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Colorado | 1041 | 84-0796160 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
2201 Kipling Street, Suite 100 Lakewood, Colorado 80215-1545 (303) 238-1438 (Address, including zip code and telephone number, including area code, of registrant’s principal executive offices) | Ann S. Carpenter, President U.S. Gold Corporation 2201 Kipling Street, Suite 100 Lakewood, Colorado 80215-1545 (303) 238-1438 (Name, address, including zip code, and telephone number, including area code, of agent for service) |
Delaware | 1041 | 20-4722999 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
2201 Kipling Street, Suite 100 Lakewood, Colorado 80215-1545 (303) 238-1438 (Address, including zip code and telephone number, including area code, of registrant’s principal executive offices) | Ann S. Carpenter, President US Gold Holdings Corporation 2201 Kipling Street, Suite 100 Lakewood, Colorado 80215-1545 (303) 238-1438 (Name, address, including zip code, and telephone number, including area code, of agent for service) |
Proposed Maximum | Proposed Maximum | |||||||||||
Title of Each Class of | Amount to be | Offering Price | Aggregate | Amount of | ||||||||
Securities to be Registered(1) | Registered(2) | Per Unit | Offering Price(3) | Registration Fee | ||||||||
US Gold Holdings Corporation common stock, par value $0.0001 per share | 51,666,755(4) | — | $452,600,773.80 | $48,428.28 | ||||||||
Common stock purchase warrants | 9,185,000(5) | — | — | — | ||||||||
Common stock, par value $0.0001 per share, issuable upon exercise of warrants | 9,185,000 | — | 80,460,600.00 | 8,609.28 | ||||||||
Common stock, par value $0.0001 per share, issuable upon exercise of broker warrants | 1,002,000 | — | 8,777,520.00 | 939.19 | ||||||||
Warrants issuable upon exercise of broker warrants | 501,000 | — | — | — | ||||||||
Common stock issuable upon exercise of broker unit warrants | 501,000 | — | 4,388,760.00 | 469.60 | ||||||||
Total | — | — | $546,227,653.80 | $58,446.36 | ||||||||
(1) | This Registration Statement relates to securities of US Gold Holdings Corporation, a Delaware corporation (“New US Gold”) to be issued (a) in exchange for all of the issued and outstanding shares of common stock of U.S. Gold Corporation (“U.S. Gold”), pursuant to the holding company reorganization transaction described herein, (b) in exchange for all shares of common stock of U.S. Gold issuable upon conversion of subscription receipts issued in U.S. Gold’s private placement transaction completed in February 2006, and (c) in exchange for all of the issued and outstanding warrants to acquire U.S. Gold common stock. |
(2) | This amount is based upon the number of shares of common stock of New US Gold issuable in connection with the holding company reorganization transaction, based on the number of shares of U.S. Gold common stock outstanding, the number of shares of U.S. Gold common stock issuable upon conversion of the subscription receipts and the number of shares of U.S. Gold common stock issuable upon exercise of warrants to acquire U.S. Gold common stock, in each case outstanding as of April 28, 2006. |
(3) | Covers all of the securities set forth in footnote 1. Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(f)(1) and Rule 457(c) under the Securities Act of 1933, as amended, based on the average of the high and low prices for U.S. Gold’s common shares as reported by theOver-the-Counter Bulletin Board on April 25, 2006. |
(4) | Includes 18,370,000 shares of common stock issuable upon conversion of the subscription receipts. |
(5) | Includes 8,350,000 common stock purchase warrants issuable upon conversion of the subscription receipts and an additional 835,000 warrants issuable as a penalty in certain events. |
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1. | Proposal 1 — approval of a reorganization transaction to create a Delaware holding company structure for U.S. Gold in connection with the Proposed Acquisitions, as described in more detail in the attached proxy statement/ prospectus and pursuant to which all outstanding shares of U.S. Gold common stock will be exchanged, on a one-for-one basis, for shares of common stock of US Gold Holdings Corporation, or New US Gold, a new Delaware holding company formed in connection with the Proposed Acquisitions; | |
2. | Proposal 2 — approval of the issuance of shares of common stock of New US Gold in connection with the Proposed Acquisitions; | |
3. | Proposal 3 — authorization to adjourn or postpone the special meeting to solicit additional votes to approve Proposals 1 and 2; | |
4. | Proposal 4 — approval of the amendment and restatement of U.S. Gold’s Non-Qualified Stock Option and Stock Grant Plan, or the “U.S. Gold Plan,” as described in more detail in the attached proxy statement/ prospectus; and | |
5. | such other matters as may be properly brought before the special meeting. |
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• | either (1) 0.35 shares of common stock of New US Gold or (2) 0.35 exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of White Knight Resources Ltd., or White Knight; | |
• | either (1) 0.23 shares of common stock of New US Gold or (2) 0.23 exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of Nevada Pacific Gold Ltd., or Nevada Pacific; | |
• | either (1) 0.63 shares of common stock of New US Gold or (2) 0.63 exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of Coral Gold Resources Ltd., or Coral Gold; and | |
• | either (1) 0.26 shares of common stock of New US Gold or (2) 0.26 exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of Tone Resources Limited., or Tone Resources. |
Sincerely, | |
ROBERT R. McEWEN | |
Chairman of the Board and Chief Executive Officer |
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1. | Proposal 1 — approval of a reorganization transaction to create a Delaware holding company structure for U.S. Gold, as described in more detail in the attached proxy statement/ prospectus; | |
2. | Proposal 2 — approval of the issuance of shares of common stock of New US Gold in connection with the Proposed Acquisitions; | |
3. | Proposal 3 — authorization to adjourn or postpone the special meeting to solicit additional votes to approve Proposals 1 and 2; | |
4. | Proposal 4 — approval of the amendment and restatement of U.S. Gold’s Non-Qualified Stock Option and Stock Grant Plan, or the “U.S. Gold Plan,” as described in more detail in the attached proxy statement/ prospectus; and | |
5. | such other matters as may be properly brought before the special meeting. |
By Order of the Board of Directors, | |
ROBERT R. McEWEN | |
Chairman of the Board and Chief Executive Officer |
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• | changes in the general economy affecting the disposable income of the public; | |
• | decisions of foreign countries and banks within those countries; | |
• | technological changes in the mining industry; | |
• | our costs; |
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• | the level of demand for our products; | |
• | changes in our business strategy; | |
• | difficulty in extrapolating drill hole results to establish mineralization; and | |
• | the uncertainty of reserve estimates and timing of development expenditures. |
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Q: | When is the special meeting? What are the matters being considered? |
A: | Our special meeting will be held on June [ ], 2006 at[11:00 a.m.], local time, at [ ]. At the meeting, shareholders will be asked to: |
• | approve the proposed Delaware holding company reorganization; | |
• | approve the issuance of common stock of New US Gold in connection with the planned acquisitions, which we refer to as the “Proposed Acquisitions,” by New US Gold of four Canadian-based gold companies, which we refer to as the “Target Companies”; | |
• | authorize the adjournment or postponement of the special meeting to solicit additional votes to approve the reorganization or the issuance of common stock of New US Gold; | |
• | approve the amendment and restatement of the U.S. Gold Non-Qualified Stock Option and Stock Grant Plan, which we refer to as the “U.S. Gold Plan”; and | |
• | act on any other business that may properly come before the meeting. |
Q: | What is the reorganization proposal? |
A: | We are asking you to approve a merger agreement that would result in our reorganization into a Delaware holding company structure. Under the merger agreement, U.S. Gold, a Colorado corporation, will become a wholly-owned subsidiary of New US Gold, a Delaware corporation, and the current shareholders of U.S. Gold will become stockholders of New US Gold with the same number of shares of New US Gold as they hold of U.S. Gold before the reorganization. A form of the merger agreement, which sets forth the plan of merger and is the primary legal document that will govern the merger, is attached as Annex A to this proxy statement/ prospectus. We encourage you to read the merger agreement carefully. |
Q: | Why are you proposing the reorganization? |
A: | We are forming a holding company in Delaware: |
• | with the expectation of making it possible for persons who hold the common shares of the Target Companies and who are U.S. taxpayers to exchange their common shares of the Target Companies for shares of New US Gold common stock without incurring U.S. federal income tax, assuming applicable requirements are met, and to allow Canadian resident shareholders of the Target Companies who exchange their common shares for exchangeable shares of a Canadian subsidiary of New US Gold to obtain a full or partial tax deferral (rollover) of any capital gains otherwise arising upon the disposition of their common shares in the Target Companies; and | |
• | to take advantage of the benefits of Delaware corporate law. |
To review the reasons for the reorganization and the Proposed Acquisitions in greater detail, see “Proposal 1 — Agreement and Plan of Merger and Delaware Holding Company Reorganization — Reasons for the Proposed Reorganization” on page 37 and “The Proposed Acquisitions — Reasons for the Proposed Acquisitions” on page 59. |
Q: | What will happen to my stock? |
A: | In the reorganization, your shares of common stock of U.S. Gold will automatically convert into the same number of shares of common stock of New US Gold. As a result, you will become a stockholder of New US Gold and will own the same number of shares of New US Gold common stock immediately after the reorganization that you |
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now own of U.S. Gold common stock. The completion of the reorganization is conditioned on either (i) all the conditions of at least one of our offers to purchase all of the outstanding common shares of the Target Companies having been satisfied, or (ii) the board of directors of U.S. Gold determining that the Proposed Acquisitions will not be completed. If the reorganization is completed, we will complete our offers to purchase the shares of the Target Companies as to which the conditions to our offer have been satisfied. As a result, New US Gold will issue additional shares of its common stock to the stockholders of the Target Company or Companies that we acquire, which will reduce your ownership percentage in New US Gold. The issuance of the additional shares of New US Gold common stock necessary to consummate the Proposed Acquisitions is subject to the affirmative vote of holders of a majority of the shares represented in person or by proxy at the special meeting. See “Proposal 2 — Issuance of New US Gold Common Stock” on page 51. |
A: | Shares of U.S. Gold common stock are not currently listed on a securities exchange, but are quoted on theOver-the-Counter Bulletin Board under the symbol “USGL.” It is a condition to our offers to purchase the outstanding shares of the Target Companies that the New US Gold shares be listed on the Toronto Stock Exchange, or TSX, and the American Stock Exchange, or AMEX. U.S. Gold has filed a listing application with the AMEX, and New US Gold intends to file listing applications with the TSX and the AMEX. New US Gold will be a public company and will continue to file periodic reports and other documents with the SEC. |
Q: | How will being a New US Gold stockholder be different from being a U.S. Gold shareholder? |
A: | After the reorganization, you will own the same number of shares of New US Gold common stock that you owned of U.S. Gold common stock immediately before the reorganization. However, as a stockholder of New US Gold, your rights will be governed by Delaware corporate law and the charter documents of the Delaware corporation. These rights are different from, and depending on the circumstances may be more or less favorable to you than, the rights that you currently have as a shareholder of a Colorado corporation. The forms of the amended and restated certificate of incorporation and amended and restated bylaws of New US Gold, which will take effect immediately before the time the reorganization is completed, are attached as Annex B and Annex C, respectively, to this proxy statement/ prospectus. |
Also, because we hope to complete one or more of the Proposed Acquisitions immediately following the reorganization, you will likely own a smaller percentage of a larger company following the completion of the reorganization and one or more Proposed Acquisitions. In addition, we are proposing to increase the number of shares reserved for issuance under the U.S. Gold Plan. If that proposal is approved, issuance of these shares in the future will dilute your ownership of our company. | |
For more information, see “Proposal 1 — Agreement and Plan of Merger and Delaware Holding Company Reorganization — Description of Capital Stock” on page 40, “ — Comparison of Shareholder Rights” on page 44, “Proposal 2 — Issuance of New US Gold Common Stock” on page 51, “Proposal 4 — Amendment and Restatement of U.S. Gold Plan” on page 54, “The Proposed Acquisitions” on page 59 and “Structure of the Delaware Holding Company Reorganization and the Proposed Acquisitions” on page 74. |
Q: | Will the management or the business of the company change as a result of the reorganization and the Proposed Acquisitions? |
A: | The current executive officers and directors of our company will remain the same. We believe our business, however, will expand as a result of the Proposed Acquisitions. The U.S. Gold board of directors believes the combined company will have a larger exploration program, a stronger cash position, reduced costs, increased market capitalization resulting in enhanced trading liquidity, better market focus and additional technical expertise. If we complete all four of the Proposed Acquisitions, our land position in Nevada would increase by approximately 344% to approximately 160 square miles, and we would acquire property in Mexico. |
Q: | Will I have to turn in my stock certificates or warrants? |
A: | No. Do not turn in your stock certificates or warrants. We will not require you to exchange your stock certificates or warrants as a result of the reorganization. After the reorganization, your U.S. Gold common stock certificates will represent the same number of shares of New US Gold common stock, and your U.S. Gold warrants will represent the right to acquire the same number of shares of New US Gold common stock. |
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Q: | Does formation of a holding company affect my federal income taxes? |
A: | The proposed reorganization is structured generally to qualify as a tax-free transaction for U.S. federal income tax purposes. We expect that you generally will not recognize any gain or loss for U.S. federal income tax purposes upon your receipt of New US Gold stock in exchange for your shares of U.S. Gold stock in the reorganization. However, U.S. Gold shareholders who arenon-U.S. holders (as defined in this proxy statement/ prospectus) may recognize gain or loss for U.S. federal income tax purposes in connection with the reorganization in certain circumstances. The tax consequences to you will depend on your own situation. You should consult your own tax advisors concerning the specific tax consequences of the reorganization to you, including any foreign, state, or local tax consequences of the reorganization. For further information, see “United States Federal Income Tax Considerations” on page 84. |
The proposed reorganization should also constitute a tax-free transaction to persons who are subject to Canadian federal income tax legislation. We expect that you will not recognize any gain or loss for Canadian federal income tax purposes upon your receipt of New US Gold stock in exchange for the shares of U.S. Gold common stock in the reorganization. For further information, see “Material Canadian Federal Income Tax Considerations” on page 87. |
Q: | How will the reorganization be treated for accounting purposes? |
A: | The financial statements of New US Gold will be prepared using the“continuity-of-interests” method of accounting as there has been no substantive change in control. Under thecontinuity-of-interests method, the financial statements of New US Gold will reflect the carrying values of assets and liabilities, results of operations and cash flows of U.S. Gold Corporation as if the Reorganization had been effective for all historical periods presented. |
Q: | Why are you asking the shareholders to approve the issuance of New US Gold common stock in the Proposed Acquisitions? |
A: | It is a condition to our offers to purchase the outstanding shares of the Target Companies that the New US Gold common stock be listed on the AMEX. The rules of the AMEX require that listed companies obtain shareholder approval of the significant issuances of shares of their common stock. U.S. Gold currently is the holder of all of the outstanding capital stock of New US Gold and therefore is in a position to approve such an issuance without the approval of U.S. Gold shareholders. However, because the U.S. Gold shareholders will eventually be New US Gold shareholders upon the closing of the Proposed Acquisitions and the Delaware holding company reorganization, and even though U.S. Gold is not currently listed on the AMEX, U.S. Gold has elected to submit the proposed issuance to the U.S. Gold shareholders for approval to provide U.S. Gold shareholders with input and as a matter of corporate governance. |
Q: | How many shares of New US Gold common stock will be issued if the Proposed Acquisitions are completed? |
A: | If we complete all of the Proposed Acquisitions and acquire all of the outstanding shares of all four Target Companies, we currently estimate that New US Gold would issue a total of approximately 45.2 million shares of its common stock to shareholders of the Target Companies, plus up to an additional 7.0 million shares if all outstanding options and warrants of each of the Target Companies were exercised. |
Q: | Why are you proposing the authorization to adjourn or postpone the special meeting? |
A: | Even though a quorum may be present at the special meeting, it is possible that we may not have received sufficient votes to approve the reorganization or the issuance of the common stock of New US Gold in connection with the Proposed Acquisitions by the time of the special meeting. In that event, we would need to adjourn or postpone the special meeting in order to solicit additional proxies. The adjournment proposal relates only to an adjournment or postponement of the special meeting for purposes of soliciting additional proxies to obtain the requisite stockholder approval to approve the reorganization and the issuance of the common stock of New US Gold. Any other adjournment or postponement of the special meeting (for example, an adjournment or postponement required because of the absence of a quorum) would be voted upon pursuant to the discretionary authority granted by the proxy. |
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Q: | Why are you proposing the amendment and restatement of the U.S. Gold Plan? |
A: | The proposed amendment and restatement of the U.S. Gold Plan (which is to be submitted to the shareholders for their approval) would change the current provisions of the plan by: |
• | providing for the grant of incentive stock options, which provide potential tax benefits to the recipients compared to non-qualified options; | |
• | increasing the number of shares of common stock which may be subject to options under the Restated Plan from 5 million shares to 9 million shares; | |
• | providing for a maximum number of option shares that can be granted to an individual within any calendar year; | |
• | providing that awards under the U.S. Gold Plan can be granted to employees, directors, consultants, advisors, and directors as the board or committee administering the plan determines in its discretion and providing that the committee may delegate to certain officers the authority to grant awards to certain employees (other than such officers) and consultants; | |
• | providing for the grant of restricted stock; and | |
• | changing the name of the U.S. Gold Plan to US Gold Equity Incentive Plan. |
The full text of the proposed amended and restated U.S. Gold Plan is attached as Annex D to this proxy statement/ prospectus. | |
We are adding incentive stock options and restricted stock to the U.S. Gold Plan to provide additional forms of equity compensation for our employees. Increasing the number of shares will permit U.S. Gold to continue to make awards to individuals whose services are important to our business operations. Under section 162(m) of the U.S. Internal Revenue Code of 1986, as amended, which we refer to as the “Code,” U.S. Gold may be limited as to federal income tax deductions to the extent that the total annual compensation in excess of $1 million is paid to U.S. Gold’s Chief Executive Officer or any one of the four highest paid executive officers who were employed by U.S. Gold on the last day of the taxable year. However, certain “performance-based” compensation, the material terms of which are disclosed to and approved by U.S. Gold’s shareholders, is not subject to this limit on deductibility. In the case of options, the material terms include a limit in the option plan on the number of option shares that can be granted to an individual in a specified period. The third amendment to the U.S. Gold Plan, limiting the number of option shares granted to an individual within a specified time period, is intended to satisfy this requirement. We are giving broader discretion to the board or committee and providing for a delegation of authority to make grants to give U.S. Gold increased flexibility in attracting and providing incentives to those individuals on whom it relies for its growth and success. As of April 28, 2006, there were 740,637 common shares remaining available for grant under the U.S. Gold Plan. |
Q: | Do U.S. Gold’s directors and executive officers support the proposals and the Proposed Acquisitions? |
A: | Our board of directors, by unanimous vote of the directors voting, approved each of Proposals 1, 2, 3 and 4 and the commencement of the offers to purchase the outstanding shares of the Target Companies. The board of directors recommends that you vote “FOR” each of Proposals 1, 2, 3 and 4. On March 7, 2006, Mr. Robert R. McEwen, our Chairman and Chief Executive Officer, announced that in his capacity as a holder of common shares, he intended to support the proposal of U.S. Gold to acquire each of White Knight, Coral Gold, Nevada Pacific and Tone Resources. |
When considering the recommendation of U.S. Gold’s board of directors with respect to the Delaware holding company reorganization and the issuance of New US Gold common stock in the Proposed Acquisitions, you should be aware that certain of our directors and executive officers may have interests in the Proposed Acquisitions that may be different from, or in addition to, the interests of U.S. Gold shareholders generally. Specifically, Mr. McEwen, our largest stockholder, owns securities in each of the four Target Companies and is a member of the boards of directors of three of the Target Companies. For a more detailed description of these interests, see “Proposal 1 — Agreement and Plan of Merger and Delaware Holding Company Reorganization” on page 36, “The Proposed Acquisitions — Background of the Proposed Acquisitions” on page 64 and “Relationships Between the Offerors and the Target Companies” on page 80. |
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Q: | What percentage of the outstanding shares do directors and executive officers hold? |
A: | As of April 28, 2006, directors and executive officers of U.S. Gold and their affiliates owned approximately 34.8% of our issued and outstanding shares of common stock entitled to vote at the special meeting. This number excludes shares that would be issuable upon exercise of outstanding options or warrants, and shares that remain to be issued upon conversion of subscription receipts issued in our February 2006 private placement. |
Q: | Who is entitled to attend and vote at the meeting? |
A: | Any holder of record of U.S. Gold common stock at the close of business on [ ], 2006, the record date, is entitled to attend and vote at the meeting. On the record date, U.S. Gold had[33,296,755] shares of common stock outstanding. Holders of the subscription receipts issued in our private placement completed in February 2006 are not entitled to vote those receipts or the shares issuable thereunder at the meeting. |
Q: | What will constitute a quorum at the meeting? |
A: | Holders of one-third of our common stock issued, outstanding and entitled to vote on the record date must be present at the meeting, either in person or by proxy, to establish a quorum. Proxies that we receive that are marked “abstain” will be considered present at the meeting for purposes of establishing a quorum. |
Q: | Do I need to attend the special meeting in person? |
A: | No. It is not necessary for you to attend the meeting to vote your shares, although we invite you to attend. |
Q: | How do I cast my vote? |
A: | After carefully reading and considering the information contained in this proxy statement/ prospectus, you can vote in any one of the following ways: |
• | by signing and returning the proxy card in the enclosed postage paid envelope; | |
• | by telephone by following the instructions on either the enclosed proxy card or voting instruction form; | |
• | on the Internet by following the instructions on the enclosed proxy card; or | |
• | by attending the special meeting and voting in person. |
Q: | May I change my vote after I have mailed my signed proxy card? |
A: | You may change your vote at any time before your shares are voted at the special meeting. This proxy statement/ prospectus contains instructions on how to change your vote. If you have instructed your broker to vote your shares, you must follow directions received from your broker to change those instructions. |
Q: | If my shares are held in “street name” by my broker, will my broker vote my shares for me? |
A: | Your broker will vote your shares only if you provide your broker with instructions on how to vote. You should instruct your broker to vote your shares, following the directions provided by your broker. If you fail to instruct your broker on any of the proposals to be considered at the special meeting, your shares will not be voted. Broker non-votes will have the effect of a vote “AGAINST” Proposal 1, but will have no effect on the outcome with respect to Proposals 2, 3 or 4. |
Q: | What vote is required to approve the reorganization proposal? |
A: | The required vote to approve the reorganization is the affirmative vote of holders of a majority of all issued and outstanding shares of our common stock. Therefore, if you abstain or otherwise do not vote on the reorganization proposal, it will have the effect of a vote “AGAINST” this proposal. |
Q: | What vote is required to approve the other proposals? |
A: | The required vote to approve the proposals to issue New US Gold common stock in connection with the Proposed Acquisitions, to adjourn the special meeting if necessary and to amend and restate the U.S. Gold Plan is the |
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affirmative vote of holders of a majority of the shares represented in person or by proxy at the meeting. Abstentions will have the effect of a vote “AGAINST” each of these proposals, but broker non-votes will have no effect on the outcome. |
Q: | Am I entitled to vote on the Proposed Acquisitions? |
A: | No. However, although we are not asking for your vote directly on the Proposed Acquisitions, we are asking you to vote to approve the reorganization and to approve the issuance of the common stock of New US Gold in connection with the Proposed Acquisitions. A vote against either the reorganization proposal or the issuance of the common stock of New US Gold has the effect of preventing New US Gold from completing the Proposed Acquisitions. |
Q: | If the shareholders approve the reorganization, when will it occur? |
A: | If the conditions to the offers to purchase with respect to one or more of the Proposed Acquisitions have been satisfied, the reorganization will occur immediately before the purchase of the common shares in connection with the Proposed Acquisitions. If the conditions have not been satisfied and the board of directors of U.S. Gold determines that such conditions will not be satisfied or otherwise determines that the Proposed Acquisitions will not be completed, the reorganization will occur when the board of directors determines to do so. |
Q: | Do I have dissenters’ (or appraisal) rights? |
A: | No. Holders of U.S. Gold common stock do not have dissenters’ rights under Colorado law as a result of the reorganization even if the reorganization is approved by our shareholders. |
A: | You may contact our information agent at: |
Kingsdale Shareholder Services Inc. | |
The Exchange Tower | |
130 King Street West | |
Suite 2950, P.O. Box 361 | |
Toronto, Ontario | |
M5X 1E2 | |
Telephone: 1-866-639-8026 |
U.S. Gold Corporation | |
2201 Kipling Street, Suite 100 | |
Lakewood, Colorado 80215-1545 | |
Telephone: (303) 238-1438 | |
Attention: William F. Pass, Vice President, Chief Financial Officer and Secretary |
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Purpose of the Special Meeting | To present proposals for the approval of U.S. Gold shareholders regarding matters necessary to complete one or more of the Proposed Acquisitions, and to approve amendments to U.S. Gold’s Non-Qualified Stock Option and Stock Grant Plan, which we refer to as the “U.S. Gold Plan.” | |
Proposal 1 | To approve the U.S. Gold Delaware holding company reorganization. The reorganization is expected to make it possible for shareholders of the Target Companies who are U.S. taxpayers to exchange their common shares for shares of New US Gold common stock without incurring U.S. federal income tax, assuming applicable requirements are met, and to allow Canadian resident shareholders of the Target Companies to obtain a full or partial tax deferral (rollover) of any capital gains otherwise arising upon the disposition of their common shares. The reorganization also will result in the shareholders of U.S. Gold, a Colorado corporation, becoming stockholders of a newly formed Delaware corporation, New US Gold. | |
Proposal 2 | To approve the issuance of additional shares of common stock of New US Gold in connection with the Proposed Acquisitions. | |
Proposal 3 | To authorize the adjournment or postponement of the special meeting to solicit additional votes to approve Proposals 1 and 2. | |
Proposal 4 | To approve the amendment and restatement of the U.S. Gold Plan to: | |
• provide for the grant of incentive stock options, which provide potential tax benefits to the recipients compared to non-qualified options; | ||
• increase the number of shares which may be granted under the U.S. Gold Plan to 9 million shares of common stock; | ||
• limit the number of option shares that may be granted to a person in any calendar year; | ||
• provide that awards under the U.S. Gold Plan can be granted to employees, directors, consultants, advisors, and directors as the board or committee administering the plan determines in its discretion and to provide that the committee may delegate to certain officers the authority to grant awards to certain employees (other than such officers) and consultants; | ||
• provide for the grant of restricted stock; and | ||
• change the name of the U.S. Gold Plan to US Gold Equity Incentive Plan. | ||
The full text of the proposed amended and restated U.S. Gold Plan is attached as Annex D to this proxy statement/ prospectus. | ||
Conditions to the Effectiveness of the Proposals | The effectiveness of Proposal 2 is conditioned upon the approval of Proposal 1 by the U.S. Gold shareholders. The effectiveness of the U.S. Gold reorganization (Proposal 1) is conditioned on either (i) all of the conditions to the offers to purchase with respect to one or more of the Proposed Acquisitions having been satisfied, or (ii) the determination by the board of directors of U.S. Gold that such conditions will not be satisfied or that the Proposed Acquisitions will not be completed. |
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The effectiveness of Proposal 4 is not conditioned upon the approval of Proposals 1 and 2. If approved, the amendment and restatement of the U.S. Gold Plan will be implemented whether or not the reorganization or any of the Proposed Acquisitions takes place. | ||
Votes Required | The approval of Proposal 1 requires approval of a majority of the outstanding shares of U.S. Gold common stock. The approval of each of Proposals 2, 3 and 4 requires the approval of the majority of the shares present in person or by proxy at a meeting at which a quorum is present. For additional information, see “The Special Meeting — Votes Required” on page 33. As of the record date, U.S. Gold’s officers and directors own approximately [34.8]% of the U.S. Gold common stock outstanding and entitled to vote. | |
Dissenters’ and Appraisal Rights | Under Colorado law, holders of U.S. Gold common stock are not entitled to dissenters’ rights of appraisal in connection with the holding company reorganization that is the subject of Proposal 1. For additional information, see “Dissenters’ and Appraisal Rights” on page 87. | |
Voting | U.S. Gold shareholders may vote by mail, telephone or the Internet, each in the manner described in the accompanying proxy card, or by voting in person at the special meeting. Additional information about voting and other procedures relevant to the special meeting is set forth in “The Special Meeting” on page 32. | |
Additional Information | Additional information regarding Proposals 1, 2, 3 and 4 is set forth in “Proposal 1 — Agreement and Plan of Merger and Delaware Holding Company Reorganization” beginning on page 36, “Proposal 2 — Issuance of New US Gold Common Stock” beginning on page 51, “Proposal 3 — Authorization to Adjourn or Postpone Special Meeting to Solicit Additional Votes” beginning on page 53 and “Proposal 4 — Amendment and Restatement of U.S. Gold Plan” beginning on page 54. |
U.S. Gold Corporation | U.S. Gold Corporation, or U.S. Gold, is engaged in the exploration for gold and other precious metals. We control a 100% working interest, subject to the paramount title of the United States, in the Tonkin Springs exploration gold property in Eureka County, Nevada. This property consists of approximately 36 square miles of unpatented lode mining claims and millsite claims located on the Battle Mountain-Eureka Trend, also known as the Cortez Trend, approximately 45 miles northwest of the town of Eureka. Some of the claims are leased from an independent third party. We are presently in the exploration stage at the Tonkin Springs exploration gold property, where we have a milling facility in place. | |
We were organized under the laws of the State of Colorado on July 24, 1979 under the name Silver State Mining Corporation. On June 21, 1988, by vote of our shareholders, we changed our name to U.S. Gold Corporation. U.S. Gold’s principal executive offices are located at 2201 Kipling Street, Suite 100, Lakewood, Colorado80215-1545 and U.S. Gold’s telephone number is (303) 238-1438. U.S. Gold’s website is www.usgold.com. Information contained on the website is not incorporated by reference into this proxy statement/ prospectus, and shareholders should not consider information contained on the website as part of this proxy statement/ prospectus. | ||
U.S. Gold common stock is not listed on a stock exchange but is quoted on the OTC Bulletin Board under the symbol “USGL.” For additional |
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information, see “Structure of the Delaware Holding Company Reorganization and the Proposed Acquisitions — About U.S. Gold” on page 75. | ||
US Gold Holdings Corporation | US Gold Holdings Corporation, or New US Gold, is a newly formed Delaware corporation that is a wholly-owned direct subsidiary of U.S. Gold. New US Gold was formed solely for the purpose of the proposed U.S. Gold reorganization and the Proposed Acquisitions, described in greater detail below, and has no significant assets or capitalization and has not engaged in any business or other activities to date. Upon completion of the proposed reorganization, U.S. Gold will be a wholly-owned subsidiary of New US Gold and the name of New US Gold will be changed to “US Gold Corporation.” New US Gold’s principal executive offices are located at 2201 Kipling Street, Suite 100, Lakewood, Colorado80215-1545 and New US Gold’s telephone number is (303) 238-1438. For additional information, see “Structure of the Delaware Holding Company Reorganization and the Proposed Acquisitions — About New US Gold” on page 76. |
Timing of the Reorganization | If Proposals 1 and 2 are approved, and we complete the offers to purchase the common shares of one or more of the Target Companies, U.S. Gold will effect the holding company reorganization immediately before the we purchase the common shares of one or more of the Target Companies pursuant to the offers to purchase. If Proposals 1 and 2 are approved and the board of directors of U.S. Gold determines that the conditions to the offers to purchase with respect to one or more of the Proposed Acquisitions will not be met or that the Proposed Acquisitions will not be completed, U.S. Gold will effect the holding company reorganization when determined by the board of directors in its discretion. | |
Structure of the Reorganization | The reorganization will be effected pursuant to an agreement and plan of merger, a form of which is attached as Annex A to this proxy statement/ prospectus. In the reorganization, a wholly-owned subsidiary of New US Gold will merge with and into U.S. Gold, with U.S. Gold as the corporation surviving the merger. As a result, U.S. Gold will become a wholly-owned operating subsidiary of New US Gold, the new holding company. | |
Reasons for the Reorganization | We are forming a holding company in Delaware: | |
• with the expectation of making it possible for persons who are holders of the common shares of the Target Companies and who are U.S. taxpayers to exchange their common shares of the Target Companies for shares of New US Gold common stock without incurring U.S. federal income tax, assuming applicable requirements are met, and to allow Canadian resident shareholders of the Target Companies who exchange their common shares for exchangeable shares of a Canadian subsidiary of New US Gold to obtain a full or partial tax deferral (rollover) of any capital gains otherwise arising upon the disposition of their common shares in the Target Companies; and | ||
• to take advantage of the benefits of Delaware corporate law. | ||
To review the reasons for the reorganization and the Proposed Acquisitions in greater detail, see “Proposal 1 — Agreement and Plan of Merger and Delaware Holding Company Reorganization — Reasons for the Proposed |
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Reorganization” on page 37 and “The Proposed Acquisitions — Reasons for the Proposed Acquisitions” on page 59. | ||
Effect of the Reorganization | In the reorganization, all of U.S. Gold’s common stock will be converted into shares of New US Gold common stock, such that each U.S. Gold shareholder will receive the same number of shares of New US Gold common stock as they held in U.S. Gold. As a stockholder of New US Gold, a Delaware corporation, however, you will have different rights than as a shareholder of U.S. Gold, a Colorado corporation. For a description of these differences, see “Proposal 1 — Agreement and Plan of Merger and Delaware Holding Company Reorganization — Comparison of Shareholder Rights” on page 44. | |
The current executive officers and directors of U.S. Gold will be the directors and officers of New US Gold. New US Gold’s certificate of incorporation and bylaws will differ in some respects from those of U.S. Gold before the reorganization. For example: | ||
• New US Gold will be incorporated under the laws of the state of Delaware, as compared with U.S. Gold’s incorporation under the laws of the state of Colorado, as described in “Proposal 1 — Agreement and Plan of Merger and Delaware Holding Company Reorganization — Comparison of Shareholder Rights” on page 44; and | ||
• there will be one share of New US Gold special voting stock (a type of New US Gold preferred stock) held by the voting and exchange trustee for the benefit of the holders of exchangeable shares of Canadian Exchange Co., which will permit the voting and exchange trustee to cast up to that number of votes as equals the number of exchangeable shares then outstanding on all matters on which the holders of New US Gold common stock are entitled to vote, as described in “Structure of the Delaware Holding Company Reorganization and the Proposed Acquisitions — The Voting and Exchange Trust Agreement” on page 76. | ||
The forms of the amended and restated certificate of incorporation and amended and restated bylaws of New US Gold, which will take effect immediately before the time the reorganization is completed, are attached as Annex B and Annex C, respectively, to this proxy statement/ prospectus. | ||
United States Federal Income Tax Considerations | The holding company reorganization is expected to qualify as a reorganization under section 368(a) of the Code and/or as a transaction governed by section 351 of the Code. As a result, the U.S. federal income tax consequences of the reorganization to U.S. Gold shareholders will generally be as follows: | |
• A shareholder who exchanges his or her shares of U.S. Gold common stock for New US Gold common stock in the reorganization will not recognize gain or loss on the exchange, except to the extent a U.S. Gold shareholder who is not a “United States person” (as defined in section 7701(a)(30) of the Code) is subject to tax under the Foreign Investment in Real Property Tax Act of 1980, or “FIRPTA.” | ||
• A shareholder’s aggregate tax basis in the New US Gold common stock received in the reorganization will be the same as his or her aggregate tax basis in the U.S. Gold common stock surrendered in exchange therefor, except to the extent a U.S. Gold shareholder who is not a United States person is subject to tax under FIRPTA. |
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• The holding period of each share of New US Gold common stock received in the reorganization by a U.S. Gold shareholder will include the holding period of U.S. Gold common stock that he or she surrendered in the reorganization, except to the extent a U.S. Gold shareholder who is not a United States person is subject to tax under FIRPTA. | ||
For additional information, see “United States Federal Income Tax Considerations” on page 84. | ||
Regulatory Approval | The reorganization is not subject to any regulatory or other approvals, other than the approval by a majority of the outstanding U.S. Gold common shares at a meeting at which a quorum is present. | |
Additional Information | Additional information regarding the U.S. Gold Delaware holding company reorganization is set forth in the section entitled “Proposal 1 — Agreement and Plan of Merger and Delaware Holding Company Reorganization” on page 36. |
Reasons for the Proposed Acquisitions | U.S. Gold’s board of directors believes that the combination of each of the Target Companies and U.S. Gold in the Proposed Acquisitions will be advantageous to U.S. Gold shareholders for a number of reasons including that the combined company will have: | |
• a larger land position in the Cortez Trend; | ||
• an expanded exploration program; | ||
• a stronger cash position; | ||
• reduced costs; | ||
• increased market capitalization resulting in enhanced trading liquidity in the common stock in the combined company; | ||
• better market focus; and | ||
• additional technical expertise. | ||
For a more detailed discussion of the advantages to U.S. Gold shareholders that U.S. Gold believes will result from the Proposed Acquisitions, see “The Proposed Acquisitions — Reasons for the Proposed Acquisitions” beginning on page 59. | ||
About the Target Companies | White Knight. White Knight is an exploration company active in identifying and generating new mineral prospects. White Knight has been exploring for gold deposits in Nevada since 1993 and currently controls the second largest land holding in the Cortez Trend. Its portfolio includes 18 properties (over 68,000 acres), 15 of which are located in the Cortez Trend. White Knight’s common shares are listed on the TSX Venture Exchange, which we call TSXV, under the symbol “WKR.” | |
Nevada Pacific. Nevada Pacific is a mining company based in Vancouver, British Columbia. According to its public filings, Nevada Pacific owns, among other things, an exploratory property portfolio covering approximately 75 square miles of mineral rights including portions of two significant gold producing belts in the State of Nevada. Nevada Pacific’s common shares are listed on the TSXV under the symbol “NPG.” | ||
Coral Gold. Coral Gold is a natural resource company primarily engaged in the exploration of natural resource properties. Coral Gold’s principal activities are the exploration of certain mineral properties located in |
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Nevada and California. According to Coral Gold’s public filings, since its 2002 fiscal year, Coral Gold has made aggregate principal expenditures of C$2,498,084 on the Robertson mining Claims in Nevada.. Coral Gold’s common shares are listed on the TSXV under the symbol “CGR” and quoted on the OTC Bulletin Board under the symbol “CGREF.” | ||
Tone Resources. Tone Resources is an exploration stage company engaged in the acquisition and exploration of mineral properties primarily located on the major gold trends in the north-central region of Nevada. According to its public filings, Tone Resources holds 410 mining claims in Nevada. Tone Resources’ common shares are listed on the TSXV under the symbol “TNS” and quoted on the Pink Sheets under the symbol “TONRF.” | ||
Effecting the Proposed Acquisitions | U.S. Gold and certain of its subsidiaries, which we refer to collectively as the “Offerors” in this proxy statement/ prospectus, propose to acquire each of the Target Companies through an offer to purchase all outstanding common shares of each of the Target Companies in exchange for shares of New US Gold common stock or exchangeable shares of a Canadian subsidiary of U.S. Gold. Each of the offers to purchase is separate and completion of each offer is not subject to completion of any of the other offers to purchase. The Offerors plan to acquire any common shares of each of the Target Companies not purchased pursuant to the offers to purchase through a merger, amalgamation, or other subsequent acquisition transaction in which such Target Company’s shareholders would receive consideration with a value equivalent to the consideration paid to such Target Company’s shareholders pursuant to the offers to purchase. | |
The Offers to Purchase | The Offerors are offering to purchase all outstanding common shares of White Knight for the following consideration: | |
• either (1) 0.35 shares of common stock of New US Gold or (2) 0.35 exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of White Knight. | ||
The Offerors intend to offer to purchase all outstanding common shares of each of the other Target Companies for the following consideration: | ||
• either (1) 0.23 shares of common stock of New US Gold or (2) 0.23 exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of Nevada Pacific; | ||
• either (1) 0.63 shares of common stock of New US Gold or (2) 0.63 exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of Coral Gold; and | ||
• either (1) 0.26 shares of common stock of New US Gold or (2) 0.26 exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of Tone Resources. | ||
Effect of the Proposed Acquisitions on U.S. Gold Shareholders | Assuming that the reorganization and all of the Proposed Acquisitions are completed, current U.S. Gold shareholders would hold 47.95% of New US Gold’s outstanding common stock on an undiluted basis, and 54.85% of New US Gold’s outstanding common stock on a fully diluted basis. Current shareholders of the four Target Companies would hold, in the aggregate, 52.05% of New US Gold’s outstanding common stock on an undiluted basis, and 51.07% of New US Gold’s outstanding common stock on a fully diluted basis. |
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Pro Forma Financial Information | Pro forma financial information for (1) each of the Proposed Acquisitions separately, and (2) all of the Proposed Acquisitions combined, is included inAnnex E to this proxy statement/ prospectus. | |
Opinion of Financial Advisor | On March 2, 2006, the board of directors of U.S. Gold established a special committee to evaluate the terms of the Proposed Acquisitions and the process of determining those terms. On March 27, 2006, the special committee of the board of directors of U.S. Gold retained Wellington West Capital Markets Inc., or “Wellington West,” to provide financial advice and assistance to the special committee including providing its opinion as to the fairness of the consideration offered under the offers to purchase, from a financial point of view, to U.S. Gold and its shareholders. Based upon and subject to the matters described in its fairness opinion dated April 6, 2006, Wellington West concluded that, as at the date of its opinion, the consideration offered under the offers to purchase is fair, from a financial point of view, to U S Gold and its shareholders. For additional information, see “The Proposed Acquisitions — Opinion of Financial Advisor” on page 67. | |
Risks Relating to the Proposed Acquisitions | There are certain risks associated with the Proposed Acquisitions and related matters and the continued ownership of New US Gold stock as described in “Risk Factors” beginning on page 28. U.S. Gold shareholders should consider these risks in determining how to vote on the proposals to be brought before the special meeting. | |
Conditions to the Proposed Acquisitions | The Offerors’ obligation to complete the offers to purchase for each of the Target Companies is subject to various conditions. Included among these are conditions that: | |
• there shall have been properly deposited and not withdrawn that number of shares of the relevant Target Company that constitutes at least 662/3% of the outstanding common shares of that Target Company, calculated on a fully diluted basis; | ||
• each of the Target Companies shall not have entered into or effectuated any other agreement or transaction with any person or entity having the effect of impairing the Offerors’ ability to acquire such Target Company or otherwise diminishing the expected economic value to the Offerors of the acquisition of such Target Company including, but not limited to, any material issuance of new securities of the Target Company, the declaration of any extraordinary dividend, the adoption of a shareholder rights plan or any other transaction not in the ordinary course of the Target Company’s business; | ||
• the shares of common stock of New US Gold shall have been approved for listing on the TSX and the AMEX and the exchangeable shares shall have been approved for listing on the TSX; and | ||
• U.S. Gold’s shareholders shall have approved Proposals 1 and 2. | ||
Holding Company Structure | The reorganization and the Proposed Acquisitions have been structured with the intent to make it possible to provide favorable tax treatment to shareholders of the Target Companies who tender their Target Company shares pursuant to the offers to purchase. By implementing the holding company structure in connection with the completion of one or more of the Proposed Acquisitions, it is possible to structure the Proposed Acquisitions so that Target Company shareholders who are U.S. taxpayers and who elect to receive shares of New US Gold common stock in exchange for |
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their Target Company common shares are not expected to recognize gain or loss for U.S. federal income tax purposes, assuming applicable requirements are met. The formation of New US Gold and the wholly-owned subsidiary of New US Gold that will merge with and into U.S. Gold enables U.S. Gold to implement this holding company structure. | ||
The expected favorable tax treatment to Target Company shareholders may not apply in the case of a Proposed Acquisition that does not close in connection with the reorganization. | ||
As a result of the formation of Canadian Exchange Co., Target Company shareholders who are subject to tax pursuant to Canadian federal income tax legislation (which includes shareholders who are residents of Canada and may include other shareholders), and who elect to receive exchangeable shares in exchange for their Target Company common shares may do so on a tax-deferred basis for purposes of the Canadian federal income tax legislation. In order to ensure that they receive such tax-deferred treatment, shareholders should file a joint election with Canadian Exchange Co. | ||
Additional information regarding the structure of the reorganization and the Proposed Acquisitions appears in the section entitled “Structure of the Delaware Holding Company Reorganization and the Proposed Acquisitions” beginning on page 74. | ||
Currency Exchange Rates | All references to “$” or “dollars” in this proxy statement/ prospectus refer to U.S. dollars, unless otherwise indicated. | |
The following table sets forth the average exchange rate for one U.S. dollar expressed in Canadian dollars for each period indicated and the exchange rate at the end of such period based upon the noon exchange rate provided by the Bank of Canada. |
Three Months | ||||||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||||||
March 31, | Year Ended December 31, | |||||||||||||||||||||||||||
2006 | 2005 | 2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||||||
(Canadian dollars) | ||||||||||||||||||||||||||||
Rate at end of period | 1.17 | 1.21 | 1.16 | 1.21 | 1.33 | 1.56 | 1.59 | |||||||||||||||||||||
Average rate for period | 1.15 | 1.23 | 1.21 | 1.30 | 1.40 | 1.57 | 1.54 |
On March 3, 2006, the last trading day before the announcement of the Proposed Acquisitions, the exchange rate for one U.S. dollar expressed in Canadian dollars based upon the noon exchange rate provided by the Bank of Canada was C$1.13. On April 28, 2006, the exchange rate for one U.S. dollar expressed in Canadian dollars based upon the noon exchange rate provided by the Bank of Canada was C$1.12. | ||
Additional Information | Additional information regarding the Proposed Acquisitions is set forth in “The Proposed Acquisitions” beginning on page 59. |
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Year Ended December 31, | ||||||||||||
2005 | 2004 | 2003 (restated) | ||||||||||
($ in thousands, except per share data) | ||||||||||||
Operating data | ||||||||||||
Other revenue | $ | 1,052 | $ | 39 | $ | 636 | ||||||
Net loss from operations before cumulative-effect gain on accounting change | (2,991 | ) | (794 | ) | (1,027 | ) | ||||||
Net loss | (2,991 | ) | (794 | ) | (623 | ) | ||||||
Basic and diluted loss per share | (0.12 | ) | (0.04 | ) | (0.04 | ) | ||||||
Weighted average shares | 25,931,172 | 20,028,173 | 17,696,098 | |||||||||
Balance sheet data | ||||||||||||
Cash, cash equivalents and short term investments | $ | 678 | $ | 75 | $ | 198 | ||||||
Inventories | 0 | 0 | 0 | |||||||||
Property, plant and equipment | 53 | 104 | 8 | |||||||||
Other assets | 4,810 | 1,256 | 1,595 | |||||||||
Total assets | $ | 5,541 | $ | 1,435 | $ | 1,801 | ||||||
Current liabilities | $ | 1,791 | $ | 35 | $ | 80 | ||||||
Long-term debt | 16 | 570 | 545 | |||||||||
Other long-term liabilities | 1,201 | 0 | 0 | |||||||||
Shareholders’ equity | 2,533 | 830 | 1,176 | |||||||||
Total liabilities and shareholders’ equity | $ | 5,541 | $ | 1,435 | $ | 1,801 | ||||||
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Six Months Ended | ||||||||||||||||||||
December 31, | Year Ended June 30, | |||||||||||||||||||
CANADIAN GAAP | 2005 | 2004 | 2005 | 2004 | 2003 | |||||||||||||||
(C$ in thousands, except per share data) | ||||||||||||||||||||
Operating data | ||||||||||||||||||||
Other revenue | $ | 196 | $ | 142 | $ | 262 | $ | 98 | $ | 8 | ||||||||||
Net loss | (481 | ) | (549 | ) | (1,063 | ) | (1,664 | ) | (358 | ) | ||||||||||
Basic and diluted loss per share | (0.01 | ) | (0.01 | ) | (0.02 | ) | (0.04 | ) | (0.01 | ) | ||||||||||
Balance sheet data | ||||||||||||||||||||
Cash, cash equivalents and short term investments | $ | 15,098 | $ | 11,934 | $ | 11,178 | $ | 9,846 | $ | 133 | ||||||||||
Inventories | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Property, plant and equipment | 302 | 144 | 139 | 86 | 7 | |||||||||||||||
Mineral properties and deferred exploration costs | 6,017 | 3,643 | 3,965 | 2,487 | 1,611 | |||||||||||||||
Other assets | 397 | 254 | 415 | 301 | 161 | |||||||||||||||
Total assets | $ | 21,814 | $ | 15,975 | $ | 15,697 | $ | 12,720 | $ | 1,912 | ||||||||||
Current liabilities | $ | 444 | $ | 128 | $ | 180 | $ | 130 | $ | 234 | ||||||||||
Long-term debt | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Other long-term liabilities | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Shareholders’ equity | 21,370 | 15,847 | 15,517 | 12,590 | 1,678 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 21,814 | $ | 15,975 | $ | 15,697 | $ | 12,720 | $ | 1,912 | ||||||||||
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Six Months Ended | ||||||||||||||||||||
December 31, | Year Ended June 30, | |||||||||||||||||||
CANADIAN GAAP | 2005 | 2004 | 2005 | 2004 | 2003 | |||||||||||||||
($ in thousands, except per share data) | ||||||||||||||||||||
Operating data | ||||||||||||||||||||
Mining revenue | $ | 3,706 | $ | 0 | $ | 5,175 | $ | 0 | $ | 0 | ||||||||||
Other revenue | 6 | 17 | 38 | 89 | 111 | |||||||||||||||
Net loss | (2,631 | ) | (1,904 | ) | (2,382 | ) | (1,937 | ) | (1,092 | ) | ||||||||||
Basic and diluted loss per share | (0.05 | ) | (0.04 | ) | (0.05 | ) | (0.06 | ) | (0.06 | ) | ||||||||||
Balance sheet data | ||||||||||||||||||||
Cash, cash equivalents and short term investments | $ | 2,339 | $ | 3,472 | $ | 957 | $ | 598 | $ | 88 | ||||||||||
Inventories | 2,033 | 1,656 | 4,527 | 2,448 | 0 | |||||||||||||||
Property, plant and equipment | 13,305 | 14,168 | 13,389 | 10,560 | 11 | |||||||||||||||
Mineral properties and deferred exploration costs | 3,760 | 2,250 | 3,106 | 2,455 | 1,487 | |||||||||||||||
Other assets | 331 | 814 | 590 | 786 | 95 | |||||||||||||||
Total assets | $ | 21,768 | $ | 22,360 | $ | 22,569 | $ | 16,847 | $ | 1,681 | ||||||||||
Current liabilities | $ | 1,032 | $ | 1,513 | $ | 1,783 | $ | 5,211 | $ | 96 | ||||||||||
Long-term debt | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Other long-term liabilities | 1,750 | 1,681 | 1,742 | 1,632 | 0 | |||||||||||||||
Shareholders’ equity | 18,986 | 19,166 | 19,044 | 10,004 | 1,585 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 21,768 | $ | 22,360 | $ | 22,569 | $ | 16,847 | $ | 1,681 | ||||||||||
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Nine Months Ended | ||||||||||||||||||||
October 31, | Year Ended January 31, | |||||||||||||||||||
CANADIAN GAAP | 2005 | 2004 | 2005 | 2004 | 2003 | |||||||||||||||
(C$ in thousands, except per share data) | ||||||||||||||||||||
Operating data | ||||||||||||||||||||
Other revenue | $ | 9 | $ | 24 | $ | 34 | $ | 15 | $ | 11 | ||||||||||
Net loss | (499 | ) | (406 | ) | (879 | ) | (754 | ) | (756 | ) | ||||||||||
Basic and diluted loss per share | (0.11 | ) | (0.09 | ) | (0.19 | ) | (0.20 | ) | (0.27 | ) | ||||||||||
Balance sheet data | ||||||||||||||||||||
Cash, cash equivalents and short term investments | $ | 701 | $ | 1,825 | $ | 1,530 | $ | 2,625 | $ | 393 | ||||||||||
Inventories | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Property, plant and equipment | 4 | 5 | 5 | 6 | 4 | |||||||||||||||
Mineral properties and deferred exploration costs | 9,016 | 8,231 | 8,472 | 7,574 | 7,159 | |||||||||||||||
Other assets | 1,083 | 669 | 743 | 762 | 1,332 | |||||||||||||||
Total assets | $ | 10,804 | $ | 10,730 | $ | 10,750 | $ | 10,967 | $ | 8,888 | ||||||||||
Current liabilities | $ | 128 | $ | 24 | $ | 163 | $ | 161 | $ | 387 | ||||||||||
Long-term debt | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Other long-term liabilities | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Shareholders’ equity | 10,676 | 10,706 | 10,587 | 10,806 | 8,501 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 10,804 | $ | 10,730 | $ | 10,750 | $ | 10,967 | $ | 8,888 | ||||||||||
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Three Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
November 30, | Year Ended August 31, | |||||||||||||||||||
CANADIAN GAAP | 2005 | 2004 | 2005 | 2004 | 2003 | |||||||||||||||
(C$ in thousands, except per share data) | ||||||||||||||||||||
Operating data | ||||||||||||||||||||
Other revenue | $ | 0 | $ | 0 | $ | 1 | $ | 1 | $ | 3 | ||||||||||
Net loss | (135 | ) | (165 | ) | (856 | ) | (1,083 | ) | (438 | ) | ||||||||||
Basic and diluted loss per share | (0.01 | ) | (0.01 | ) | (0.06 | ) | (0.09 | ) | (0.07 | ) | ||||||||||
Balance sheet data | ||||||||||||||||||||
Cash, cash equivalents and short term investments | $ | 27 | $ | 187 | $ | 5 | $ | 373 | $ | 289 | ||||||||||
Inventories | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Property, plant and equipment | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Mineral properties and deferred exploration costs | 1,138 | 1,107 | 1,124 | 906 | 450 | |||||||||||||||
Other assets | 44 | 54 | 44 | 57 | 68 | |||||||||||||||
Total assets | $ | 1,209 | $ | 1,348 | $ | 1,173 | $ | 1,336 | $ | 807 | ||||||||||
Current liabilities | $ | 158 | $ | 34 | $ | 129 | $ | 43 | $ | 79 | ||||||||||
Long-term debt | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Other long-term liabilities | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Shareholders’ equity | 1,051 | 1,314 | 1,044 | 1,293 | 728 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,209 | $ | 1,348 | $ | 1,173 | $ | 1,336 | $ | 807 | ||||||||||
19
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Unaudited | ||||||||||||||||
Pro Forma | ||||||||||||||||
Consolidated | ||||||||||||||||
Year Ended | Year Ended December 31, | |||||||||||||||
December 31, | ||||||||||||||||
UNITED STATES GAAP | 2005 | 2005 | 2004 | 2003 (restated) | ||||||||||||
($ in thousands, except per share data) | ||||||||||||||||
Operating data | ||||||||||||||||
Other revenue | $ | 1,349 | $ | 1,052 | $ | 39 | $ | 636 | ||||||||
Net loss from operations before cumulative-effect gain on accounting change | $ | (6,125 | ) | $ | (2,991 | ) | $ | (794 | ) | $ | (1,027 | ) | ||||
Net loss | (6,125 | ) | (2,991 | ) | (794 | ) | (623 | ) | ||||||||
Basic and diluted loss per share | (0.09 | ) | (0.12 | ) | (0.04 | ) | (0.04 | ) | ||||||||
Weighted average shares | 65,018,912 | 25,931,172 | 20,028,173 | 17,696,098 | ||||||||||||
Balance sheet data | ||||||||||||||||
Cash, cash equivalents and short term investments | $ | 42,219 | $ | 678 | $ | 75 | $ | 198 | ||||||||
Inventories | 0 | 0 | 0 | 0 | ||||||||||||
Property, plant and equipment | 313 | 53 | 104 | 8 | ||||||||||||
Mineral properties and deferred exploration costs | 153,601 | 0 | 0 | 0 | ||||||||||||
Other assets | 42,726 | 4,810 | 1,256 | 1,595 | ||||||||||||
Total assets | $ | 238,859 | $ | 5,541 | $ | 1,435 | $ | 1,801 | ||||||||
Current liabilities | $ | 2,173 | $ | 1,791 | $ | 35 | $ | 80 | ||||||||
Long-term debt | 16 | 16 | 570 | 545 | ||||||||||||
Other long-term liabilities | 33,851 | 1,201 | 0 | 0 | ||||||||||||
Shareholders’ equity | 202,819 | 2,533 | 830 | 1,176 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 238,859 | $ | 5,541 | $ | 1,435 | $ | 1,801 | ||||||||
20
Table of Contents
Unaudited | ||||||||||||||||
Pro Forma | ||||||||||||||||
Consolidated | ||||||||||||||||
Year Ended | Year Ended December 31, | |||||||||||||||
December 31, | ||||||||||||||||
UNITED STATES GAAP | 2005 | 2005 | 2004 | 2003 | ||||||||||||
($ in thousands, except per share data) | ||||||||||||||||
Operating data | ||||||||||||||||
Mining revenue | $ | 8,881 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Other revenue | 1,167 | 1,052 | 39 | 636 | ||||||||||||
Net loss from operations before cumulative-effect gain on accounting change | (7,947 | ) | (2,991 | ) | (794 | ) | (1,027 | ) | ||||||||
Net loss | (7,947 | ) | (2,991 | ) | (794 | ) | (623 | ) | ||||||||
Basic and diluted loss per share | (0.13 | ) | (0.12 | ) | (0.04 | ) | (0.04 | ) | ||||||||
Weighted average shares | 61,080,767 | 25,931,172 | 20,028,173 | 17,696,098 | ||||||||||||
Balance sheet data | ||||||||||||||||
Cash, cash equivalents and short term investments | $ | 35,119 | $ | 678 | $ | 75 | $ | 198 | ||||||||
Inventories | 2,033 | 0 | 0 | 0 | ||||||||||||
Property, plant and equipment | 13,358 | 53 | 104 | 8 | ||||||||||||
Mineral properties and deferred exploration costs | 107,955 | 0 | 0 | 0 | ||||||||||||
Other assets | 42,715 | 4,810 | 1,256 | 1,595 | ||||||||||||
Total assets | $ | 201,180 | $ | 5,541 | $ | 1,435 | $ | 1,801 | ||||||||
Current liabilities | $ | 2,823 | $ | 1,791 | $ | 35 | $ | 80 | ||||||||
Long-term debt | 16 | 16 | 570 | 545 | ||||||||||||
Other long-term liabilities and deferred gain | 25,870 | 1,201 | 0 | 0 | ||||||||||||
Shareholders’ equity | 172,471 | 2,533 | 830 | 1,176 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 201,180 | $ | 5,541 | $ | 1,435 | $ | 1,801 | ||||||||
Unaudited | ||||||||||||||||
Pro Forma | ||||||||||||||||
Consolidated | ||||||||||||||||
Year Ended | Year Ended December 31, | |||||||||||||||
December 31, | ||||||||||||||||
UNITED STATES GAAP | 2005 | 2005 | 2004 | 2003 | ||||||||||||
($ in thousands, except per share data) | ||||||||||||||||
Operating data | ||||||||||||||||
Other revenue | $ | 1,049 | $ | 1,052 | $ | 39 | $ | 636 | ||||||||
Net loss from operations before cumulative-effect gain on accounting change | (4,768 | ) | (2,991 | ) | (794 | ) | (1,027 | ) | ||||||||
Net loss | (4,768 | ) | (2,991 | ) | (794 | ) | (623 | ) | ||||||||
Basic and diluted loss per share | (0.10 | ) | (0.12 | ) | (0.04 | ) | (0.04 | ) | ||||||||
Weighted average shares | 47,711,394 | 25,931,172 | 20,028,173 | 17,696,098 |
21
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Unaudited | ||||||||||||||||
Pro Forma | ||||||||||||||||
Consolidated | ||||||||||||||||
Year Ended | Year Ended December 31, | |||||||||||||||
December 31, | ||||||||||||||||
UNITED STATES GAAP | 2005 | 2005 | 2004 | 2003 | ||||||||||||
($ in thousands, except per share data) | ||||||||||||||||
Balance sheet data | ||||||||||||||||
Cash, cash equivalents and short term investments | $ | 38,795 | $ | 678 | $ | 75 | $ | 198 | ||||||||
Inventories | 0 | 0 | 0 | 0 | ||||||||||||
Property, plant and equipment | 57 | 53 | 104 | 8 | ||||||||||||
Mineral properties and deferred exploration costs | 25,893 | 0 | 0 | 0 | ||||||||||||
Other assets | 43,305 | 4,810 | 1,256 | 1,595 | ||||||||||||
Total assets | $ | 108,050 | $ | 5,541 | $ | 1,435 | $ | 1,801 | ||||||||
Current liabilities | $ | 1,900 | $ | 1,791 | $ | 35 | $ | 80 | ||||||||
Long-term debt | 16 | 16 | 570 | 545 | ||||||||||||
Other long-term liabilities and deferred gain | 5,210 | 1,201 | 0 | 0 | ||||||||||||
Shareholders’ equity | 100,924 | 2,533 | 830 | 1,176 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 108,050 | $ | 5,541 | $ | 1,435 | $ | 1,801 | ||||||||
Unaudited | ||||||||||||||||
Pro Forma | ||||||||||||||||
Consolidated | ||||||||||||||||
Year Ended | Year Ended December 31, | |||||||||||||||
December 31, | ||||||||||||||||
UNITED STATES GAAP | 2005 | 2005 | 2004 | 2003 | ||||||||||||
($ in thousands, except per share data) | ||||||||||||||||
Operating data | ||||||||||||||||
Other revenue | $ | 1,051 | $ | 1,052 | $ | 39 | $ | 636 | ||||||||
Net loss from operations before cumulative-effect gain on accounting change | (4,031 | ) | (2,991 | ) | (794 | ) | (1,027 | ) | ||||||||
Net loss | (4,031 | ) | (2,991 | ) | (794 | ) | (623 | ) | ||||||||
Basic and diluted loss per share | (0.08 | ) | (0.12 | ) | (0.04 | ) | (0.04 | ) | ||||||||
Weighted average shares | 48,889,396 | 25,931,172 | 20,028,173 | 17,696,098 | ||||||||||||
Balance sheet data | ||||||||||||||||
Cash, cash equivalents and short term investments | $ | 34,649 | $ | 678 | $ | 75 | $ | 198 | ||||||||
Inventories | 0 | 0 | 0 | 0 | ||||||||||||
Property, plant and equipment | 53 | 53 | 104 | 8 | ||||||||||||
Mineral properties and deferred exploration costs | 44,857 | 0 | 0 | 0 | ||||||||||||
Other assets | 42,422 | 4,810 | 1,256 | 1,595 | ||||||||||||
Total assets | $ | 121,981 | $ | 5,541 | $ | 1,435 | $ | 1,801 | ||||||||
Current liabilities | $ | 1,926 | $ | 1,791 | $ | 35 | $ | 80 | ||||||||
Long-term debt | 16 | 16 | 570 | 545 | ||||||||||||
Other long-term liabilities and deferred gain | 10,853 | 1,201 | 0 | 0 | ||||||||||||
Shareholders’ equity | 109,186 | 2,533 | 830 | 1,176 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 121,981 | $ | 5,541 | $ | 1,435 | $ | 1,801 | ||||||||
22
Table of Contents
Unaudited | ||||||||||||||||
Pro Forma | ||||||||||||||||
Supplementary | ||||||||||||||||
Consolidated | ||||||||||||||||
Year Ended | Year Ended December 31, | |||||||||||||||
December 31, | ||||||||||||||||
UNITED STATES GAAP | 2005 | 2005 | 2004 | 2003 | ||||||||||||
($ in thousands, except per share data) | ||||||||||||||||
Operating data | ||||||||||||||||
Mining revenue | $ | 8,881 | $ | 1,052 | $ | 39 | $ | 636 | ||||||||
Other revenue | 1,459 | |||||||||||||||
Net loss from operations before cumulative-effect gain on accounting change | (12,886 | ) | (2,991 | ) | (794 | ) | (1,027 | ) | ||||||||
Net loss | (12,886 | ) | (2,991 | ) | (794 | ) | (623 | ) | ||||||||
Basic and diluted loss per share | (0.14 | ) | (0.12 | ) | (0.04 | ) | (0.04 | ) | ||||||||
Weighted average shares | 94,806,954 | 25,931,172 | 20,028,173 | 17,696,098 | ||||||||||||
Balance sheet data | ||||||||||||||||
Cash, cash equivalents and short term investments | $ | 43,914 | $ | 678 | $ | 75 | $ | 198 | ||||||||
Inventories | 2,033 | 0 | 0 | 0 | ||||||||||||
Property, plant and equipment | 13,621 | 53 | 104 | 8 | ||||||||||||
Mineral properties and deferred exploration costs | 332,306 | 0 | 0 | 0 | ||||||||||||
Other assets | 44,016 | 4,810 | 1,256 | 1,595 | ||||||||||||
Total assets | $ | 435,890 | $ | 5,541 | $ | 1,435 | $ | 1,801 | ||||||||
Current liabilities | $ | 3,449 | $ | 1,791 | $ | 35 | $ | 80 | ||||||||
Long-term debt | 16 | 16 | 570 | 545 | ||||||||||||
Other long-term liabilities and deferred gain | 72,184 | 1,201 | 0 | 0 | ||||||||||||
Shareholders’ equity | 360,241 | 2,533 | 830 | 1,176 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 435,890 | $ | 5,541 | $ | 1,435 | $ | 1,801 | ||||||||
• | U.S. Gold and each of the Target Companies separately on a historical basis; | |
• | U.S. Gold and each of the Target Companies separately on an equivalent unauditedpro formacondensed combined basis; and | |
• | U.S. Gold and all of the Target Companies combined on an equivalent unauditedpro formacondensed combined basis. |
23
Table of Contents
Year Ended | |||||
December 31, 2005 | |||||
U.S. Gold — Historical | |||||
Historical per common share: | |||||
Income per basic share | $ | (0.12 | ) | ||
Income per diluted share | $ | (0.12 | ) | ||
Dividends declared | $ | 0 | |||
Book value per share | $ | 0.08 |
Year Ended | |||||
June 30, 2005 | |||||
White Knight — Historical (Canadian GAAP) | |||||
Historical per common share: | |||||
Income per basic share | C$ | (0.02 | ) | ||
Income per diluted share | C$ | (0.02 | ) | ||
Dividends declared | C$ | 0 | |||
Book value per share | C$ | 0.29 |
Year Ended | |||||
December 31, 2005 | |||||
UnauditedPro FormaCondensed Combined — U.S. Gold and White Knight (U.S. GAAP) | |||||
Unauditedpro formacondensed combined per common share of New US Gold: | |||||
Income per basic share | $ | (0.09 | ) | ||
Income per diluted share | $ | (0.09 | ) | ||
Dividends declared | $ | 0 | |||
Book value per share | $ | 2.80 |
24
Table of Contents
Year Ended | |||||
June 30, 2005 | |||||
Nevada Pacific — Historical (Canadian GAAP) | |||||
Historical per common share: | |||||
Income per basic share | $ | (0.05 | ) | ||
Income per diluted share | $ | (0.05 | ) | ||
Dividends declared | $ | 0 | |||
Book value per share | $ | 0.34 |
Year Ended | |||||
December 31, 2005 | |||||
UnauditedPro FormaCondensed Combined — U.S. Gold and Nevada Pacific (U.S. GAAP) | |||||
Unauditedpro formacondensed combined per common share of New US Gold: | |||||
Income per basic share | $ | (0.13 | ) | ||
Income per diluted share | $ | (0.13 | ) | ||
Dividends declared | $ | 0 | |||
Book value per share | $ | 2.52 |
Year Ended | |||||
January 31, 2005 | |||||
Coral Gold — Historical (Canadian GAAP) | |||||
Historical per common share: | |||||
Income per basic share | C$ | (0.19 | ) | ||
Income per diluted share | C$ | (0.19 | ) | ||
Dividends declared | C$ | 0 | |||
Book value per share | C$ | 2.28 |
Year Ended | |||||
December 31, 2005 | |||||
UnauditedPro FormaCondensed Combined — U.S. Gold and Coral Gold (U.S. GAAP) | |||||
Unauditedpro formacondensed combined per common share of New US Gold: | |||||
Income per basic share | $ | (0.10 | ) | ||
Income per diluted share | $ | (0.10 | ) | ||
Dividends declared | $ | 0 | |||
Book value per share | $ | 1.83 |
Year Ended | |||||
August 31, 2005 | |||||
Tone Resources — Historical (Canadian GAAP) | |||||
Historical per common share: | |||||
Income per basic share | C$ | (0.06 | ) | ||
Income per diluted share | C$ | (0.06 | ) | ||
Dividends declared | C$ | 0 | |||
Book value per share | C$ | 0.08 |
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Table of Contents
Year Ended | |||||
December 31, 2005 | |||||
UnauditedPro FormaCondensed Combined — U.S. Gold and Tone Resources (U.S. GAAP) | |||||
Unauditedpro formacondensed combined per common share of New US Gold: | |||||
Income per basic share | $ | (0.08 | ) | ||
Income per diluted share | $ | (0.08 | ) | ||
Dividends declared | $ | 0 | |||
Book value per share | $ | 1.94 | |||
UnauditedPro FormaCondensed Combined — U.S. Gold and All Four Target Companies (U.S. GAAP) | |||||
Unauditedpro formacondensed combined per common share of New US Gold: | |||||
Income per basic share | $ | (0.14 | ) | ||
Income per diluted share | $ | (0.14 | ) | ||
Dividends declared | $ | 0 | |||
Book value per share | $ | 3.53 |
TSXV | OTC Bulletin Board | Pink Sheets | ||||||||||||||||||||||
March 3, | April 28, | March 3, | April 28, | March 3, | April 28, | |||||||||||||||||||
Issuer | 2006 | 2006 | 2006 | 2006 | 2006 | 2006 | ||||||||||||||||||
White Knight | C$ | 1.79 | C$ | 2.78 | US$ | — | US$ | — | US$ | — | US$ | — | ||||||||||||
Nevada Pacific | C$ | 1.20 | C$ | 1.94 | US$ | — | US$ | — | US$ | — | US$ | — | ||||||||||||
Coral Gold | C$ | 3.25 | C$ | 5.20 | US$ | 2.85 | US$ | 4.6383 | US$ | — | US$ | — | ||||||||||||
Tone Resources | C$ | 1.35 | C$ | 2.25 | US$ | — | US$ | — | US$ | 1.093 | US$ | 2.00 | ||||||||||||
U.S. Gold | C$ | — | C$ | — | US$ | 5.65 | US$ | 8.95 | US$ | — | US$ | — |
26
Table of Contents
Tone | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Gold/OTCBB | White Knight/TSXV | Nevada Pacific/TSXV | Coral Gold/TSXV (1) | Resources/TSXV | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Avg. Daily | Avg. Daily | Avg. Daily | Avg. Daily | Avg. Daily | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
High | Low | Volume | High | Low | Volume | High | Low | Volume | High | Low | Volume | High | Low | Volume | ||||||||||||||||||||||||||||||||||||||||||||||
($) | (C$) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31 | 1.85 | 0.81 | 71,116 | 0.92 | 0.55 | 84,905 | 1.60 | 0.92 | 207,211 | 5.50 | 2.90 | N/A | 0.61 | 0.30 | 13,544 | |||||||||||||||||||||||||||||||||||||||||||||
June 30 | 1.03 | 0.60 | 39,022 | 1.61 | 0.50 | 235,841 | 1.50 | 0.85 | 68,644 | 3.60 | 2.20 | N/A | 0.65 | 0.38 | 9,474 | |||||||||||||||||||||||||||||||||||||||||||||
September 30 | 0.72 | 0.38 | 40,000 | 1.49 | 0.87 | 178,946 | 1.12 | 0.83 | 88,380 | 3.70 | 1.00 | 17,912 | 0.45 | 0.28 | 11,750 | |||||||||||||||||||||||||||||||||||||||||||||
December 31 | 0.54 | 0.40 | 22,006 | 1.20 | 0.70 | 111,059 | 1.11 | 0.74 | 136,396 | 1.95 | 1.12 | 6,928 | 0.75 | 0.39 | 19,610 | |||||||||||||||||||||||||||||||||||||||||||||
2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31 | 0.42 | 0.34 | 39,009 | 0.93 | 0.60 | 71,839 | 0.96 | 0.76 | 97,566 | 2.30 | 1.12 | 6,441 | 0.60 | 0.37 | 7,865 | |||||||||||||||||||||||||||||||||||||||||||||
June 30 | 0.53 | 0.30 | 23,781 | 0.92 | 0.55 | 27,852 | 0.96 | 0.51 | 71,069 | 1.89 | 1.33 | 2,396 | 0.45 | 0.32 | 5,492 | |||||||||||||||||||||||||||||||||||||||||||||
September 30 | 2.81 | 0.35 | 297,451 | 1.80 | 0.85 | 311,711 | 0.91 | 0.55 | 148,785 | 2.10 | 1.31 | 6,019 | 0.41 | 0.25 | 7,116 | |||||||||||||||||||||||||||||||||||||||||||||
December 31 | 3.95 | 1.94 | 231,105 | 2.10 | 1.31 | 154,997 | 0.90 | 0.34 | 380,319 | 4.17 | 0.90 | 16,672 | 0.97 | 0.18 | 39,916 | |||||||||||||||||||||||||||||||||||||||||||||
2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31 | 9.25 | 3.48 | 252,088 | 2.39 | 1.40 | 256,490 | 1.65 | 0.81 | 92,376 | 6.34 | 3.14 | 18,857 | 2.13 | 0.70 | 92,376 | |||||||||||||||||||||||||||||||||||||||||||||
Through April 30 | 10.15 | 7.60 | 429,887 | 2.80 | 2.07 | 17,625 | 1.80 | 1.25 | N/A | 6.99 | 4.60 | N/A | 2.30 | 1.80 | N/A |
(1) | Coral Gold effected a1-for-10 stock split on September 14, 2004. All prices for periods before the split have been adjusted to reflect the split. |
27
Table of Contents
• | New US Gold, as the majority shareholder, may owe fiduciary duties to the minority shareholders of the Target Company, whose interests may diverge from the interests of New US Gold; and | |
• | New US Gold may not have access to cash flow generated by the Target Company, except to the extent it is distributed to all the Target Company shareholders proportionately in the form of dividends. |
28
Table of Contents
29
Table of Contents
• | under Delaware corporate law, fewer corporate transactions give rise to dissenters’ rights than under Colorado corporate law; and |
30
Table of Contents
• | under Delaware corporate law, stockholders of New US Gold will not have the right to propose amendments to the company’s certificate of incorporation, as opposed to Colorado corporate law, which gives holders of 10% of the voting shares the right to propose amendments to the articles of incorporation of a Colorado corporation. |
• | limit the business at special meetings to the purpose stated in the notice of the meeting; | |
• | require unanimous written consent for action by New US Gold stockholders without a meeting;and | |
• | establish advance notice requirements for submitting nominations for election to the board of directors and for proposing matters for consideration by stockholders at a meeting. |
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Table of Contents
• | The Offerors have commenced an offer to purchase all outstanding common shares of White Knight in exchange for a choice of common stock of New US Gold, or exchangeable shares of a Canadian subsidiary of U.S. Gold which we call “Canadian Exchange Co.” The Offerors intend to commence offers to purchase all of the outstanding common shares of each of the other Target Companies, on substantially similar terms, as soon as practicable following the completion by Coral Gold, Nevada Pacific and Tone Resources of formal valuations required under applicable law. The offers to purchase are conditioned upon approval by U.S. Gold shareholders of Proposals 1 and 2 described in this proxy statement/ prospectus. A summary of the four Proposed Acquisitions, a summary of each of the four Target Companies, historical financial statements,pro formafinancial information and corporate per share information, market data, per share market price and dividend information for U.S. Gold and each of the four Target Companies are set forth in this proxy statement/ prospectus. | |
• | U.S. Gold intends to effect a holding company reorganization transaction immediately before completing any of the four offers to purchase, as a result of which all current U.S. Gold shareholders will become shareholders of New US Gold, a new holding company which intends to apply to have its shares listed on the AMEX and the TSX, and which will be the successor registrant to U.S. Gold for SEC reporting purposes, all as described in greater detail in “Proposal 1 — Agreement and Plan of Merger and Delaware Holding Company Reorganization” beginning on page 36. If Proposals 1 and 2 are both approved, the Delaware holding company reorganization will not be effected unless either (i) all the conditions to the offer to purchase with respect to one or more of the Proposed Acquisitions have been satisfied, or (ii) the board of directors determines that such conditions will not be satisfied or otherwise determines that the Proposed Acquisitions will not be completed, and determines in its discretion to proceed with the reorganization. | |
• | Promptly following the completion of any of the offers to purchase the common shares of any of the Target Companies, New US Gold will seek to acquire all of the common shares of such Target Company not purchased pursuant to the offers to purchase, through a merger, amalgamation, plan of arrangement or other similar transaction (which we call a “subsequent acquisition transaction”) in which it is expected that all remaining shareholders of the Target Companies will receive consideration which is at least equal in value as the consideration paid to shareholders of the Target Companies pursuant to the offers to purchase. |
32
Table of Contents
• | “FOR” Proposal 1 — approval of the agreement and plan of merger and the Delaware holding company reorganization as described in more detail in “Proposal 1 — Agreement and Plan of Merger and Delaware Holding Company Reorganization” on page 36; | |
• | “FOR” Proposal 2 — approval of the issuance of shares of common stock of New US Gold in connection with the Proposed Acquisitions as described in more detail in “Proposal 2 — Issuance of New US Gold Common Stock” on page 51; | |
• | “FOR” Proposal 3 — authorization to adjourn or postpone the special meeting to solicit additional votes to approve Proposals 1 and 2 as described in more detail in “Proposal 3 — Authorization to Adjourn or Postpone Special Meeting to Solicit Additional Votes” on page 53; | |
• | “FOR” Proposal 4 — approval of the amendment and restatement of the U.S. Gold Plan as described in more detail in “Proposal 4 — Amendment and Restatement of U.S. Gold Plan” on page 54; and | |
• | in accordance with the recommendation of the board of directors on any other matters that properly may be brought before the special meeting or any adjournment or postponement thereof or, in the absence of a Board recommendation, in the proxy holder’s discretion. |
• | Proposal 1 — the approval of the agreement and plan of merger and the reorganization require the approval of a majority of the outstanding shares of U.S. Gold; | |
• | Proposal 2 — the approval of the issuance of shares of common stock of New US Gold in connection with the Proposed Acquisitions requires the approval of the majority of the shares present in person or by proxy at a meeting at which a quorum is present. | |
• | Proposal 3 — the authorization of the adjournment or postponement of the special meeting to solicit additional votes in favor of Proposals 1 and 2 requires the approval of the majority of the shares present in person or by proxy at a meeting at which a quorum is present; and | |
• | Proposal 4 — the approval of the amendment and restatement of the U.S. Gold Plan requires the approval of the majority of the shares present in person or by proxy at a meeting at which a quorum is present. |
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• | New US Gold will be incorporated under the laws of the state of Delaware, as compared with U.S. Gold’s incorporation under the laws of the state of Colorado, as described in “— Comparison of Shareholder Rights” on page 44; and | |
• | there will be one share of New US Gold special voting stock (a type of New US Gold preferred stock) held by the voting and exchange trustee for the benefit of the holders of exchangeable shares of Canadian Exchange Co., which will permit the voting and exchange trustee to cast up to that number of votes as equals the number of exchangeable shares then outstanding on all matters on which the holders of New US Gold common stock are entitled to vote, as described in “Structure of the Delaware Holding Company Reorganization and the Proposed Acquisitions — The Voting and Exchange Trust Agreement” on page 76. |
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• | 9,552,405 common shares of White Knight, which, based on information contained in White Knight’s management discussion and analysis dated February 27, 2006, represents approximately 16.1% of its outstanding common shares; | |
• | 12,500,000 common shares of Nevada Pacific and warrants exercisable to acquire 12,500,000 common shares of Nevada Pacific, which, based on information contained in Nevada Pacific’s public disclosure, represents approximately 36.3% of the outstanding common shares, assuming the exercise by Mr. McEwen of all of the warrants exercisable to acquire common shares held by him; | |
• | 1,250,000 common shares of Coral Gold, which, based on information contained in Coral Gold’s press release dated March 6, 2006, represents approximately 19.8% of the outstanding common shares; and | |
• | 2,500,000 common shares of Tone Resources and warrants to acquire 2,500,000 common shares of Tone Resources, which, based on information contained in Tone Resources’ public disclosure represents approximately 30.2% of the outstanding common shares, assuming the exercise by Mr. McEwen of all of the warrants exercisable to acquire common shares held by him. |
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• | to acquire all shares of the Target Companies tendered for New US Gold common stock pursuant to the offers to purchase; | |
• | to permit the exchange of all exchangeable shares of Canadian Exchange Co. issued pursuant to the offers to purchase for an equivalent number of shares of New US Gold common stock, in accordance with the terms of the exchangeable shares; | |
• | to complete a subsequent acquisition transaction to acquire any common shares of the Target Companies not acquired through the offers to purchase; | |
• | upon exercise of assumed warrants and options to acquire common shares of the Target Companies; | |
• | upon exercise of currently outstanding stock options that U.S. Gold has granted to its employees, directors and consultants; | |
• | pursuant to awards that U.S. Gold may grant under the U.S. Gold Plan; | |
• | upon conversion of subscription receipts issued in connection with the private placement in February 2006; and | |
• | upon exercise of warrants and broker warrants to purchase shares of New US Gold common stock issued or issuable in connection with the private placement in February 2006. |
• | Predictability, Flexibility and Responsiveness of Delaware Law to Corporate Needs. For many years, Delaware has followed a policy of encouraging incorporation in that state and has adopted comprehensive, modern and flexible corporate laws, which are updated regularly to meet changing business needs. As a result of this deliberate policy to provide a hospitable climate for corporate development, many major public corporations have chosen Delaware for their domicile. In addition, the Delaware courts have developed considerable expertise in resolving corporate issues relating to public companies. Thus, a substantial body of case law has developed construing Delaware corporate law and establishing legal principles and policies regarding publicly-held Delaware corporations. We believe that, for these reasons, Delaware law will provide greater legal predictability with respect to our corporate legal matters than we have under Colorado law. We will, however, continue to operate our current exploration business as a Colorado corporation and a subsidiary of New US Gold. New US Gold will be the public company. We believe that Delaware law will provide greater efficiency, predictability and flexibility in our public company’s legal affairs than is presently available under Colorado law. | |
• | Attractiveness of Delaware Law to Directors and Officers. We believe that organizing our company under Delaware law will enhance our ability to attract and retain qualified directors and officers. The corporate law of Delaware, including its extensive body of case law, offers directors and officers of public companies more certainty and stability. Under Delaware law, the parameters of director and officer liability are more clearly defined and better understood than under Colorado law. To date, we have not experienced difficulty in retaining directors or officers, but directors of public companies are exposed to significant potential liability. We therefore believe that providing the benefits afforded directors by Delaware law will enable us to compete more effectively with other public companies in the recruitment of talented and experienced directors and officers. At the same time, we believe that Delaware law regarding corporate fiduciary duties provides |
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appropriate protection for our stockholders from possible abuses by directors and officers. In addition, under Delaware law, directors’ personal liability cannot be eliminated for any breach of the director’s duty of loyalty to the corporation or its stockholders, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, unlawful payment of dividends or unlawful repurchases or redemptions of stock, or any transactions from which the director derived an improper personal benefit. |
• | Increased Costs and Expenses Associated with the Reorganization and Incorporating New US Gold in Delaware. The reorganization, including the incorporation of New US Gold in Delaware, may result in substantial direct costs. These costs and expenses are expected to consist primarily of attorney’s fees, accountants’ fees, filing fees and financial printing expenses and will be substantially incurred before the vote of our shareholders. The reorganization may also result in certain indirect costs by diverting the attention of our management and employees from our business and resulting in increased administrative costs and expenses. These administrative costs and expenses will include keeping separate records and overseeing legal and regulatory compliance for each of New US Gold, U.S. Gold, and the subsidiaries created in the course of the reorganization or otherwise. | |
• | Criticisms Regarding Minority Stockholder Rights. Delaware law has been publicly criticized on the grounds that it does not afford minority stockholders all the same substantive rights and protections that are available under the laws of a number of other states (including Colorado). As a result of the incorporation of New US Gold in Delaware, the rights of stockholders will change in a number of important respects. U.S. Gold’s board of directors believes that the advantages of incorporation in Delaware to New US Gold and its stockholders outweigh its possible disadvantages; however, U.S. Gold’s stockholders should review the summary of these differences in “Proposal 1 — Agreement and Plan of Merger and Delaware Holding Company Reorganization — Comparison of Shareholder Rights” on page 44. Some of these differences, which may be less favorable to stockholders after the reorganization, include the following: |
— | under Delaware corporate law, fewer corporate transactions give rise to dissenters’ rights than under Colorado corporate law; and | |
— | under Delaware corporate law, stockholders of New US Gold will not have the right to propose amendments to the company’s certificate of incorporation, as opposed to Colorado corporate law, which gives holders of 10% of the voting shares the right to propose amendments to the articles of incorporation of a Colorado corporation. |
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• | A holder that is not a U.S. person (as defined in Regulation S of the Securities Act) may exercise the warrant if the holder is not in the United States; is not exercising the warrants for, or on behalf or benefit of, a U.S. Person or person in the United States; does not execute or deliver the warrant exercise form in the United States; agrees not to engage in hedging transactions with regard to the common stock before the expiration of a one-year distribution compliance period; acknowledges that the shares of common stock issuable upon exercise of the warrants are “restricted securities” as defined in Rule 144 of the Securities Act and acknowledges that U.S. Gold Corporation shall refuse to register any transfer of the common stock not made in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act, or pursuant to an available exemption from registration under the Securities Act. | |
• | Other holders may exercise the warrants in transactions that do not require registration under the Securities Act or any applicable U.S. state laws and regulations upon furnishing U.S. Gold Corporation an opinion of counsel of recognized standing in form and substance satisfactory to U.S. Gold Corporation. |
• | fixes a record date for issuance of certain dividends or distributions; | |
• | subdivides or splits its common stock into a greater number of shares; | |
• | consolidates, reduces or combines the outstanding amount of common stock into a lesser number of shares; | |
• | issues rights, options or warrants exercisable at a price less than 95% of the current market price of our common stock; | |
• | undertakes a merger, consolidation or other arrangement which results in a reclassification or redesignation of our common stock, or a change or our common stock into other shares or securities; or | |
• | transfers, sells or otherwise conveys all or substantially all of its assets. |
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• | for any breach of the director’s duty of loyalty to us or our stockholders; | |
• | for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; | |
• | under Section 174 of the DGCL (governing distributions to and redemptions or repurchases from stockholders); or | |
• | for any transaction from which the director derived any improper personal benefit. |
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• | Stockholder meetings may take place at any location designated by resolution of the board of directors. | |
• | Stockholders’ meetings must be held annually for the election of directors and the transaction of other business. | |
• | New US Gold’s board may fix a record date for stockholder meetings that will be not be more than 60 days nor less than 10 days before the meeting. Should New US Gold’s board fail to do so, the record date will be either the close of business on the day preceding the day on which notice of the stockholder meeting was given, or the close of business on the day on which New US Gold’s board adopts a resolution for the payment of dividends or distributions. | |
• | Unless otherwise required by law, notice of any stockholder meeting must be provided to stockholders not less than 10 nor more than 60 days before the date of the meeting. | |
• | Where notice is required to be given, a waiver of notice has the same effect as notice. Waiver of notice includes attendance by a stockholder at a meeting, unless the stockholder attends the meeting for the express purpose of objecting that the meeting was not lawfully called due to the lack of notice. | |
• | The secretary of New US Gold must prepare and make available to any stockholder a list of all stockholders entitled to vote at a meeting at least 10 days before every meeting. | |
• | Stockholders may vote by proxy and may revoke any proxy that is not irrevocable by attending the meeting and voting in person or by delivering to the Secretary a revocation of the proxy. | |
• | At meetings for the election of directors, a plurality of the votes cast is necessary to elect directors. | |
• | Any director may be removed from office with or without cause by the holders of a majority of the combined voting power of the outstanding shares of voting stock, voting together as a single class. |
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U.S. Gold (Colorado) | New US Gold (Delaware) | |||
Authorized Shares | The authorized capital stock of U.S. Gold consists of 250 million shares of common stock, no par value. As of April 28, 2006, a total of 33,296,755 shares of common stock have been issued. An additional 1,048,000 shares are reserved for issuance under outstanding stock options, and an additional 29,058,000 shares are reserved for issuance upon conversion of subscription receipts. No preferred stock has been authorized for issuance. | Following the filing of New US Gold’s amended and restated certificate of incorporation before completion of the reorganization, the authorized capital stock of New US Gold will consist of 250,000,001 shares, consisting of 250 million shares of common stock, par value $0.0001 per share, 1,000 of which have been issued to U.S. Gold, and one share of preferred stock, par value $0.0001 per share, which has been designated and authorized for issuance as the Special Voting Share. Rights to receive shares of U.S. Gold common stock under U.S. Gold’s stock option and stock grant plan, or under outstanding warrants, will be converted into rights to receive shares of New US Gold common stock on the same terms as were in effect before the reorganization. | ||
Par Value | U.S. Gold stock has no par value. | New US Gold’s common stock has a par value of $0.0001 per share, to reduce franchise tax obligations and to assist in calculating surplus, as required under the DGCL, if and when New US Gold distributes dividends. | ||
Voting Requirements | Holders of common stock are entitled to one vote per share and vote together as a single class on all matters to be voted upon by shareholders. Under the CBCA, shareholders have the right to cumulate their votes in the election of directors under specified procedures unless the articles of incorporation or bylaws of specified categories of corporations provide otherwise. U.S. Gold’s articles of incorporation eliminate cumulative voting by shareholders. | Holders of common stock are entitled to one vote per share and will vote together as a single class on all matters to be voted upon by stockholders. Under the DGCL, stockholders do not have the right to cumulate their votes in the election of directors unless such right is granted in the certificate of incorporation. New US Gold’s amended and restated certificate of incorporation does not provide for cumulative voting. The special voting stock has the number of votes equal to the number of exchangeable shares (other than exchangeable shares held by New US Gold or its affiliates), which may be cast by the voting and exchange trustee at any meeting at which New US Gold stockholders are entitled to vote. | ||
Vote Required for Election of Directors | U.S. Gold’s bylaws provide that the directors shall be elected at the annual meeting. U.S. Gold’s articles of incorporation provide that one-third of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. Directors are elected by a plurality of votes cast. | New US Gold’s amended and restated bylaws provide for election of directors by a vote of a plurality of the shares present in person or proxy at the meeting and entitled to vote. New US Gold’s amended and restated certificate of incorporation provides that one-third of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. | ||
Classified Board of Directors | U.S. Gold’s articles of incorporation, as amended, do not provide for a classified board of directors. Accordingly, under the CBCA, all of U.S. Gold’s directors are elected annually. | New US Gold’s amended and restated certificate of incorporation does not provide for a classified board of directors. Accordingly, all directors of New US Gold will be elected annually. |
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U.S. Gold (Colorado) | New US Gold (Delaware) | |||
Number of Directors | Under the CBCA, the number of directors must be specified in or determined in accordance with a corporation’s bylaws. U.S. Gold’s amended and restated bylaws provide that the board of directors is to have seven members or such other number as is designated by the board of directors, so long as there are not less than three directors. The CBCA, like the DGCL, provides that shareholders may amend a corporation’s bylaws without the approval of the board of directors. Accordingly, shareholders of U.S. Gold have the ability to determine the size of the board of directors. U.S. Gold’s Board of directors currently has five members, plus one vacancy. | The DGCL permits a corporation’s certificate of incorporation to specify the number of directors. Under New US Gold’s amended and restated certificate of incorporation and amended and restated bylaws, the board of directors of New US Gold is to have at least five but no more than twelve directors, as may be further specified in the bylaws or by the board of directors. Stockholders may not decrease the size of the board below five or increase the size of the board above twelve without board recommendation, because such action would require an amendment to the certificate of incorporation. New US Gold’s board of directors will have five members. | ||
Removal of Directors | Consistent with the CBCA, U.S. Gold’s bylaws provide that the company’s shareholders may remove directors of the company with or without cause. | Consistent with the DGCL, New US Gold’s amended and restated certificate of incorporation provides that the company’s stockholders may remove directors of the company with or without cause. | ||
Vacancies on the Board of Directors | Under the CBCA and U.S. Gold’s bylaws, vacancies on the board of directors will be filled by the remaining directors, unless the vacancy is caused by a new position, in which case the vacancy may be filled by a majority of the remaining directors or by the shareholders at a special meeting. | Under the DGCL and New US Gold’s amended and restated bylaws, vacancies on the board of directors of New US Gold will be filled by the remaining directors, if the vacancy is caused by an increase in the size of the board, or by either the board or the stockholders at a special meeting in the case of other vacancies. | ||
Shareholders’ Power to Call Special Meetings | In accordance with the CBCA, U.S. Gold’s bylaws provide that a special meeting of shareholders can be called at the request of holders of not less than 10% of the outstanding shares of U.S. Gold. | Under the DGCL, special stockholder meetings may be called by stockholders to the extent authorized by the company’s certificate of incorporation or bylaws. New US Gold’s bylaws allow for stockholders of at least 10% of the outstanding shares of U.S. Gold to call a special meeting. | ||
Shareholder Action Without a Meeting | Under the CBCA and U.S. Gold’s bylaws, shareholder action without a meeting is permitted if written consent of all shareholders entitled to vote is obtained. | Under the DGCL, unless otherwise provided in the certificate of incorporation, stockholder action without a meeting is permitted if written consent of at least the minimum number of shares necessary to authorize the action is obtained. New US Gold’s amended and restated bylaws require stockholder action without a meeting to be taken by unanimous written consent of all stockholders. | ||
Notice of Shareholder Meetings | Consistent with the CBCA, U.S. Gold’s bylaws require that if the authorized shares of U.S. Gold are to be increased, at least 30 days’ notice shall be given to the shareholders of record. Additionally, under the CBCA, if a shareholder meeting is adjourned for more than 120 days (in which case a new record date is to be fixed by the board of directors of U.S. Gold), notice shall be given to record holders as of the new record date. In all other cases, pursuant to U.S. Gold’s bylaws, shareholders must be given at least 10 days’ notice, but not more than 50 days’ notice, of shareholder meetings. | Consistent with the DGCL, New US Gold’s amended and restarted bylaws do not include a separate notice period if the authorized shares of New US Gold are to be increased. Under the DGCL, if a shareholder meeting is adjourned for more than 30 days (in which case a new record date is to be fixed by the board of directors of U.S. Gold), notice shall be given to record holders as of the new record date. In all other cases, except as otherwise required by the DGCL, U.S. Gold’s bylaws require that shareholders must be given at least 10 days’ notice, but not more than 60 days’ notice, of shareholder meetings. |
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U.S. Gold (Colorado) | New US Gold (Delaware) | |||
Notice of Shareholder Nominations for Directors and Business to be Brought Before Meetings | U.S. Gold’s articles of incorporation, as amended, and bylaws do not contain any provisions regarding advance notice of shareholder nominations of directors or notice of business to be brought before meetings of shareholders. | New US Gold’s amended and restated bylaws specify that a stockholder must provide director nominations or business to be presented at a stockholders’ meeting at least 90 and not more than 120 days prior to the first anniversary of the preceding year’s annual meeting, or in the event of a special meeting or an annual meeting called for a date that is not within 30 days of such anniversary date, the stockholder must provide notice within 10 days of announcement of the meeting date. The amended and restated bylaws also establish the minimum information a stockholder must provide when nominating a director or identifying business to be presented at a stockholders’ meeting. | ||
Indemnification | Under U.S. Gold’s bylaws, U.S. Gold is required to indemnify former and current directors, officers, employees and agents of U.S. Gold against expenses incurred in any action brought against those persons as a result of their role with U.S. Gold, if they were acting in good faith, in a manner reasonably believed to have been in the best interests of U.S. Gold and with respect to any criminal action or proceeding, had no reason to believe their behavior was unlawful. Similarly, U.S. Gold may, in some circumstances, advance to a person potentially eligible for indemnification the expenses incurred in defending such an action. Under the CBCA, U.S. Gold must reimburse the reasonable expenses of a director who was wholly successful in defending an action brought against him or her as a result of his or her role with U.S. Gold. | New US Gold’s amended and restated certificate of incorporation and amended and restated bylaws provide for mandatory indemnification of former or current officers and directors, and permissive indemnification for former or current employees and agents, of New US Gold with respect to expenses incurred in any action brought against those persons as a result of their role with New US Gold if certain conditions are satisfied. Subject to certain conditions, New US Gold’s amended and restated bylaws provide for mandatory advancement of expenses incurred by officers and directors and permissive advancement of expenses incurred by employees and agents in defending such an action. Under the DGCL and the amended and restated bylaws, a person seeking indemnification is generally required to have acted in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation. | ||
Dividends | Colorado law permits a corporation to declare and pay dividends unless, after paying them, the corporation would not be able to pay its debts or the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed to satisfy the preferential rights superior to those receiving the distribution on dissolution. | Delaware law permits a corporation to declare and pay dividends out of surplus or if there is not a surplus, out of net profits, as long as the amount of capital following the payment is not less than the aggregate amount of capital represented by the issued and outstanding stock of all classes. |
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U.S. Gold (Colorado) | New US Gold (Delaware) | |||
Amendment to the Charter | Consistent with the CBCA, under the U.S. Gold articles of incorporation, as amended, amendments to the articles of incorporation that are subject to shareholder approval that do not add, change or delete a quorum or voting requirement shall be approved if a quorum exists and the votes cast favoring the action exceed the votes cast opposing the action. Amendments to the articles of incorporation that are subject to shareholder approval that add, change or delete a quorum or voting requirement will be subject to the existing requirement being amended and the new requirement being proposed. Matters such as (i) approval of a plan of merger or share exchange; (ii) a transaction involving a sale, lease, exchange or other disposition of all or substantially all of the property of U.S. Gold, other than in the usual course of business; and (iii) a proposal to dissolve U.S. Gold shall be approved by a vote of a majority of all the votes entitled to be cast on the matter. | Consistent with the DGCL, the amended and restated certificate of incorporation for New US Gold generally can be amended upon recommendation by the board of directors and a vote of the majority of outstanding shares entitled to vote on the amendment, unless a higher vote is required by the certificate of incorporation. The DGCL requires separate class votes in limited circumstances involving matters that affect particular classes of common stock differently from other classes. | ||
Amendment to the Bylaws | Under U.S. Gold’s bylaws, the board of directors may alter, amend or repeal the bylaws, subject to repeal or change by action of the shareholders. | The amended and restated bylaws of New US Gold provide that the board of directors of New US Gold may amend or repeal the bylaws of New US Gold at any meeting by a majority of the directors present at a meeting at which a quorum is present. New US Gold’s stockholders may amend or repeal the bylaws even though the bylaws may also be amended or repealed by the board of directors. | ||
Business Combination Statute | The CBCA does not contain any business combination provisions. | Section 203 of the DGCL provides for a three-year moratorium on certain business combination transactions with “interested stockholders” (generally, persons who beneficially own 15% or more of the corporation’s outstanding voting stock). New US Gold has opted out of Section 203 of the DGCL in New US Gold’s amended and restated certificate of incorporation. | ||
Dissenters’ and Appraisal Rights | Under the CBCA, shareholders are entitled to exercise dissenters’ rights in the event of certain mergers, share exchanges, sales, leases, exchanges or other dispositions of all or substantially all of the property of the corporation. Shareholders also may dissent in the case of a reverse stock split that reduces the number of shares owned to a fraction of a share or to scrip if such scrip is to be acquired for cash or voided. Dissenters’ rights in Colorado are available to beneficial owners as well as record holders. Shareholders are not entitled to dissenters’ rights in certain circumstances, including in transactions in which they surrender and receive stock that is listed for trading on a stock exchange or stock that is held of record by more than 2,000 shareholders. Dissenters’ rights are not available as a result of the reorganization proposal. | The DGCL provides appraisal rights only in the case of a stockholder objecting to certain mergers or consolidations. Thus, under the DGCL, stockholders have no appraisal rights in a sale, lease or exchange of all or substantially all of a corporation’s assets. Appraisal rights in Delaware are available to record holders only. Stockholders are not entitled to dissenters’ rights in certain circumstances, including in transactions in which they surrender their stock and receive stock of the surviving corporation or another corporation whose shares are listed for trading on a stock exchange or stock that is held of record by more than 2,000 stockholders. Dissenters’ rights would not be available as a result of the reorganization proposal. |
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U.S. Gold (Colorado) | New US Gold (Delaware) | |||
Examination of Books and Records | Under the CBCA, any record or beneficial shareholder of U.S. Gold may, upon five days’ written demand, inspect certain records, including shareholder actions, minutes of shareholder meetings, communications with shareholders and recent financial statements. In addition, upon five days’ written demand, any such shareholder may inspect the list of shareholders and certain other corporate records, including minutes of the meetings of board of directors of U.S. Gold, if the shareholder either (i) has been a shareholder for at least three months or (ii) is a shareholder of at least 5% of all outstanding shares of any class of shares when the demand is made, provided that the demand is made in good faith for a proper purpose reasonably related to such person’s interests as a shareholder. | Under the DGCL, the inspection rights of the stockholders of New US Gold are the same as under Colorado law, except: (i) there is no requirement that a stockholder has been a stockholder for at least three months or is a stockholder of at least 5% of all outstanding shares of any class of shares when the demand is made, and (ii) if New US Gold refuses to permit inspection or does not reply to the demand within five business days after the demand has been made, the stockholder may apply to the Court of Chancery for an order to compel such inspection. | ||
Dissolution | Under the CBCA, the board of directors of U.S. Gold may submit a proposal of voluntary dissolution of U.S. Gold to the shareholders of U.S. Gold entitled to vote thereon. The board of directors of U.S. Gold must recommend such dissolution to the shareholders as part of the dissolution proposal, unless the board of directors of U.S. Gold determines that because of a conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders. | Under the DGCL, New US Gold may dissolve upon action by a majority of the board of directors and approval of a majority of the outstanding shares. If the board of directors does not approve such dissolution, the stockholder vote required for approving a dissolution of New US Gold is a unanimous written consent of all stockholders entitled to vote thereon. | ||
Shareholder Derivative Actions | Under the CBCA, if a court finds that a derivative action was brought without reasonable cause, the court may require the plaintiff to pay the defendants’ reasonable expenses attributable to the defense of such action, exclusive of attorney’s fees. In addition, U.S. Gold may, at any time before final judgment, require the plaintiff to give a security for the costs and reasonable expenses which may be incurred by U.S. Gold or other parties named as defendants in the defense of such action, but not including attorney’s fees, if the shareholder instituting the action holds less than 5% of the outstanding shares of any class of U.S. Gold, unless the shares so held have a market value in excess of $25,000. If the court then finds that the action was instituted without cause, the corporation may have recourse to such security in the amount determined by the court. | The DGCL’s requirements for bringing derivative actions are substantially similar to those contained in the CBCA, except that the DGCL does not impose (i) the reasonable cause requirement and (ii) the security requirement imposed by the CBCA. | ||
Franchise Tax | There is no franchise tax in Colorado | The DGCL requires corporations to pay franchise tax annually (the current maximum is $165,000 a year and it is possible that New US Gold will pay the maximum franchise tax each year). |
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• | Up to approximately 45.2 million shares of common stock of New US Gold and/or exchangeable shares of Canadian Exchange Co., to be issued either as payment for common shares of the Target Companies tendered in the offers to purchase or pursuant to subsequent acquisition transactions. The exchangeable shares of Canadian Exchange Co. are convertible, upon the terms and conditions described herein, into shares of New US Gold common stock on a one-for-one basis. | |
• | Up to approximately 7.0 million shares of common stock of New US Gold and/or exchangeable shares of Canadian Exchange Co. issuable upon exercise of warrants and options to purchase common shares of the Target Companies outstanding which are assumed or otherwise become exercisable for exchangeable shares of Canadian Exchange Co. or shares of New US Gold common stock in connection with or following the completion of the offers to purchase and the subsequent acquisition transactions. |
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(1) | provide for the grant of incentive options under section 422 of the Code, which provide potential tax benefits to the recipients compared to non-qualified options; | |
(2) | increase the number of shares of U.S. Gold common stock reserved for issuance under the U.S. Gold Plan by 4 million, for a total of 9 million shares; | |
(3) | specify that no more than 1 million shares may be subject to grants of options to an individual in a calendar year; | |
(4) | provide that awards under the U.S. Gold Plan can be granted to employees, directors, consultants, advisors, and directors as the board or committee administering the plan determines in its discretion and to provide that the committee may delegate to certain officers the authority to grant awards to certain employees (other than such officers), consultants and advisors; | |
(5) | provide for the grant of restricted stock; and | |
(6) | change the name of the U.S. Gold Plan to US Gold Equity Incentive Plan. |
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• | the maximum number of shares subject to one or more options that may be granted during any calendar year to any participant is 1,000,000 shares of common stock; and | |
• | the maximum number of shares that may be issued under the Restated Plan is 9,000,000 shares of common stock, if Proposal 4 is approved by U.S. Gold shareholders. |
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• | provide that any or all options shall become fully exercisable regardless of whether all conditions of exercise relating to length of service, attainment of financial performance goals or otherwise have been satisfied; | |
• | provide that any or all restrictions with respect to restricted stock and other awards shall lapse; | |
• | provide for the assumption of the outstanding options by the successor company or the substitution of new options for the outstanding options on terms comparable to the outstanding options; or | |
• | make any other provision for outstanding awards as the committee deems appropriate and consistent with applicable law. |
• | the fair market value of common stock on the date the incentive option was exercised or, if less, the amount received on the disposition, over | |
• | the exercise price. |
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• | A larger land position within the Cortez Trend and a larger exploration program. U.S. Gold holds a 100% interest in the Tonkin Springs exploration gold property in Eureka County, Nevada, subject to paramount title in the United States. This property consists of approximately 36 square miles of unpatented lode mining claims and millsite claims located on the Battle Mountain-Eureka Trend, approximately 45 miles northwest of the town of Eureka, in north-central Nevada. Upon successful completion of the Proposed Acquisitions, U.S. Gold’s land position would increase by approximately 344% to approximately 160 square miles. Over the next two years, U.S. Gold has planned 400,000 feet of exploration drilling on its Tonkin Springs exploration gold property at a cost of $30 million. If the Proposed Acquisitions are successfully completed, U.S. Gold intends to aggressively explore the properties of Nevada Pacific, Coral Gold, Tone Resources and White Knight over the next two years to coincide with its explorations program at its Tonkin Springs exploration gold property. | |
• | A stronger cash position and reduced costs. On February 22, 2006, U.S. Gold completed a private placement of 16,700,000 subscription receipts. Of the companies currently exploring for gold in Nevada, U.S. Gold has one of the strongest cash positions. Successful completion of one or more of the Proposed Acquisitions will also give U.S. Gold access to the additional cash resources of the companies acquired. Due to the strategic locations in Nevada of the assets of each of Nevada Pacific, Coral Gold, Tone Resources and White Knight and the elimination of redundant fees and costs, the Offerors expect that New US Gold will realize lower total costs than if each company was to remain a separate entity. | |
• | Enhanced trading liquidity and better market focus. The Offerors expect that the successful completion of the Proposed Acquisitions will result in increased market capitalization and trading liquidity of the combined company, resulting in better market focus. Because of the increased market capitalization and liquidity of the combined company, the Offerors expect that the combined company will have greater access to equity and debt capital markets than U.S. Gold currently does, and greater appeal to institutional investors. The Offerors expect that this access will provide management of the combined company greater flexibility to execute its business plan under various financial market conditions. | |
• | Additional technical expertise. The Offerors believe that one or more of Nevada Pacific, Coral Gold, Tone Resources and White Knight has quality employees with good technical expertise. The Offerors hope to retain at least some of these key employees following the successful completion of the Strategic Offers to assist in New US Gold’s business and operations going forward. |
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• | either (1) 0.35 shares of common stock of New US Gold or (2) 0.35 exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of White Knight. |
• | either (1) 0.23 shares of common stock of New US Gold or (2) 0.23 exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of Nevada Pacific; | |
• | either (1) 0.63 shares of common stock of New US Gold or (2) 0.63 exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of Coral Gold; and | |
• | either (1) 0.26 shares of common stock of New US Gold or (2) 0.26 exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of Tone Resources. |
Total | Total | Percentage of | Percentage of | |||||||||||||||||
New US Gold | New US Gold | New US Gold | Undiluted | Fully Diluted | ||||||||||||||||
Shares Issuable Per | Shares Issuable | Shares Issuable | New US Gold | New US Gold | ||||||||||||||||
Company | Outstanding Share | (undiluted) | (fully diluted) | Shares Held (1) | Shares Held (1) | |||||||||||||||
US Gold | 1.00 | 41,646,755 | (2) | 49,996,755 | (3) | 47.95 | % | 48.93 | % | |||||||||||
White Knight | 0.35 | 20,732,240 | 22,387,740 | 23.87 | % | 21.91 | % | |||||||||||||
Nevada Pacific | 0.23 | 15,759,026 | 18,449,595 | 18.15 | % | 18.06 | % | |||||||||||||
Coral Gold | 0.63 | 4,095,862 | 5,080,222 | 4.72 | % | 4.97 | % | |||||||||||||
Tone Resources | 0.26 | 4,614,889 | 6,258,224 | 5.31 | % | 6.13 | % | |||||||||||||
Total for All Target Companies | — | 45,202,017 | 52,175,781 | 52.05 | % | 51.07 | % | |||||||||||||
Total for US Gold and All Target Companies | — | 86,848,772 | 102,172,536 | 100.00 | % | 100.00 | % | |||||||||||||
(1) | Securities of the Target Companies held by Mr. Robert R. McEwen that would be converted into New US Gold common stock in the Proposed Acquisitions are included in the Target Company ownership percentages. |
(2) | Includes 33,296,755 shares of common stock outstanding as of April 28, 2006, plus 8,350,000 additional shares of common stock, which represents the minimum that will be issued upon conversion of the subscription receipts issued in February 2006. |
(3) | Includes shares listed in the undiluted column, plus an additional 8,350,000 shares of common stock which may be issued pursuant to the exchange of the remaining subscription receipts if all of the conditions to the release of escrowed offering proceeds are satisfied. |
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(a) | there shall have been properly deposited and not withdrawn that number of shares of the relevant Target Company that constitutes at least 662/3% of the outstanding common shares of that Target Company, calculated on a fully diluted basis; | |
(b) | each of the Target Companies shall not have entered into or effectuated any other agreement or transaction with any person or entity having the effect of impairing the Offerors’ ability to acquire such Target Company or otherwise diminishing the expected economic value to the Offerors of the acquisition of such Target Company including, but not limited to, any material issuance of new securities of the Target Company, the declaration of any extraordinary dividend, the adoption of a shareholder rights plan or any other transaction not in the ordinary course of the Target Company’s business; | |
(c) | the shares of common stock of New US Gold shall have been approved for listing on the TSX and the AMEX and the exchangeable shares shall have been approved for listing on the TSX; | |
(d) | the registration statements for the shares of common stock of New US Gold and the exchangeable shares to be issued pursuant to the offers to purchase and the shares of common stock of New US Gold that may be issued upon the exchange of any such exchangeable shares shall have become effective under the Securities Act of 1933, as amended, and no stop order suspending the effectiveness of the registration statements or a proceeding seeking a stop order shall have been issued nor shall there have been proceedings for that purpose initiated or threatened by the SEC and New US Gold shall have received all necessary state securities law or blue sky authorizations; | |
(e) | a receipt for a final prospectus qualifying the distribution of securities underlying the U.S. Gold subscription receipts and qualifying New US Gold as a reporting issuer shall have been issued in all jurisdictions of Canada; | |
(f) | all necessary orders shall have been obtained from relevant Canadian securities regulatory authorities in respect of the exchangeable shares to be issued pursuant to the offers to purchase, the shares of common stock of New US Gold that may be issued upon the exchange of any such exchangeable shares and the resale of any such exchangeable shares or shares of common stock of New US Gold; | |
(g) | the Offerors shall have received waivers relating to any change of control provisions in any note, bond, mortgage, indenture, license, lease, contract, agreement or other instrument or obligation to which any of the Target Companies or any of their respective subsidiaries is a party or by which any of them or any of their properties or assets may be bound, except such waivers the absence of which would not in the aggregate materially adversely affect such Target Company and its respective subsidiaries; | |
(h) | the holders of shares of common stock of U.S. Gold, voting at a meeting of such holders, shall have approved the Delaware holding company reorganization and the issuance of shares of New US Gold common stock in the Proposed Acquisitions; | |
(i) | there shall not be in effect or threatened any temporary restraining order, preliminary or permanent injunction or other order or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition challenging the offers to purchase or preventing the completion of the offers to purchase or any of the other transactions described in this proxy statement/ prospectus, and there shall be no statute, rule, regulation, order, injunction or decree enacted, entered, promulgated or enforced by any court, |
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administrative agency or commission or other governmental authority or instrumentality which requires consent or approval or challenges, prohibits, restricts or makes illegal the completion of the offers to purchase or any subsequent acquisition transaction; | ||
(j) | there shall not be pending or threatened any suit, action or proceeding by any governmental entity: |
(i) | challenging the offers to purchase, seeking to restrain or prohibit the completion of the offers to purchase or seeking to obtain from New US Gold or any of the Target Companies or their respective subsidiaries any damages that are material in relation to any of the Target Companies or their respective subsidiaries, on a consolidated basis, or New US Gold and its subsidiaries, on a consolidated basis; | |
(ii) | seeking to prohibit or limit the ownership or operation by New US Gold or any of the Target Companies or any of New US Gold’s subsidiaries of any material portion of the business or assets of any of the Target Companies or New US Gold or any of New US Gold’s subsidiaries or to compel any of the Target Companies or New US Gold or any of New US Gold’s subsidiaries to dispose of or hold separate any material portion of the business or assets of New US Gold or any of the Target Companies or any of New US Gold’s subsidiaries as a result of the offers to purchase; | |
(iii) | seeking to prohibit New US Gold from effectively controlling in any material respect the business or operations of any of the Target Companies; or | |
(iv) | which otherwise is reasonably likely to have a material adverse effect on New US Gold and its subsidiaries, on a consolidated basis, or any of the Target Companies and their respective subsidiaries, on a consolidated basis; |
(k) | there shall be no change or threatened change in the business, properties, assets, liabilities, capitalization, shareholders’ equity, condition (financial or otherwise), operations, licenses or franchises, results of operations or prospects of any of the Target Companies or any of their respective subsidiaries, on a consolidated basis, that, in the reasonable judgment of the Offerors, has or may have a material adverse effect on any of the Target Companies and their respective subsidiaries, on a consolidated basis, and the Offerors shall not have become aware of any fact that, in the reasonable judgment of the Offerors, has or may have a material adverse effect on any of the Target Companies and their respective subsidiaries or their business or prospects or the value to New US Gold of the common shares of any of the Target Companies; | |
(l) | the Offerors shall have obtained or received all approvals, consents, clearances or waivers required to be obtained or received from any governmental regulatory agency, authority or commission in connection with the offers to purchase and any subsequent acquisition transaction; and | |
(m) | there shall not have occurred or been threatened: |
(i) | any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in theover-the-counter market in the United States or Canada; | |
(ii) | any extraordinary or material adverse change in the financial markets or major stock exchange indices in the United States or Canada or in the market price of the common shares of any of the Target Companies; | |
(iii) | any change in the general political, market, economic or financial conditions in the U.S. or Canada that could, in the reasonable judgment of U.S. Gold, have a material adverse effect upon the business, properties, assets, liabilities, capitalization, shareholders equity, condition (financial or otherwise), operations, licenses or franchises, results of operations or prospects of any of the Target Companies or any of their respective subsidiaries; | |
(iv) | any material change in U.S. or Canadian currency exchange rates or a suspension of, or limitation on, the markets therefor; | |
(v) | a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or Canada; | |
(vi) | any limitation (whether or not mandatory) by any government, domestic, foreign or supranational, or governmental entity on, or other event that, in the reasonable judgment of U.S. Gold, might affect the extension of credit by banks or other lending institutions; |
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(vii) | a commencement of war or armed hostilities or other national or international calamity involving the U.S. or Canada; or | |
(viii) | in the case of any of the foregoing existing at the time of the commencement of the offers to purchase, a material acceleration or worsening thereof. |
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• | 0.35 shares of U.S. Gold common stock or exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of White Knight. | |
• | 0.23 shares of U.S. Gold common stock or exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of Nevada Pacific. | |
• | 0.63 shares of U.S. Gold common stock or exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of Coral Gold. | |
• | 0.26 shares of U.S. Gold common stock or exchangeable shares of a wholly-owned subsidiary of U.S. Gold for each outstanding common share of Tone Resources. |
1. | Audited financial statements of White Knight for the years ended June 30, 1997, through June 30, 2005; unaudited quarterly financial statements for the second quarter ended December 31, 2005; | |
2. | Audited financial statements of Coral Gold for the years ended January 31, 1997 through January 31, 2005; unaudited quarterly financial statements for the third quarter ended October 31, 2005; | |
3. | Audited financial statements of Tone Resources for the years ended August 31, 2003 through August 31, 2005; unaudited quarterly financial statements for the first quarter ended November 30, 2005; | |
4. | Audited financial statements of Nevada Pacific for the years ended June 30, 1998 through June 30, 2005; unaudited quarterly financial statements for the second quarter ended December 31, 2005; | |
5. | Audited financial statements of U.S. Gold for the years ended December 31, 1995 through December 31, 2005; unaudited quarterly financials for the third quarter ended September 30, 2005; | |
6. | Annual information form of Nevada Pacific dated February 24, 2005; | |
7. | Final Long Form Prospectus of Tone Resources dated February 10, 2003; | |
8. | 2005 annual report of Coral Gold; | |
9. | Management information circular of Coral Gold dated May 6, 2005; | |
10. | Management information circular of Nevada Pacific dated October 27, 2005; | |
11. | Management information circular of Tone Resources dated January 6, 2006; | |
12. | Management information circular of White Knight dated October 24, 2005; | |
13. | Technical Report on the Roberts Mountain Project, Roberts Mountain, Eureka County, Nevada USAprepared by Marvin A. Mitchell P.Eng., Mitchell Geological Services Inc., October 21, 2002; | |
14. | Technical Report for the Slaven Canyon Property, Lander County, Nevada, USAprepared by Timothy D. Jefferson, P.G., and Arthur R. Leger, P.G., November 16, 2005; |
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15. | Summary Report for the Celt Property, Eureka County, Nevadaprepared by Ken Brook, RPG, Desert Ventures Inc., September 23, 2005; | |
16. | Technical Report on the Cottonwood Property, Eureka County, Nevada, USAprepared by John M. Leask, P.Eng., July 11, 2005; | |
17. | Summary Report for the McClusky-Tonkin Summit Property, Eureka County, Nevadaprepared by Ken Brook, RPG, Desert Ventures Inc., September 22, 2005; | |
18. | Technical Report on the Fye Canyon Property, Eureka County, Nevadaprepared by John M. Leask, P.Eng., April 15, 2005; | |
19. | NI43-101 Technical Report on the New Pass Property, Churchill County, Nevadaprepared by Paul A. Pelke, California Registered Geologist, October 2004; | |
20. | Technical Report on the Indian Ranch Property, Eureka County, Nevada, USAprepared by John M. Leask, P.Eng., December 20, 2004; | |
21. | Amended Technical Report for the Magistral Gold Project, Sinaloa State, Mexico, prepared by Pincock Allen & Holt, January 6, 2005; | |
22. | Technical Report on the Tonkin Springs Project, Nevada, USA, May 2004; | |
23. | Filings on the System for Electronic Disclosure by Insiders (SEDI) for Coral Gold, Nevada Pacific, Tone Resources, and White Knight; | |
24. | March 6, 2006 Corporate Presentation of U.S. Gold; | |
25. | Spring 2006 Corporate Presentation of Nevada Pacific; | |
26. | Press releases for U.S. Gold, White Knight, Nevada Pacific, Coral Gold and Tone Resources since January 1, 2005; | |
27. | Public information relating to the business, operations, financial performance and stock trading history of U.S. Gold, White Knight, Nevada Pacific, Coral Gold, Tone Resources and other selected public companies considered by us to be relevant; | |
28. | Public information with respect to other transactions of a comparable nature considered by us to be relevant; | |
29. | Public information regarding the industries in which U.S. Gold and the Target Companies operate; | |
30. | Representations contained in a certificate addressed to us, dated as of the date hereof, from senior officers of U.S. Gold as to the completeness and accuracy of the information upon which the fairness opinion is based; and | |
31. | Such other corporate, industry and financial market information, investigations and analyses as Wellington West considered necessary or appropriate in the circumstances. |
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1. | New US Gold was formed as a wholly-owned subsidiary of U.S. Gold. | |
2. | A new Colorado corporation, which we call “Merger Sub,” was formed as a wholly-owned subsidiary of New US Gold. | |
3. | Alberta ULC was formed as a wholly-owned subsidiary of New US Gold. | |
4. | Canadian Exchange Co. was formed as a wholly-owned subsidiary of U.S. Gold. | |
5. | In the reorganization, (a) Merger Sub will merge with and into U.S. Gold, with U.S. Gold as the surviving corporation, and (b) all shares of U.S. Gold common stock will be converted into shares of New US Gold common stock on a one-for-one basis. As a result, U.S. Gold will become a wholly-owned subsidiary of New US Gold and the current U.S. Gold shareholders will become shareholders of New US Gold. | |
6. | In connection with the Proposed Acquisitions, Target Company shareholders who are U.S. taxpayers are expected to tender their Target Company common shares to New US Gold or Alberta ULC in exchange for shares of New US Gold common stock and Target Company shareholders residing in Canada are expected to tender their Target Company common shares to Canadian Exchange Co. in exchange for exchangeable shares. | |
7. | New US Gold will hold all the issued and outstanding stock of U.S. Gold following the reorganization and will hold indirectly (through its ownership of Alberta ULC and Canadian Exchange Co.) all the Target Company common shares purchased pursuant to the offers to purchase and acquired in any subsequent acquisition transaction. | |
8. | The common stock of New US Gold and the exchangeable shares will be publicly traded and New US Gold will be the successor registrant to U.S. Gold for the purposes of United States securities laws. |
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(i) | a subsidiary of Canadian Exchange Co. would amalgamate with such Target Company; | |
(ii) | in connection with the amalgamation, warrants of such Target Company would be exchangeable for warrants to purchase exchangeable shares; | |
(iii) | shareholders who did not deposit their common shares under the offer to purchase would be entitled to elect to receive shares of common stock of New US Gold or exchangeable shares in the same exchange ratio offered pursuant to the offer to purchase; and | |
(iv) | such Target Company’s stock option plan would be replaced with a stock option plan of Canadian Exchange Co. or New US Gold. |
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(a) | a determination by the board of directors of New US Gold to institute voluntary liquidation, dissolution or winding up proceedings with respect to New US Gold or to affect any other distribution of assets of New US Gold among its stockholders for the purpose of winding up its affairs; or | |
(b) | the earlier of (i) receipt by New US Gold of notice of, and (ii) New US Gold otherwise becoming aware of any threatened or instituted claim, suit, petition or other proceeding with respect to involuntary liquidation, dissolution or winding up of New US Gold or to effect any other distribution of assets of New US Gold among its stockholders for the purpose of winding up its affairs. |
(a) | not declare or pay any dividend on the shares of common stock of New US Gold unless (i) on the same day Canadian Exchange Co. declares or pays, as the case may be, an equivalent dividend on the exchangeable shares and (ii) Canadian Exchange Co. has sufficient money or other assets or authorized but unissued securities available to enable the due declaration and the due and punctual payment, in accordance with applicable law, of an equivalent dividend on the exchangeable shares; | |
(b) | advise Canadian Exchange Co. in advance of the declaration of any dividend on the shares of common stock of New US Gold and take other actions reasonably necessary to ensure that the declaration date, record date and payment date for dividends on the exchangeable shares are the same as those for any corresponding dividends on the shares of common stock of New US Gold; |
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(c) | ensure that the record date for any dividend declared on the shares of common stock of New US Gold is not less than ten days after the declaration date of such dividend; and | |
(d) | take all actions and do all things reasonably necessary or desirable to enable and permit Canadian Exchange Co., in accordance with applicable law, to pay the liquidation amount, the retraction price or the redemption price to the holders of the exchangeable shares in the event of a liquidation, dissolution or winding up of Canadian Exchange Co., a retraction request by a holder of exchangeable shares or a redemption of exchangeable shares by Canadian Exchange Co., as the case may be. |
(i) | adding to the covenants of any or all of the parties; | |
(ii) | evidencing successors of New US Gold; | |
(iii) | making certain necessary amendments; or | |
(iv) | curing ambiguities or clerical errors (provided, in each case, that the board of directors of each of New US Gold, Canadian Exchange Co. and Alberta ULC are of the opinion that such amendments are not prejudicial to the interests of the holders of the exchangeable shares), the support agreement may not be amended without the approval of the holders of the exchangeable shares. |
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• | 9,552,405 common shares of White Knight, which, based on information contained in White Knight’s management discussion and analysis dated February 27, 2006, represents approximately 16.1% of its outstanding common shares; | |
• | 12,500,000 common shares of Nevada Pacific and warrants exercisable to acquire 12,500,000 common shares of Nevada Pacific, which, based on information contained in Nevada Pacific’s public disclosure, represents approximately 36.3% of the outstanding common shares, assuming the exercise by Mr. McEwen of all of the warrants exercisable to acquire common shares held by him; | |
• | 1,250,000 common shares of Coral Gold, which, based on information contained in Coral Gold’s press release dated March 6, 2006, represents approximately 19.8% of the outstanding common shares; and | |
• | 2,500,000 common shares of Tone Resources and warrants to acquire 2,500,000 common shares of Tone Resources, which, based on information contained in Tone Resources’ public disclosure represents approximately 30.2% of the outstanding common shares, assuming the exercise by Mr. McEwen of all of the warrants exercisable to acquire common shares held by him. |
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Shares Beneficially Owned | ||||||||
Name and Address of Beneficial Owner | Number | Percentage | ||||||
Robert R. McEwen (1) | 11,602,500 | (2) | 27.5 | % | ||||
Peter Bojtos (1) | 125,000 | (3) | * | |||||
Declan Costelloe (1) | 5,000 | (3) | * | |||||
Michele L. Ashby (1) | 0 | (3) | * | |||||
Leanne M. Baker (1) | 0 | (3) | * | |||||
Ann S. Carpenter (1) | 100,000 | (3)(4) | * | |||||
William F. Pass (1) | 347,075 | (3) | * | |||||
NovaGold Resources, Inc. P.O. Box 24, Suite 2300 200 Granville Street Vancouver, British Columbia V6C 1S4, Canada | 5,374,544 | 12.9 | ||||||
All officers and directors as a group (seven individuals) | 12,179,575 | (2)(3)(4) | 28.9 | % |
* | Less than one percent. |
(1) | Officer or Director. |
(2) | Includes 335,000 shares of common stock issuable upon automatic conversion of subscription receipts owned by the individual and 167,500 shares of common stock issuable upon exercise of warrants which will be issued upon conversion of the subscription receipts. Excludes an additional 335,000 shares of common stock and an additional 167,500 shares of common stock underlying warrants which may be issuable upon conversion of the subscription receipts. |
(3) | Excludes stock options which are not exercisable within 60 days of the date of this proxy statement/ prospectus. |
(4) | Includes 100,000 shares underlying options that are exercisable within 60 days of the date of this proxy statement/ prospectus. |
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• | A U.S. Gold shareholder who exchanges his or her shares of U.S. Gold common stock for New US Gold common stock in the reorganization will not recognize gain or loss on the exchange, except to the extent a U.S. Gold shareholder who is not a “United States person” (as defined in section 7701(a)(30) of the Code), which we call a“non-U.S. holder,” is subject to tax under section 897 of the Code (enacted pursuant to U.S. tax legislation referred to as the Foreign Investment in Real Property Tax Act of 1980, or “FIRPTA”), as discussed below. | |
• | A U.S. Gold shareholder’s aggregate tax basis in the New US Gold common stock received in the reorganization will be the same as his or her aggregate tax basis in the U.S. Gold common stock surrendered in the reorganization, except to the extent a non-U.S. holder is subject to tax under FIRPTA. | |
• | The holding period of each share of New US Gold common stock received in the reorganization by a U.S. Gold shareholder will include the holding period of U.S. Gold common stock that he or she surrendered in the reorganization, except to the extent a non-U.S. holder is subject to tax under FIRPTA. | |
• | Neither New US Gold nor U.S. Gold will recognize any gain or loss as a result of the reorganization. |
(1) | the relevant class of stock of the USRPHC is “regularly traded on an established securities market” for purposes of section 897(c)(3) of the Code; and | |
(2) | that foreign stockholder does not hold and has not held (either directly or indirectly, after the application of the constructive ownership rules of section 318 of the Code, as modified by section 897(c)(6)(C) of the Code) more than 5% of the outstanding shares of such relevant class of stock of the USRPHC at any time during the shorter of (x) the five-year period ending on the date of the disposition of such interest or |
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(y) the period during which such stockholder held such interest, the shorter of such periods referred to as the “Testing Period.” |
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• | a significantnon-U.S. holder subject to such tax will recognize gain or loss measured by the difference between the fair market value of the New US Gold common stock received in the reorganization and that significantnon-U.S. holder’s adjusted tax basis in its U.S. Gold common stock surrendered in the reorganization; | |
• | the aggregate tax basis of the New US Gold common stock received in the reorganization will equal the fair market value of that New US Gold common stock as of the effective time of the reorganization; and | |
• | the significantnon-U.S. holder’s holding period for the New US Gold common stock received in the reorganization will begin the day after the effective time of the reorganization. |
• | file a U.S. federal income tax return reporting the gain subject to the FIRPTA Tax as income effectively connected with the conduct of a trade or business within the United States and taxable as either ordinary income or capital gain; and | |
• | pay any FIRPTA Tax due upon the filing of the return or, depending upon the circumstances, earlier through estimated payments. |
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• | U.S. Gold’s Annual Reports on Form 10-KSB for the fiscal years ended December 31, 2005 and December 31, 2004, filed with the SEC on April 7, 2006 and March 31, 2005, respectively; | |
• | U.S. Gold’s Current Reports on Form 8-K filed on February 27, March 6, March 31 and May 1, 2006; and | |
• | The description of U.S. Gold common stock contained in U.S. Gold’s Registration Statement on Form SB-2 (File No. 333-133228), filed on April 12, 2006, and any amendments or reports filed for the purpose of updating that description. |
Corporate Secretary |
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By order of the Board of Directors, | |
U.S. GOLD CORPORATION | |
/s/ Robert R. McEwen | |
Robert R. McEwen | |
Chairman of the Board and Chief Executive Officer |
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A. | New US Gold is a wholly owned subsidiary of US Gold and Merger Sub is, in turn, a wholly owned subsidiary of New US Gold. |
B. | Pursuant to this Agreement and immediately prior to the completion of the Tender Offers (as defined below), (i) Merger Sub, in accordance with the Colorado Business Corporation Act (as amended from time to time, the “CBCA”) will merge with and into US Gold (the “Merger”), with US Gold continuing as the surviving corporation of such Merger and a wholly owned operating subsidiary of New US Gold, (ii) each share of US Gold Common Stock will be converted into the right to receive one share of New US Gold common stock, and (iii) each share of New US Gold held by US Gold will be cancelled. | |
C. | The Board of Directors of US Gold, New US Gold, and Merger Sub deem it advisable and in the best interests of US Gold, New US Gold, and Merger Sub, respectively, that Merger Sub merge with and into US Gold upon the terms and subject to the conditions of this Agreement and have approved this Agreement. |
D. | The consummation of the Merger requires, among other things, the approval of this Agreement by the affirmative vote of a majority of the outstanding shares of US Gold common stock (the “US Gold Shareholder Approval”). |
E. | It is the intention of the parties hereto that the reorganization contemplated by this Agreement shall be a tax-free transaction under Section 351 and/or Section 368 of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. |
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(a) | Surviving Corporation. The Articles of Incorporation of US Gold as in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation, except for the following amendments thereto: |
(b) | New US Gold. New US Gold will file (and US Gold as the sole stockholder of New US Gold agrees to approve the filing of) Amended and Restated Articles of Incorporation of New US Gold with the Secretary of State of the State of Delaware immediately prior to the Effective Time, in the form attached hereto asExhibit A. New US Gold further agrees to adopt Bylaws immediately prior to the Effective Time in the form attached hereto asExhibit B. |
(a) | Surviving Corporation. The directors and officers of US Gold immediately prior to the Effective Time shall be the directors and officers of the Surviving Corporation, each to hold office in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation and the Colorado Business Corporation Act until their respective successors are duly elected or appointed and qualified or until their earlier death, resignation or removal. |
(b) | New US Gold. The directors and officers of US Gold immediately prior to the Effective Time shall be the directors and officers of New US Gold immediately after the Effective Time, each to hold office in accordance with the Certificate of Incorporation and Bylaws of New US Gold and the Delaware General Corporation Law until their respective successors are duly elected or appointed and qualified or until their earlier death, resignation or removal. |
(a) | Cancellation of Treasury Stock. Each share of common stock of US Gold, no par value per share (the “US Gold Common Stock”) that is owned by US Gold or any subsidiary shall automatically be cancelled and retired and cease to exist, and no cash, New US Gold Common Stock (as defined below) or other consideration shall be delivered or deliverable in exchange therefor. |
(b) | Conversion of US Gold Common Stock. Except as provided in this Section 2.1, each issued and outstanding share of US Gold Common Stock issued and outstanding immediately prior to the Effective Time (other than any shares of US Gold Common Stock held by New US Gold, which shares shall continue to be outstanding) shall be converted into the right to receive one fully paid and nonassessable share of common stock of New US Gold, par value $0.0001 per share (the “New US Gold Common Stock”). All certificates formerly representing shares of US Gold Common Stock shall, without any action on the part of any party, be deemed to represent after the Merger the equivalent number of shares of New US Gold Common Stock. |
(c) | Conversion of Options and Warrants to Purchase US Gold Common Stock. Each issued and outstanding warrant to purchase US Gold Common Stock shall automatically be deemed converted into a warrant, respectively, to purchase an equivalent number of shares of New US Gold Common Stock, on the same terms and subject to the same conditions as applied to the warrant to purchase US Gold Common Stock being so converted. Each issued and outstanding option to purchase US Gold Common Stock issued under the terms of the US Gold Corporation option plan, as it may be amended and restated (the “Option Plan”) shall automatically be converted, into an option to purchase the same number of shares of New US Gold |
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Common Stock, on the same terms and subject to the same conditions as applied to the option to purchase the US Gold Common Stock so converted and in a manner that meets the requirements of Treasury Regulation Section 1.424-1. The shares of US Gold Common Stock reserved and authorized under the Option Plan, but not subject to outstanding options shall be converted under the terms of the Option Plan into the same number of shares of New US Gold Common Stock, and New US Gold shall take or shall have taken all action necessary to assume the Option Plan, and all of US Gold’s obligations under the Option Plan. |
(d) | Conversion of US Gold Subscription Receipts and Compensation Options. Each issued and outstanding subscription receipt in US Gold convertible into US Gold Common Stock and warrants to purchase US Gold Common Stock (a “Subscription Receipt”) issued pursuant to the Subscription Receipt Indenture dated as of February 22, 2006 among US Gold, GMP Securities L.P and Equity Transfer Services Inc. shall be converted into one subscription receipt convertible into an equivalent number of New US Gold Common Stock and warrants to purchase New US Gold Common Stock, and US Gold shall take all action necessary to accomplish such conversion. Each issued and outstanding compensation option in US Gold convertible into broker warrants to purchase US Gold Common Stock (a “Compensation Option”) issued pursuant to the Agency Agreement dated as of February 22, 2006 among US Gold, GMP Securities L.P and Griffiths McBurney Corp. shall be converted into one compensation option convertible into an equivalent number of broker warrants to purchase New US Gold Common Stock, and US Gold shall take all action necessary to accomplish such conversion. |
(a) | Effectiveness of Registration Statement. The registration statement on Form S-4 filed with the Securities and Exchange Commission by New US Gold in connection with the issuance of shares of common stock of New US Gold in the Merger shall have become effective under the Securities Act of 1933, as amended, and shall not be the subject of any stop order or proceedings seeking a stop order. | |
(b) | Shareholder Approval. The US Gold Shareholder Approval shall have been obtained at a special meeting of the shareholders of US Gold. | |
(c) | Completion or Expiration of Tender Offers. Satisfaction of any one of the following: |
(1) | Satisfaction of each of the conditions, except the condition requiring completion of the Merger, for at least one of the US Gold, New US Gold and US Gold Canadian Acquisition Corporation Offers to Purchase all of the outstanding common shares of (a) White Knight Resources Ltd., (b) Nevada Pacific Gold Ltd., (c) Coral Gold Resources Ltd. and (d) Tone Resources Ltd, dated , 2006 (the “Tender Offers”), as specified therein; or | |
(2) | A determination by the Board of Directors of US Gold and of New US Gold that each of the Tender Offers has expired. |
(d) | No Injunctive Orders. No court or governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law or order (whether temporary, preliminary or permanent) that is in effect and has a material adverse effect on US Gold or enjoins or otherwise prohibits consummation of the transactions contemplated by this Agreement, and no judicial or administrative proceeding that seeks any such result shall continue to be pending. |
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(e) | Required Approvals. All required approvals, licenses and certifications from, and notifications and filings to, governmental entities and non-governmental third parties shall have been obtained or made, as applicable. |
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U.S. GOLD CORPORATION, a Colorado corporation |
By: |
Name: |
Title: |
US GOLD HOLDINGS CORPORATION, a Delaware corporation |
By: |
Name: |
Title: |
USGL MERGER SUB, INC., a Colorado corporation |
By: |
Name: |
Title: |
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(i) | The Special Voting Share shall entitle the holder thereof to an aggregate number of votes equal to the number of exchangeable shares (“Exchangeable Shares”) of US Gold Canadian Acquisition Corporation, a corporation existing under and governed by the Business Corporations Act (Alberta) (“Canadian Exchange Co.”), issued and outstanding from time to time which are not owned by the Corporation or any company more than 50% of the outstanding stock of which is owned, directly or indirectly, by the Corporation, by one or more other Subsidiaries of the Corporation, or by the Corporation and one or more other Subsidiaries of the Corporation (such company, a “Subsidiary”). | |
(ii) | Except as otherwise provided herein or by law, the holder of the Special Voting Share and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation. | |
(iii) | Except as set forth herein, the holder of the Special Voting Share shall have no special voting rights, and its consent shall not be required (except to the extent it is entitled to vote with the holders of shares of Common Stock as set forth herein) for taking any corporate action. |
(4) | Additional Provisions. |
(i) | The holder of the Special Voting Share is entitled to exercise the voting rights attendant thereto in such manner as such holder desires. | |
(ii) | At such time as (A) the Special Voting Share entitles its holder to a number of votes equal to zero because there are no Exchangeable Shares of Canadian Exchange Co. issued and outstanding that are not owned by the Corporation or any Subsidiary, and (B) there is no share of stock, debt, option or other agreement, obligation or commitment of Canadian Exchange Co. which could by its terms require Canadian Exchange Co. to issue any Exchangeable Shares to any person other than the Corporation or any of its Subsidiaries, then the Special Voting Share shall thereupon be retired and cancelled promptly thereafter. Such Special Voting Share shall upon its cancellation, and upon the taking of any action required by applicable law, become an authorized but unissued share of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. |
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(a) | The material facts of such relationship or interest is disclosed or known to the Board of Directors or committee which in good faith authorizes, approves, or ratifies the contract or transaction by the affirmative votes of a majority of the disinterested directors; or | |
(b) | The material facts of such relationship or interest is disclosed or known to the shareholders entitled to vote and they in good faith authorize, approve, or ratify such contract or transaction by vote; or | |
(c) | The contract or transaction is fair and reasonable to the Corporation as of the time it is authorized, approved or ratified. |
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Name: | |
President | |
Name: | |
Secretary |
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(a) | the name, age, residence address, and business address of each proposed nominee and of each such person; | |
(b) | the principal occupation or employment, the name, type of business and address of the corporation or other organization in which such employment is carried on of each proposed nominee and of each such person; | |
(c) | the class and number of shares of stock of the corporation owned beneficially, either directly or indirectly, by each proposed nominee and each such person; | |
(d) | a description of any arrangement or understanding of each proposed nominee and of each such person with each other or any other person regarding future employment or any future transaction to which the corporation will or may be a party; and | |
(e) | any other information required by the Securities Exchange Act of 1934. |
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(b) | The Corporation may indemnify, to the full extent that it shall have power under applicable law to do so and in a manner permitted by such law, any person who is made or threatened to be made a party to or is otherwise involved (as a witness or otherwise) in any threatened, pending, or completed Proceeding, by reason of the fact that such person is or was an employee or agent of the Corporation, or while not serving as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, or agent of Another Enterprise (such person hereinafter, a “Permissive Indemnitee”), against expenses (including attorneys’ fees), judgments, fines (including ERISA excise taxes or penalties) and amounts paid in settlement actually and reasonably incurred by him or her in connection with such Proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. | |
(c) | Anything in this Section 1 to the contrary notwithstanding, if a person was or is a party or was or is threatened to be made a party to any Proceeding by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of Another Enterprise, then the Corporation shall not indemnify such person for any judgment, fines, or amounts paid in settlement to the Corporation in connection with such Proceeding. The Corporation shall indemnify any such person who is a Mandatory Indemnitee, and may indemnify any such person who is a Permissive Indemnitee, in each case to the full extent that it shall have power under applicable law to do so and in a manner permitted by such law, and subject to Section 3 of this Article VII, against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such Proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation; provided, however, that no indemnification for such expenses shall be made in respect of any claim, issue, or matter in such Proceeding as to which the person shall have been adjudged liable to the Corporation unless (and only to the extent that) the Court of Chancery of the State of Delaware or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that the Court of Chancery or such other court shall deem proper. |
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(d) | To the extent that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any threatened, pending, or completed Proceeding referred to in Section 145(a) or (b) of the General Corporation Law of the State of Delaware, or in defense of any claim, issue, or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith. | |
(e) | The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendre or its equivalent, shall not, of itself, create a presumption that the person seeking indemnification did not act in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. |
(b) | With respect to any person who is made or threatened to be made a party to or is otherwise involved (as a witness or otherwise) in any threatened, pending, or completed Proceeding, by reason of the fact that such person is or was an employee or agent of the Corporation, or while not serving as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, or agent of Another Enterprise, the Corporation may, in its discretion and upon such terms and conditions, if any, as the Corporation deems appropriate, pay the expenses (including attorneys’ fees) incurred by such person in defending any such Proceeding in advance of its final disposition. |
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(b) | If successful in whole or in part in any suit brought pursuant to Section 5(a) of this Article VII, or in a suit brought by the Corporation to recover an advancement of expenses (whether pursuant to the terms of an undertaking or otherwise), the person seeking to enforce a right to indemnification or an advancement of expenses hereunder or the person from whom the Corporation sought to recover an advancement of expenses, as the case may be, shall be entitled to be paid by the Corporation the reasonable expenses (including attorneys’ fees) of prosecuting or defending such suit. | |
(c) | In any suit brought by a person seeking to enforce a right to indemnification hereunder (but not a suit brought by a person seeking to enforce a right to an advancement of expenses hereunder), it shall be a defense that the person seeking to enforce a right to indemnification has not met any applicable standard for indemnification under applicable law. With respect to any suit brought by a person seeking to enforce a right to indemnification or right to advancement of expenses hereunder or any suit brought by the Corporation to recover an advancement of expenses (whether pursuant to the terms of an undertaking or otherwise), neither (i) the failure of the Corporation to have made a determination prior to commencement of such suit that indemnification of such person is proper in the circumstances because such person has met the applicable standards of conduct under applicable law, nor (ii) an actual determination by the Corporation that such person has not met such applicable standards of conduct, shall create a presumption that such person has not met the applicable standards of conduct or, in a case brought by such person seeking to enforce a right to indemnification, be a defense to such suit. | |
(d) | In any suit brought by a person seeking to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses (whether pursuant to the terms of an undertaking or otherwise), the burden shall be on the Corporation to prove that the person seeking to enforce a right to indemnification or to an advancement of expenses or the person from whom the Corporation seeks to recover an advancement of expenses is not entitled to be indemnified, or to such an advancement of expenses, under this Article VII or otherwise. |
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Secretary |
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ARTICLE I INTRODUCTION | D-4 | ||||
1.1 Establishment | D-4 | ||||
1.2 Purposes | D-4 | ||||
1.3 Effective Date; Amendment and Restatement | D-4 | ||||
1.4 Assumption By Holding Company | D-4 | ||||
ARTICLE II DEFINITIONS | D-4 | ||||
2.1 Definitions | D-4 | ||||
2.2 Gender and Number | D-6 | ||||
ARTICLE III PLAN ADMINISTRATION | D-6 | ||||
3.1 General | D-6 | ||||
3.2 Delegation by Committee | D-6 | ||||
ARTICLE IV STOCK SUBJECT TO THE PLAN | D-6 | ||||
4.1 Number of Shares | D-6 | ||||
4.2 Limit on Option Grants | D-7 | ||||
4.3 Other Shares of Stock | D-7 | ||||
4.4 Adjustments for Stock Split, Stock Dividend, Etc. | D-7 | ||||
4.5 General Adjustment Rules | D-7 | ||||
4.6 Determination by the Committee, Etc. | D-7 | ||||
ARTICLE V CORPORATE REORGANIZATION; CHANGE IN CONTROL | D-7 | ||||
5.1 Adjustment of Awards | D-7 | ||||
5.2 Assumption or Substitution of Options and Other Awards | D-8 | ||||
5.3 Corporate Transaction | D-8 | ||||
ARTICLE VI PARTICIPATION | D-8 | ||||
ARTICLE VII OPTIONS | D-9 | ||||
7.1 Grant of Options | D-9 | ||||
7.2 Stock Option Agreements | D-9 | ||||
7.3 Restrictions on Incentive Options | D-10 | ||||
7.4 Transferability | D-11 | ||||
7.5 Shareholder Privileges | D-11 | ||||
ARTICLE VIII RESTRICTED STOCK AWARDS | D-11 | ||||
8.1 Grant of Restricted Stock Awards | D-11 | ||||
8.2 Restrictions | D-11 | ||||
8.3 Privileges of a Stockholder, Transferability | D-11 | ||||
8.4 Enforcement of Restrictions | D-11 | ||||
ARTICLE IX STOCK BONUSES | D-12 | ||||
ARTICLE X OTHER COMMON STOCK GRANTS | D-12 | ||||
ARTICLE XI RIGHTS OF PARTICIPANTS | D-12 | ||||
11.1 Service | D-12 | ||||
11.2 Nontransferability of Awards Other Than Options | D-12 | ||||
11.3 No Plan Funding | D-12 | ||||
ARTICLE XII GENERAL RESTRICTIONS | D-12 | ||||
12.1 Investment Representations | D-12 | ||||
12.2 Compliance with Securities Laws | D-13 | ||||
12.3 Changes in Accounting Rules | D-13 | ||||
ARTICLE XIII PLAN AMENDMENT, MODIFICATION AND TERMINATION | D-13 | ||||
ARTICLE XIV WITHHOLDING | D-13 | ||||
14.1 Withholding Requirement | D-13 |
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ARTICLE XV REQUIREMENTS OF LAW | D-13 | ||||
15.1 Requirements of Law | D-13 | ||||
15.2 Federal Securities Law Requirements | D-13 | ||||
15.3 Governing Law | D-13 | ||||
ARTICLE XVI DURATION OF THE PLAN | D-14 |
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(a) | “Affiliated Corporation” means any corporation or other entity that is affiliated with the Company through stock ownership or otherwise and is designated as an “Affiliated Corporation” by the Board, provided, however, that for purposes of Incentive Options granted pursuant to the Plan, an “Affiliated Corporation” means any parent or subsidiary of the Company as defined in Section 424 of the Code. | |
(b) | “Award” means an Option, grant of Stock pursuant to ARTICLE IX or other issuances of Stock hereunder. | |
(c) | “Board” means the Board of Directors of U.S. Gold Corporation, a Colorado corporation. Upon the closing of the Merger, Board means the Board of Directors of US Gold Holdings Corporation, a Delaware corporation. | |
(d) | “Code” means the Internal Revenue Code of 1986, as it may be amended from time to time. |
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(e) | “Committee” means a committee consisting of members of the Board who are empowered hereunder to take actions in the administration of the Plan. If applicable, the Committee shall be so constituted at all times as to permit the Plan to comply with Rule 16b-3 or any successor rule promulgated under the Exchange Act. Except as provided in Section 3.2, the Committee shall select Participants from Eligible Directors, Eligible Employees and Eligible Consultants of the Company and shall determine the Awards to be made pursuant to the Plan and the terms and conditions thereof. | |
(f) | “Company” means U.S. Gold Corporation, a Colorado corporation, and the Affiliated Corporations. On and after the closing of the Merger, Company means U.S. Gold Holdings Corporation, a Delaware corporation, and the Affiliated Corporations. | |
(g) | “Disabled” or“Disability” shall have the meaning given to such terms in Section 22(e)(3) of the Code. | |
(h) | “Effective Date” means the original effective date of the Plan, March 17, 1989. | |
(i) | “Eligible Consultants” means those consultants and advisors to the Company who are determined, by the Committee, to be individuals whose services are important to the Company and who are eligible to receive Awards, other than Incentive Options, under the Plan. | |
(j) | “Eligible Directors” means those members of the Board who are determined by the Committee to be individuals whose services are important to the Company and who are eligible to receive Awards under the Plan. Eligible Directors who are not also Eligible Employees may not receive Incentive Options. | |
(k) | “Eligible Employees” means those employees (including, without limitation, officers and directors who are also employees) of the Company or any subsidiary or division thereof, upon whose judgment, initiative and efforts the Company is, or will become, largely dependent for the successful conduct of its business. For purposes of the Plan, an employee is any individual who provides services to the Company or any subsidiary or division thereof as a common law employee and whose remuneration is subject to the withholding of federal income tax pursuant to Section 3401 of the Code. | |
(l) | “Exchange Act” shall mean the Securities Exchange Act of 1934, as it may be amended from time to time. | |
(m) | “Fair Market Value” means, as of a given date, (i) the closing price of a Share on the principal stock exchange on which Shares are then trading, if any (or as reported on any composite index that includes such principal exchange) on such date, or if Shares were not traded on such date, then on the next preceding date on which a trade occurred; or (ii) if the Stock is not traded on an exchange but is quoted on Nasdaq, the OTC Bulletin Board or a successor quotation system, the mean between the closing representative bid and asked prices for the Stock on such date as reported by Nasdaq, the OTC Bulletin Board or such successor quotation system; or (iii) if the Stock is not publicly traded on an exchange and not quoted on an electronic quotation system, the Fair Market Value of a Share shall be determined by the Committee acting in good faith. | |
(n) | “Incentive Option” means an Option designated as such and granted in accordance with Section 422 of the Code. Incentive Options maybe granted only after the shareholders approve the amendment to the Plan that adds Incentive Options to the Awards that may be granted under the Plan. | |
(o) | “Merger” means the closing of the transactions contemplated by the Agreement and Plan of Merger among U.S. Gold Corporation, US Gold Holdings Corporation, and USGL Merger Sub, Inc., dated as of April 17, 2006. | |
(p) | “Non-Qualified Option” means any Option other than an Incentive Option. | |
(q) | “Option” means a right to purchase Stock at a stated or formula price for a specified period of time. Options granted under the Plan shall be either Incentive Options or Non-Qualified Options. | |
(r) | “Option Agreement” shall have the meaning given to such term in Section 7.2 hereof. | |
(s) | “Option Holder” means a Participant who has been granted one or more Options under the Plan. | |
(t) | “Option Period” means the period of time, determined by the Committee, during which an Option may be exercised by the Option Holder. | |
(u) | “Option Price” means the price at which each share of Stock subject to an Option may be purchased, determined in accordance with subsection 7.2(b). |
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(v) | “Participant” means an Eligible Director, Eligible Employee or Eligible Consultant designated by the Committee from time to time during the term of the Plan to receive one or more of the Awards provided under the Plan. | |
(w) | “Restricted Stock Award” means an award of Stock granted to a Participant pursuant to ARTICLE VIII that is subject to certain restrictions imposed in accordance with the provisions of such Article. | |
(x) | “Securities Act” means the Securities Act of 1933, as it may be amended from time to time. | |
(y) | “Share” means one whole share of Stock. | |
(z) | “Stock” means the common stock of the Company. | |
(aa) | “Stock Bonus” means either an outright grant of Stock or a grant of Stock subject to and conditioned upon certain employment or performance related goals. |
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(a) | Provide that any or all Options shall become fully exercisable regardless of whether all conditions of exercise relating to length of service, attainment of financial performance goals or otherwise have been satisfied; | |
(b) | Provide that any or all restrictions with respect to Restricted Stock and other Awards shall lapse; | |
(c) | Provide for the assumption or substitution of any or all Awards as described in Section 5.2; |
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(d) | Make any other provision for outstanding Awards as the Committee deems appropriate and consistent with applicable law. |
(a) | Merger; Reorganization:the merger or consolidation of the Company with or into another corporation or other reorganization (other than a reorganization under the United States Bankruptcy Code) of the Company (other than a consolidation, merger, or reorganization in which the Company is the continuing corporation and which does not result in any reclassification or change of outstanding shares of Stock); or | |
(b) | Sale:the sale or conveyance of the property of the Company as an entirety or substantially as an entirety (other than a sale or conveyance in which the Company continues as a holding company of an entity or entities that conduct the business or businesses formerly conducted by the Company); | |
(c) | Liquidation:the dissolution or liquidation of the Company; or | |
(d) | Change in Control:A “Change in Control” shall be deemed to have occurred if either (i) any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of either (a) the then-outstanding shares of Stock (“Outstanding Shares”) or (b) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (“Voting Power”) or (ii) at any time during any period of two consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the Board (and any new director whose election by the Board or whose nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof. |
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(a) | Number of Shares.Each Option Agreement shall state that it covers a specified number of shares of Stock, as determined by the Committee. | |
(b) | Price.The price at which each share of Stock covered by an Option may be purchased shall be determined in each case by the Committee and set forth in the Option Agreement, but in no event shall the price be less than 100 percent of the Fair Market Value of the Stock on the date the Option is granted. | |
(c) | Duration of Options; Restrictions on Exercise.Each Option Agreement shall state the Option Period. The Option Period must end, in all cases, not more than ten years from the date the Option is granted. The Option Agreement shall also set forth any installment or other restrictions on exercise of the Option during such period, if any, as may be determined by the Committee. Each Option shall become exercisable (vest) over such period of time, if any, or upon such events, as determined by the Committee. | |
(d) | Termination of Services, Death, Etc.The Committee may specify the period, if any, during which an Option may be exercised following termination of the Option Holder’s services. The effect of this subsection 7.2(d) shall be limited to determining the consequences of a termination and nothing in this subsection 7.2(d) shall restrict or otherwise interfere with the Company’s discretion with respect to the termination of any individual’s services. If the Committee does not otherwise specify, the following shall apply: |
(i) | If the services of the Option Holder are terminated within the Option Period for “cause”, as determined by the Company, the Option shall thereafter be void for all purposes. | |
(ii) | If the Option Holder dies during the Option Period while still performing services for the Company or within the three-month period referred to in (iii) below, the Option may be exercised by those entitled to do so under the Option Holder’s will or by the laws of descent and distribution within one year following the Option Holder’s death, (provided that such exercise must occur within the Option Period), but not thereafter. In any such case, the Option may be exercised only as to the shares as to which the Option had become exercisable on or before the date of the Option Holder’s death. | |
(iii) | If the services of the Option Holder are terminated (which for this purpose means that the Option Holder is no longer employed by the Company or performing services for the Company) by the Company within the Option Period for any reason other than cause or death, the Option may be exercised by the Option Holder within three months following the date of such termination (provided that such exercise must occur within the Option Period), but not thereafter. In any such case, the Option may be exercised only as to the shares as to which the Option had become exercisable on or before the date of termination of employment or services. |
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(e) | Exercise, Payments, Etc. |
(i) | Manner of Exercise.The method for exercising each Option granted hereunder shall be by delivery to the Company of written notice specifying the number of Shares with respect to which such Option is exercised. The purchase of such Shares shall take place at the principal offices of the Company within thirty (30) days following delivery of such notice, at which time the Option Price of the Shares shall be paid in full by any of the methods set forth below or a combination thereof. Except as set forth in the next sentence, the Option shall be exercised when the Option Price for the number of shares as to which the Option is exercised is paid to the Company in full. If the Option Price is paid by means of a broker’s transaction described in subsection 7.2(e)(ii)(C), in whole or in part, the closing of the purchase of the Stock under the Option shall take place (and the Option shall be treated as exercised) on the date on which, and only if, the sale of Stock upon which the broker’s transaction was based has been closed and settled, unless the Option Holder makes an irrevocable written election, at the time of exercise of the Option, to have the exercise treated as fully effective for all purposes upon receipt of the Option Price by the Company regardless of whether or not the sale of the Stock by the broker is closed and settled. A properly executed certificate or certificates representing the Shares shall be delivered to or at the direction of the Option Holder upon payment therefor. If Options on less than all shares evidenced by an Option Certificate are exercised, the Company shall deliver a new Option Certificate evidencing the Option on the remaining shares upon delivery of the Option Certificate for the Option being exercised. | |
(ii) | If the exercise price is $2,000 or less, the exercise price shall be paid by one or a combination of the methods set forth in subsections 7.2(e)(ii)(A) or (B) below. If the exercise price is more than $2,000, the exercise price shall be paid by any of the following methods or any combination of the following methods at the election of the Option Holder, or by any other method approved by the Committee upon the request of the Option Holder: |
(A) | in cash; | |
(B) | by certified check, cashier’s check or other check acceptable to the Company, payable to the order of the Company; or | |
(C) | by delivery to the Company of a properly executed notice of exercise together with irrevocable instructions to a broker to deliver to the Company promptly the amount of the proceeds of the sale of all or a portion of the Stock or of a loan from the broker to the Option Holder required to pay the Option Price. |
(f) | Date of Grant.An Option shall be considered as having been granted on the date specified in the grant resolution of the Committee. | |
(g) | Withholding. |
(i) | Non-Qualified Options.Upon exercise of an Option, the Option Holder shall make appropriate arrangements with the Company to provide for the amount of additional withholding required by Sections 3102 and 3402 of the Code and applicable state income tax laws. | |
(ii) | Incentive Options.If an Option Holder makes a disposition (as defined in Section 424(c) of the Code) of any Stock acquired pursuant to the exercise of an Incentive Option prior to the expiration of two years from the date on which the Incentive Option was granted or prior to the expiration of one year from the date on which the Option was exercised, the Option Holder shall send written notice to the Company at the Company’s principal place of business of the date of such disposition, the number of shares disposed of, the amount of proceeds received from such disposition and any other information relating to such disposition as the Company may reasonably request. The Option Holder shall, in the event of such a disposition, make appropriate arrangements with the Company to provide for the amount of additional withholding, if any, required by Sections 3102 and 3402 of the Code and applicable state income tax laws. |
(a) | Initial Exercise.The aggregate Fair Market Value of the Shares with respect to which Incentive Options are exercisable for the first time by an Option Holder in any calendar year, under the Plan or otherwise, shall |
D-10
Table of Contents
not exceed $100,000. For this purpose, the Fair Market Value of the Shares shall be determined as of the date of grant of the Option and Incentive Options shall be taken into account in the order granted. | ||
(b) | Ten Percent Stockholders.Incentive Options granted to an Option Holder who is the holder of record of more than 10% of the total combined voting power of all classes of stock of the Company shall have an Option Price equal to at least 110% of the Fair Market Value of the Shares on the date of grant of the Option and the Option Period for any such Option shall not exceed five years. |
(a) | General Rule: No Lifetime Transfers.An Option shall not be transferable by the Option Holder except by will or pursuant to the laws of descent and distribution. An Option shall be exercisable during the Option Holder’s lifetime only by him or her, or in the event of Disability or incapacity, by his or her guardian or legal representative. The Option Holder’s guardian or legal representative shall have all of the rights of the Option Holder under this Plan. | |
(b) | No Assignment.No right or interest of any Option Holder in an Option granted pursuant to the Plan shall be assignable or transferable during the lifetime of the Option Holder, either voluntarily or involuntarily, or be subjected to any lien, directly or indirectly, by operation of law, or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy, except as set forth above. |
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(a) | Requiring the Participant to keep the Stock certificates, duly endorsed, in the custody of the Company while the restrictions remain in effect; or | |
(b) | Requiring that the Stock certificates, duly endorsed, be held in the custody of a third party while the restrictions remain in effect. |
D-12
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D-13
Table of Contents
U.S. GOLD CORPORATION | |
a Colorado corporation |
By: |
Name: | |
Title: |
D-14
Table of Contents
U.S. Gold Corporation and White Knight Resources Ltd. | E-2 | |||
U.S. Gold Corporation and Nevada Pacific Gold Ltd. | E-9 | |||
U.S. Gold Corporation and Coral Gold Resources Ltd. | E-16 | |||
U.S. Gold Corporation and Tone Resources Limited | E-23 | |||
UnauditedPro FormaConsolidated Supplementary Financial Statements of U.S. Gold Corporation | E-30 |
E-1
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Unaudited Pro Forma Consolidated Balance Sheet | E-3 | |||
Unaudited Pro Forma Consolidated Statement of Operations | E-4 | |||
Notes to the Unaudited Pro Forma Consolidated Financial Statements | E-5 |
E-2
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December 31, 2005 | ||||||||||||||||||||||||||||||||||
Pro forma | Pro forma | |||||||||||||||||||||||||||||||||
As reported | consolidated | consolidated | ||||||||||||||||||||||||||||||||
U.S. Gold | Pro forma | U.S. Gold | ||||||||||||||||||||||||||||||||
U.S. Gold | White Knight | Pro forma | Corporation | adjustments | Corporation | |||||||||||||||||||||||||||||
Corporation | Resources Ltd. | adjustments | Notes | (Cdn GAAP) | US GAAP | Notes | (US GAAP) | |||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||
Current | ||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 677,518 | $ | 88,540 | $ | 34,944,750 | 4(a) | $ | 29,322,513 | $ | 29,322,513 | |||||||||||||||||||||||
(6,388,295 | ) | 4(c) | ||||||||||||||||||||||||||||||||
Temporary investments | — | 12,896,077 | 12,896,077 | 7(ii) | 12,896,077 | |||||||||||||||||||||||||||||
Accounts receivable | 25,667 | 103,212 | 128,879 | 128,879 | ||||||||||||||||||||||||||||||
Other current assets — prepaid expenses | 85,483 | 2,708 | 88,191 | 88,191 | ||||||||||||||||||||||||||||||
Total current assets | 788,668 | 13,090,537 | 28,556,455 | 42,435,660 | 42,435,660 | |||||||||||||||||||||||||||||
Restricted cash | — | — | 37,575,000 | 4(a) | 37,575,000 | 37,575,000 | ||||||||||||||||||||||||||||
Property and equipment, net | 53,305 | 259,410 | 312,715 | 312,715 | ||||||||||||||||||||||||||||||
Mineral property interests | — | 2,348,693 | 2,348,693 | $ | (2,348,693 | ) | 7(i) | — | ||||||||||||||||||||||||||
Acquired mineral property interests | — | — | 148,426,958 | 3 | 148,426,958 | 5,174,408 | 7(i)&7(iv) | 153,601,366 | ||||||||||||||||||||||||||
Deferred exploration costs | — | 2,825,715 | 2,825,715 | (2,825,715 | ) | 7(i) | — | |||||||||||||||||||||||||||
Restrictive time deposits for reclamation bonding | 2,937,746 | 201,259 | 3,139,005 | 3,139,005 | ||||||||||||||||||||||||||||||
Long-lived asset — asset retirement | 942,924 | — | 942,924 | 942,924 | ||||||||||||||||||||||||||||||
Other assets: | ||||||||||||||||||||||||||||||||||
Inactive milling equipment | 777,819 | — | 777,819 | 777,819 | ||||||||||||||||||||||||||||||
Prepaid insurance | 29,970 | — | 29,970 | 29,970 | ||||||||||||||||||||||||||||||
Other assets | 10,118 | 34,400 | 44,518 | 44,518 | ||||||||||||||||||||||||||||||
Total other assets | 817,907 | 34,400 | — | 852,307 | — | 852,307 | ||||||||||||||||||||||||||||
Total assets | $ | 5,540,550 | $ | 18,760,014 | $ | 214,558,413 | $ | 238,858,977 | $ | — | $ | 238,858,977 | ||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||
Current | ||||||||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 96,794 | $ | 326,618 | $ | 423,412 | $ | 423,412 | ||||||||||||||||||||||||||
Installment purchase contracts | 97,303 | — | 97,303 | 97,303 | ||||||||||||||||||||||||||||||
Due to related parties | — | 55,107 | 55,107 | 55,107 | ||||||||||||||||||||||||||||||
Reclamation plan cost (reclamation obligation) | 1,597,032 | — | 1,597,032 | 1,597,032 | ||||||||||||||||||||||||||||||
Total current liabilities | 1,791,129 | 381,725 | — | 2,172,854 | — | 2,172,854 | ||||||||||||||||||||||||||||
Installment purchase contracts, long-term | 16,083 | — | 16,083 | 16,083 | ||||||||||||||||||||||||||||||
Retirement obligation | 1,127,689 | — | 1,127,689 | 1,127,689 | ||||||||||||||||||||||||||||||
Future income tax liability | — | — | $ | 32,651,043 | 4(e) | 32,651,043 | 32,651,043 | |||||||||||||||||||||||||||
Other permit obligations | 72,510 | — | 72,510 | 72,510 | ||||||||||||||||||||||||||||||
Total liabilities | 3,007,411 | 381,725 | 32,651,043 | 36,040,179 | — | 36,040,179 | ||||||||||||||||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||||||||||||||||
Capital stock | 40,465,813 | 26,804,465 | (26,804,465 | ) | 4(b) | 240,751,472 | 240,751,472 | |||||||||||||||||||||||||||
127,765,909 | 3 | — | — | |||||||||||||||||||||||||||||||
72,519,750 | 4(a) | — | — | |||||||||||||||||||||||||||||||
Other equity accounts | — | 1,916,492 | (1,916,492 | ) | 4(b) | — | — | |||||||||||||||||||||||||||
Deficit | (37,932,674 | ) | (10,342,668 | ) | 10,342,668 | 4(b) | (37,932,674 | ) | (37,932,674 | ) | ||||||||||||||||||||||||
Total shareholders’ equity | 2,533,139 | 18,378,289 | 181,907,370 | 202,818,798 | — | 202,818,798 | ||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,540,550 | $ | 18,760,014 | $ | 214,558,413 | $ | 238,858,977 | $ | — | $ | 238,858,977 | ||||||||||||||||||||||
E-3
Table of Contents
For the period ended December 31, 2005 | ||||||||||||||||||||||||||||||||||
Pro forma | ||||||||||||||||||||||||||||||||||
consolidated | Pro forma | |||||||||||||||||||||||||||||||||
As reported | U.S. Gold | consolidated | ||||||||||||||||||||||||||||||||
Corporation | Pro forma | U.S. Gold | ||||||||||||||||||||||||||||||||
U.S. Gold | White Knight | Pro forma | (Cdn | adjustments | Corporation | |||||||||||||||||||||||||||||
Corporation | Resources Ltd. | adjustments | Notes | GAAP) | US GAAP | Notes | (US GAAP) | |||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Earnings (loss) from mining operations | ||||||||||||||||||||||||||||||||||
Other revenue | ||||||||||||||||||||||||||||||||||
Earnest money forfeited | $ | 200,000 | $ | 200,000 | $ | 200,000 | ||||||||||||||||||||||||||||
Interest and other income | 32,032 | $ | 294,563 | 326,595 | 326,595 | |||||||||||||||||||||||||||||
Management fee | 330,000 | — | 330,000 | 330,000 | ||||||||||||||||||||||||||||||
Realized gain from disposition of shares | 520,428 | — | 520,428 | 520,428 | ||||||||||||||||||||||||||||||
Gain (loss) on sale of assets | (29,982 | ) | — | (29,982 | ) | (29,982 | ) | |||||||||||||||||||||||||||
Gain (loss) on foreign exchange | — | 1,634 | 1,634 | 1,634 | ||||||||||||||||||||||||||||||
Total other revenue | 1,052,478 | 296,197 | 1,348,675 | 1,348,675 | ||||||||||||||||||||||||||||||
Costs and expenses | ||||||||||||||||||||||||||||||||||
General and administrative | 1,027,194 | 808,305 | 1,835,499 | 1,835,499 | ||||||||||||||||||||||||||||||
Write-off of purchase | ||||||||||||||||||||||||||||||||||
price receivable | 182,748 | — | 182,748 | 182,748 | ||||||||||||||||||||||||||||||
Property holding costs | 761,081 | — | 761,081 | 761,081 | ||||||||||||||||||||||||||||||
Employment termination | ||||||||||||||||||||||||||||||||||
payments | 1,423,824 | — | 1,423,824 | 1,423,824 | ||||||||||||||||||||||||||||||
Stock compensation expense | 294,400 | 174,760 | $ | 337,476 | 4(d) | 806,636 | 806,636 | |||||||||||||||||||||||||||
Equity share of subsidiary loss | 58,888 | — | 58,888 | 58,888 | ||||||||||||||||||||||||||||||
Realization reserve — stock | 168,960 | — | 168,960 | 168,960 | ||||||||||||||||||||||||||||||
Interest | 3,011 | 5,016 | 8,027 | 8,027 | ||||||||||||||||||||||||||||||
Accretion of asset retirement | ||||||||||||||||||||||||||||||||||
obligation | 110,243 | — | 110,243 | 110,243 | ||||||||||||||||||||||||||||||
Write-off of deferred | ||||||||||||||||||||||||||||||||||
exploration costs | — | 107,296 | 107,296 | $ | 1,692,739 | 7(i) | 1,800,034 | |||||||||||||||||||||||||||
Write-off of mineral | ||||||||||||||||||||||||||||||||||
property costs | — | — | — | 277,428 | 7(i) | 277,428 | ||||||||||||||||||||||||||||
Depreciation | 12,850 | 27,329 | 40,179 | 40,179 | ||||||||||||||||||||||||||||||
Total costs and expenses | 4,043,199 | 1,122,704 | 337,476 | 5,503,379 | 1,970,167 | 7,473,546 | ||||||||||||||||||||||||||||
Loss before income taxes | (2,990,721 | ) | (826,507 | ) | (337,476 | ) | (4,154,704 | ) | (1,970,167 | ) | (6,124,871 | ) | ||||||||||||||||||||||
Provision for income taxes | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Net loss | $ | (2,990,721 | ) | $ | (826,507 | ) | $ | (337,476 | ) | $ | (4,154,704 | ) | $ | (1,970,167 | ) | $ | (6,124,871 | ) | ||||||||||||||||
Basic and diluted net loss per share | $ | (0.12 | ) | 6 | $ | (0.06 | ) | 7(v) | $ | (0.09 | ) | |||||||||||||||||||||||
E-4
Table of Contents
(i) | White Knight acquisition (the “Acquisition”) and | |
(ii) | Private placement dated February 22, 2006 for gross proceeds of $75,150,000 of which $37,575,000 is being held in an escrow account pending satisfaction of certain release Conditions. |
(a) | A unauditedpro forma consolidated balance sheet combining the audited balance sheet of U.S. Gold as at December 31, 2005 with the unaudited balance sheet of White Knight Resources Ltd. as at December 31, 2005 giving effect to the transactions as if they occurred on December 31, 2005. | |
(b) | A unauditedpro forma consolidated statement of operations combining the audited statement of operations of the Company for the year ended December 31, 2005, giving effect to the transactions as if they occurred on January 1, 2005, with the unaudited constructed statement of operations of White Knight for the twelve months ended December 31, 2005. White Knight’s statement of operations for the twelve months ended December 31, 2005 has been constructed by adding together (a) the results for the six months ended June 30, 2005 (derived from White Knight’s audited financial statements for the year ended June 30, 2005 and the unaudited interim results for the six months ended December 31, 2004) and (b) the unaudited interim results for the six months ended December 31, 2005. |
As at December 31, 2005 | $ | 0.86 | ||
Average for the twelve months ended December 31, 2005 | $ | 0.83 |
E-5
Table of Contents
White Knight Acquisition |
Purchase price: | |||||
Shares issued on acquisition | $ | 127,765,909 | |||
Acquisition costs (estimated at 5% of purchase price) | 6,388,295 | ||||
$ | 134,154,204 | ||||
Net assets acquired: | |||||
Cash and cash equivalents | $ | 88,540 | |||
Temporary investments | 12,896,077 | ||||
Accounts receivable | 103,212 | ||||
Other current assets — prepaid expenses | 2,708 | ||||
Property and equipment, net | 259,410 | ||||
Mineral property interests | 2,348,693 | ||||
Deferred exploration costs | 2,825,715 | ||||
Restrictive time deposits for reclamation bonding | 201,259 | ||||
Other assets | 34,400 | ||||
Accounts payable and accrued liabilities | (326,618 | ) | |||
Due to related parties | (55,107 | ) | |||
Future income tax liability | (32,651,043 | ) | |||
Acquired mineral property interests | 148,426,958 | ||||
$ | 134,154,204 | ||||
(a) | Cash proceeds of $75,150,000 from the February 22, 2006 private placement, of which $34,944,750 (net of commission but before deduction of expenses of the offering) is included under cash and cash equivalents and $37,575,000 is included under restricted cash pending release from escrow. An amount of $72,519,750 has been added to share capital. | |
(b) | Elimination of acquired business capital stock, equity accounts and accumulated deficit. |
E-6
Table of Contents
(c) | Transaction costs have been assumed to be $6,388,295 representing 5 per cent of the total fair value of shares issued in connection with the Acquisition. | |
(d) | Stock compensation expense in the amount of $337,476 has been recognized in U.S. Gold’s unauditedpro forma statement of operations to reflect Canadian GAAP requirements. | |
(e) | Future income taxes have been taken into consideration in connection with the purchase price allocation where assumed fair values are not the same as the carry forward book values. |
Number of | ||||||||
shares | Amount | |||||||
Issued common shares of U.S. Gold | 33,296,755 | $ | 40,465,812 | |||||
Issue of subscription receipts | 16,700,000 | 72,519,750 | ||||||
Shares issued for White Knight | 20,732,240 | 122,320,217 | ||||||
Impact of outstanding options and warrants in White Knight as if they were exercised | 1,655,500 | 5,445,693 | ||||||
Pro formabalance | 72,384,495 | $ | 240,751,472 | |||||
(Shares or | ||||
US dollars) | ||||
Actual weighted average number of U.S. Gold common shares outstanding | 25,931,172 | |||
Assumed number of U.S. Gold common shares issued to White Knight shareholders | 20,732,240 | |||
Issue of subscription receipts | 16,700,000 | |||
Impact of outstanding warrants and options in White Knight as if they were exercised | 1,655,500 | |||
Pro formaweighted average number of U.S. Gold common shares outstanding | 65,018,912 | |||
Pro formanet loss | $ | (4,154,704 | ) | |
Pro formaadjusted basic loss per share | $ | (0.06 | ) |
E-7
Table of Contents
(iii) | Stock Option Plans |
(iv) | Acquired mineral property interests |
Acquired mineral property interests under Canadian GAAP | $ | 148,426,958 | ||
Add: Acquired mineral exploration costs written off | 5,174,408 | |||
Acquired mineral property interests under US GAAP | $ | 153,601,366 | ||
(v) | Thepro forma net loss per share under US GAAP is as follows: |
Pro formaweighted average number of U.S. Gold common shares outstanding | 65,018,912 | |||
Pro formanet loss | $ | (6,124,871 | ) | |
Pro formaadjusted basic loss per share | $ | (0.09 | ) |
E-8
Table of Contents
Unaudited Pro Forma Consolidated Balance Sheet | E-10 | |||
Unaudited Pro Forma Consolidated Statement of Operations | E-11 | |||
Notes to the Unaudited Pro Forma Consolidated Financial Statements | E-12 |
E-9
Table of Contents
December 31, 2005 | ||||||||||||||||||||||||||||||||||
Pro forma | Pro forma | |||||||||||||||||||||||||||||||||
As reported | consolidated | consolidated | ||||||||||||||||||||||||||||||||
U.S. Gold | Pro forma | U.S. Gold | ||||||||||||||||||||||||||||||||
U.S. Gold | Nevada Pacific | Pro forma | Corporation | adjustments | Corporation | |||||||||||||||||||||||||||||
Corporation | Gold Ltd. | adjustments | Notes | (Cdn GAAP) | US GAAP | Notes | (US GAAP) | |||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||
Current | ||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 677,518 | $ | 2,338,765 | $ | 2,029,183 | 3 | $ | 35,119,310 | $ | 35,119,310 | |||||||||||||||||||||||
34,944,750 | 4(a) | |||||||||||||||||||||||||||||||||
(4,870,906 | ) | 4(c) | ||||||||||||||||||||||||||||||||
Accounts receivable | 25,667 | 120,968 | 146,635 | 146,635 | ||||||||||||||||||||||||||||||
Product inventory and stockpiled ore | — | 1,695,877 | 1,695,877 | 1,695,877 | ||||||||||||||||||||||||||||||
Supplies inventory | — | 337,390 | 337,390 | 337,390 | ||||||||||||||||||||||||||||||
Other current assets — prepaid expenses | 85,483 | 116,134 | 201,617 | 201,617 | ||||||||||||||||||||||||||||||
Total current assets | 788,668 | 4,609,134 | 32,103,027 | 37,500,829 | 37,500,829 | |||||||||||||||||||||||||||||
Restricted cash | — | — | 37,575,000 | 4(a) | 37,575,000 | 37,575,000 | ||||||||||||||||||||||||||||
Property and equipment, net | 53,305 | 13,304,716 | 13,358,021 | 13,358,021 | ||||||||||||||||||||||||||||||
Mineral property interests | — | 3,760,444 | 3,760,444 | $ | (3,760,444 | ) | 7(i) | — | ||||||||||||||||||||||||||
Acquired mineral property interests | — | — | 104,194,127 | 3 | 104,194,127 | 3,760,444 | 7(i)&7(iii) | 107,954,571 | ||||||||||||||||||||||||||
Restrictive time deposits for reclamation bonding | 2,937,746 | 93,228 | 3,030,974 | 3,030,974 | ||||||||||||||||||||||||||||||
Long-lived asset — asset retirement | 942,924 | — | 942,924 | 942,924 | ||||||||||||||||||||||||||||||
Other assets: | ||||||||||||||||||||||||||||||||||
Inactive milling equipment | 777,819 | — | 777,819 | 777,819 | ||||||||||||||||||||||||||||||
Prepaid insurance | 29,970 | — | 29,970 | 29,970 | ||||||||||||||||||||||||||||||
Other assets | 10,118 | — | 10,118 | 10,118 | ||||||||||||||||||||||||||||||
Total other assets | 817,907 | — | — | 817,907 | — | 817,907 | ||||||||||||||||||||||||||||
Total assets | $ | 5,540,550 | $ | 21,767,522 | $ | 173,872,154 | $ | 201,180,226 | $ | — | $ | 201,180,226 | ||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||
Current | ||||||||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 96,794 | $ | 1,031,586 | $ | 1,128,380 | $ | 1,128,380 | ||||||||||||||||||||||||||
Installment purchase contracts | 97,303 | — | 97,303 | 97,303 | ||||||||||||||||||||||||||||||
Reclamation plan cost (reclamation obligation) | 1,597,032 | — | 1,597,032 | 1,597,032 | ||||||||||||||||||||||||||||||
Total current liabilities | 1,791,129 | 1,031,586 | — | 2,822,715 | — | 2,822,715 | ||||||||||||||||||||||||||||
Installment purchase contracts, long-term | 16,083 | — | 16,083 | 16,083 | ||||||||||||||||||||||||||||||
Retirement obligation | 1,127,689 | 1,626,039 | 2,753,728 | 2,753,728 | ||||||||||||||||||||||||||||||
Future income tax liability | — | — | $ | 22,920,681 | 4(e) | 22,920,681 | 22,920,681 | |||||||||||||||||||||||||||
Other permit obligations | 72,510 | — | 72,510 | 72,510 | ||||||||||||||||||||||||||||||
Other liabilities | — | 123,495 | 123,495 | 123,495 | ||||||||||||||||||||||||||||||
Total liabilities | 3,007,411 | 2,781,120 | 22,920,681 | 28,709,212 | — | 28,709,212 | ||||||||||||||||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||||||||||||||||
Capital stock | 40,465,813 | 28,376,033 | (28,376,033 | ) | 4(b) | 210,403,688 | 210,403,688 | |||||||||||||||||||||||||||
97,418,125 | 3 | |||||||||||||||||||||||||||||||||
72,519,750 | 4(a) | — | — | |||||||||||||||||||||||||||||||
Other equity accounts | — | 1,119,231 | (1,119,231 | ) | 4(b) | — | — | |||||||||||||||||||||||||||
Deficit | (37,932,674 | ) | (10,508,862 | ) | 10,508,862 | 4(b) | (37,932,674 | ) | (37,932,674 | ) | ||||||||||||||||||||||||
Total shareholders’ equity | 2,533,139 | 18,986,402 | 150,951,473 | 172,471,014 | — | 172,471,014 | ||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,540,550 | $ | 21,767,522 | $ | 173,872,154 | $ | 201,180,226 | $ | — | $ | 201,180,226 | ||||||||||||||||||||||
E-10
Table of Contents
For the period ended December 31, 2005 | ||||||||||||||||||||||||||||||||||
Pro forma | Pro forma | |||||||||||||||||||||||||||||||||
As reported | consolidated | consolidated | ||||||||||||||||||||||||||||||||
U.S. Gold | Pro forma | U.S. Gold | ||||||||||||||||||||||||||||||||
U.S. Gold | Nevada Pacific | Pro forma | Corporation | adjustments | Corporation | |||||||||||||||||||||||||||||
Corporation | Gold Ltd. | adjustments | Notes | (Cdn GAAP) | US GAAP | Notes | (US GAAP) | |||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Sales | $ | 8,881,168 | $ | 8,881,168 | $ | 8,881,168 | ||||||||||||||||||||||||||||
Cost of sales | 8,024,132 | 8,024,132 | 8,024,132 | |||||||||||||||||||||||||||||||
Depreciation and depletion | 1,203,093 | 1,203,093 | 1,203,093 | |||||||||||||||||||||||||||||||
Royalties | 472,743 | 472,743 | 472,743 | |||||||||||||||||||||||||||||||
9,699,968 | 9,699,968 | 9,699,968 | ||||||||||||||||||||||||||||||||
Earnings (loss) from mining operations | (818,800 | ) | (818,800 | ) | (818,800 | ) | ||||||||||||||||||||||||||||
Other revenue | ||||||||||||||||||||||||||||||||||
Earnest money forfeited | $ | 200,000 | — | 200,000 | 200,000 | |||||||||||||||||||||||||||||
Interest and other income | 32,032 | 27,205 | 59,237 | 59,237 | ||||||||||||||||||||||||||||||
Management fee | 330,000 | — | 330,000 | 330,000 | ||||||||||||||||||||||||||||||
Realized gain from disposition of shares | 520,428 | — | 520,428 | 520,428 | ||||||||||||||||||||||||||||||
Gain (loss) on sale of assets | (29,982 | ) | 155,199 | 125,217 | 125,217 | |||||||||||||||||||||||||||||
Gain (loss) on foreign exchange | — | (67,043 | ) | (67,043 | ) | (67,043 | ) | |||||||||||||||||||||||||||
Total other revenue | 1,052,478 | 115,361 | 1,167,839 | 1,167,839 | ||||||||||||||||||||||||||||||
Costs and expenses | ||||||||||||||||||||||||||||||||||
General and administrative | 1,027,194 | 1,800,234 | 2,827,428 | 2,827,428 | ||||||||||||||||||||||||||||||
Write-off of purchase price receivable | 182,748 | — | 182,748 | 182,748 | ||||||||||||||||||||||||||||||
Property holding costs | 761,081 | — | 761,081 | 761,081 | ||||||||||||||||||||||||||||||
Employment termination payments | 1,423,824 | — | 1,423,824 | 1,423,824 | ||||||||||||||||||||||||||||||
Stock compensation expense | 294,400 | 472,707 | $ | 337,476 | 4(d) | 1,104,583 | 1,104,583 | |||||||||||||||||||||||||||
Equity share of subsidiary loss | 58,888 | — | 58,888 | 58,888 | ||||||||||||||||||||||||||||||
Realization reserve — stock | 168,960 | — | 168,960 | 168,960 | ||||||||||||||||||||||||||||||
Interest | 3,011 | 246 | 3,257 | 3,257 | ||||||||||||||||||||||||||||||
Accretion of asset retirement obligation | 110,243 | — | 110,243 | 110,243 | ||||||||||||||||||||||||||||||
Write-off of mineral property costs | — | — | — | $ | 1,510,769 | 7(i) | 1,510,769 | |||||||||||||||||||||||||||
Write-down of mineral properties | — | 131,710 | 131,710 | 131,710 | ||||||||||||||||||||||||||||||
Depreciation | 12,850 | — | 12,850 | 12,850 | ||||||||||||||||||||||||||||||
Total costs and expenses | 4,043,199 | 2,404,897 | 337,476 | 6,785,572 | 1,510,769 | 8,296,341 | ||||||||||||||||||||||||||||
Loss before income taxes | (2,990,721 | ) | (3,108,336 | ) | (337,476 | ) | (6,436,533 | ) | (1,510,769 | ) | (7,947,302 | ) | ||||||||||||||||||||||
Provision for income taxes | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Net loss | $ | (2,990,721 | ) | $ | (3,108,336 | ) | $ | (337,476 | ) | $ | (6,436,533 | ) | $ | (1,510,769 | ) | $ | (7,947,302 | ) | ||||||||||||||||
Basic and diluted net loss per share | $ | (0.12 | ) | 6 | $ | (0.11 | ) | 7(iv) | $ | (0.13 | ) | |||||||||||||||||||||||
E-11
Table of Contents
(i) | Nevada Pacific acquisition (the “Acquisition”) and | |
(ii) | Private placement dated February 22, 2006 for gross proceeds of $75,150,000 of which $37,575,000 is being held in an escrow account pending satisfaction of certain release Conditions. |
(a) | A unauditedpro formaconsolidated balance sheet combining the audited balance sheet of U.S. Gold as at December 31, 2005 with the unaudited balance sheet of Nevada Pacific as at December 31, 2005 giving effect to the transactions as if they occurred on December 31, 2005. | |
(b) | A unauditedpro formaconsolidated statement of operations combining the audited statement of operations of the Company for the year ended December 31, 2005 with the unaudited constructed statement of operations of Nevada Pacific for the twelve months ended December 31, 2005, giving effect to the transactions as if they occurred on January 1, 2005. Nevada Pacific’s statement of operations for the twelve months ended December 31, 2005 has been constructed by adding together (a) the results for the six months ended June 30, 2005 (derived from Nevada Pacific’s audited financial statements for the year ended June 30, 2005 and the unaudited interim results for the six months ended December 31, 2004) and (b) the unaudited interim results for the six months ended December 31, 2005. |
As at December 31, 2005 | $ | 0.86 | ||
Average for the twelve months ended December 31, 2005 | $ | 0.83 |
E-12
Table of Contents
2. | Summary of significant accounting policies |
3. | Business acquisitions |
Nevada Pacific Acquisition |
Purchase price: | |||||
Shares issued on acquisition | $ | 97,418,125 | |||
Acquisition costs (estimated at 5% of purchase price) | 4,870,906 | ||||
$ | 102,289,031 | ||||
Net assets acquired: | |||||
Cash and cash equivalents | $ | 4,367,948 | |||
Accounts receivable | 120,968 | ||||
Product inventory and stockpiled ore | 1,695,877 | ||||
Supplies inventory | 337,390 | ||||
Other current assets — prepaid expenses | 116,134 | ||||
Property, plant and equipment | 13,304,716 | ||||
Mineral properties | 3,760,444 | ||||
Reclamation bonds | 93,228 | ||||
Accounts payable and accrued liabilities | (1,031,586 | ) | |||
Other liabilities | (123,495 | ) | |||
Asset retirement obligation | (1,626,039 | ) | |||
Future income tax liability | (22,920,681 | ) | |||
Acquired mineral property interests | 104,194,127 | ||||
$ | 102,289,031 | ||||
E-13
Table of Contents
4. | Pro forma assumptions and adjustments |
(a) | Cash proceeds of $75,150,000 from the February 22, 2006 private placement, of which $34,944,750 (net of commission but before deduction of expenses of the offering) is included under cash and cash equivalents and $37,575,000 is included under restricted cash pending release from escrow. An amount of $72,519,750 has been added to share capital. | |
(b) | Elimination of acquired business capital stock, equity accounts and accumulated deficit. | |
(c) | Transaction costs have been assumed to be $4,870,906 representing 5 per cent of the total fair value of shares issued in connection with the Acquisition. | |
(d) | Stock compensation expense in the amount of $337,476 has been recognized in U.S. Gold’s unauditedpro formastatement of operations to reflect Canadian GAAP requirements. | |
(e) | Future income taxes have been taken into consideration in connection with the purchase price allocation where assumed fair values are not the same as the carry forward book values. |
Number of | ||||||||
shares | Amount | |||||||
Issued common shares of U.S. Gold | 33,296,755 | $ | 40,465,812 | |||||
Issue of subscription receipts | 16,700,000 | 72,519,750 | ||||||
Shares issued for Nevada Pacific | 15,759,026 | 92,978,256 | ||||||
Impact of outstanding options and warrants in Nevada Pacific as if they were exercised | 2,690,569 | 4,439,870 | ||||||
Pro formabalance | 68,446,350 | $ | 210,403,688 | |||||
(Shares or | ||||
US dollars) | ||||
Actual weighted average number of U.S. Gold common shares outstanding | 25,931,172 | |||
Assumed number of U.S. Gold common shares issued to Nevada Pacific shareholders | 15,759,026 | |||
Issue of subscription receipts | 16,700,000 | |||
Impact of outstanding warrants and options in Nevada Pacific as if they were exercised | 2,690,569 | |||
Pro formaweighted average number of U.S. Gold common shares outstanding | 61,080,767 | |||
Pro formanet loss | $ | (6,436,533 | ) | |
Pro formaadjusted basic loss per share | $ | (0.11 | ) |
E-14
Table of Contents
(iii) | Acquired mineral property interests |
Acquired mineral property interests under Canadian GAAP | $ | 104,194,127 | ||
Add: Acquired mineral exploration costs written off | 3,760,444 | |||
Acquired mineral property interests under US GAAP | $ | 107,954,571 | ||
(iv) | Thepro forma net loss per share under US GAAP is as follows: |
Pro formaweighted average number of U.S. Gold common shares outstanding | 61,080,767 | |||
Pro formanet loss | $ | (7,947,302 | ) | |
Pro formaadjusted basic loss per share | $ | (0.13 | ) |
(v) | Stripping costs incurred during production in the mining industry |
(vi) | Amortization |
E-15
Table of Contents
Unaudited Pro Forma Consolidated Balance Sheet | E-17 | |||
Unaudited Pro Forma Consolidated Statement of Operations | E-18 | |||
Notes to the Unaudited Pro Forma Consolidated Financial Statements | E-19 |
E-16
Table of Contents
December 31, 2005 | ||||||||||||||||||||||||||||||||||
Pro forma | Pro forma | |||||||||||||||||||||||||||||||||
As reported | consolidated | consolidated | ||||||||||||||||||||||||||||||||
U.S. Gold | Pro forma | U.S. Gold | ||||||||||||||||||||||||||||||||
U.S. Gold | Coral Gold | Pro forma | Corporation | adjustments | Corporation | |||||||||||||||||||||||||||||
Corporation | Resources Ltd. | adjustments | Notes | (Cdn GAAP) | US GAAP | Notes | (US GAAP) | |||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||
Current | ||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 677,518 | $ | 547,186 | $ | 3,870,000 | 3 | $ | 38,745,923 | $ | 38,745,923 | |||||||||||||||||||||||
34,944,750 | 4(a) | |||||||||||||||||||||||||||||||||
(1,293,531 | ) | 4(c) | ||||||||||||||||||||||||||||||||
Temporary investments | — | 48,755 | 48,755 | 7(ii) | 48,755 | |||||||||||||||||||||||||||||
Accounts receivable | 25,667 | 74,547 | 100,214 | 100,214 | ||||||||||||||||||||||||||||||
Other current assets — prepaid expenses | 85,483 | 13,359 | 98,842 | 98,842 | ||||||||||||||||||||||||||||||
Total current assets | 788,668 | 683,847 | 37,521,219 | 38,993,734 | 38,993,734 | |||||||||||||||||||||||||||||
Restricted cash | 37,575,000 | 4(a) | 37,575,000 | 37,575,000 | ||||||||||||||||||||||||||||||
Property and equipment, net | 53,305 | 3,311 | 56,616 | 56,616 | ||||||||||||||||||||||||||||||
Mineral property interests | — | 7,663,301 | 7,663,301 | $ | (7,663,301 | ) | 7(i) | — | ||||||||||||||||||||||||||
Acquired mineral property interests | — | — | 18,229,853 | 3 | 18,229,853 | 7,663,301 | 7(i)&7(iv) | 25,893,154 | ||||||||||||||||||||||||||
Restrictive time deposits for reclamation bonding | 2,937,746 | 233,720 | 3,171,466 | 3,171,466 | ||||||||||||||||||||||||||||||
Investment in subsidiary | — | 467,317 | 467,317 | 467,317 | ||||||||||||||||||||||||||||||
Long-lived asset retirement | 942,924 | — | 942,924 | 942,924 | ||||||||||||||||||||||||||||||
Other assets: | ||||||||||||||||||||||||||||||||||
Inactive milling equipment | 777,819 | — | 777,819 | 777,819 | ||||||||||||||||||||||||||||||
Prepaid insurance | 29,970 | — | 29,970 | 29,970 | ||||||||||||||||||||||||||||||
Other assets | 10,118 | 132,239 | 142,357 | 142,357 | ||||||||||||||||||||||||||||||
Total other assets | 817,907 | 132,239 | — | 950,146 | — | 950,146 | ||||||||||||||||||||||||||||
Total assets | $ | 5,540,550 | $ | 9,183,735 | $ | 93,326,072 | $ | 108,050,357 | $ | — | $ | 108,050,357 | ||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||
Current | ||||||||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 96,794 | $ | 35,102 | $ | 131,896 | $ | 131,896 | ||||||||||||||||||||||||||
Installment purchase contracts | 97,303 | — | 97,303 | 97,303 | ||||||||||||||||||||||||||||||
Advances payable | — | 74,131 | 74,131 | 74,131 | ||||||||||||||||||||||||||||||
Reclamation plan cost (reclamation obligation) | 1,597,032 | — | 1,597,032 | 1,597,032 | ||||||||||||||||||||||||||||||
Total current liabilities | 1,791,129 | 109,233 | — | 1,900,362 | — | 1,900,362 | ||||||||||||||||||||||||||||
Installment purchase contracts, long-term | 16,083 | — | 16,083 | 16,083 | ||||||||||||||||||||||||||||||
Retirement obligation | 1,127,689 | — | 1,127,689 | 1,127,689 | ||||||||||||||||||||||||||||||
Future income tax liability | — | — | $ | 4,010,213 | 4(e) | 4,010,213 | 4,010,213 | |||||||||||||||||||||||||||
Other permit obligations | 72,510 | — | 72,510 | 72,510 | ||||||||||||||||||||||||||||||
Total liabilities | 3,007,411 | 109,233 | 4,010,213 | 7,126,857 | — | 7,126,857 | ||||||||||||||||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||||||||||||||||
Capital stock | 40,465,813 | 25,670,398 | (25,670,398 | ) | 4(b) | 138,856,174 | 138,856,174 | |||||||||||||||||||||||||||
25,870,611 | 3 | |||||||||||||||||||||||||||||||||
72,519,750 | 4(a) | — | — | |||||||||||||||||||||||||||||||
Other equity accounts | — | 631,821 | (631,821 | ) | 4(b) | — | — | |||||||||||||||||||||||||||
Deficit | (37,932,674 | ) | (17,227,717 | ) | 17,227,717 | 4(b) | 37,932,674 | 37,932,674 | ||||||||||||||||||||||||||
Total shareholders’ equity | 2,533,139 | 9,074,502 | 89,315,859 | 100,923,500 | — | 100,923,500 | ||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,540,550 | $ | 9,183,735 | $ | 93,326,072 | $ | 108,050,357 | $ | — | $ | 108,050,357 | ||||||||||||||||||||||
E-17
Table of Contents
For the period ended December 31, 2005 | ||||||||||||||||||||||||||||||||||
Pro forma | Pro forma | |||||||||||||||||||||||||||||||||
As reported | consolidated | consolidated | ||||||||||||||||||||||||||||||||
U.S. Gold | Pro forma | U.S. Gold | ||||||||||||||||||||||||||||||||
U.S. Gold | Coral Gold | Pro forma | Corporation | adjustments | Corporation | |||||||||||||||||||||||||||||
Corporation | Resources Ltd. | adjustments | Notes | (Cdn GAAP) | US GAAP | Notes | (US GAAP) | |||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Earnings (loss) from mining operations | ||||||||||||||||||||||||||||||||||
Other revenue | ||||||||||||||||||||||||||||||||||
Earnest money forfeited | $ | 200,000 | $ | 200,000 | $ | 200,000 | ||||||||||||||||||||||||||||
Interest and other income | 32,032 | $ | 15,270 | 47,302 | 47,302 | |||||||||||||||||||||||||||||
Management fee | 330,000 | — | 330,000 | 330,000 | ||||||||||||||||||||||||||||||
Realized gain from disposition of shares | 520,428 | — | 520,428 | 520,428 | ||||||||||||||||||||||||||||||
Gain (loss) on sale of assets | (29,982 | ) | (3,296 | ) | (33,278 | ) | (33,278 | ) | ||||||||||||||||||||||||||
Gain (loss) on foreign exchange | — | (15,576 | ) | (15,576 | ) | (15,576 | ) | |||||||||||||||||||||||||||
Total other revenue | 1,052,478 | (3,602 | ) | 1,048,876 | 1,048,876 | |||||||||||||||||||||||||||||
Costs and expenses | ||||||||||||||||||||||||||||||||||
General and administrative | 1,027,194 | 480,660 | 1,507,854 | 1,507,854 | ||||||||||||||||||||||||||||||
Write-off of purchase price receivable | 182,748 | — | 182,748 | 182,748 | ||||||||||||||||||||||||||||||
Property holding costs | 761,081 | — | 761,081 | 761,081 | ||||||||||||||||||||||||||||||
Employment termination payments | 1,423,824 | — | 1,423,824 | 1,423,824 | ||||||||||||||||||||||||||||||
Stock compensation expense | 294,400 | 311,545 | $ | 337,476 | 4(d) | 943,421 | 943,421 | |||||||||||||||||||||||||||
Equity share of subsidiary loss | 58,888 | — | 58,888 | 58,888 | ||||||||||||||||||||||||||||||
Realization reserve — stock | 168,960 | — | 168,960 | 168,960 | ||||||||||||||||||||||||||||||
Interest | 3,011 | — | 3,011 | 3,011 | ||||||||||||||||||||||||||||||
Accretion of asset retirement obligation | 110,243 | — | 110,243 | 110,243 | ||||||||||||||||||||||||||||||
Write-off of mineral property costs | — | — | — | $ | 642,993 | 7(i) | 642,993 | |||||||||||||||||||||||||||
Depreciation | 12,850 | 764 | 13,614 | 13,614 | ||||||||||||||||||||||||||||||
Total costs and expenses | 4,043,199 | 792,970 | 337,476 | 5,173,645 | 642,993 | 5,816,638 | ||||||||||||||||||||||||||||
Loss before income taxes | (2,990,721 | ) | (796,572 | ) | (337,476 | ) | (4,124,769 | ) | (642,993 | ) | (4,767,762 | ) | ||||||||||||||||||||||
Provision for income taxes | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Net loss | $ | (2,990,721 | ) | $ | (796,572 | ) | $ | (337,476 | ) | $ | (4,124,769 | ) | $ | (642,993 | ) | $ | (4,767,762 | ) | ||||||||||||||||
Basic and diluted net loss per share | $ | (0.12 | ) | 6 | $ | (0.09 | ) | 7(v) | $ | (0.10 | ) | |||||||||||||||||||||||
E-18
Table of Contents
1. | Basis of presentation |
(i) | Coral Gold acquisition (the “Acquisition”) and | |
(ii) | Private placement dated February 22, 2006 for gross proceeds of $75,150,000 of which $37,575,000 is being held in an escrow account pending satisfaction of certain release Conditions. |
(a) | A unauditedpro forma consolidated balance sheet combining the audited balance sheet of U.S. Gold as at December 31, 2005 with the unaudited balance sheet of Coral Gold as at October 31, 2005 giving effect to the transactions as if they occurred on December 31, 2005. | |
(b) | A unauditedpro forma consolidated statement of operations combining the audited statement of operations of the Company for the year ended December 31, 2005 with the unaudited constructed statement of operations of Coral Gold for the twelve months ended October 31, 2005, giving effect to the transactions as if they occurred on January 1, 2005. The Coral Gold’s statement of operations for the twelve months ended October 31, 2005 has been constructed by adding together (a) the results for the three months ended January 31, 2005 (derived from Coral Gold’s audited financial statements for the year ended January 31, 2005 and the unaudited interim results for the nine months ended October 31, 2004) and (b) the unaudited interim results for the nine months ended October 31, 2005. |
As at October 31, 2005 | $ | 0.85 | ||
Average for the twelve months ended October 31, 2005 | $ | 0.82 |
E-19
Table of Contents
2. | Summary of significant accounting policies |
3. | Business acquisitions |
Coral Gold Acquisition |
Purchase price: | |||||
Shares issued on acquisition | $ | 25,870,611 | |||
Acquisition costs (estimated at 5% of purchase price) | 1,293,531 | ||||
$ | 27,164,142 | ||||
Net assets acquired: | |||||
Cash and cash equivalents | $ | 4,417,186 | |||
Temporary investments | 48,755 | ||||
Accounts receivable | 74,547 | ||||
Other current assets — prepaid expenses | 13,359 | ||||
Property and equipment, net | 3,311 | ||||
Mineral property interests | 7,663,301 | ||||
Restrictive time deposits for reclamation bonding | 233,720 | ||||
Investment in subsidiary | 467,317 | ||||
Other assets | 132,239 | ||||
Accounts payable and accrued liabilities | (35,102 | ) | |||
Advances payable | (74,131 | ) | |||
Future income tax payable | (4,010,213 | ) | |||
Acquired mineral property interests | 18,229,853 | ||||
$ | 27,164,142 | ||||
E-20
Table of Contents
4. | Pro forma assumptions and adjustments |
(a) | Cash proceeds of $75,150,000 from the February 22, 2006 private placement, of which $34,944,750 (net of commission but before deduction of expenses of the offering) is included under cash and cash equivalents and $37,575,000 is included under restricted cash pending release from escrow. An amount of $72,519,750 has been added to share capital. | |
(b) | Elimination of acquired business capital stock, equity accounts and accumulated deficit. | |
(c) | Transaction costs have been assumed to be $1,293,531 representing 5 per cent of the total fair value of shares issued in connection with the Acquisition. | |
(d) | Stock compensation expense in the amount of $337,476 has been recognized in U.S. Gold’s unauditedpro forma statement of operations to reflect Canadian GAAP requirements. | |
(e) | Future income taxes have been taken into consideration in connection with the purchase price allocation where assumed fair values are not the same as the carry forward book values. |
Number of | ||||||||
shares | Amount | |||||||
Issued common shares of U.S. Gold | 33,296,755 | $ | 40,465,812 | |||||
Issue of subscription receipts | 16,700,000 | 72,519,750 | ||||||
Shares issued for Coral Gold | 4,095,862 | 24,165,589 | ||||||
Impact of outstanding options and warrants in Coral Gold as if they were exercised | 984,360 | 1,705,023 | ||||||
Pro formabalance | 55,076,977 | $ | 138,856,174 | |||||
(Shares or | ||||
US dollars) | ||||
Actual weighted average number of U.S. Gold common shares outstanding | 25,931,172 | |||
Assumed number of U.S. Gold common shares issued to Coral Gold shareholders | 4,095,862 | |||
Issue of subscription receipts | 16,700,000 | |||
Impact of outstanding warrants and options in Coral Gold as if they were exercised | 984,360 | |||
Pro formaweighted average number of U.S. Gold common shares outstanding | 47,711,394 | |||
Pro formanet loss | $ | (4,124,769 | ) | |
Pro formaadjusted basic loss per share | $ | (0.09 | ) |
(i) | Mining and exploration expenses |
E-21
Table of Contents
(ii) | Temporary Investments |
(iii) | Stock Option Plans |
(iv) | Acquired mineral property interests |
Acquired mineral property interests under Canadian GAAP | $ | 18,229,853 | ||
Add: Acquired mineral exploration costs written off | 7,663,301 | |||
Acquired mineral property interests under US GAAP | $ | 25,893,154 | ||
(v) | Thepro forma net loss per share under US GAAP is as follows: |
Pro formaweighted average number of U.S. Gold common shares outstanding | 47,711,394 | |||
Pro formanet loss | $ | (4,767,762 | ) | |
Pro formaadjusted basic loss per share | $ | (0.10 | ) |
E-22
Table of Contents
Unaudited Pro Forma Consolidated Balance Sheet | E-24 | |||
Unaudited Pro Forma Consolidated Statement of Operations | E-25 | |||
Notes to the Unaudited Pro Forma Consolidated Financial Statements | E-26 |
E-23
Table of Contents
December 31, 2005 | ||||||||||||||||||||||||||||||||||
As reported | Pro forma | Pro forma | ||||||||||||||||||||||||||||||||
consolidated | consolidated | |||||||||||||||||||||||||||||||||
Tone | U.S. Gold | Pro forma | U.S. Gold | |||||||||||||||||||||||||||||||
U.S. Gold | Resources | Pro forma | Corporation | adjustments | Corporation | |||||||||||||||||||||||||||||
Corporation | Limited | adjustments | Notes | (Cdn GAAP) | US GAAP | Notes | (US GAAP) | |||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||
Current | ||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 677,518 | $ | 23,408 | $ | 709,500 | 3 | $ | 34,648,515 | $ | 34,648,515 | |||||||||||||||||||||||
34,944,750 | 4(a) | |||||||||||||||||||||||||||||||||
(1,706,661 | ) | 4(c) | ||||||||||||||||||||||||||||||||
Accounts receivable | 25,667 | 6,008 | 31,675 | 31,675 | ||||||||||||||||||||||||||||||
Product inventory and stockpiled ore | — | — | — | — | ||||||||||||||||||||||||||||||
Supplies inventory | — | — | — | — | ||||||||||||||||||||||||||||||
Other current assets — prepaid expenses | 85,483 | 2,150 | 87,633 | 87,633 | ||||||||||||||||||||||||||||||
Total current assets | 788,668 | 31,566 | 33,947,589 | 34,767,823 | 34,767,823 | |||||||||||||||||||||||||||||
Restricted cash | — | — | 37,575,000 | 4(a) | 37,575,000 | 37,575,000 | ||||||||||||||||||||||||||||
Property and equipment, net | 53,305 | — | 53,305 | 53,305 | ||||||||||||||||||||||||||||||
Mineral property interests | — | 978,319 | 978,319 | $ | (978,319 | ) | 7(i) | — | ||||||||||||||||||||||||||
Acquired mineral property interests | — | — | 43,878,718 | 3 | 43,878,718 | 978,319 | 7(i)&7(iii) | 44,857,037 | ||||||||||||||||||||||||||
Restrictive time deposits for reclamation bonding | 2,937,746 | 29,564 | 2,967,310 | 2,967,310 | ||||||||||||||||||||||||||||||
Long-lived asset retirement | 942,924 | 942,924 | 942,924 | |||||||||||||||||||||||||||||||
Other assets: | ||||||||||||||||||||||||||||||||||
Inactive milling equipment | 777,819 | — | 777,819 | 777,819 | ||||||||||||||||||||||||||||||
Prepaid insurance | 29,970 | — | 29,970 | 29,970 | ||||||||||||||||||||||||||||||
Other assets | 10,118 | — | 10,118 | 10,118 | ||||||||||||||||||||||||||||||
Total other assets | 817,907 | — | — | 817,907 | — | 817,907 | ||||||||||||||||||||||||||||
Total assets | $ | 5,540,550 | $ | 1,039,449 | $ | 115,401,307 | $ | 121,981,306 | $ | — | $ | 121,981,306 | ||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||
Current | ||||||||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 96,794 | $ | 135,325 | $ | 232,119 | $ | 232,119 | ||||||||||||||||||||||||||
Installment purchase contracts | 97,303 | — | 97,303 | 97,303 | ||||||||||||||||||||||||||||||
Reclamation plan cost (reclamation obligation) | 1,597,032 | — | 1,597,032 | 1,597,032 | ||||||||||||||||||||||||||||||
Total current liabilities | 1,791,129 | 135,325 | — | 1,926,454 | — | 1,926,454 | ||||||||||||||||||||||||||||
Installment purchase contracts, long-term | 16,083 | — | 16,083 | 16,083 | ||||||||||||||||||||||||||||||
Retirement obligation | 1,127,689 | — | 1,127,689 | 1,127,689 | ||||||||||||||||||||||||||||||
Future income tax liability | — | — | $ | 9,652,465 | 4(e) | 9,652,465 | 9,652,465 | |||||||||||||||||||||||||||
Other permit obligations | 72,510 | — | 72,510 | 72,510 | ||||||||||||||||||||||||||||||
Total liabilities | 3,007,411 | 135,325 | 9,652,465 | 12,795,201 | — | 12,795,201 | ||||||||||||||||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||||||||||||||||
Capital stock | 40,465,813 | 2,481,340 | (2,481,340 | ) | 4(b) | 147,118,779 | 147,118,779 | |||||||||||||||||||||||||||
34,133,216 | 3 | |||||||||||||||||||||||||||||||||
72,519,750 | 4(a) | — | — | |||||||||||||||||||||||||||||||
Other equity accounts | — | 641,805 | (641,805 | ) | 4(b) | — | — | |||||||||||||||||||||||||||
Deficit | (37,932,674 | ) | (2,219,021 | ) | 2,219,021 | 4(b) | (37,932,674 | ) | (37,932,674 | ) | ||||||||||||||||||||||||
Total shareholders’ equity | 2,533,139 | 904,124 | 105,748,842 | 109,186,105 | — | 109,186,105 | ||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,540,550 | $ | 1,039,449 | $ | 115,401,307 | $ | 121,981,306 | $ | — | $ | 121,981,306 | ||||||||||||||||||||||
E-24
Table of Contents
For the period ended December 31, 2005 | ||||||||||||||||||||||||||||||||||
As reported | �� | Pro forma | Pro forma | |||||||||||||||||||||||||||||||
consolidated | consolidated | |||||||||||||||||||||||||||||||||
Tone | U.S. Gold | Pro forma | U.S. Gold | |||||||||||||||||||||||||||||||
U.S. Gold | Resources | Pro forma | Corporation | adjustments | Corporation | |||||||||||||||||||||||||||||
Corporation | Limited | adjustments | Notes | (Cdn GAAP) | US GAAP | Notes | (US GAAP) | |||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Earnings (loss) from mining operations | ||||||||||||||||||||||||||||||||||
Other revenue | ||||||||||||||||||||||||||||||||||
Earnest money forfeited | $ | 200,000 | $ | 200,000 | $ | 200,000 | ||||||||||||||||||||||||||||
Interest and other income | 32,032 | $ | 439 | 32,471 | 32,471 | |||||||||||||||||||||||||||||
Management fee | 330,000 | — | 330,000 | 330,000 | ||||||||||||||||||||||||||||||
Realized gain from disposition of shares | 520,428 | — | 520,428 | 520,428 | ||||||||||||||||||||||||||||||
Gain (loss) on sale of assets | (29,982 | ) | — | (29,982 | ) | (29,982 | ) | |||||||||||||||||||||||||||
Gain (loss) on foreign exchange | — | (1,723 | ) | (1,723 | ) | (1,723 | ) | |||||||||||||||||||||||||||
Total other revenue | 1,052,478 | (1,284 | ) | 1,051,194 | 1,051,194 | |||||||||||||||||||||||||||||
Costs and expenses | ||||||||||||||||||||||||||||||||||
General and administrative | 1,027,194 | 374,645 | 1,401,839 | 1,401,839 | ||||||||||||||||||||||||||||||
Write-off of purchase price receivable | 182,748 | — | 182,748 | 182,748 | ||||||||||||||||||||||||||||||
Property holding costs | 761,081 | — | 761,081 | 761,081 | ||||||||||||||||||||||||||||||
Employment termination payments | 1,423,824 | — | 1,423,824 | 1,423,824 | ||||||||||||||||||||||||||||||
Stock compensation expense | 294,400 | 233,415 | $ | 337,476 | 4(d) | 865,291 | 865,291 | |||||||||||||||||||||||||||
Equity share of subsidiary loss | 58,888 | — | 58,888 | 58,888 | ||||||||||||||||||||||||||||||
Realization reserve — stock | 168,960 | — | 168,960 | 168,960 | ||||||||||||||||||||||||||||||
Interest | 3,011 | — | 3,011 | 3,011 | ||||||||||||||||||||||||||||||
Accretion of asset retirement obligation | 110,243 | — | 110,243 | 110,243 | ||||||||||||||||||||||||||||||
Write-off of deferred exploration costs | — | — | — | $ | 25,335 | 7(i) | 25,335 | |||||||||||||||||||||||||||
Write-off of mineral property costs | — | 67,871 | 67,871 | 67,871 | ||||||||||||||||||||||||||||||
Depreciation | 12,850 | — | 12,850 | 12,850 | ||||||||||||||||||||||||||||||
Total costs and expenses | 4,043,199 | 675,930 | 337,476 | 5,056,605 | 25,335 | 5,081,940 | ||||||||||||||||||||||||||||
Loss before income taxes | (2,990,721 | ) | (677,214 | ) | (337,476 | ) | (4,005,411 | ) | (25,335 | ) | (4,030,746 | ) | ||||||||||||||||||||||
Provision for income taxes | — | — | — | — | ||||||||||||||||||||||||||||||
Net loss | $ | (2,990,721 | ) | $ | (677,214 | ) | $ | (337,476 | ) | $ | (4,005,411 | ) | $ | (25,335 | ) | $ | (4,030,746 | ) | ||||||||||||||||
Basic and diluted net loss per share | $ | (0.12 | ) | 6 | $ | (0.08 | ) | 7(iv) | $ | (0.08 | ) | |||||||||||||||||||||||
E-25
Table of Contents
(i) Tone Resources acquisition (the “Acquisition”) and | ||
(ii) Private placement dated February 22, 2006 for gross proceeds of $75,150,000 of which $37,575,000 is being held in an escrow account pending satisfaction of certain release Conditions. |
(a) A unauditedpro formaconsolidated balance sheet combining the audited balance sheet of U.S. Gold as at December 31, 2005 with the unaudited balance sheet of Tone Resources as at November 30, 2005 giving effect to the transactions if they occurred on December 31, 2005. | ||
(b) A unauditedpro formaconsolidated statement of operations combining the audited statement of operations of the Company for the year ended December 31, 2005 with the unaudited constructed statement of operations of Tone Resources for the twelve months ended November 30, 2005. Tone Resources’ statement of operations for the twelve months ended November 30, 2005 has been constructed by adding together (a) the results for the nine months ended August 31, 2005, (derived from Tone’s audited financial statements for the year ended August 31, 2005 and the unaudited interim results for the three months ended November 30, 2004) and (b) the unaudited interim results for the three months ended November 30, 2005, giving effect to the transactions if they occurred on January 1, 2005. |
As at November 30, 2005 | $ | 0.86 | ||
Average for the twelve months ended November 30, 2005 | $ | 0.82 |
E-26
Table of Contents
Tone Resources acquisition |
Purchase price: | |||||
Shares issued on acquisition | $ | 34,133,216 | |||
Acquisition costs (estimated at 5% of purchase price) | 1,706,661 | ||||
$ | 35,839,877 | ||||
Net assets acquired: | |||||
Cash and cash equivalents | $ | 732,908 | |||
Accounts receivable | 6,008 | ||||
Retainers and prepaid expenses | 2,150 | ||||
Reclamation bond | 29,564 | ||||
Mineral property costs | 978,319 | ||||
Accounts payable and accrued liabilities | (135,325 | ) | |||
Future income tax liability | (9,652,465 | ) | |||
Acquired mineral property interests | 43,878,718 | ||||
$ | 35,839,877 |
(a) Cash proceeds of $75,150,000 from the February 22, 2006 private placement, of which $34,944,750 (net of commission but before deduction of expenses of the offering) is included under cash and cash equivalents and $37,575,000 is included under restricted cash pending release from escrow. An amount of $72,519,750 has been added to share capital. | ||
(b) Elimination of acquired business capital stock, equity accounts and accumulated deficit. | ||
(c) Transaction costs have been assumed to be $1,706,661 representing 5 per cent of the total fair value of shares issued in connection with the Acquisition. |
E-27
Table of Contents
(d) Stock compensation expense in the amount of $337,476 has been recognized in U.S. Gold’s unauditedpro formastatement of operations to reflect Canadian GAAP requirements. | ||
(e) Future income taxes have been taken into consideration in connection with the purchase price allocation where assumed fair values are not the same as the carry forward book values. |
Number of | ||||||||
shares | Amount | |||||||
Issued common shares of U.S. Gold | 33,296,755 | $ | 40,465,812 | |||||
Issue of subscription receipts | 16,700,000 | 72,519,750 | ||||||
Shares issued for Tone Resources | 4,614,889 | 27,227,847 | ||||||
Impact of outstanding options and warrants in Tone Resources as if they were exercised | 1,643,335 | 6,905,370 | ||||||
Pro formabalance | 56,254,979 | $ | 147,118,779 | |||||
(Shares or | ||||
US dollars) | ||||
Actual weighted average number of U.S. Gold common shares outstanding | 25,931,172 | |||
Assumed number of U.S. Gold common shares issued to Tone Resources shareholders | 4,614,889 | |||
Issue of subscription receipts | 16,700,000 | |||
Impact of outstanding warrants and options in Tone Resources as if they were exercised | 1,643,335 | |||
Pro formaweighted average number of U.S. Gold common shares outstanding | 48,889,396 | |||
Pro formanet loss | $ | (4,005,411 | ) | |
Pro formaadjusted basic loss per share | $ | (0.08 | ) |
(i) | Mining and exploration expenses |
(ii) | Stock Option Plans |
E-28
Table of Contents
(iii) | Acquired mineral property interests |
Acquired mineral property interests under Canadian GAAP | $ | 43,878,718 | ||
Add: Acquired mineral exploration costs written off | 978,319 | |||
Acquired mineral property interests under US GAAP | $ | 44,857,037 | ||
(iv) | Thepro forma net loss per share under US GAAP is as follows: |
Pro formaweighted average number of U.S. Gold common shares outstanding | 48,889,396 | |||
Pro formanet loss | $ | (4,030,746 | ) | |
Pro formaadjusted basic loss per share | $ | (0.08 | ) |
E-29
Table of Contents
Unaudited Pro Forma Consolidated Supplementary Balance Sheet | E-31 | |||
Unaudited Pro Forma Consolidated Supplementary Statement of Operations | E-32 | |||
Notes to the Unaudited Pro Forma Consolidated Supplementary Financial Statements | E-33 |
E-30
Table of Contents
Pro forma | Pro forma | Pro forma | |||||||||||||||||||||||||||||||||||||||
consolidated | consolidated | consolidated | |||||||||||||||||||||||||||||||||||||||
Tone | U.S. Gold | Pro forma | U.S. Gold | ||||||||||||||||||||||||||||||||||||||
Resources | White Knight | Coral Gold | Nevada Pacific | Pro forma | Corporation | adjustments | Corporation | ||||||||||||||||||||||||||||||||||
Limited | Resources Ltd. | Resources Ltd. | Gold Ltd. | adjustments | Notes | (Cdn GAAP) | US GAAP | Notes | (US GAAP) | ||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||||||||
Current | |||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 34,648,515 | $ | 88,540 | $ | 547,186 | $ | 2,338,765 | $ | (12,552,732 | ) | 4(a) | $ | 30,969,457 | $ | 30,969,457 | |||||||||||||||||||||||||
5,899,183 | 4(b) | ||||||||||||||||||||||||||||||||||||||||
Temporary investments | — | 12,896,077 | 48,755 | — | 12,944,832 | 12,944,832 | |||||||||||||||||||||||||||||||||||
Accounts receivable | 31,675 | 103,212 | 74,547 | 120,968 | 330,402 | 330,402 | |||||||||||||||||||||||||||||||||||
Product inventory and stockpiled ore | — | — | — | 1,695,877 | 1,695,877 | 1,695,877 | |||||||||||||||||||||||||||||||||||
Supplies inventory | — | — | — | 337,390 | 337,390 | 337,390 | |||||||||||||||||||||||||||||||||||
Other current assets — prepaid expenses | 87,633 | 2,708 | 13,359 | 116,134 | 219,834 | 219,834 | |||||||||||||||||||||||||||||||||||
Total current assets | 34,767,823 | 13,090,537 | 683,847 | 4,609,134 | (6,653,549 | ) | 46,497,792 | — | 46,497,792 | ||||||||||||||||||||||||||||||||
Restricted cash | 37,575,000 | — | — | — | 37,575,000 | 37,575,000 | |||||||||||||||||||||||||||||||||||
Property and equipment, net | 53,305 | 259,410 | 3,311 | 13,304,716 | 13,620,742 | 13,620,742 | |||||||||||||||||||||||||||||||||||
Mineral property interests | 978,319 | 2,348,693 | 7,663,301 | 3,760,444 | 14,750,757 | $ | (14,750,757 | ) | 4(f) | — | |||||||||||||||||||||||||||||||
Acquired mineral property interests | 43,878,718 | — | 270,850,938 | 4(c) | 314,729,656 | 17,576,472 | 4(f) | 332,306,128 | |||||||||||||||||||||||||||||||||
Deferred exploration costs | — | 2,825,715 | — | — | 2,825,715 | (2,825,715 | ) | 4(f) | — | ||||||||||||||||||||||||||||||||
Restrictive time deposits for reclamation bonding | 2,967,310 | 201,259 | 233,720 | 93,228 | 3,495,517 | 3,495,517 | |||||||||||||||||||||||||||||||||||
Investment in subsidiary | — | — | 467,317 | — | 467,317 | 467,317 | |||||||||||||||||||||||||||||||||||
Long-lived asset — asset retirement | 942,924 | — | — | — | 942,924 | 942,924 | |||||||||||||||||||||||||||||||||||
Other assets: | |||||||||||||||||||||||||||||||||||||||||
Inactive milling equipment | 777,819 | — | — | — | 777,819 | 777,819 | |||||||||||||||||||||||||||||||||||
Prepaid insurance | 29,970 | — | — | — | 29,970 | 29,970 | |||||||||||||||||||||||||||||||||||
Other assets | 10,118 | 34,400 | 132,239 | — | 176,757 | 176,757 | |||||||||||||||||||||||||||||||||||
Total other assets | 817,907 | 34,400 | 132,239 | — | — | 984,546 | — | 984,546 | |||||||||||||||||||||||||||||||||
Total assets | $ | 121,981,306 | $ | 18,760,014 | $ | 9,183,735 | $ | 21,767,522 | $ | 264,197,389 | $ | 435,889,966 | $ | — | $ | 435,889,966 | |||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||||||||||
Current | |||||||||||||||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 232,119 | $ | 326,618 | $ | 35,102 | $ | 1,031,586 | $ | 1,625,425 | $ | 1,625,425 | |||||||||||||||||||||||||||||
Installment purchase contracts | 97,303 | — | — | — | 97,303 | 97,303 | |||||||||||||||||||||||||||||||||||
Due to related parties | — | 55,107 | — | — | 55,107 | 55,107 | |||||||||||||||||||||||||||||||||||
Advances payable | — | — | 74,131 | — | 74,131 | 74,131 | |||||||||||||||||||||||||||||||||||
Reclamation plan cost (reclamation obligation) | 1,597,032 | — | — | — | 1,597,032 | 1,597,032 | |||||||||||||||||||||||||||||||||||
Total current liabilities | 1,926,454 | 381,725 | 109,233 | 1,031,586 | — | 3,448,998 | — | 3,448,998 | |||||||||||||||||||||||||||||||||
Installment purchase contracts, long-term | 16,083 | — | — | — | 16,083 | 16,083 | |||||||||||||||||||||||||||||||||||
Retirement obligation | 1,127,689 | — | — | 1,626,039 | 2,753,728 | 2,753,728 | |||||||||||||||||||||||||||||||||||
Future income tax liability | 9,652,465 | — | — | — | $ | 59,581,937 | 4(c) | 69,234,402 | 69,234,402 | ||||||||||||||||||||||||||||||||
Other permit obligations | 72,510 | — | — | — | 72,510 | 72,510 | |||||||||||||||||||||||||||||||||||
Other liabilities | — | — | — | 123,495 | — | 123,495 | 123,495 | ||||||||||||||||||||||||||||||||||
Total liabilities | 12,795,201 | 381,725 | 109,233 | 2,781,120 | 59,581,937 | 75,649,216 | — | 75,649,216 | |||||||||||||||||||||||||||||||||
Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||
Capital stock | 147,118,779 | 26,804,465 | 25,670,398 | 28,376,033 | (80,850,896 | ) | 4(d) | 398,173,424 | 398,173,424 | ||||||||||||||||||||||||||||||||
251,054,645 | 3 | ||||||||||||||||||||||||||||||||||||||||
Other equity accounts | — | 1,916,492 | 631,821 | 1,119,231 | (3,667,544 | ) | 4(d) | — | — | ||||||||||||||||||||||||||||||||
Deficit | (37,932,674 | ) | (10,342,668 | ) | (17,227,717 | ) | (10,508,862 | ) | 38,079,247 | 4(d) | (37,932,674 | ) | (37,932,674 | ) | |||||||||||||||||||||||||||
Total shareholders’ equity | 109,186,105 | 18,378,289 | 9,074,502 | 18,986,402 | 204,615,452 | 360,240,750 | — | 360,240,750 | |||||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 121,981,306 | $ | 18,760,014 | $ | 9,183,735 | $ | 21,767,522 | $ | 264,197,389 | $ | 435,889,966 | $ | — | $ | 435,889,966 | |||||||||||||||||||||||||
E-31
Table of Contents
Pro forma | Pro forma | Pro forma | |||||||||||||||||||||||||||||||||||||
consolidated | consolidated | consolidated | |||||||||||||||||||||||||||||||||||||
Tone | U.S. Gold | Pro forma | U.S. Gold | ||||||||||||||||||||||||||||||||||||
Resources | White Knight | Coral Gold | Nevada Pacific | Corporation | adjustments | Corporation | |||||||||||||||||||||||||||||||||
Limited | Resources Ltd. | Resources Ltd. | Gold Ltd. | Notes | (Cdn GAAP) | US GAAP | Notes | (US GAAP) | |||||||||||||||||||||||||||||||
Sales | $ | 8,881,168 | $ | 8,881,168 | $ | 8,881,168 | |||||||||||||||||||||||||||||||||
Cost of sales | 8,024,132 | 8,024,132 | 8,024,132 | ||||||||||||||||||||||||||||||||||||
Depreciation and depletion | 1,203,093 | 1,203,093 | 1,203,093 | ||||||||||||||||||||||||||||||||||||
Royalties | 472,743 | 472,743 | 472,743 | ||||||||||||||||||||||||||||||||||||
9,699,968 | 9,699,968 | 9,699,968 | |||||||||||||||||||||||||||||||||||||
Earnings (loss) from mining operations | (818,800 | ) | (818,800 | ) | (818,800 | ) | |||||||||||||||||||||||||||||||||
Other revenue | |||||||||||||||||||||||||||||||||||||||
Earnest money forfeited | $ | 200,000 | 200,000 | 200,000 | |||||||||||||||||||||||||||||||||||
Interest and other income | 32,471 | $ | 294,563 | $ | 15,270 | 27,205 | 369,509 | 369,509 | |||||||||||||||||||||||||||||||
Management fee | 330,000 | — | — | — | 330,000 | 330,000 | |||||||||||||||||||||||||||||||||
Realized gain from disposition of shares | 520,428 | — | — | — | 520,428 | 520,428 | |||||||||||||||||||||||||||||||||
Gain (loss) on sale of assets | (29,982 | ) | — | (3,296 | ) | 155,199 | 121,921 | 121,921 | |||||||||||||||||||||||||||||||
Gain (loss) on foreign exchange | (1,723 | ) | 1,634 | (15,576 | ) | (67,043 | ) | (82,708 | ) | (82,708 | ) | ||||||||||||||||||||||||||||
Total other revenue | 1,051,194 | 296,197 | (3,602 | ) | 115,361 | 1,459,150 | 1,459,150 | ||||||||||||||||||||||||||||||||
Costs and expenses | |||||||||||||||||||||||||||||||||||||||
General and administrative | 1,401,839 | 808,305 | 480,660 | 1,800,234 | 4,491,038 | 4,491,038 | |||||||||||||||||||||||||||||||||
Write-off of purchase price receivable | 182,748 | — | — | — | 182,748 | 182,748 | |||||||||||||||||||||||||||||||||
Property holding costs | 761,081 | — | — | — | 761,081 | 761,081 | |||||||||||||||||||||||||||||||||
Employment termination payments | 1,423,824 | — | — | — | 1,423,824 | 1,423,824 | |||||||||||||||||||||||||||||||||
Stock compensation expense | 865,291 | 174,760 | 311,545 | 472,707 | 1,824,303 | 1,824,303 | |||||||||||||||||||||||||||||||||
Equity share of subsidiary loss | 58,888 | — | — | — | 58,888 | 58,888 | |||||||||||||||||||||||||||||||||
Realization reserve — stock | 168,960 | — | — | — | 168,960 | 168,960 | |||||||||||||||||||||||||||||||||
Interest | 3,011 | 5,016 | — | 246 | 8,273 | 8,273 | |||||||||||||||||||||||||||||||||
Accretion of asset retirement obligation | 110,243 | — | — | — | 110,243 | 110,243 | |||||||||||||||||||||||||||||||||
Write-off of deferred exploration costs | — | 107,296 | — | — | 107,296 | $ | 1,692,739 | 4(f) | 1,800,034 | ||||||||||||||||||||||||||||||
Write-off of mineral property costs | 67,871 | — | — | — | 67,871 | 2,456,525 | 4(f) | 2,524,396 | |||||||||||||||||||||||||||||||
Write-down of mineral properties | — | — | — | 131,710 | 131,710 | 131,710 | |||||||||||||||||||||||||||||||||
Depreciation | 12,850 | 27,329 | 764 | — | 40,943 | 40,943 | |||||||||||||||||||||||||||||||||
Total costs and expenses | 5,056,605 | 1,122,704 | 792,970 | 2,404,897 | 9,377,176 | 4,149,264 | 13,526,440 | ||||||||||||||||||||||||||||||||
Loss before income taxes | (4,005,411 | ) | (826,507 | ) | (796,572 | ) | (3,108,336 | ) | (8,736,826 | ) | (4,149,264 | ) | (12,886,090 | ) | |||||||||||||||||||||||||
Provision for income taxes | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
NET LOSS | $ | (4,005,411 | ) | $ | (826,507 | ) | $ | (796,572 | ) | $ | (3,108,336 | ) | $ | (8,736,826 | ) | $ | (4,149,264 | ) | $ | (12,886,090 | ) | ||||||||||||||||||
Basic and diluted net loss per share | $ | (0.08 | ) | 6 | $ | (0.09 | ) | 7 | $ | (0.14 | ) | ||||||||||||||||||||||||||||
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(a) A unauditedpro formaconsolidated supplementary balance sheet combining the audited balance sheet of U.S. Gold as at December 31, 2005 with the unaudited consolidated balance sheet of Tone Resources as at November 30, 2005, the unaudited consolidated balance sheet of White Knight as at December 31, 2005, the unaudited consolidated balance sheet of Nevada Pacific as at December 31, 2005 and the unaudited consolidated balance sheet of Coral Gold as at October 31, 2005, giving effect to the transactions as if they occurred on December 31, 2005. | ||
(b) A unauditedpro formaconsolidated supplementary statement of operations combining the audited statement of operations of the Company for the year ended December 31, 2005 with unaudited constructed statement of operations of Tone Resources for the twelve months ended November 30, 2005, the unaudited constructed statement of operations of Nevada Pacific for the twelve months ended December 31, 2005, the unaudited constructed statement of operations of White Knight for the twelve months ended December 31, 2005 and the unaudited constructed statement of operations of Coral Gold for the twelve months ended October 31, 2005, giving effect to the transactions as if they occurred on January 1, 2005. |
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(a) | Transaction costs have been assumed to be 5 per cent of the total fair value of shares issued in connection with the acquisition of the Targets. | |
(b) | Cash and cash equivalents have been adjusted to include proceeds from share issuances up to March 5, 2006, the date of the press release announcing the proposed transactions, to the extent determinable from publicly available records. | |
(c) | After reflecting thepro formapurchase adjustments, the excess of the purchase consideration over the adjusted book values of the Targets’ assets and liabilities has been allocated in full to Acquired Mineral Property Interests, together with the related future income tax liability. | |
(d) | Elimination of acquired business capital stock, other equity accounts and accumulated deficit. | |
(e) | Stock compensation expense in the amount of $337,476 has been recognized in U.S. Gold’spro formastatement of operations and shareholders’ equity to reflect Canadian GAAP requirements. | |
(f) | Under US GAAP, exploration and development expenditures incurred on properties where mineralization has not been classified as a proven and probable reserve under SEC rules are expensed as incurred. |
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Number of | ||||||||
shares | Amount | |||||||
Issued common shares of U.S. Gold | 33,296,755 | $ | 40,465,812 | |||||
Issue of subscription receipts | 16,700,000 | 72,519,750 | ||||||
Shares issued for acquisition of Targets | 45,202,018 | 266,691,904 | ||||||
Impact of outstanding options and warrants in Targets as if they were exercised | 6,973,764 | 18,495,958 | ||||||
Pro formabalance | 102,172,537 | $ | 398,173,424 | |||||
(Shares or | ||||
US dollars) | ||||
Actual weighted average number of U.S. Gold common shares outstanding | 25,931,172 | |||
Issue of subscription receipts | 16,700,000 | |||
Shares issued for acquisition of Targets | 45,202,018 | |||
Impact of outstanding warrants and options in Targets as if they were exercised | 6,973,764 | |||
Pro formaweighted average number of U.S. Gold common shares outstanding | 94,806,954 | |||
Pro formanet loss | $ | (8,736,826 | ) | |
Pro formaadjusted basic loss per share | $ | (0.09 | ) |
(Shares or | ||||
US dollars) | ||||
Pro formaweighted average number of U.S. Gold common shares outstanding | 94,806,954 | |||
Pro formanet loss | $ | (12,886,090 | ) | |
Pro formaadjusted basic loss per share | $ | (0.14 | ) | |
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Wellington West Capital Markets Inc. 145 King Street West, Suite 700 Toronto, Ontario M5J 1J8 Tel: (416) 642-1900 Fax: (416) 642-1910 | ||
• | 0.35 shares of U.S. Gold common stock for each outstanding common share of White Knight Resources Ltd. | |
• | 0.23 shares of U.S. Gold common stock for each outstanding common share of Nevada Pacific Gold Ltd. | |
• | 0.63 shares of U.S. Gold common stock for each outstanding common share of Coral Gold Resources Ltd. | |
• | 0.26 shares of U.S. Gold common stock for each outstanding common share of Tone Resources Limited. |
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i. | Audited financial statements of White Knight Resources for the years ended June 30, 1997 through June 30, 2005; unaudited quarterly financial statements for the second quarter ended December 31, 2005; | |
ii. | Audited financial statements of Coral Gold Resources for the years ended January 31, 1997 through January 31, 2005; unaudited quarterly financial statements for the third quarter ended October 31, 2005; | |
iii. | Audited financial statements of Tone Resources for the years ended August 31, 2003, 2004, and 2005; unaudited quarterly financial statements for the first quarter ended November 30, 2005; | |
iv. | Audited financial statements of Nevada Pacific Gold Ltd. for the years ended June 30, 1998, through June 30, 2005; unaudited quarterly financial statements for the second quarter ended December 31, 2005; | |
v. | Audited financial statements of U.S. Gold for the years ended December 31, 1995 through December 31, 2005; audited quarterly financials for the third quarter ended September 30, 2005; | |
vi. | Annual Information Form of Nevada Pacific Gold Ltd. dated February 24, 2005; | |
vii. | Final Long Form Prospectus of Tone Resources dated February 10, 2003 | |
viii. | 2005 annual report of Coral Gold Resources; | |
ix. | Management Information Circular of Coral Gold Resources dated May 6, 2005; |
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x. | Management Information Circular of Nevada Pacific Gold Ltd. dated October 27, 2005; | |
xi. | Management Information Circular of Tone Resources dated January 6, 2006; | |
xii. | Management Information Circular of White Knight Resources dated October 24, 2005; | |
xiii. | Technical Report on the Roberts Mountain Project, Roberts Mountain, Eureka County, Nevada USA prepared by Marvin A. Mitchell PEng, Mitchell Geological Services Inc, October 21, 2002; | |
xiv. | Technical Report for the Slaven Canyon Property, Lander County, Nevada, USA prepared by Timothy D. Jefferson, P.G., and Arthur R. Leger, P.G., November 16, 2005; | |
xv. | Summary Report for the Celt Property, Eureka County, Nevadaprepared by Ken Brook, RPG, Desert Ventures Inc., September 23, 2005; | |
xvi. | Technical Report on the Cottonwood Property, Eureka County, Nevada, USA prepared by John M. Leask, P.Eng, July 11, 2005; | |
xvii. | Summary Report for the McClusky-Tonkin Summit Property, Eureka County, Nevadaprepared by Ken Brook, RPG, Desert Ventures Inc, September 22, 2005; | |
xviii. | Technical Report on the Fye Canyon Property, Eureka County, Nevada prepared by John M. Leask, P.Eng., April 15, 2005; | |
xix. | NI 43-101 Technical Report on the New Pass Property, Churchill County, Nevadaprepared by Paul A Pelke, California Registered Geologist, October 2004; | |
xx. | Technical Report on the Indian Ranch Property, Eureka County, Nevada, USA prepared by John M. Leask, P.Eng., December 20, 2004; | |
xxi. | Amended Technical Report for the Magistral Gold Project, Sinaloa State, Mexico,prepared by Pincock Allen & Holt, January 6, 2005; | |
xxii. | Technical Report on the Tonkin Springs Project, Nevada, USA, May 2004; | |
xxiii. | Filings on the System for Electronic Disclosure by Insiders (SEDI) for Coral Gold Resources, Nevada Pacific Gold Ltd., Tone Resources, and White Knight Resources; | |
xxiv. | March 6, 2006 Corporate Presentation of U.S. Gold; | |
xxv. | Spring 2006 Corporate Presentation of Nevada Pacific Gold Ltd.; | |
xxvi. | Press releases for U.S. Gold, White Knight Resources, Nevada Pacific Gold, Coral Gold Resources and Tone Resources since January 1, 2005; | |
xxvii. | Public information relating to the business, operations, financial performance and stock trading history of U.S. Gold, White Knight Resources, Nevada Pacific Gold, Coral Gold, Tone Resources and other selected public companies considered by us to be relevant; |
xxviii. | Public information with respect to other transactions of a comparable nature considered by us to be relevant; |
xxix. | Public information regarding the industries in which U.S. Gold and the Companies operate; | |
xxx. | Representations contained in a certificate addressed to us, dated as of the date hereof, from senior officers of U.S. Gold as to the completeness and accuracy of the information upon which the Fairness Opinion is based; and | |
xxxi. | Such other corporate, industry and financial market information, investigations and analyses as Wellington West considered necessary or appropriate in the circumstances. |
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1.2 | Interpretation Not Affected by Headings, etc. |
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(1) | With respect to each US Gold Meeting and US Gold Consent, the Trustee will mail or cause to be mailed (or otherwise communicate in the same manner as US Gold utilizes in communications to holders of US Gold Common Stock, subject to the Trustee being advised in writing of such manner and provided that such manner of communications is reasonably available to the Trustee) to each of the Beneficiaries named in the List at the Beneficiaries’ respective addresses as set forth in the List, on the same day as the initial mailing or notice (or other communication) with respect thereto is given by US Gold to its stockholders: |
(a) | a copy of such notice, together with any related materials, including any circular or information statement or listing particulars, to be provided to shareholders of US Gold but excluding proxies to vote US Gold Common Stock; | |
(b) | a statement that such Beneficiary is entitled to instruct the Trustee as to the exercise of the Beneficiary Votes with respect to such US Gold Meeting or US Gold Consent, as the case may be, or, pursuant and subject to Section 4.7, to attend such US Gold Meeting and to exercise personally the Beneficiary Votes thereat; | |
(c) | a statement as to the manner in which such instructions may be given to the Trustee, including an express indication that instructions may be given to the Trustee to give: |
(i) | a proxy to such Beneficiary or his, her or its designee to exercise personally such holder’s Beneficiary Votes; or | |
(ii) | a proxy to a designated agent or other representative of the management of US Gold to exercise such Beneficiary Votes; |
(d) | a statement that if no such instructions are received from the Beneficiary, the Beneficiary Votes to which such Beneficiary is entitled will not be exercised; | |
(e) | a form of direction whereby the Beneficiary may so direct and instruct the Trustee as contemplated herein; and | |
(f) | a statement of (i) the time and date by which such instructions must be received by the Trustee in order to be binding upon it, which in the case of a US Gold Meeting shall not be earlier than the close of business on the second Business Day prior to such meeting, and (ii) the method for revoking or amending such instructions. |
(2) | The materials referred to in this Section 4.3 are to be provided to the Trustee by US Gold, and the materials referred to in Sections 4.3(1)(c), 4.3(1)(e) and 4.3(1)(f) shall (if reasonably practicable to do so) be subject to reasonable comment by the Trustee in a timely manner; provided, however, that the Trustee shall have no obligation to review such materials. Subject to the foregoing, US Gold shall ensure that the materials to be provided to the Trustee are provided in sufficient time to permit the Trustee to comment as aforesaid and to send all materials to each Beneficiary at the same time as such materials are first sent to holders of US Gold Common Stock. US Gold agrees not to communicate with holders of US Gold Common Stock with respect to the materials referred to in this Section 4.3 otherwise than by mail unless such method of communication is also reasonably available to the Trustee for communication with the Beneficiaries. | |
(3) | For the purpose of determining Beneficiary Votes to which a Beneficiary is entitled in respect of any US Gold Meeting or US Gold Consent, the number of Exchangeable Shares owned of record by the Beneficiary shall be determined at the close of business on the record date established by US Gold or by applicable law for purposes of determining stockholders entitled to vote at such US Gold Meeting or to give written |
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consent in connection with such US Gold Consent. US Gold will notify the Trustee of any decision of the board of directors of US Gold with respect to the calling of any US Gold Meeting or the seeking of any US Gold Consent and shall provide all necessary information and materials to the Trustee in each case promptly and in any event in sufficient time to enable the Trustee to perform its obligations contemplated by this Section 4.3. |
(a) | received by the Trustee as the registered holder of the Special Voting Share and made available by US Gold generally to the holders of US Gold Common Stock; or | |
(b) | specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by US Gold. |
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(1) | In connection with each US Gold Meeting and US Gold Consent, the Trustee shall exercise, either in person or by proxy, in accordance with the instructions received from a Beneficiary pursuant to Section 4.3 hereof, the Beneficiary Votes as to which such Beneficiary is entitled to direct the vote (or any lesser number thereof as may be set forth in the instructions); provided, however, that such written instructions are received by the Trustee from the Beneficiary prior to the time and date fixed by the Trustee for receipt of such instruction in the notice sent or caused to be sent by the Trustee to the Beneficiary pursuant to Section 4.3. | |
(2) | The Trustee shall cause such representatives who are empowered by it to sign and deliver, on behalf of the Trustee, proxies for Voting Rights enabling a Beneficiary to attend each US Gold Meeting. Upon submission by a Beneficiary (or its designee) named in the List prepared in connection with the relevant meeting of identification satisfactory to the Trustee’s representative, and at the Beneficiary’s request, such representative shall sign and deliver to such Beneficiary (or its designee) a proxy to exercise personally the Beneficiary Votes as to which such Beneficiary is otherwise entitled hereunder to direct the vote, if such Beneficiary either (i) has not previously given the Trustee instructions pursuant to Section 4.3 in respect of such meeting or (ii) submits to such representative written revocation of any such previous instructions. At such meeting, the Beneficiary (or its designee) exercising such Beneficiary Votes shall have the same rights in respect of such Beneficiary Votes as the Trustee to speak at the meeting in respect of any matter, question, proposal or proposition, to vote by way of ballot at the meeting in respect of any matter, question, proposal or proposition, and to vote at such meeting by way of a show of hands in respect of any matter, question or proposition. |
(a) | a current List; and | |
(b) | upon the request of the Trustee, mailing labels to enable the Trustee to carry out its duties under this agreement. |
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(a) | hold the Automatic Exchange Right and the Exchange Right and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this agreement; and | |
(b) | except as specifically authorized by this agreement, have no power or authority to exercise or otherwise deal in or with the Automatic Exchange Right and the Exchange Right, and the Trustee shall not exercise such right for any purpose other than the purposes for which this Trust is created pursuant to this agreement. |
5.4 | Purchase Price |
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5.5 | Exercise Instructions |
5.6 | Delivery of US Gold Common Stock; Effect of Exercise |
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5.7 | Exercise of Exchange Right Subsequent to Retraction |
5.8 | Stamp or Other Transfer Taxes |
5.9 | Notice of Insolvency Event |
5.10 | Call Rights |
5.11 | Automatic Exchange Right |
(1) | US Gold shall give the Trustee written notice of each of the following events (each a “US Gold Liquidation Event”) at the time set forth below: |
(a) | in the event of any determination by the board of directors of US Gold to institute voluntary liquidation, dissolution or winding up proceedings with respect to US Gold or to effect any other |
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distribution of assets of US Gold among its stockholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution, winding up or other distribution; and | ||
(b) | immediately, upon the earlier of (i) receipt by US Gold of notice of and (ii) US Gold otherwise becoming aware of any threatened or instituted claim, suit, petition or other proceeding with respect to the involuntary liquidation, dissolution or winding up of US Gold or to effect any other distribution of assets of US Gold among its stockholders for the purpose of winding up its affairs. |
(2) | Immediately following receipt by the Trustee from US Gold of notice of any US Gold Liquidation Event contemplated by Section 5.11(1)(a) or 5.11(1)(b), the Trustee will give notice thereof to the Beneficiaries. Such notice shall be provided by US Gold to the Trustee and shall include a brief description of the automatic exchange of Exchangeable Shares for shares of US Gold Common Stock provided for in Section 5.11(4) below (the “Automatic Exchange Right”). | |
(3) | In order that the Beneficiaries will be able to participate on a pro rata basis with the holders of US Gold Common Stock in the distribution of assets of US Gold in connection with a US Gold Liquidation Event, immediately prior to the effective date (the “US Gold Liquidation Event Effective Date”) of a US Gold Liquidation Event all of the then outstanding Exchangeable Shares (other than Exchangeable Shares held by US Gold or its Subsidiaries) shall be automatically exchanged for shares of US Gold Common Stock. To effect such automatic exchange, US Gold shall purchase each Exchangeable Share outstanding on the immediately prior to the US Gold Liquidation Event Effective Date and held by a Beneficiary, and each such Beneficiary shall sell the Exchangeable Shares held by it at such time, for a purchase price per share equal to (a) the Current Market Price of a share of US Gold Common Stock on the immediately prior to the US Gold Liquidation Event Effective Date, which shall be satisfied in full by US Gold delivering to such holder one share of US Gold Common Stock, plus (b) the Dividend Amount, if any. | |
(4) | On the date immediately prior to the US Gold Liquidation Event Effective Date, the closing of the transaction of purchase and sale contemplated by the automatic exchange of Exchangeable Shares for US Gold Common Stock shall be deemed to have occurred, and each Beneficiary shall be deemed to have transferred to US Gold all of such Beneficiary’s right, title and interest in and to such Exchangeable Shares and shall cease to be a holder of such Exchangeable Shares and US Gold shall deliver or cause to be delivered to the Trustee, for delivery to such holders, the certificates for the number of shares of US Gold Common Stock deliverable upon the automatic exchange of Exchangeable Shares for US Gold Common Stock (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance, security interest or adverse claim) and a cheque for the balance, if any, of the total purchase price for such Exchangeable Shares and any interest on such deposit shall belong to US Gold. Concurrently with each such Beneficiary ceasing to be a holder of Exchangeable Shares, such Beneficiary shall be considered and deemed for all purposes to be the holder of the shares of US Gold Common Stock delivered to it, or to the Trustee on its behalf, pursuant to the automatic exchange of Exchangeable Shares for shares of US Gold Common Stock and the certificates held by such Beneficiary previously representing the Exchangeable Shares exchanged by such Beneficiary with US Gold pursuant to such automatic exchange shall thereafter be deemed to represent the shares of US Gold Common Stock delivered to such Beneficiary by US Gold pursuant to such automatic exchange. Upon the request of any Beneficiary and the surrender by such Beneficiary of Exchangeable Share certificates deemed to represent shares of US Gold Common Stock, duly endorsed in blank and accompanied by such instruments of transfer as US Gold may reasonably require, the Trustee shall deliver or cause to be delivered to such Beneficiary certificates representing the shares of US Gold Common Stock of which such Beneficiary is the holder and a cheque in payment of the remaining portion, if any, of the purchase price (less any amount required to be withheld under theIncome Tax Act(Canada) or United States tax laws, or any provision of any federal, provincial, state, local or foreign tax laws). Notwithstanding the foregoing until each Beneficiary is actually entered on the register of holders of US Gold Common Stock, such Beneficiary shall be deemed to still be a holder of the transferred Exchangeable Shares for purposes of all voting rights with respect thereto under this agreement. |
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5.12 | US Gold Common Stock |
5.13 | Withholding Rights |
6.1 | Powers and Duties of the Trustee |
(1) | The rights, powers, duties and authorities of the Trustee under this agreement, in its capacity as trustee of the Trust, shall include: (a) receipt and deposit of the Special Voting Share from US Gold as trustee for and on behalf of the Beneficiaries in accordance with the provisions of this agreement; |
(a) | granting proxies and distributing materials to Beneficiaries as provided in this agreement; | |
(b) | voting the Beneficiary Votes in accordance with the provisions of this agreement; | |
(c) | receiving the grant of the Exchange Right and the Automatic Exchange Right from US Gold as trustee for and on behalf of the Beneficiaries in accordance with the provisions of this agreement; | |
(d) | exercising the Exchange Right and enforcing the benefit of the Automatic Exchange Right, in each case in accordance with the provisions of this agreement, and in connection therewith receiving from Beneficiaries any requisite documents and distributing to such Beneficiaries shares of US Gold Common Stock and cheques, if any, to which such Beneficiaries are entitled pursuant to the exercise of the Exchange Right or the Automatic Exchange Right, as the case may be; | |
(e) | holding title to the Trust Estate; | |
(f) | investing any moneys forming, from time to time, a part of the Trust Estate as provided in this agreement; | |
(g) | taking action at the direction of a Beneficiary or Beneficiaries to enforce the obligations of US Gold, Alberta ULC and Canadian Exchange Co. under this agreement and under the Share Provisions; and | |
(h) | taking such other actions and doing such other things as are specifically provided in this agreement. |
(2) | In the exercise of such rights, powers, duties and authorities the Trustee shall have (and is granted) such incidental and additional rights, powers and authority not in conflict with any of the provisions of this agreement as the Trustee, acting in good faith and in the reasonable exercise of its discretion, may deem necessary, appropriate or desirable to effect the purpose of the Trust. Any exercise of duties or of discretionary rights, powers and authorities by the Trustee shall be final, conclusive and binding upon all persons. For greater certainty, the Trustee shall have only those duties as set out specifically in this agreement. |
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(3) | The Trustee in exercising its rights, powers, duties and authorities hereunder shall act honestly and in good faith and with a view to the best interests of the Beneficiaries and shall exercise the care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances. | |
(4) | The Trustee shall not be bound to give notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless and until it shall be specifically required to do so under the terms hereof; nor shall the Trustee be required to take any notice of, or to do or to take any act, action or proceeding as a result of any default or breach of any provision hereunder, unless and until notified in writing of such default, which notice shall distinctly specify the default or breach desired to be brought to the attention of the Trustee, and in the absence of such notice the Trustee may for all purposes of this agreement conclusively assume that no default or breach has been made in the observance or performance of any of the representations, warranties, covenants, agreements or conditions contained herein. |
6.2 | No Conflict of Interest |
6.3 | Dealings With Transfer Agents, Registrars, Etc. |
(1) | Each of US Gold, Alberta ULC and Canadian Exchange Co. irrevocably authorizes the Trustee, from time to time, to: |
(a) | consult, communicate and otherwise deal with the respective registrars and transfer agents, and with any such subsequent registrar or transfer agent, of the Exchangeable Shares and US Gold Common Stock; and | |
(b) | requisition, from time to time, from any such registrar or transfer agent any information readily available from the records maintained by it, which the Trustee may reasonably require for the discharge of its duties and responsibilities under this agreement. |
(2) | Each of US Gold and Alberta ULC covenant that it will supply the Trustee or the Transfer Agent, as the case may be, in a timely manner with duly executed share certificates for the purpose of completing the exercise from time to time of all rights to acquire US Gold Common Stock hereunder, under the Share Provisions and under any other security or commitment given to the Beneficiaries pursuant thereto, in each case pursuant to the provisions hereof or of the Share Provisions or otherwise. |
(a) | the property and funds comprising the Trust Estate as of that date; | |
(b) | the number of exercises of the Exchange Right, if any, and the aggregate number of Exchangeable Shares received by the Trustee on behalf of Beneficiaries in consideration of the issuance and delivery by US Gold or Alberta ULC of shares of US Gold Common Stock in connection with the Exchange Right, during the calendar year ended on such December 31st; and |
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(c) | all other actions taken by the Trustee in the performance of its duties under this agreement that it had not previously reported. |
6.5 | Income Tax Returns and Reports |
6.6 | Indemnification Prior To Certain Actions By Trustee |
(1) | The Trustee shall exercise any or all of the rights, duties, powers or authorities vested in it by this agreement at the request, order or direction of any Beneficiary upon such Beneficiary furnishing to the Trustee reasonable funding, security and indemnity against the costs, expenses and liabilities which may be incurred by the Trustee therein or thereby, provided that no Beneficiary shall be obligated to furnish to the Trustee any such funding, security or indemnity in connection with the exercise by the Trustee of any of its rights, duties, powers and authorities with respect to the Special Voting Share pursuant to Article 4, subject to Section 6.15 and with respect to the Exchange Right pursuant to Article 5, subject to Section 6.15, and with respect to the Automatic Exchange Right pursuant to Article 5. | |
(2) | None of the provisions contained in this agreement shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the exercise of any of its rights, powers, duties, or authorities unless funded, given security and indemnified as aforesaid. |
6.7 | Action of Beneficiaries |
6.8 | Reliance By Trustee Upon Declarations |
6.9 | Evidence and Authority To Trustee |
(1) | US Gold, Alberta ULC and/or Canadian Exchange Co. shall furnish to the Trustee evidence of compliance with the conditions provided for in this agreement relating to any action or step required or permitted to be taken by US Gold, Alberta ULC and/or Canadian Exchange Co. or the Trustee under this agreement or as a result of any obligation imposed under this agreement, including, without limitation, in respect of the Voting |
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Rights or the Exchange Right and the taking of any other action to be taken by the Trustee at the request of or on the application of US Gold, Alberta ULC and/or Canadian Exchange Co. forthwith if and when: |
(a) | such evidence is required by any other section of this agreement to be furnished to the Trustee in accordance with the terms of this Section 6.9; or | |
(b) | the Trustee, in the exercise of its rights, powers, duties and authorities under this agreement, gives US Gold, Alberta ULC and/or Canadian Exchange Co. written notice requiring it to furnish such evidence in relation to any particular action or obligation or matter specified in such notice. |
(2) | Such evidence shall consist of an Officer’s Certificate of US Gold, Alberta ULC and/or Canadian Exchange Co. or a statutory declaration or a certificate made by persons entitled to sign an Officer’s Certificate stating that any such condition has been complied with in accordance with the terms of this agreement. | |
(3) | Whenever such evidence relates to a matter other than the Voting Rights or the Exchange Right or the Automatic Exchange Right and except as otherwise specifically provided herein, such evidence may consist of a report or opinion of any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert or any other person whose qualifications give authority to a statement made by such person, provided that if such report or opinion is furnished by a director, officer or employee of US Gold, Alberta ULC and/or Canadian Exchange Co. it shall be in the form of an Officer’s Certificate or a statutory declaration. | |
(4) | Each statutory declaration, Officer’s Certificate, opinion or report furnished to the Trustee as evidence of compliance with a condition provided for in this agreement shall include a statement by the person giving the evidence: |
(a) | declaring that such person has read and understands the provisions of this agreement relating to the condition in question; | |
(b) | describing the nature and scope of the examination or investigation upon which such person based the statutory declaration, certificate, statement or opinion; and | |
(c) | declaring that such person has made such examination or investigation as such person believes is necessary to enable them to make the statements or give the opinions contained or expressed therein. |
6.10 | Experts, Advisers and Agents |
(a) | in relation to these presents act and rely on the opinion or advice of or information obtained from any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert, whether retained by the Trustee or by US Gold, Alberta ULC and/or Canadian Exchange Co. or otherwise, and may retain or employ such assistance as may be necessary to the proper determination and discharge of its powers and duties and determination of its rights or duties hereunder and may pay proper and reasonable compensation for all such legal and other advice or assistance as aforesaid; | |
(b) | employ such agents and other assistance as it may reasonably require for the proper determination and/or discharge of its powers and duties hereunder; and | |
(c) | pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all reasonable disbursements, costs and expenses made or incurred by it in the discharge of its duties hereunder and in the management of the Trust. |
6.11 | Investment of Moneys Held By Trustee |
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6.12 | Trustee Not Required to Give Security |
6.13 | Trustee Not Bound to Act on Request |
6.14 | Authority to Carry on Business |
(1) | If conflicting claims or demands are made or asserted with respect to any interest of any Beneficiary in any Exchangeable Shares, including any disagreement between the heirs, representatives, successors or assigns succeeding to all or any part of the interest of any Beneficiary in any Exchangeable Shares, resulting in conflicting claims or demands being made in connection with such interest, then the Trustee shall be entitled, in its sole discretion, to refuse to recognize or to comply with any such claims or demands. In so refusing, the Trustee may elect not to exercise any Voting Rights, Exchange Right, Automatic Exchange Right or other rights subject to such conflicting claims or demands and, in so doing, the Trustee shall not be or become liable to any person on account of such election or its failure or refusal to comply with any such conflicting claims or demands. The Trustee shall be entitled to continue to refrain from acting and to refuse to act until: |
(a) | the rights of all adverse claimants with respect to the Voting Rights, Exchange Right, Automatic Exchange Right or other rights subject to such conflicting claims or demands have been adjudicated by a final judgement of a court of competent jurisdiction; or | |
(b) | all differences with respect to the Voting Rights, Exchange Right or other rights subject to such conflicting claims or demands have been conclusively settled by a valid written agreement binding on all such adverse claimants, and the Trustee shall have been furnished with an executed copy of such agreement. |
(2) | If the Trustee elects to recognize any claim or comply with any demand made by any such adverse claimant, it may in its discretion require such claimant to furnish such surety bond or other security satisfactory to the Trustee as it shall deem appropriate to fully indemnify it as between all conflicting claims or demands. |
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(1) | US Gold, Alberta ULC and Canadian Exchange Co. jointly and severally agree to indemnify and hold harmless the Trustee and each of its directors, officers, employees and agents appointed and acting in accordance with this agreement (collectively, the “Indemnified Parties”) against all claims, losses, damages, reasonable costs, penalties, fines and reasonable expenses (including reasonable expenses of the Trustee’s legal counsel) which, without fraud, negligence, recklessness, wilful misconduct or bad faith on the part of such Indemnified Party, may be paid, incurred or suffered by the Indemnified Party by reason or as a result of the Trustee’s acceptance or administration of the Trust, its compliance with its duties set forth in this agreement, or any written or oral instruction delivered to the Trustee by US Gold, Alberta ULC or Canadian Exchange Co. pursuant hereto. Notwithstanding the foregoing, in no case will the Trustee be indemnified for consequential damages. | |
(2) | In no case shall US Gold, Alberta ULC or Canadian Exchange Co. be liable under this indemnity for any claim against any of the Indemnified Parties unless US Gold, Alberta ULC and Canadian Exchange Co. shall be notified by the Trustee of the written assertion of a claim or of any action commenced against the Indemnified Parties, promptly after any of the Indemnified Parties shall have received any such written assertion of a claim or shall have been served with a summons or other first legal process giving information as to the nature and basis of the claim. Subject to (ii) below, US Gold, Alberta ULC and Canadian Exchange Co. shall be entitled to participate at their own expense in the defence and, if US Gold, Alberta ULC and Canadian Exchange Co. so elect at any time after receipt of such notice, either of them may assume the defence of any suit brought to enforce any such claim. The Trustee shall have the right to employ separate counsel in any such suit and participate in the defence thereof, but the fees and expenses of such counsel shall be at the expense of the Trustee unless: (i) the employment of such counsel has been authorized by US Gold, Alberta ULC or Canadian Exchange Co.; or (ii) the named parties to any such suit include both the Trustee and US Gold, Alberta ULC or Canadian Exchange Co. and the Trustee shall have been advised by counsel acceptable to US Gold, Alberta ULC or Canadian Exchange Co. that there may be one or more legal defences available to the Trustee that are different from or in addition to those available to US Gold, Alberta ULC or Canadian Exchange Co. and that, in the judgement of such counsel, would present a conflict of interest were a joint representation to be undertaken (in which case US Gold, Alberta ULC and Canadian Exchange Co. shall not have the right to assume the defence of such suit on behalf of the Trustee but shall be liable to pay the reasonable fees and expenses of counsel for the Trustee). The indemnities contained in this Article 8 shall survive the termination of the Trust and the resignation or removal of the Trustee. |
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(a) | adding to the covenants of any or all parties hereto for the protection of the Beneficiaries hereunder provided that the board of directors of each of Canadian Exchange Co., Alberta ULC and US Gold shall be of the good faith opinion (confirmed in writing by each to the Trustee) that such additions will not be prejudicial to the rights or interests of the Beneficiaries; | |
(b) | making such amendments or modifications not inconsistent with this agreement (as confirmed in writing by Canadian Exchange Co. which may be relied upon by the Trustee), as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the board of directors of each of US Gold, Alberta ULC and Canadian Exchange Co. (confirmed in writing by each to the Trustee) and in the opinion of the Trustee, in reliance upon a certificate of Canadian Exchange Co., having in mind the best interests of the Beneficiaries, it may be expedient to make, provided that such boards of directors (confirmed in writing by each to the Trustee) and the Trustee, acting in reliance upon a certificate of Canadian Exchange Co., shall be of the opinion that such amendments and modifications will not be prejudicial to the rights or interests of the Beneficiaries as a whole; or | |
(c) | making such changes or corrections which, on the advice of counsel to US Gold, Alberta ULC, Canadian Exchange Co. and the Trustee, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error. |
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(a) | no outstanding Exchangeable Shares are held by a Beneficiary; | |
(b) | each of US Gold, Alberta ULC and Canadian Exchange Co. elects in writing to terminate the Trust and such termination is approved by the Beneficiaries in accordance with Section 9.2 of the Share Provisions; and | |
(c) | 21 years after the death of the last survivor of the descendants of His Majesty King George VI of Canada and the United Kingdom of Great Britain and Northern Ireland living on the date of the creation of the Trust. |
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US GOLD OPERATING CORPORATION |
By: |
Name: | |
Title: | |
US GOLD HOLDINGS CORPORATION |
By: |
Name: | |
Title: | |
US GOLD ALBERTA ULC |
By: |
Name: | |
Title: | |
US GOLD CANADIAN ACQUISITION CORPORATION |
By: |
Name: | |
Title: | |
[ ] (Trustee) |
By: |
Name: | |
Title: |
By: |
Name: | |
Title: |
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(a) | not declare or pay any dividend on the US Gold Common Stock unless Canadian Exchange Co. shall (i) simultaneously declare or pay, as the case may be, an equivalent dividend on the Exchangeable Shares (an “Equivalent Dividend”), and (ii) have sufficient money or other assets or authorized but unissued securities available to enable the due declaration and the due and punctual payment, in accordance with applicable law, of any such Equivalent Dividend; | |
(b) | advise Canadian Exchange Co. sufficiently in advance of the declaration by US Gold of any dividend on the US Gold Common Stock and take all such other actions as are reasonably necessary, in co-operation with Canadian Exchange Co., to ensure that the respective declaration date, record date and payment date for an Equivalent Dividend on the Exchangeable Shares shall be the same as the declaration date, record date and payment date for the corresponding dividend on the US Gold Common Stock and that such dividend on the Exchangeable Shares shall comply with any requirements of the stock exchange on which the Exchangeable Shares are listed; | |
(c) | ensure that the record date for determining shareholders entitled to receive any dividend declared on the US Gold Common Stock is not less than 10 Business Days after the declaration date for such dividend or such shorter period as may be permitted under applicable law; | |
(d) | take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Canadian Exchange Co., in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the Liquidation Amount, in respect of each issued and outstanding Exchangeable Share upon the liquidation, dissolution or winding-up of Canadian Exchange Co. or any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs including, without limitation, all such actions and all such things as are necessary or desirable to |
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enable and permit Canadian Exchange Co. to cause to be delivered shares of US Gold Common Stock to the holders of Exchangeable Shares in accordance with the provisions of Article 5 of the Share Provisions; | ||
(e) | take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Canadian Exchange Co., in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the Retraction Price and the Redemption Price, including, without limitation, all such actions and all such things as are necessary or desirable to enable and permit Canadian Exchange Co. to cause to be delivered shares of US Gold Common Stock to the holders of Exchangeable Shares, upon the retraction or redemption of Exchangeable Shares in accordance with the provisions of Article 6 or Article 7 of the Share Provisions, as the case may be; | |
(f) | take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Alberta ULC or US Gold, in accordance with applicable law, to perform its obligations arising upon the exercise by it of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, including all such actions and all such things as are necessary or desirable to enable and permit Alberta ULC or US Gold to cause to be delivered shares of US Gold Common Stock to the holders of Exchangeable Shares in accordance with the provisions of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, as the case may be; and | |
(g) | not exercise its vote as a shareholder to initiate the voluntary liquidation, dissolution or winding up of Canadian Exchange Co. or any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs, nor take any action or omit to take any action that is designed to result in the liquidation, dissolution or winding up of Canadian Exchange Co. or any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs. |
(a) | in the event of any determination by the board of directors of Canadian Exchange Co. to institute voluntary liquidation, dissolution or winding-up proceedings with respect to Canadian Exchange Co. or to effect any |
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other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution; | ||
(b) | immediately, upon the earlier of (i) receipt by Canadian Exchange Co. of notice of, and (ii) Canadian Exchange Co. otherwise becoming aware of, any threatened or instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of Canadian Exchange Co. or to effect any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs; | |
(c) | immediately, upon receipt by Canadian Exchange Co. of a Retraction Request; | |
(d) | at least 30 days prior to any Redemption Date determined by the board of directors of Canadian Exchange Co. in accordance with the Share Provisions; and | |
(e) | as soon as practicable upon the issuance by Canadian Exchange Co. of any Exchangeable Shares or rights to acquire Exchangeable Shares. |
(a) | US Gold will not without prior approval of Canadian Exchange Co. and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 9.2 of the Share Provisions: |
(i) | issue or distribute shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of US Gold Common Stock) to the holders of all or substantially all of the then outstanding US Gold Common Stock by way of stock dividend or other distribution, other than an issue of shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of US Gold Common Stock) to holders of shares of US Gold Common Stock who exercise an option to receive dividends in US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire US Gold Common Stock) in lieu of receiving cash dividends; or | |
(ii) | issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding shares of US Gold Common Stock entitling them to subscribe for or to purchase shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of US Gold Common Stock); or |
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(iii) | issue or distribute to the holders of all or substantially all of the then outstanding shares of US Gold Common Stock (A) shares or securities (including evidence of indebtedness) of US Gold of any class other than US Gold Common Stock (or securities convertible into or exchangeable for or carrying rights to acquire shares of US Gold Common Stock), or (B) rights, options or warrants other than those referred to in Section 2.7(a)(ii) above, or (C) assets of US Gold; |
(b) | US Gold will not without the prior approval of Canadian Exchange Co. and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 9.2 of the Share Provisions: |
(i) | subdivide, redivide or change the then outstanding shares of US Gold Common Stock into a greater number of shares of US Gold Common Stock; or | |
(ii) | reduce, combine, consolidate or change the then outstanding shares of US Gold Common Stock into a lesser number of shares of US Gold Common Stock; or | |
(iii) | reclassify or otherwise change the shares of US Gold Common Stock or effect an amalgamation, merger, reorganization or other transaction affecting the shares of US Gold Common Stock; |
(c) | US Gold will ensure that the record date for any event referred to in Section 2.7(a) or Section 2.7(b), or (if no record date is applicable for such event) the effective date for any such event, is not less than ten Business Days after the date on which such event is declared or announced by US Gold (with simultaneous notification thereof by US Gold to Canadian Exchange Co.). | |
(d) | The board of directors of Canadian Exchange Co. shall determine, acting in good faith and in its sole discretion (with the assistance of such reputable and qualified independent financial advisors and/or other experts as the board may require), economic equivalence for the purposes of any event referred to in Section 2.7(a) or Section 2.7(b) and each such determination shall be conclusive and binding on US Gold. In making each such determination, the following factors shall, without excluding other factors determined by the board of directors of Canadian Exchange Co. to be relevant, be considered by the board of directors of Canadian Exchange Co.: |
(i) | in the case of any stock dividend or other distribution payable in shares of US Gold Common Stock, the number of such shares issued in proportion to the number of shares of US Gold Common Stock previously outstanding; | |
(ii) | in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of US Gold Common Stock), the relationship between the exercise price of each such right, option or warrant and the Current Market Price of a share of US Gold Common Stock; | |
(iii) | in the case of the issuance or distribution of any other form of property (including, without limitation, any shares or securities of US Gold of any class other than US Gold Common Stock, any rights, options or warrants other than those referred to in Section 2.7(d)(ii), any evidences of indebtedness of US Gold or any assets of US Gold), the relationship between the fair market value (as determined by the board of directors of Canadian Exchange Co. in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding share of US Gold Common Stock and the Current Market Price of a share of US Gold Common Stock; | |
(iv) | in the case of any subdivision, redivision or change of the then outstanding shares of US Gold Common Stock into a greater number of shares of US Gold Common Stock or the reduction, combination, consolidation or change of the then outstanding shares of US Gold Common Stock into |
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a lesser number of shares of US Gold Common Stock or any amalgamation, merger, reorganization or other transaction affecting the US Gold Common Stock, the effect thereof upon the then outstanding shares of US Gold Common Stock; and | ||
(v) | in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of shares of US Gold Common Stock as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares). |
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(a) | such other person or continuing corporation (the “US Gold Successor”) by operation of law, becomes, without more, bound by the terms and provisions of this agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, an agreement supplemental hereto and such other instruments (if any) as are necessary or advisable to evidence the assumption by the US Gold Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such US Gold Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of US Gold under this agreement; and | |
(b) | such transaction shall be upon such terms and conditions as substantially to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the other parties hereunder or the holders of the Exchangeable Shares. |
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(a) | Subject to Section 4.2, Section 4.3, and Section 4.5 of this agreement may not be amended or modified except by an agreement in writing executed by Canadian Exchange Co., Alberta ULC and US Gold and approved by the holders of the Exchangeable Shares in accordance with Section 9.2 of the Share Provisions. | |
(b) | No amendment or modification or waiver of any of the provisions of this agreement otherwise permitted hereunder shall be effective unless made in writing and signed by all of the parties hereto. |
(a) | adding to the covenants of any or all of the parties hereto for the protection of the Non-Affiliated Holders; | |
(b) | evidencing the succession of US Gold Successors and the covenants of and obligations assumed by each such US Gold Successor in accordance with the provisions of Article 3; | |
(c) | making such amendments or modifications not inconsistent with this agreement as may be necessary or desirable with respect to matters or questions which, in the opinion of the board of directors of each of Canadian Exchange Co., Alberta ULC and US Gold, having in mind the best interests of the Non-Affiliated Holders as a whole, it may be expedient to make, provided that each such board of directors shall be of the opinion that such amendments or modifications will not be prejudicial in any material respect to the rights or interests of the Non-Affiliated Holders as a whole of the Exchangeable Shares; or | |
(d) | making such changes or corrections which, on the advice of counsel to Canadian Exchange Co., Alberta ULC and US Gold, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error, provided that the boards of directors of each of Canadian Exchange Co., Alberta ULC and US Gold shall be of the opinion that such changes or corrections will not be prejudicial in any material respect to the rights or interests of the Non-Affiliated Holders. |
4.6 | Meeting to Consider Amendments |
4.7 | Enurement |
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4.8 | Notices to Parties |
(a) | in the case of US Gold, to the following address: |
2201 Kipling Street | |
Suite 100 | |
Lakewood, Colorado | |
80215 | |
Facsimile No.: (303) 238-1438 | |
Attention: William F. Pass | |
with a copy to: | |
Fraser Milner Casgrain LLP | |
1 First Canadian Place | |
100 King Street West, Suite 3900 | |
Toronto, Ontario | |
M5X 1B2 | |
Attention: Michael Melanson | |
Fax: (416) 863-4592 |
(b) | in the case of Alberta ULC, to the following address: |
2900 Manulife Place | |
10180-101 Street | |
Edmonton, Alberta | |
T5J 3V5 | |
Facsimile No.: (780) 423-7276 | |
Attention: Corporate Secretary | |
with a copy to: | |
Fraser Milner Casgrain LLP | |
1 First Canadian Place | |
100 King Street West, Suite 3900 | |
Toronto, Ontario | |
M5X 1B2 | |
Attention: Michael Melanson | |
Fax: (416) 863-4592 |
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(c) | in the case of Canadian Exchange Co., to the following address: |
2900 Manulife Place | |
10180-101 Street | |
Edmonton, Alberta | |
T5J 3V5 | |
Facsimile No.: (780) 423-7276 | |
Attention: Corporate Secretary | |
with a copy to: | |
U.S. Gold Corporation | |
2201 Kipling Street | |
Suite 100 | |
Lakewood, Colorado | |
80215 | |
Facsimile No.: (303) 238-1438 | |
Attention: William F. Pass |
4.9 | Counterparts |
4.10 | Jurisdiction |
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US GOLD OPERATING CORPORATION |
Per: |
Name: | |
Title: | |
US GOLD HOLDINGS CORPORATION |
Per: |
Name: | |
Title: | |
US GOLD ALBERTA ULC |
Per: |
Name: | |
Title: | |
US GOLD CANADIAN ACQUISITION CORPORATION |
Per: |
Name: | |
Title: |
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Item No. | Description | |||
*2 | .1 | Form of Agreement and Plan of Merger by and among U.S. Gold Corporation, US Gold Holdings Corporation and USGL Merger Sub, Inc. (attached as Annex A to the proxy statement/prospectus which forms a part of this registration statement and incorporated herein by reference). | ||
3 | .1.1 | Articles of Incorporation of the Company filed with the Secretary of State of Colorado on June 24, 1979 (incorporated by reference from the Report on Form 10-KSB dated March 27, 1996, Exhibit 3.1, File No. 000-09137). | ||
3 | .1.2 | Articles of Amendment to the Articles of Incorporation of the Company filed with the Secretary of State of Colorado on June 22, 1988 (incorporated by reference from Report on Form 10-K for the year ended December 31, 1988, Exhibit 3.1, File No. 000-09137). | ||
3 | .1.3 | Articles of Amendment to the Articles of Incorporation of the Company filed with the Secretary of State of Colorado on July 5, 1988 (incorporated by reference from Report on Form 10-K for the year ended December 31, 1988, Exhibit 3.2, File No. 000-09137). |
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Item No. | Description | |||
3 | .1.4 | Articles of Amendment to the Articles of Incorporation of the Company filed with the Secretary of State of Colorado on December 20, 1991 (incorporated by reference from Report on Form 10-K for the year ended December 31, 1991, Exhibit 3.3, File No. 000-09137). | ||
3 | .1.5 | Articles of Amendment to the Articles of Incorporation of the Company filed with the Secretary of State of Colorado on November 15, 2005 (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 3.1.5, File No. 000-9137). | ||
*3 | .2.1 | Certificate of Incorporation of New US Gold filed with the Secretary of State of Delaware on April 17, 2006. | ||
*3 | .2.2 | Amended and Restated Certificate of Incorporation of New US Gold (attached as Annex B to the proxy statement/prospectus which forms a part of this registration statement and incorporated herein by reference). | ||
3 | .3.1 | Bylaws of the Company, as amended June 22, 1988 (incorporated by reference from the Report on Form 10-KSB for the year ended December 31, 1996, Exhibit 3.1, File No. 000-09137). | ||
3 | .3.2 | Amendment to the Bylaws of the Company effective as of October 3, 2005 (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 3.2.1, File No. 000-09137). | ||
*3 | .4.1 | Bylaws of New US Gold. | ||
*3 | .4.2 | Amended and Restated Bylaws of New US Gold (attached as Annex C to the proxy statement/prospectus which forms a part of this registration statement and incorporated herein by reference). | ||
**5 | .1 | Opinion of Dufford & Brown, P.C. | ||
**5 | .2 | Opinion of Fraser Milner Casgrain LLP. | ||
10 | .1 | Mining Lease by and between Lyle F. Campbell, Julian E. Simpson and Jean C. Simpson, and Tonkin Springs Gold Mining Company, effective as of January 1, 1986, with amendments (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 10.1, File No. 000-09137). | ||
10 | .2 | First Amendment dated January 10, 1986 to Mining Lease by and between Lyle F. Campbell, Julian E. Simpson and Jean C. Simpson, and Tonkin Springs Gold Mining Company, effective as of January 1, 1986 (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 10.2, File No. 000-09137). | ||
10 | .3 | Sixth Amendment to Tonkin Mining Lease dated June 29, 1989 to Mining Lease by and between Lyle F. Campbell, Julian E. Simpson and Jean C. Simpson, and Tonkin Springs Gold Mining Company, effective as of January 1, 1986 (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 10.3, File No. 000-09137). | ||
10 | .4 | Seventh Amendment to Tonkin Mining Lease dated April 18, 1990 to Mining Lease by and between Lyle F. Campbell, Julian E. Simpson and Jean C. Simpson, and Tonkin Springs Gold Mining Company, effective as of January 1, 1986 (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 10.4, File No. 000-09137). | ||
10 | .5 | Eighth Amendment to Campbell/ Simpson Tonkin Springs Venture Limited Partnership Tonkin Mineral Lease dated April 20, 1992 to Mining Lease by and between Lyle F. Campbell, Julian E. Simpson and Jean C. Simpson, and Tonkin Springs Gold Mining Company, effective as of January 1, 1986 (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 10.5, File No. 000-09137). | ||
10 | .6 | Ninth Amendment to Campbell/ Simpson Tonkin Springs Venture Limited Partnership Tonkin Mineral Lease dated January 22, 1993 to Mining Lease by and between Lyle F. Campbell, Julian E. Simpson and Jean C. Simpson, and Tonkin Springs Gold Mining Company, effective as of January 1, 1986 (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 10.6, File No. 000-09137). | ||
10 | .7 | Tenth Amendment to Campbell/ Simpson Tonkin Springs Venture Limited Partnership Tonkin Mineral Lease dated April 30, 1993 to Mining Lease by and between Lyle F. Campbell, Julian E. Simpson and Jean C. Simpson, and Tonkin Springs Gold Mining Company, effective as of January 1, 1986 (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 10.7, File No. 000-09137). |
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Item No. | Description | |||
10 | .8 | Eleventh Amendment to Campbell/ Simpson Tonkin Springs Venture Limited Partnership Tonkin Mineral Lease dated June 28, 1993 to Mining Lease by and between Lyle F. Campbell, Julian E. Simpson and Jean C. Simpson, and Tonkin Springs Gold Mining Company, effective as of January 1, 1986 (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 10.8, File No. 000-09137). | ||
10 | .9 | Twelfth Amendment to Tonkin Mining Lease dated November 27, 1995 to Mining Lease by and between Lyle F. Campbell, Julian E. Simpson and Jean C. Simpson, and Tonkin Springs Gold Mining Company, effective as of January 1, 1986 (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 10.9, File No. 000-09137). | ||
10 | .10 | Thirteenth Amendment to Tonkin Mining Lease dated February 1, 2003 to Mining Lease by and between Lyle F. Campbell, Julian E. Simpson and Jean C. Simpson, and Tonkin Springs Gold Mining Company, effective as of January 1, 1986 (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 10.10, File No. 000-09137). | ||
10 | .11 | Agreement To Pay Distributions dated February 21, 1992, by and between Tonkin Springs Gold Mining Company and French American Banking Corporation (incorporated by reference from the Report on Form 8-K dated February 21, 1992, Exhibit 4, File No. 000-09137). | ||
10 | .12 | Purchase Agreement between BacTech Nevada Corporation and U.S. Gold Corporation dated effective July 31, 2003 related to the purchase by BacTech of 55% interest in Tonkin Springs LLC from Tonkin Springs Venture L.P., a subsidiary of the Company (incorporated by reference from the Report on Form 8-K dated August 6, 2003, Exhibit 10.1, File No. 000-09137). | ||
10 | .13 | Amended and Restated Members’ Agreement of the Tonkin Springs LLC between Tonkin Springs Venture L.P. and BacTech Nevada Corporation dated effective July 31, 2003 (incorporated by reference from the Report on Form 8-K dated August 6, 2003, Exhibit 10.2, File No. 000-09137). | ||
10 | .14 | Amended and Restated Operating Agreement of the Tonkin Springs LLC between Tonkin Springs Venture L.P. and BacTech Nevada Corporation dated effective July 31, 2003 (incorporated by reference from the Report on Form 8-K dated August 6, 2003, Exhibit 10.3, File No. 000-09137). | ||
10 | .15 | Amended and Restated Non-Qualified Stock Option and Stock Grant Plan, as amended effective September 19, 2003 (incorporated by reference from the Report on Form 10-KSB for the year ended December 31, 2003, Exhibit 10.2, File No. 000-09137). | ||
10 | .16 | Termination Agreement between the Company and William W. Reid dated July 29, 2005 (incorporated by reference from the report on Form 8-K dated July 29, 2005, Exhibit 10.1, File No. 000-09137). | ||
10 | .17 | Termination Agreement between the Company and David C. Reid dated July 29, 2005 (incorporated by reference from the report on Form 8-K dated July 29, 2005, Exhibit 10.2, File No. 000-09137). | ||
10 | .18 | Termination Agreement between the Company and William F. Pass dated July 29, 2005 (incorporated by reference from the report on Form 8-K dated July 29, 2005, Exhibit 10.3, File No. 000-09137). | ||
10 | .19 | Letter Agreement of Private Placement between the Company and Robert R. McEwen dated July 29, 2005 (incorporated by reference from the report on Form 8-K dated July 29, 2005, Exhibit 2.1, File No. 000-09137). | ||
10 | .20 | Stock Subscription Agreement between the Company and Robert R. McEwen dated July 29, 2005 (incorporated by reference from the report on Form 8-K dated July 29, 2005, Exhibit 2.2, File No. 000-09137). | ||
10 | .21 | Employment Agreement between the Company and Ann Carpenter dated October 24, 2005 (incorporated by reference from the report on Form 8-K dated October 24, 2005, Exhibit 10.1, File No. 000-09137). | ||
10 | .22 | Form of Indemnification Agreement (incorporated by reference from the report on Form 8-K dated December 7, 2005, Exhibit 10.1, File No. 000-09137). | ||
10 | .23 | Agency Agreement between the Company, GMP Securities L.P. and Griffiths McBurney Corp. dated February 22, 2006 (incorporated by reference from the report on Form 8-K dated February 27, 2006, Exhibit 10.1, File No. 000-09137). |
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Item No. | Description | |||
10 | .24 | Subscription Receipt Indenture between the Company, GMP Securities L.P. and Equity Transfer Services Inc. dated February 22, 2006 (incorporated by reference from the report on Form 8-K dated February 27, 2006, Exhibit 10.2, File No. 000-09137). | ||
10 | .25 | Warrant Indenture between the Company and Equity Transfer Services Inc. dated February 22, 2006 (incorporated by reference from the report on Form 8-K dated February 27, 2006, Exhibit 10.3, File No. 000-09137). | ||
10 | .26 | Compensation Option issued by the Company in favor of GMP Securities L.P. dated February 22, 2006 (incorporated by reference from the report on Form 8-K dated February 27, 2006, Exhibit 10.4, File No. 000-09137). | ||
10 | .27 | Form of Subscription Agreement between the Company and Subscribers (incorporated by reference from the report on Form 8-K dated February 27, 2006, Exhibit 10.4, File No. 000-09137). | ||
10 | .28 | Registration Rights Agreement dated February 22, 2006 between the Company and GMP Securities L.P. (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 10.28, File No. 000-09137). | ||
10 | .29 | Employment Agreement dated February 22, 2006 between the Company and William F. Pass (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 10.29, File No. 000-09137). | ||
*10 | .30 | US Gold Equity Incentive Plan (attached as Annex D to the proxy statement/prospectus which forms a part of this registration statement and incorporated herein by reference). | ||
21 | .1 | Subsidiaries of the Company (incorporated by reference filed with the Company’s Annual Report for the fiscal year ended December 31, 2005, Exhibit 21, File No. 000-09137). | ||
*23 | .1 | Consent of Stark Winter Schenkein & Co., LLP. | ||
**23 | .2 | Consent of Davidson & Company LLP (White Knight Resources, Ltd.). | ||
**23 | .3 | Consent of PricewaterhouseCoopers LLP (Nevada Pacific Gold Ltd.). | ||
**23 | .4 | Consent of Ernst & Young LLP (Coral Gold Resources Ltd.). | ||
**23 | .5 | Consent of Amisano Hanson (Tone Resources Limited). | ||
**23 | .6 | Consent of Dufford & Brown, P.C. (included in Exhibit 5.1). | ||
**23 | .7 | Consent of Fraser Milner Casgrain LLP (included in Exhibit 5.2). | ||
*23 | .8 | Consent of Holme Roberts & Owen LLP. | ||
*24 | .1 | Power of Attorney (included on signature page). | ||
*99 | .1 | Form of proxy card. |
* | Filed herewith. |
** | To be filed by amendment. |
(1) | To file, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: |
(i) | Include any prospectus required by section 10(a)(3) of the Securities Act of 1933; | |
(ii) | Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission |
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pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and | ||
(iii) | Include any additional or changed material information on the plan of distribution; |
(2) | For determining liability under the Securities Act, to treat each such post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering; | |
(3) | To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering; | |
(4) | For determining liability of the co-registrant under the Securities Act to any purchaser in the initial distribution of the securities, that in a primary offering of securities of the co-registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the co-registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
(i) | Any preliminary prospectus or prospectus of the co-registrant relating to the offering required to be filed pursuant to Rule 424; | |
(ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the co-registrant or used or referred to by the co-registrant; | |
(iii) | The portion of any other free writing prospectus relating to the offering containing material information about the co-registrant or its securities provided by or on behalf of the co-registrant; and | |
(iv) | Any other communication that is an offer in the offering made by the co-registrant to the purchaser. |
(5) | That, prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form. | |
(6) | That every prospectus (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | |
(7) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the co-registrants pursuant to the foregoing provisions, or otherwise, the co-registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the co-registrants of expenses incurred or paid by a director, officer or controlling person of the respective co-registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the co-registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. | |
(8) | To respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. |
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(9) | To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
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U.S. GOLD CORPORATION | |
(Registrant) |
By: | /s/ William F. Pass |
William F. Pass, Vice President and | |
Chief Financial Officer | |
US GOLD HOLDINGS CORPORATION | |
(Registrant) |
By: | /s/ William F. Pass |
William F. Pass, Vice President, Secretary | |
and Treasurer |
/s/ Robert R. McEwen Robert R. McEwen | Chief Executive Officer and Chairman of the Board (Principal Executive Officer) | April 28, 2006 | ||||
/s/ William F. Pass William F. Pass | Vice President, Chief Financial Officer, and Secretary (Principal Financial and Accounting Officer) | April 28, 2006 | ||||
/s/ Michele L. Ashby Michele L. Ashby | Director | April 28, 2006 | ||||
/s/ Leanne M. Baker Leanne M. Baker | Director | April 28, 2006 | ||||
/s/ Peter Bojtos Peter Bojtos | Director | April 28, 2006 |
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/s/ Declan J. Costelloe Declan J. Costelloe | Director | April 28, 2006 |
/s/ Ann S. Carpenter Ann S. Carpenter | President and Director (Principal Executive Officer) | April 28, 2006 | ||||
/s/ William F. Pass William F. Pass | Vice President, Secretary and Treasurer and Director (Principal Financial and Accounting Officer) | April 28, 2006 |
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