the British Columbia Securities Commission. In the event the Warrants evidenced hereby (or any portion thereof) are assignable or transferable as permitted herein, they may be assigned or transferred by the holder duly completing and executing the transfer form attached hereto as Schedule "D". The rights and obligations of the parties hereunder shall be binding upon and enure to the benefit of their successors and permitted assigns.
SCHED UL E " B "
E XERCIS E FORM
TO: I-Miner a l s I n c .
Terms which are not otherwise defined herein shall have the meanings ascribed to such terms in the Warrant
Certificate held by the undersigned and issued by I -M in erals Inc. (the "Company").
The undersigned hereby exercises the right to acquire ___________ Common Shares of the Company in accordance with and subject to the provisions of such Warrant Certificate and herewith makes payment of the purchase price in full for the said number of Common Shares.
The Common Shares are to be issued as follows:
Name: |
Address in full: | |
Social Insurance Number: |
Note: If further nominees are intended, please attach (and initial) a schedule giving these particulars.
DATED this day of , 201
Signature Guaranteed | (Signature of Warrantholder) | |
Print full name | ||
Print full address |
Instructions:
1. | The registered holder may exercise its right to receive Common Shares by completing this form and surrendering this form and the Warrant Certificate representing the Warrants being exercised to the Company. |
2. | If the Exercise Form indicates that Common Shares are to be issued to a person or persons other than the registered holder of t he Warrant Certificate, the signature of such holder of the Exercise Fo1m must be guaranteed by an authorized officer of a chartered bank, trust company or an investment dealer who is a member of a recognized stock exchange. |
3. | If the Exercise Form is signed by a trustee, exercise, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a judiciary or representative capacity, the certificate must be accompanied by evidence of authority to sign satisfactory to the Company. |
SCHEDULE "C"
WARRANT EXERCISE GRID
Common Shares Issued | Common Shares Available | Initials of Authorized Officer |
SCHEDULE "D"
TRANSFER FORM
FOR VALUE RECEIVED the undersigned hereby
sells, assigns and transfers unto
_________________________________________________________________________________________
(Please print or
typewrite name and
address
of assignee)
_________________________________________________________________________________________
________________Wa rrant(s) represented by the
within certificate, and do(es) hereby irrevocably constitute and
appoint_________________________________________________________________________________________ the attorney of the undersigned to transfer
the said Warrants maintained by the transfer agent of the Company
with
full power of
substitution hereunder.
DATED this
day of
,
Signature of Holder | ||
Name of Holder (please print) | Signature Guarantee |
The signature of the Holder to this assignment must correspond exactly with the name of the Holder as set forth on the face of this Warrant certificate in every particular, without alteration or enlargement or any change whatsoever and the signature must be guaranteed by a Canadian chartered bank or by a Canadian trust company or by a medallion signature guarantee from a member of a recognized Signature Medallion Guarantee Program.
DATED:
SEPTEMBER 13, 2013
_____________________________________________________________________
Among:
I-Minerals | |
OF THE FIRST PART | |
Inc. And: | |
i - minerals USA | OF THE SECOND PART |
Inc. And: | |
OF THE THIRD PART | |
BV Lending, LLC | |
_____________________________________________________________________
LOAN AGREEMENT
_____________________________________________________________________
Tupper Jonsson
&
Yeadon
1710-1177
West Hastings
Street
Vancouver, B.
C.
V6E 2L3
Telephone: (604) 640-6355
SALES AGREEMENT
THIS AGREEMENT is made and entered into this 28 day of April , 2014 (the "Effective Date") by and between I-Minerals USA, Inc. , an Idaho corporation, whose address is P.O. Box 809, Hayden, ID 83835 (hereinafter "Seller") and Pre-Mix, Inc. , a Washington corporation, whose address is 6901 SR 270, Pullman, WA 99163 (hereinafter "Buyer").
RECITALS:
WHEREAS, Seller produces certain tailings (the "Product") on its property in the State of Idaho, described on Mineral Lease E410013 in Latah County, Idaho (hereinafter the "Property") and desires to dispose of the Product from such Property; and
WHEREAS, Buyer desires to purchase the Product from Seller and use all or portions of the same in Buyer's products;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties mutually agree as follows:
1. Product. Seller agrees to provide to Buyer the Product as such Product becomes available. The Product includes all tailings and related materials as designated by Seller on the Property. Said Product is located on the Property for reasonable access by Buyer. It is understood that Seller shall be under no obligation to produce or make available any fixed volume of Product material to Buyer. Buyer may purchase up to 30,000 tons of the Project per calendar year.
2. Price. Buyer shall pay to Seller the sum of S$ 0.50 per ton for all Product made available under this Agreement. The renewal rates, if any, shall be mutually agreed in good faith by the parties.
3. Payment Terms.
a. Payment for such the Product shall be based upon net weight.
b. All such Product shall be weighed at the Buyer certified scale(s) located at their Property. Records of weights shall be submitted to Seller on a monthly basis.
c. Buyer shall be invoiced for all such Product on a monthly basis. Payment shall be made to Seller not later than thirty (30) days after the end of the month for which an invoice is made. A late payment fee of $250.00 per month per invoice shall be due and payable for all payments not paid within such thirty (30) day period. Further, interest shall be charge on all late payments at the lesser of eighteen percent (18%) per annum, compounded monthly, or the highest rate allowed by applicable law
SALES AGREEMENT |
4. Term.
a. The initial term of this Agreement shall be from the Effective Date until December 31, 2018, unless terminated sooner as provided herein.
b. The parties may extend this Agreement by mutual consent for a period of two (2) years following the initial term.
c. In the event that either party is in breach of this Agreement, the party alleging such breach shall notify the other party in writing and specify the acts or omissions in breach. The breaching party shall have ten (10) days to cure such breach or satisfactorily respond to circumstances contained in the notice, failure to do so will entitle the non-breaching party to terminate this Agreement immediately thereafter.
5. Product Removal.
a. Except as otherwise provided herein, the removal and disposition of the Product shall be at the sole cost and expense of Buyer.
b. The removal of the Product by Buyer shall be between the months of May and November.
c. Buyer's personnel may enter on property owned, leased , operated or with respect to which Seller has any type of license or other type of right of entry. Seller hereby grants to Buyer a revocable, limited license to access such property, subject to the terms and conditions of this agreement, and any other agreement or restriction regarding such property. Buyer agrees that this agreement does not obligate Seller to provide a license to access to such property. Access shall only be with the knowledge and approval of a cognizant Seller employee and for valid business reasons. Buyer shall notify the all agencies that request or require notification regarding its activities, schedule and /or plans related to this agreement, including, without limitation, appropriate personnel of the Idaho Department of Lands office(s) in Deary, Idaho.
d. Buyer shall be responsible for the safety of its employees, and all other persons who may be affected by Buyer, and for the protection of the equipment and all materials to be incorporated therein, and all applicable laws, ordinances, rules, regulations, and order of any public authority having jurisdiction for the safety of persons or property.
e. Seller is the permittee under a permit entitled "Mining and Reclamation Plan, Idaho Department of Lands Mineral Lease 9276" (the "Permit"). Buyer shall comply with all terms and condition s of the Permit.
f. Seller has implemented a Storm Water Pollution Prevention Plan ("SWPPP") which is a requirement of the National Pollution Discharge Elimination System ("NPDES"). The SWPPP regulates water quality. Seller's SWPPP permit tracking number is IDR05CU73. Buyer shall comply with all terms and conditions of Seller's SWPPP permit.
SALES AGREEMENT | 2 |
6. Intended Use. It is understood that Buyer shall be solely responsible for utilization of the Product obtained under this Agreement. The intended use of such material is as an ingredient in Buyer's products.
7. Assumption of Risk. Buyer hereby assumes all risks involved in the hauling, transportation, stock piling, or other disposal of any Product obtained under this Agreement.
8. Insurance. Buyer shall maintain during the term of this agreement and shall provide to Seller prior to accessing Seller property certificate(s) of insurance evidencing;
a. Worker's Compensation Coverage-Statutory Limitation 1,000,000.00
b. General Liability (Contractor's General Liability) $2,000,000.00
c. Automobile Liability $1,000,000.00
Buyer shall name Seller as an additional insured on Buyer's applicable insurance. Such insurance certificates must be issued by a company or companies acceptable to Seller, and must provide for thirty (30) days written notice to Seller prior to modification, non-renewal or cancellation. Buyer agrees to waive any rights of subrogation which it may have against Seller.
9. Release. Buyer, and its agents, employees, contractors, officers, directors, and any other related or affiliated party (together the "Releasing Parties") hereby release Seller and its assignees, transferees, principals, heirs, partners, officers directors, employees, servants, attorneys and representatives (the "Released Parties") from, and waive any and all cl aims with respect to, any and all action, suits and costs, of whatever nature, character or description, whether known or unknown, anticipated or unanticipated, which the Releasing Parties may have or ma y hereafter have or claim to have, against the Released Parties by reason of entering on or occupying any property or premises of the Released Parties, or otherwise for any matter related to this agreement (herein called the "Release"). In furtherance of this intention, the releases herein shall be and remain in effect as full and complete general releases notwithstanding only action or omission by any of the Released Parties.
10. Indemnification. Buyer agrees to indemnify, defend and hold Seller harmless from and against any claim, demand, loss, liability, or expense which may arise or be connected in any way, directly or indirectly, with the Product obtained under this Agreement, including the sale or use of any article or product containing such Product material.
11. No Warranties .
a. SELLER MAKES NO REPRESEN TAT IO N O R WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, AS TO MERCHA NTA B ILITY, FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER MATTER WIT H RESPECT TO THE PRODUCT. ALL WARRANTIES OF ANY TYPE OR KIN D, EXPRESS OR IMPLIED, ARE HEREBY DISCLAIMED.
b. Buyer accepts such Product in as "AS-IS" condition.
SALES AGREEMENT | 3 |
12. Default and Remedies . In the event of a default, each party shall have available all rights and remedies at law and/or in equity. All remedies shall be cumulative and not alternative.
13. Business Relationship. Buyer shall perform this Agreement as an independent contractor. Nothing contained herein shall be construed to be inconsistent with this relationship or status. Buyer shall be solely and exclusively responsible for all labor expenses, payroll taxes, worker" compensation, medical benefits or any other expenses in connection with this Agreement. It is understood that Buyer shall maintain sole control over the manner and means of performing this Agreement.
14. Arbitration. The parties shall endeavor to resolve any disputes in an amicable manner. Should their good faith efforts fail, the parties agree that their dispute shall be resolved through final and binding arbitration. From a list of five (5) or seven (7) arbitrators provided by the American Arbitration Association or Federal Mediation and Conciliation Service, the parties shall alternately strike until one (1) arbitrator has been selected. The fees and expenses of the arbitrator shall be equally shared by the parties. The decision of the arbitrator may be enforced in any competent court having jurisdiction of the party over whom enforcement is sought.
15. Assignment. Buyer shall not assign or transfer the obligations or responsibilities contained herein at any time during the term of the Agreement without the prior written consent of Seller, which may not be withheld, delayed or denied in Seller's sole discretion.
16. Waiver. The failure of either party to require the performance of any of the terms herein, or the waiver by either party of any breach of this Agreement, shall neither prevent a subsequent enforcement of such term nor be deemed a waiver of any subsequent breach.
17. Modification. This Agreement shall not be modified, altered, or amended except in writing signed by the parties.
18. Binding Effect. The terms and conditions contained herein shall be binding upon and inure to the benefit of the parties, and to their respective heirs, executors, successors, and assigns.
SALES AGREEMENT | 4 |
IN WITNESS WHEREOF, the parties have executed the Agreement on the day and year first above written.
SELLER: | BUYER: |
I-Minerals USA, Inc.,
an Idaho corporation |
Pre-Mix, Inc.,
|
By : /s/ Thomas Conway Name: Thomas Conway Title: CEO & President |
By: /s/ Jesse Espy Name: Jesse Espy Title : General Manager |
SALES AGREEMENT | 5 |
SRK CONSULTING (U.S.), Inc.
SRK Denver
7175 West Jefferson
Avenue
Suite 3000
Lakewood, CO 80235
T: 303.985.1333
F: 303.985.9947
denver@srk.com
www.srk.com
December 23, 2014
I-Minerals Inc.
Suite 880, 580 Hornby Street
Vancouver, British Columbia
Canada, V6C 3B6
Re |
I-Minerals Inc. (the “Company”)
Amendment No. 1 to Registration Statement on Form 10/A (the “Registration Statement”) |
I, Valerie Obie, BS Mining, RM-SME, hereby consent to the inclusion and reference of the report titled “NI 43-101 Updated Prefeasibility Technical Report – Bovill Kaolin Project, Latah County, Idaho” dated June 26, 2014, prepared by SRK Consulting (U.S.), Inc. of Lakewood, Colorado (the “Report”) as referenced in the Registration Statement to be filed by the Company with the United States Securities Exchange.
SRK Consulting (U.S.), Inc.
/s/ Valerie Obie
_______________________
Valerie Obie, BS Mining, RM-SME
Principal Consultant (Mineral
Economics)