As filed with the Securities and
Exchange Commission on April 17, 2009
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
VISTA GOLD CORP.
(Exact name of registrant
as specified in its charter)
Yukon
Territory
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98-0542444
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(State or other
jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification
No.)
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Suite 5,
7961 Shaffer Parkway
Littleton,
Colorado
(720)
981-1185
(Address, including zip code,
and telephone number, including area code, of registrants principal executive
offices)
Michael B. Richings
Executive Chairman and Chief Executive Officer
Vista Gold Corp.
Suite 5, 7961 Shaffer Parkway
Littleton, Colorado 80127
(720) 981-1185
(Name, address, including
zip code, and telephone number, including area code, of agent for service)
Copies to:
Jason
J. Brooks, Esq.
Melanie
Bradley, Esq.
Borden Ladner Gervais
LLP
1200 Waterfront Centre
200 Burrard Street,
P.O. Box 48600
Vancouver, B.C. Canada
V7X 1T2
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Kenneth
G. Sam, Esq.
Jason
K. Brenkert, Esq.
Dorsey &
Whitney LLP
Republic Plaza
Building, Suite 4700
370 Seventeenth Street
Denver, CO 80202-5647
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From
time to time after the effective date of this registration statement
(Approximate date of commencement
of proposed sale to public)
If
the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
o
If
any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box.
x
If
this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
o
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
o
If
this Form is a registration statement pursuant to General Instruction I.D.
or a post-effective amendment thereto that shall become effective upon filing
with the Commission pursuant to Rule 462(e) under the Securities Act,
check the following box.
o
If
this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the
Securities Act, check the following box.
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filed
o
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Small reporting company
o
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CALCULATION OF REGISTRATION FEE
Title of each class of
securities to be registered(1)
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Proposed Maximum
Aggregate Offering Price(2)
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Amount of
registration fee(3)
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Common Shares, without
par value
Debt Securities
Warrants
Subscription Receipts
Units
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$
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200,000,000
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$
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11,160
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Total
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$
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200,000,000
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$
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11,160
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(1)
Includes
an indeterminate number of common shares, common share or debt securities
purchase warrants, an indeterminate principal amount of debt securities,
subscription receipts for any combination thereof or units of any combination
thereof. This registration statement
also covers (i) common shares or debt securities that may be issued upon
exercise of warrants and (ii) such indeterminate amount of securities as
may be issued in exchange for, or upon conversion of, as the case may be, the
securities registered hereunder. No
separate consideration will be received for any securities issued upon
conversion or exchange. In addition, any
securities registered hereunder may be sold separately or as units with other
securities registered hereunder. The securities which may be offered pursuant
to this registration statement include, pursuant to Rule 416 of the
Securities Act of 1933, as amended (the Securities Act), such additional
number of common shares of the Registrant that may become issuable as a result
of any stock split, stock dividends or similar event.
(2)
Represents
the initial offering price of all securities sold up to an aggregate public
offering price not to exceed $200,000,000 or the equivalent thereof in foreign
currencies, foreign currency units or composite currencies to the Registrant.
(3)
Pursuant
to Rule 457(o) under the Securities Act, the registration fee has
been calculated on the basis of the maximum aggregate offering price and the
number of securities being registered has been omitted.
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act, or until this registration statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
The information in this
prospectus is not complete and may be changed.
We may not sell these securities until the Securities and Exchange
Commission declares our registration statement effective. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
Subject
To Completion: Dated April 17, 2009
VISTA GOLD CORP.
$200,000,000
Common Shares
Debt Securities
Warrants
Subscription Receipts
Units
Vista
Gold Corp. may offer and sell, from time to time, up to $200,000,000 aggregate
initial offering price of the Companys common shares, without par value (Common
Shares), debt securities (Debt Securities), warrants to purchase Common
Shares or Debt Securities (Warrants), subscription receipts for Common
Shares, Debt Securities, Warrants or any combination thereof (Subscription
Receipts), or any combination thereof (Units) (collectively, the Common
Shares, Debt Securities, Warrants, Subscription Receipts, and Units are
referred to as the Securities) in one or more transactions under this
prospectus (the Prospectus).
This
Prospectus provides you with a general description of the Securities that the
Company may offer. Each time the Company offers Securities, it will provide you
with a prospectus supplement (the Prospectus Supplement) that describes
specific information about the particular Securities being offered and may add,
update or change information contained in this Prospectus. You should read both
this Prospectus and the Prospectus Supplement, together with any additional
information which is incorporated by reference into this Prospectus.
This
Prospectus may not be used to offer or sell securities without the Prospectus
Supplement which includes a description of the method and terms of that
offering.
The
Company may sell the Securities on a continuous or delayed basis to or through
underwriters, dealers or agents or directly to purchasers. The Prospectus
Supplement, which the Company will provide to you each time it offers
Securities, will set forth the names of any underwriters, dealers or agents
involved in the sale of the Securities, and any applicable fee, commission or
discount arrangements with them. For
additional information on the methods of sale, you should refer to the section
entitled Plan of Distribution in this Prospectus.
The
Common Shares are traded on the NYSE Amex and on the Toronto Stock Exchange
under the symbol VGZ. On April 16, 2009, the last reported sale price of
the Common Shares on the NYSE Amex was $1.98 per share and on the Toronto Stock
Exchange was Cdn$2.31 per share.
There is
currently no market through which the Securities, other than the Common Shares,
may be sold and purchasers may not be able to resell the Securities purchased
under this Prospectus. This may affect
the pricing of the Securities, other than the Common Shares, in the secondary
market, the transparency and availability of trading prices, the liquidity of
these Securities and the extent of issuer regulation.
See Risk Factors and Uncertainties.
Investing in the Securities involves risks. See Risk Factors and Uncertainties on page 5.
These Securities have not been approved or disapproved by the
U.S. Securities and Exchange Commission (SEC) or any state securities
commission nor has the SEC or any state securities commission passed upon the
accuracy or adequacy of this Prospectus.
Any representation to the contrary is a criminal offense.
THE DATE OF THIS PROSPECTUS IS
, 2009.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
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1
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SUMMARY
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2
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RISK FACTORS AND UNCERTAINTIES
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5
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DOCUMENTS INCORPORATED BY REFERNCE
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14
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UNCERTAINTY OF FORWARD-LOOKING
STATEMENTS
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15
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CAUTIONARY NOTE TO U.S. INVESTORS REGARDING RESERVE
AND RESOURCE ESTIMATES
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18
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PRESENTATION OF FINANCIAL INFORMATION AND EXCHANGE RATE
DATA
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18
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RECENT DEVELOPMENTS
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19
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USE OF PROCEEDS
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19
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RATIO OF EARNINGS TO FIXED CHARGES
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19
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DESCRIPTION OF COMMON SHARES
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19
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DESCRIPTION OF DEBT SECURITIES
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19
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DESCRIPTION OF WARRANTS
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31
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DESCRIPTION OF SUBSCRIPTION RECEIPTS
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33
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DESCRIPTION OF UNITS
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36
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PLAN OF DISTRIBUTION
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38
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CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS FOR
U.S. RESIDENTS
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39
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U.S. FEDERAL INCOME TAX CONSEQUENCES
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40
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INTERESTS OF NAMED EXPERTS AND COUNSEL
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47
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EXPERTS
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47
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WHERE YOU CAN FIND MORE INFORMATION
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48
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ABOUT
THIS PROSPECTUS
This Prospectus is a part
of a registration statement that the Company filed with the SEC utilizing a shelf
registration process. Under this shelf
registration process, the Company may sell any combination of the Securities
described in this Prospectus in one or more offerings up to a total dollar
amount of initial aggregate offering price of $200,000,000.
This Prospectus provides you with a general
description of the Securities that we may offer. The specific terms of the
Securities in respect of which this Prospectus is being delivered will be set
forth in a Prospectus Supplement and may include, where applicable: (i) in
the case of Common Shares, the number of Common Shares offered, the offering
price and any other specific terms of the offering; (ii) in the case of
Debt Securities, the specific designation, aggregate principal amount, currency
or the currency unit for which such Debt Securities may be purchased, maturity,
interest provisions, authorized denominations, offering price, covenants,
events of default, any redemption terms, any sinking fund provisions, any
exchange or conversion terms, whether payment on the Debt Securities will be
senior or subordinated to the Companys other liabilities and obligations and
any other specific terms; (iii) in the case of Warrants, the designation,
number and terms of the Common Shares or Debt Securities purchasable upon
exercise of the Warrants, any procedures that will result in the adjustment of
those numbers, the exercise price, dates and periods of exercise, and the
currency or the currency unit in which the exercise price must be paid and any
other specific terms; (iv) in the case of Subscription Receipts, the
designation, number and terms of the Common Shares, Warrants or Debt Securities
receivable upon satisfaction of certain release conditions, any procedures that
will result in the adjustment of those numbers, any additional payments to be
made to holders of Subscription Receipts upon satisfaction of the release
conditions, the terms of the release conditions, terms governing the escrow of
all or a portion of the gross proceeds from the sale of the Subscription
Receipts, terms for the refund of all or a portion of the purchase price for
Subscription Receipts in the event the release conditions are not met and any
other specific terms; and (v) in the case of Units, the designation,
number and terms of the Common Shares, Warrants, Debt Securities or
Subscription Receipts comprising the Units.
A Prospectus Supplement may include specific variable terms pertaining
to the Securities that are not within the alternatives and parameters set forth
in this Prospectus.
In connection with any offering of the Securities
(unless otherwise specified in a Prospectus Supplement), the underwriters or
agents may over-allot or effect transactions which stabilize or maintain the
market price of the Securities offered at a higher level than that which might
exist in the open market. Such
transactions, if commenced, may be interrupted or discontinued at any time. See Plan of Distribution.
Please carefully read
both this Prospectus and any Prospectus Supplement together with the documents
incorporated herein by reference under Documents Incorporated by Reference
and the additional information described below under Where You Can Find More
Information.
Owning securities may subject you to tax consequences both in
Canada and the United States. This
Prospectus or any applicable Prospectus Supplement may not describe these tax
consequences fully. You should read the
tax discussion in any Prospectus Supplement with respect to a particular
offering and consult your own tax advisor with respect to your own particular
circumstances.
References in this
Prospectus to $ are to United States dollars. Canadian dollars are indicated
by the symbol Cdn$.
You should rely only on
the information contained in this Prospectus.
The Company has not authorized anyone to provide you with information
different from that contained in this Prospectus. The distribution or possession of this
Prospectus in or from certain jurisdictions may be restricted by law. This Prospectus is not an offer to sell these
Securities and is not soliciting an offer to buy these Securities in any
jurisdiction where the offer or sale is not permitted or where the person
making the offer or sale is not qualified to do so or to any person to whom it
is not permitted to make such offer or sale.
The information contained in this Prospectus is accurate only as of the
date of this Prospectus, regardless of the time of delivery of this Prospectus
or of any sale of the Securities. The
Companys business, financial condition, results of operations and prospects
may have changed since that date.
In
this Prospectus and in any Prospectus Supplement, unless the context otherwise
requires, references to Vista and the Company refer to Vista Gold Corp.,
either alone or together with its subsidiaries.
1
SUMMARY
The
Company
Vista Gold Corp. was
originally incorporated on November 28, 1983 under the name Granges
Exploration Ltd.. In November 1983, Granges Exploration Ltd.
acquired all the mining interests of Granges AB in Canada. On June 28,
1985, Granges Exploration Ltd. and Pecos Resources Ltd. amalgamated
under the name Granges Exploration Ltd. and on June 9, 1989,
Granges Exploration Ltd. changed its name to Granges Inc. On May 1,
1995, Granges Inc. and Hycroft Resources & Development Corporation
were amalgamated under the name Granges Inc. Effective November 1,
1996, Granges Inc. and Da Capo Resources Ltd. amalgamated under the
name Vista Gold Corp. Effective December 17, 1997, Vista Gold Corp. was
continued from British Columbia to the Yukon Territory, Canada under the
Business Corporations Act
(Yukon
Territory). On September 22, 2006, the Company entered into an Arrangement
and Merger Agreement (the Arrangement Agreement) with Allied Nevada Gold
Corp. (Allied Nevada), Carl Pescio and Janet Pescio (the Pescios),
pursuant to which the Companys Nevada-based mining properties and related
assets were transferred to Allied Nevada and the Pescios interests in certain
Nevada-based mining properties and related assets were transferred to Allied
Nevada. Completion of the transaction occurred on May 10, 2007. The
current addresses, telephone and facsimile numbers of the offices of the
Company are:
Executive Office
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Registered and Records Office
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Suite 5 - 7961
Shaffer Parkway
Littleton, Colorado, USA 80127
Telephone: (720) 981-1185
Facsimile: (720) 981-1186
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200 - 204
Lambert Street
Whitehorse, Yukon Territory, Canada Y1A 3T2
Telephone: (867) 667-7600
Facsimile: (867) 667-7885
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Business
of the Company
The Company is currently
engaged in the evaluation, acquisition, exploration and advancement of gold
exploration and potential development projects. Historically, the Companys
approach to acquisitions of gold projects has generally been to seek projects
within political jurisdictions with well established mining, land ownership and
tax laws, which have adequate drilling and geological data to support the
completion of a third-party review of the geological data and to complete an
estimate of mineral resources and/or mineral reserves. In addition, the Company
looks for opportunities to improve the value of its gold projects including
through exploration drilling and re-engineering the operating assumptions
underlying previous engineering work.
Beginning in 2007, the
Companys Board of Directors and management decided to take on a new direction
regarding the Companys more advanced gold projects. The Company plans to move its more advanced
projects forward through advanced and pre-feasibility studies, so production
decisions can be made on those projects.
Currently, the Companys
holdings include the Paredones Amarillos gold project in Mexico; the Mt. Todd
gold project in Australia; the Guadalupe de los Reyes gold project in Mexico;
the Yellow Pine gold project in Idaho; the Awak Mas gold project in Indonesia;
the Long Valley gold project in California; and mining claims in Colorado and
Utah. The Company also owns
approximately 25% of the shares of Zamora Gold Corp., a company exploring for
gold in Ecuador. Additional information about these projects is available in
the Companys amendment number one to
its Annual Report on Form 10-K/A for the year ended December 31,
2008, filed on Form 10-K/A under Item 2. Properties. In April 2008,
the Company sold its Amayapampa gold project in Bolivia to Republic Gold
Limited, an Australian mining company (see Significant Developments in 2008
Sale of Amayapampa Gold Project, Bolivia in the Companys Annual Report on Form 10-K
for the year ended December 31, 2008).
The Company does not
produce gold and does not currently generate operating earnings. Through fiscal
2008 and fiscal 2009 to date, funding to acquire and explore gold properties
and to operate the Company has been principally acquired through equity and
debt financings (consisting of private placements of equity units consisting of
Common Shares and warrants to purchase Common Shares, public offerings of
Common Shares and, in March 2008, a brokered private placement of senior
secured convertible notes (the Notes)) and the sale of securities held by the
Company (consisting of the sale of shares of Allied Nevada Gold Corp. held by
the Company). The Company expects to
continue to raise capital through additional equity and/or debt financings, and
through the exercise of stock options and warrants. The Company anticipates raising funds for
interim financing needs through various bridge loan or convertible debt
alternatives.
2
The
Securities Offered under this Prospectus
The Company may offer
the Common Shares, Debt Securities, Warrants,
Subscription Receipts, or Units with a total value of up to $200,000,000
million from time to time under this Prospectus, together with any applicable
Prospectus Supplement and related free writing prospectus, at prices and on
terms to be determined by market conditions at the time of offering. This Prospectus provides you with a general
description of the Securities the Company may offer. Each time the Company offers Securities, it
will provide a Prospectus Supplement that will describe the specific amounts,
prices and other important terms of the Securities, including, to the extent
applicable:
·
designation or classification;
·
aggregate principal amount or
aggregate offering price;
·
maturity, if applicable;
·
original issue discount, if any;
·
rates and times of payment of
interest or dividends, if any;
·
redemption, conversion, exchange or
sinking fund terms, if any;
·
conversion or exchange prices or
rates, if any, and, if applicable, any provisions for changes to or adjustments
in the conversion or exchange prices or rates and in the securities or other
property receivable upon conversion or exchange;
·
ranking;
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restrictive covenants, if any;
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voting or other rights, if any; and
·
important United States federal
income tax considerations.
A Prospectus Supplement
and any related free writing prospectus that the Company may authorize to be
provided to you may also add, update or change information contained in this
Prospectus or in documents the Company has incorporated by reference. However, no Prospectus Supplement or free
writing prospectus will offer a security that is not registered and described
in this Prospectus at the time of the effectiveness of the registration
statement of which this Prospectus is a part.
The
Company may sell the Securities on a continuous or delayed basis to or through
underwriters, dealers or agents or directly to purchasers. The Prospectus
Supplement, which the Company will provide to you each time it offers
Securities, will set forth the names of any underwriters, dealers or agents
involved in the sale of the Securities, and any applicable fee, commission or
discount arrangements with them.
Common Shares
The Company may offer
Common Shares. Holders of Common Shares
are entitled to one vote per Common Share on all matters that require
shareholder approval. Holders of our
Common Shares are entitled to dividends when and if declared by the Board of
Directors of the Company. Our Common
Shares are described in greater detail in this Prospectus under Description of
Common Shares.
Debt
Securities
The Company may offer
debt securities from time to time, in one or more series, as either senior or
subordinated debt or as senior or subordinated convertible debt. The debt securities will be issued under one
or more documents called indentures, which are contracts between the Company and
a trustee for the holders of the debt securities. In this Prospectus, the Company has
summarized certain general features of the debt securities under Description
of Debt Securities. The Company urges you, however, to read any Prospectus
Supplement and any free writing prospectus that the Company may authorize to be
provided to you related to the series of debt securities being offered, as well
as the complete indentures that contain the terms of the debt securities. A form of indenture has been filed as an
exhibit to the registration statement of which this Prospectus is a part, and
supplemental indentures and forms of debt securities containing the terms of
debt securities being offered will be filed as exhibits to the registration
statement of which this Prospectus is a part, or incorporated by reference from
a current report on Form 8-K that the Company files with the SEC.
3
Warrants
The Company may offer
Warrants for the purchase of Common Shares or Debt Securities, in one or more
series, from time to time. The Company
may issue Warrants independently or together with Common Shares, Debt
Securities, or Subscription Receipts, and the Warrants may be attached to or
separate from such securities.
The Warrants will be
evidenced by warrant certificates and may be issued under one or more warrant
indentures, which are contracts between the Company and a warrant trustee for
the holders of the Warrants. In this prospectus,
the Company has summarized certain general features of the Warrants under Description
of Warrants. The Company urges you,
however, to read any Prospectus Supplement and any free writing prospectus that
the Company may authorize to be provided to you related to the series of
Warrants being offered, as well as the complete warrant indentures and warrant
certificates that contain the terms of the Warrants. Specific warrant indentures will contain
additional important terms and provisions and will be filed as exhibits to the
registration statement of which this Prospectus is a part, or incorporated by
reference from a current report on Form 8-K that the Company files with
the SEC.
Subscription Receipts
The Company may issue
Subscription Receipts, which will entitle holders to receive upon satisfaction
of certain release conditions and for no additional consideration, Common
Shares, Debt Securities, Warrants or any combination thereof. Subscription Receipts will be issued pursuant
to one or more subscription receipt agreements, each to be entered into between
the Company and an escrow agent, which will establish the terms and conditions
of the Subscription Receipts. Each
escrow agent will be a financial institution organized under the laws of Canada
or a province thereof and authorized to carry on business as a trustee. A copy of the form of subscription receipt
agreement will be filed as an exhibit to the registration statement of which
this Prospectus is a part, or will be incorporated by reference from a current
report on Form 8-K that the Company files with the SEC.
Units
The Company may offer
Units consisting of Common Shares, Debt Securities, Warrants and/or
Subscription Receipts to purchase any of such securities in one or more
series. In this Prospectus, we have
summarized certain general features of the Units under Description of Units. The Company urges you, however, to read any
Prospectus Supplement and any free writing prospectus that the Company may
authorize to be provided to you related to the series of Units being offered. The Company may evidence each series of units
by unit certificates that the Company will issue under a separate unit
agreement with a unit agent. The Company
will file as exhibits to the registration statement of which this Prospectus is
a part, or will incorporate by reference from a current report on Form 8-K
that the Company files with the SEC, the unit agreements that describe the
terms of the series of Units the Company is offering before the issuance of the
related series of Units.
Ratio of Earnings to Fixed Charges
The Companys ratio of
earnings to fixed charges for the year ended December 31, 2008 is less than
one-to-one. See Ratio of Earnings to
Fixed Charges.
THIS PROSPECTUS MAY NOT BE
USED TO OFFER OR SELL ANY SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS
SUPPLEMENT.
4
RISK FACTORS AND UNCERTAINTIES
Investing in the Securities involves
a high degree of risk. Prospective
investors in a particular offering of Securities should carefully consider the
following risks, as well as the other information contained in this Prospectus,
any applicable Prospectus Supplement, and the documents incorporated by
reference herein before investing in the Securities. If any of the following risks actually
occurs, the Companys business could be materially harmed. The risks and uncertainties described below
are not the only ones the Company faces.
Additional risks and uncertainties, including those of which the Company
is currently unaware or that the Company deems immaterial, may also adversely affect
the Companys business.
The Company is a passive foreign investment company for
U.S. tax purposes, which can have a materially adverse effect on a U.S.
shareholders economic return on investment in the Companys Common Shares.
For U.S. federal
income tax purposes, the Company was classified as a passive foreign investment
company (PFIC) under section 1297 of the U.S. Internal Revenue Code of 1986,
as amended (the Code) for its taxable year ended December 31, 2008, and
likely will be a PFIC in subsequent taxable years until it has significant
operating income. Classification of a
corporation as a PFIC is a tax attribute which may have a material adverse
effect on a U.S. shareholders economic return.
Whether, and to what extent, there will be a material adverse effect
depends to a very large extent on whether a U.S. shareholder makes certain
elections in timely fashion. These
elections are discussed in the Companys Annual Report on Form 10-K for
the year ended December 31, 2008, under Part IIItem 5. Market for
Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity SecuritiesCertain U.S. Federal Income Tax Considerations. Each U.S. investor in the Companys Common
Shares is urged to review that discussion and consult an independent U.S. tax
adviser, because the PFIC rules are complex.
Feasibility study results and preliminary assessment results
are based on estimates that are subject to uncertainty.
Feasibility
studies are used to determine the economic viability of a deposit, as are
pre-feasibility studies and preliminary assessments. Feasibility studies are the most detailed and
reflect a higher level of confidence in the reported capital and operating
costs. Generally accepted levels of
confidence are plus or minus 15% for feasibility studies, plus or minus 25-30%
for pre-feasibility studies and plus or minus 35-40% for preliminary
assessments. These levels reflect the
levels of confidence that exist at the time the study is completed. While these studies are based on the best
information available to the Company for the level of study, the Company cannot
be certain that actual costs will not significantly exceed the estimated
cost. While the Company incorporates
what it believes is an appropriate contingency factor in cost estimates to account
for this uncertainty, there can be no assurance that the contingency factor is
adequate.
The economic viability of a deposit is based on many factors
that are subject to uncertainty.
Many factors are
involved in the determination of the economic viability of a deposit, including
the achievement of satisfactory mineral reserve estimates, the level of
estimated metallurgical recoveries, capital and operating cost estimates and
estimates of future gold prices. Resource
estimates are based on the assay results of many intervals from many drill
holes and the interpolation of those results between holes. There is no certainty that metallurgical
recoveries obtained in bench scale or pilot plant scale tests will be achieved
in commercial operations. Capital and
operating cost estimates are based upon many factors, including anticipated
tonnage and grades of ore to be mined and processed, the configuration of the
orebody, ground and mining conditions, expected recovery rates of the gold from
the ore and anticipated environmental and regulatory compliance costs. Each of these factors involves uncertainties
and as a result, the Company cannot give any assurance that its development or
exploration projects will become operating mines. Further, it may take many years from the
initial phase of drilling before production is possible and, during that time,
the economic feasibility of exploiting a discovery may change as the result of
changing commodity and supply costs. If
a mine is developed, actual operating results may differ from those anticipated
in a feasibility study.
There may be delays in commencement of construction on the
Paredones Amarillos gold project.
Delays in
commencement of construction could result from delays in receiving the required
governmental permits including the Change of Land Use Permit (CUSF) and the
Temporary Occupation Permit (TOP) (for the life of the project), or from
factors such as availability and performance of engineering and construction
contractors, suppliers and consultants, availability of required equipment and
receipt of required governmental approvals.
Any delay in the performance of any one or more of the contractors,
suppliers, consultants or other persons on which we depend, or lack of
availability of required equipment, or delay or failure to receive required
governmental approvals,
5
could delay or
prevent commencement of construction on the Paredones Amarillos gold
project. There can be no assurance
whether or when construction at the Paredones Amarillos gold project will
commence or that the necessary personnel, equipment or supplies will be
available to the Company if and when construction is commenced. If the Company is unable to acquire permits
to mine the property, then it will have no reserves under SEC Industry Guide 7.
The final status of the Companys required governmental
permits for the Paredones Amarillos gold project could negatively impact its
mineral reserves.
The Company has
not yet received its required governmental permits for the Paredones Amarillos
gold project. We decided to apply for a
new CUSF and have presented an application for a TOP for the use of the federal
land which overlies the Paredones Amarillos deposit. The TOP is a necessary pre-requisite for the
CUSF application. The Company has not yet received the TOP, which was expected
by the end of 2008. Communications that
the Companys advisors have had with the office of the General Director of
Mines of the Ministry of Economy (the department responsible for awarding the
TOP) indicate that the approval process is proceeding normally, but at a slower
pace than expected. However, there are
many variables and uncertainties involved throughout the TOP and CUSF approval
process and approval is not guaranteed.
If the Company is unable to secure a TOP and CUSF, Mexican law will
prohibit it from mining the Paredones Amarillos gold project and, accordingly,
the Company will have no reserves at Paredones Amarillos under SEC Industry
Guide 7.
Increased costs could affect the Companys financial
condition.
The Company anticipates that costs at its projects
including the Paredones Amarillos gold project, Mt. Todd gold project and its
Awak Mas gold project as well as other properties that it may explore or
develop, will frequently be subject to variation from one year to the next due
to a number of factors, such as changing ore grade, metallurgy and revisions to
mine plans in response to the physical shape and location of the ore body. In addition, costs are affected by the price
of commodities such as fuel and electricity.
Such commodities are, at times, subject to volatile price movements,
including increases that could make production at certain operations less
profitable. A material increase in costs
at any significant location could have a significant effect on the Companys
profitability.
A shortage of equipment and supplies could adversely affect
the Companys ability to operate its business.
The Company is dependent on various supplies and
equipment to carry out its mining exploration and development operations. The shortage of such supplies, equipment and
parts could have a material adverse effect on the Companys ability to carry
out its operations and therefore limit or increase the cost of production.
We cannot be certain that the Companys acquisition,
exploration and development activities will be commercially successful.
The Company currently has no properties that produce
gold in commercial quantities.
Substantial expenditures are required to acquire existing gold
properties, to establish mineral reserves through drilling and analysis, to
develop metallurgical processes to extract metal from the ore and, in the case
of new properties, to develop the mining and processing facilities and
infrastructure at any site chosen for mining.
The Company cannot be assured that any mineral reserves or mineral
resources acquired or discovered will be in sufficient quantities to justify
commercial operations or that the funds required for development can be
obtained on a timely basis.
The price of gold is subject to fluctuations, which could
adversely affect the realizable value of the Companys assets and potential
future results of operations and cash flow.
The Companys principal assets are mineral reserves
and mineral resources. The Company
intends to attempt to acquire additional properties containing mineral reserves
and mineral resources. The price that
the Company pays to acquire these properties will be, in large part, influenced
by the price of gold at the time of the acquisition. The Companys potential future revenues are
expected to be, in large part, derived from the mining and sale of gold from
these properties or from the outright sale or joint venture of some of these
properties. The value of these mineral
reserves and mineral resources, and the value of any potential gold production
therefrom, will vary in proportion to variations in gold prices. The price of gold has fluctuated widely, and
is affected by numerous factors beyond the Companys control including, but not
limited to, international, economic and political trends, expectations of
inflation, currency exchange fluctuations, central bank activities, interest
rates, global or regional consumption patterns and speculative activities. The effect of these factors on the price of
gold, and therefore the economic viability of any of the Companys projects,
cannot accurately be predicted. Any drop
in the price of gold would adversely affect the Companys asset values, cash
flows, potential revenues and profits.
6
Mining exploration, development and operating activities are
inherently hazardous.
Mineral exploration involves many risks that even a
combination of experience, knowledge and careful evaluation may not be able to
overcome. Operations in which the
Company has direct or indirect interests will be subject to all the hazards and
risks normally incidental to exploration, development and production of gold
and other metals, any of which could result in work stoppages, damage to
property and possible environmental damage.
The nature of these risks is such that liabilities might exceed any
liability insurance policy limits. It is
also possible that the liabilities and hazards might not be insurable, or, the
Company could elect not to be insured against such liabilities due to high
premium costs or other reasons, in which event, the Company could incur
significant costs that could have a material adverse effect on its financial
condition.
Calculations of mineral reserves and of mineral resources
are estimates only, subject to uncertainty due to factors including metal
prices, inherent variability of the ore, and recoverability of metal in the
mining process.
There is a degree of uncertainty attributable to the
calculation of reserves and corresponding grades dedicated to future
production. Until mineral reserves are
actually mined and processed, the quantity of ore and grades must be considered
as estimates only. In addition, the quantity of mineral reserves and ore may
vary depending on metal prices.
Estimates of mineral resources are subject to uncertainty as well. The estimating of mineral reserves and
mineral resources is a subjective process and the accuracy of such estimates is
a function of the quantity and quality of available data and the assumptions
used and judgments made in interpreting engineering and geological
information. There is significant
uncertainty in any mineral reserve or mineral resource estimate, and the actual
deposits encountered and the economic viability of mining a deposit may differ
materially from the Companys estimates.
Estimated mineral reserves or mineral resources may have to be
recalculated based on changes in metal prices, further exploration or
development activity or actual production experience. This could materially and adversely affect
estimates of the volume or grade of mineralization, estimated recovery rates or
other important factors that influence estimates of mineral reserves or mineral
resources. Any material change in the
quantity of mineral reserves, mineralization, grade or stripping ratio may
affect the economic viability of the Companys properties. In addition, there can be no assurance that
gold recoveries or other metal recoveries in small-scale laboratory tests will
be duplicated in larger scale tests under on-site conditions or during
production.
The Companys exploration and development operations are
subject to environmental regulations, which could result in the Company
incurring additional costs and operational delays.
All phases of the Companys operations are subject to
environmental regulation. Environmental
legislation is evolving in some countries or jurisdictions in a manner which
will require stricter standards and enforcement, increased fines and penalties
for non-compliance, more stringent environmental assessments of proposed
projects and a heightened degree of responsibility for companies and their
officers, directors and employees. There
is no assurance that future changes in environmental regulation, if any, will
not adversely affect the Companys projects.
The Company is currently subject to U.S. federal and state government
environmental regulations with respect to its properties in Idaho and
California in the United States. The
Company is also currently subject to environmental regulations with respect to
its properties in Mexico, Australia and Indonesia.
U.S.
Federal Laws
The U.S. Bureau of Land Management requires that
mining operations on lands subject to its regulation obtain an approved plan of
operations subject to environmental impact evaluation under the
National Environmental Policy Act
. Any significant modifications to the plan of
operations may require the completion of an environmental assessment or
Environmental Impact Statement (EIS) prior to approval. Mining companies must post a bond or other
surety to guarantee the cost of post-mining reclamation. These requirements could add significant
additional cost and delays to any mining project the Company undertakes.
Under the U.S.
Resource
Conservation and Recovery Act
, mining companies may incur costs for
generating, transporting, treating, storing, or disposing of hazardous waste,
as well as for closure and post-closure maintenance once they have completed
mining activities on a property. The
Companys mining operations may produce air emissions, including fugitive dust
and other air pollutants, from stationary equipment, storage facilities, and
the use of mobile sources such as trucks and heavy construction equipment which
are subject to review, monitoring and/or control requirements under the
Federal Clean Air Act
and state air
quality laws. Permitting rules may
impose limitations on the Companys production levels or create additional
capital expenditures in order to comply with the rules.
7
The U.S.
Comprehensive
Environmental Response Compensation and Liability Act of 1980
, as
amended (CERCLA), imposes strict, joint and several liability on parties
associated with releases or threats of releases of hazardous substances. Those liable groups include, among others,
the current owners and operators of facilities which release hazardous
substances into the environment and past owners and operators of properties who
owned such properties at the time the disposal of the hazardous substances
occurred. This liability could include
the cost of removal or remediation of the release and damages for injury to the
surrounding property. The Company cannot
predict the potential for future CERCLA liability with respect to its U.S.
properties.
Idaho Laws
Permitting a mining operation, such as Yellow Pine,
located on patented mining claims within a National Forest in Idaho would
require obtaining various federal, state and local permits under the
coordination of the Idaho joint review process.
Mining projects require the establishment and presentation of
environmental baseline conditions for air, water, vegetation, wildlife,
cultural, historical, geological, geotechnical, geochemical, soil and
socioeconomic parameters. An EIS would
be required for any mining activities proposed on public lands. Permits would also be required for
storm-water discharge; wetland disturbance (dredge and fill); surface mining;
cyanide use, transport and storage; air quality; dam safety (for water storage
and/or tailing storage); septic and sewage; water rights appropriation; and
possibly others. In addition, compliance
must be demonstrated with the
Endangered
Species Act
and the
National
Historical Preservation Act
consultation process. Possible county zoning and building permits
and authorization may be required.
Baseline environmental conditions are the basis by which direct and
indirect project-related impacts are evaluated and by which potential
mitigation measures are proposed. If the
Companys project is found to significantly adversely impact any of these
baseline conditions, it could incur significant costs to correct the adverse
impact, or might have to delay the start of production.
California
Laws
A new mining operation in California, such as the Long
Valley gold project, which is on federal unpatented mining claims within a
National Forest, requires various federal, state and local permits. Mining projects require the establishment and
presentation of environmental baseline conditions for air, water, vegetation,
wildlife, cultural, historical, geological, geotechnical, geochemical, soil,
and socioeconomic parameters. An EIS
would be required for any mining activities proposed on public lands. Also required would be a Plan of
Operations/Reclamation Plan, and permits for waste-water discharge; a county
mining plan and reclamation plan; a county mining operations permit; special
use permits from the U.S. Forest Service; and possibly others. In addition, compliance must be demonstrated
with the Endangered Species Act and the National Historical Preservation Act
consultation process. Possible county
zoning and building permits and authorization may be required. Baseline environmental conditions are the
basis by which direct and indirect project-related impacts are evaluated and by
which potential mitigation measures are proposed. If the Companys project is found to
significantly adversely impact any of these baseline conditions, it could incur
significant costs to correct the adverse impact, or delay the start of
production. In addition, on December 12,
2002, California adopted a backfilling law requiring open-pit surface mining
operations for metallic minerals to back-fill the mines. While the Company has determined that the
geometry of our Long Valley gold project would lend itself to compliance with
this law, future adverse changes to this law could have a corresponding adverse
impact on the Companys financial performance and results of operations, for
example, by requiring changes to operating constraints, technical criteria,
fees or surety requirements.
Mexico
Laws
The Company is required under Mexican laws and
regulations to acquire permits and other authorizations before the Paredones
Amarillos or Guadalupe de los Reyes gold projects can be developed and
mined. Since the passage of Mexicos
1988 General Law on Ecological Equilibrium and Environmental Protection, a
sophisticated system for environmental regulation has evolved. In addition, the North American Free Trade
Agreement requirements for regulatory standards in Mexico equivalent to those
of the United States and Canada have obligated the Mexican government to continue
further development of environmental regulation. Most regulatory programs are implemented by
various divisions of the Secretariat of Environment and Natural Resources of
Mexico (SEMARNAT). While the Company
believes that it has or will be able to obtain on a timely basis the necessary
permits to place the Paredones Amarillos gold project into production, there
can be no assurance that the Company will be able to acquire updates to
necessary permits or authorizations on a timely basis. See discussions of Paredones Amarillos permit
status in the Companys Annual Report on Form 10-K for the year ended December 31,
2008, under Part IIItem 7. Managements Discussion and Analysis of
Financial Condition and Results of OperationsOther. Likewise, there can be no assurance that the
Company will be able to acquire the necessary permits or authorizations on a
timely basis to place the Guadalupe de los Reyes gold project into
production. Delays in acquiring any
permit, authorization or updates could increase the development cost of the
Paredones Amarillos
8
gold project or the Guadalupe de los Reyes gold
project, or delay the start of production.
The most significant environmental permitting requirements, as they
relate to the Paredones Amarillos and the Guadalupe de los Reyes gold projects
are developing reports on environmental impacts; regulation and permitting of
discharges to air, water and land; new source performance standards for
specific air and water pollutant emitting sources; solid and hazardous waste
management regulations; developing risk assessment reports; developing
evacuation plans; and monitoring inventories of hazardous materials. If the Paredones Amarillos or the Guadalupe
de los Reyes gold projects are found to not be in compliance with any of these
requirements, the Company could incur significant compliance costs, or might
have to delay the start of production.
Australia
Laws
Mineral projects in the Northern Territory are subject
to Northern Territory laws and regulations regarding environmental matters and
the discharge of hazardous wastes and materials. As with all mining projects, the Mt. Todd
gold project would be expected to have a variety of environmental impacts
should development proceed. The Company
is required under Australian laws and regulations (federal, state and
territorial) to acquire permits and other authorizations before the Mt. Todd
gold project can be developed and mined.
In Australia, environmental legislation plays a significant role in the
mining industry. Various environmental
documents such as the EIS over the Mt. Todd gold project, covering studies on,
inter alia, air, water, pollution, hazardous and toxic wastes, reclamation of
mining area, etc. must be prepared and submitted to the Mining and Petroleum
Authorizations and Evaluation Division of the Department of Regional
Development, Primary Industry, Fisheries and Resources of the Northern
Territory government for approval.
The preparations of the EIS and related documents and
other relevant environmental licenses would involve incurrence of time and
costs and there is no assurance that those approvals/licenses can be obtained
in a timely manner. The Northern Territory
government also has administrative discretion not to approve the EIS documents
or grant the required environmental licenses (including any renewal or
extensions of such documents). The
Company has entered into an agreement with the Northern Territory relating to
environmental and rehabilitation issues.
The Company must also comply with Aboriginal heritage legislation
requirements which require heritage survey work to be undertaken prior to the
commencement of mining operations. All
these conditions may result in the occurrence of significant production costs
and delay the production activity of the Mt. Todd gold project.
These conditions could frustrate investors seeking
certainty in their investments and, as a result, the Company may incur costs
and time to manage any issues which may arise and that could possibly affect
the overall mining activity of the Mt. Todd gold project.
Indonesia
Laws
We are required under Indonesian laws and regulations
to acquire permits and other authorizations before the Companys current
Indonesian mining project, the Awak Mas gold project, can be developed and
mined. In Indonesia, environmental
legislation plays a significant role in the mining industry. Various environmental documents such as the
analysis of environmental impact (AMDAL) concerning the Awak Mas gold
project, covering studies on, inter alia, air, water, land, pollution,
hazardous and toxic wastes and reclamation of mining area, must be prepared and
submitted to the Ministry of Environment for approval. In addition, the Company is also required to
submit periodical environmental reports to the relevant environmental
government agencies pursuant to the AMDAL and other required environmental
licenses (e.g. license for tailing waste).
The preparation of AMDAL documents and other relevant
environmental license documents involves incurrence of time and costs and there
is no assurance that those approvals/licenses can be obtained in a timely
manner. The Indonesian government also
has administrative discretion not to approve AMDAL documents or grant the
required environmental licenses (including any renewal or extensions of such
documents). All these conditions may
delay the production activity of the Awak Mas gold project.
Failure to meet all of the requirements with respect
to the above environmental documents, licensing and report submissions could
cause the Company to be subject to administrative and criminal sanctions as
well as fines. In extreme cases, the
administrative sanctions can also be imposed in the form of revocation of the
Companys business license and the contract of work that it has with the
Indonesian government.
As well, from time to time the implementation of the
regional autonomy law in Indonesia can cause uncertainty as to the existence
and applicability of national and regional regulations (including in the
environmental sector). Often regional
regulations are in conflict with higher regulations that apply nationally. As a result the Company may incur
9
costs and time to manage any issues which may arise
and that could possibly affect the overall mining activity of the Awak Mas gold
project.
The Companys receipt of future payments in connection with
its disposal of the Amayapampa gold project is subject to uncertainty.
In April 2008, the Company announced the disposal
of its wholly-owned subsidiary Vista Gold (Antigua) Corp. (Vista Gold Antigua)
to Republic Gold Corp. (Republic).
Vista Gold Antigua indirectly held the Companys interest in the
Amayapampa gold project in Bolivia. For
further details, see the Companys Annual Report on Form 10-K for the year
ended December 31, 2008, and in particular Part IIItem 7.
Managements Discussion and Analysis of Financial Condition and Results of
OperationsOther. Under the terms of
the transaction, Republic has agreed to pay the Company $3.0 million in three
payments of $1.0 million. The first of
these payments is due and payable upon the start of commercial production (as
defined in the purchase and sale agreement) at Amayapampa followed by $1.0
million payments on each of the first and second anniversaries of the start of
commercial production. In addition,
Republic has agreed to pay the Company a net smelter return royalty on the gold
produced by or on behalf of Republic from the Amayapampa gold project in
varying percentages depending on the price of gold per ounce. The Amayapampa gold project is not currently
in production and the Company cannot assure that it will ever become a
producing mine or, if production is commenced at the mine, the timing and
amounts for any such production.
Further, having disposed of the Amayapampa gold project, the Company
will have no control over the development of this project. Depending on whether and when production
commences at Amayapampa and levels of production achieved, receipt by the
Company of the future payments contemplated by the purchase and sale agreement
for the Amayapampa gold project is subject to uncertainty. Finally a number of legal proceedings have
been initiated in Bolivia with respect to the ownership interests in the mining
concessions comprising the Amayapampa gold project. Although the Company is not a party to these
proceedings, if these challenges are successful, then the Company may lose its
royalty and payment stream described above.
Leverage as a result of the Companys outstanding
convertible notes may harm its financial condition and results of operations.
On March 7, 2008, the Company announced the
closing of a private placement in which it issued $30 million in aggregate
principal amount of the Notes. The Notes
were convertible into Common Shares of the Company at the option of the holder
at a conversion price of $6.00 per share, subject to adjustment in certain
circumstances, including if the Companys Common Shares are trading on the Amex
at less than $5.00 on March 4, 2009, or the Company issues Common Shares,
or securities convertible into Common Shares, at a price of less than $6.00
during the term of the Notes, subject to a minimum conversion price of
$4.80. Pursuant to the terms of the
Notes, on March 4, 2009, the conversion price of the Notes was
automatically adjusted from $6.00 per share to $4.80 per share. As a result of the adjustment, 6.25 million
Common Shares are issuable upon conversion of the Notes. Prior to the adjustment, 5 million Common
Shares were issuable upon the conversion of the Notes. Upon conversion of the Notes, existing
shareholders will suffer immediate dilution of their capital interest in the
Company. Further, the market price of
the Common Shares could decline as a result of the conversion of the Notes and
the sale into the market of the Common Shares underlying the Notes. These factors could make it more difficult
for the Company to raise funds through future offerings of Common Shares.
The Notes bear interest at a rate of 10% per annum
(calculated and payable semi-annually in arrears) and will mature on March 4,
2011. The Companys obligations under
the Notes are guaranteed by its Mexican subsidiary, Minera Paredones Amarillos
S.A. de C.V., and the guarantee is secured by the personal property and real
property associated with the Paredones Amarillos gold project.
The Companys level and the terms of its indebtedness
will have several important effects on its future operations, including,
without limitation that it:
·
will require the
Company to dedicate a portion of its cash flow from operations, if any, to the
payment of principal and interest on the Companys outstanding indebtedness,
thereby reducing the funds available to it for operations and any future
business opportunities;
·
could increase the
Companys vulnerability to adverse changes in general economic and industry
conditions, as well as to competitive pressure; and
·
depending on the
levels of its outstanding debt, could limit the Companys ability to obtain
additional financing for working capital, capital expenditures, general
corporate and other purposes.
10
The Companys ability to make payments of principal
and interest on its indebtedness depends upon the Companys future ability to
generate funds, including through operating cash flows, which will be subject
to the potential development of certain of its properties into producing mines,
metal prices, prevailing economic conditions, industry cycles and financial,
business and other factors affecting its operations, many of which are beyond
the Companys control. If the Company
cannot raise sufficient funds or its cash flows were to prove inadequate to
meet its debt service and other obligations in the future, the Company may be
required, among other things:
·
to
obtain
additional financing in the
debt or equity markets;
·
to
refinance
or restructure all or a
portion of its indebtedness; or
·
to sell selected assets.
The Company cannot assure you that such measures will
be sufficient to enable the Company to service its debt. In addition, any such financing, refinancing
or sale of assets might not be available on economically favorable terms or at
all. If the Company does not generate
sufficient cash flow from operation, and additional financings, borrowings or
refinancings, or proceeds of asset sales are not available to it, the Company
may not have sufficient cash to enable it to meet its obligations, including
payments on the Notes. See Recent
market events and conditions and General economic conditions.
The Company faces intense competition in the mining
industry.
The mining industry is intensely competitive in all of
its phases. As a result of this
competition, some of which is with large established mining companies with
substantial capabilities and with greater financial and technical resources
than the Companys, the Company may be unable to acquire additional attractive
mining claims or financing on terms it considers acceptable. The Company also competes with other mining
companies in the recruitment and retention of qualified managerial and
technical employees. If the Company is
unable to successfully compete for qualified employees, its exploration and
development programs may be slowed down or suspended. The Company competes with other gold
companies for capital. If it is unable
to raise sufficient capital, the Companys exploration and development programs
may be jeopardized or it may not be able to acquire, develop or operate gold
projects.
The Company may be unable to raise additional capital on
favorable terms.
The exploration and development of the Companys
properties, specifically the construction of mining facilities and commencement
of mining operations, require substantial additional financing. Significant capital investment is required to
achieve commercial production from each of the Companys properties. The Company will have to raise additional
funds from external sources in order to maintain and advance its existing
property positions and to acquire new gold projects. There can be no assurance that additional
financing will be available at all or on acceptable terms and, if additional
financing is not available, the Company may have to substantially reduce or
cease its operations.
Some of the Companys directors may have conflicts of
interest as a result of their involvement with other natural resource
companies.
Some of the Companys directors are directors or
officers of other natural resource or mining-related companies. C. Thomas Ogryzlo is the President, Chief Executive
Officer and a director of Polaris Geothermal Inc. and is a director of Baja
Mining Corp. Michael B. Richings, who is
also the Companys Executive Chairman and Chief Executive Officer, is a
director of Allied Nevada Gold Corp., which holds interests in mining
properties. John Clark is a director of
Alberta Clipper Energy Inc. (a Canadian oil and gas exploration and production
company) and Chief Financial Officer and a director of Polaris Geothermal Inc. W. Durand Eppler is director of Allied Nevada
Gold Corp. and Augusta Resource Corporation.
Tracy Stevenson is the non-executive chairman of Quaterra Resources
Inc. These associations may give rise to
conflicts of interest from time to time.
In the event that any such conflict of interest arises, a director who
has such a conflict is required to disclose the conflict at a meeting of the
directors of the company in question and to abstain from voting for or against
approval of any matter in which such director may have a conflict. In appropriate cases, the company in question
will establish a special committee of independent directors to review a matter
in which several directors, or management, may have a conflict. In accordance with the laws of the Yukon Territory,
the directors of all Yukon Territory companies are required to act honestly, in
good faith and in the best interests of a company for which they serve as a
director.
11
There may be challenges to the Companys title in its
mineral properties.
There may be challenges to the title to the mineral
properties in which the Company holds a material interest. If there are title defects with respect to
any of its properties, the Company might be required to compensate other
persons or perhaps reduce its interest in the affected property. Also, in any such case, the investigation and
resolution of title issues would divert managements time from ongoing
exploration and development programs.
The Companys property interests in Mexico and Indonesia are
subject to risks from political and economic instability in those countries.
The Company has property interests in Mexico and
Indonesia which may be affected by risks associated with political or economic
instability in those countries. The
risks include, but are not limited to: military repression, extreme
fluctuations in currency exchange rates, labor instability or militancy,
mineral title irregularities and high rates of inflation. In addition, changes in mining or investment
policies or shifts in political attitude in Mexico or Indonesia may adversely
affect the Companys business. The
Company may be affected in varying degrees by government regulation with
respect to restrictions on production, price controls, export controls, income
taxes, expropriation of property, maintenance of claims, environmental
legislation, land use, land claims of local people, water use and mine
safety. The effect of these factors
cannot be accurately predicted.
The Companys financial position and results are subject to
fluctuations in foreign currency values.
Because the Company has mining exploration and
evaluation operations in North and South America and in Australia and
Indonesia, the Company is subject to foreign currency fluctuations, which may
materially affect its financial position and results. The Company does not engage in currency
hedging to offset any risk of currency fluctuations.
The Company measures and reports its financial results
in U.S. dollars. The Company has mining
projects in Mexico, Australia and Indonesia, and it is looking for other
projects elsewhere in the world.
Economic conditions and monetary policies in these countries can result
in severe currency fluctuations.
Currently all of the Companys material transactions
in Mexico, Australia and Indonesia are denominated in U.S. dollars. However, if the Company were to begin
commercial operations in any of these or other countries, it is possible that
material transactions incurred in the local currency, such as engagement of
local contractors for major projects, will be settled at a U.S. dollar value
that is different from the U.S. dollar value of the transaction at the time it
was incurred. This could have the effect
of undermining profits from operations in that country.
Future sales of Securities, including Common Shares, in the
public or private markets could adversely affect the trading price of the
Common Shares and the Companys ability to raise funds in new share offerings.
Future sales of substantial amounts of Securities (including
the Common Shares) or securities exchangeable, convertible or exercisable for
Securities in the public or private markets, or the perception that such sales
could occur, could adversely affect prevailing trading prices of the Companys
Common Shares and could impair its ability to raise capital through future
offerings of equity or equity-related securities. In March 2008, the Company announced the
closing of a private placement in which it issued $30 million in aggregate
principal amount of the Notes. (See Leverage
as a result of the Companys outstanding convertible notes may harm its
financial condition and results of operations above). The Notes are convertible into Common Shares
at the option of the holder at a conversion price of $6.00 per share, subject
to adjustment in certain circumstances, including if the Companys Common
Shares are trading on the Amex at less than $5.00 on March 4, 2009, or it
issues Common Shares, or securities convertible into Common Shares, at a price
of less than $6.00 during the term of the Notes, subject to a minimum
conversion price of $4.80. Pursuant to the terms of the Notes, on March 4,
2009, the conversion price of the Notes was automatically adjusted from $6.00
per share to $4.80 per share. As a
result of the adjustment, 6.25 million Common Shares are issuable upon
conversion of the Notes. Prior to the adjustment, 5 million Common Shares were
issuable upon the conversion of the Notes.
Shareholders would suffer dilution upon the conversion of the Notes into
the Companys Common Shares. For
example, if all $30 million of outstanding Notes were converted at the minimum
conversion price of $4.80, this would result in the issuance of an additional
6,250,000 Common Shares, or 15.3% of the Companys issued and outstanding
Common Shares as of the date of this Propectus assuming conversion of the
Notes. No prediction can be made as to
the effect, if any, that future sales of Securities (including Common Shares)
or securities exchangeable, convertible or exercisable for Securities or the
availability of Common Shares for future sale, will have on the trading price
of the Companys Common Shares.
Market for the Securities.
There is currently no market through which the
Securities, other than the Common Shares, may be sold and purchasers may not be
able to resell the Securities purchased under this Prospectus and unless
otherwise specified in a Prospectus Supplement, the Debt Securities, Warrants,
Subscription Receipts and Units will not be listed on any securities or stock
exchange or any automated dealer quotation system. This may affect the pricing
of the Securities, other than the Common Shares, in the secondary market, the
transparency and availability of trading prices, the liquidity of these
securities and the extent of issuer regulation. There can be no assurance that
an active trading market for the Securities, other than the Common Shares, will
develop or, if developed, that any such market will be sustained.
12
It may be difficult to enforce judgments or bring actions
outside the United States against the Company and certain of its directors and
officers.
The Company is a Canadian corporation and certain of
its directors and officers are neither citizens nor residents of the United
States. A substantial part of the assets
of several of these persons, and of the Company, are located outside the United
States. As a result, it may be difficult
or impossible for an investor:
·
to enforce in
courts outside the United States judgments obtained in United States courts
based upon the civil liability provisions of United States federal securities
laws against these persons and the Company; or
·
to bring in courts
outside the United States an original action to enforce liabilities based upon
United States federal securities laws against these persons and the Company.
Recent market events and conditions.
In 2007 and into 2008, the U.S. credit markets began
to experience serious disruption due to a deterioration in residential property
values, defaults and delinquencies in the residential mortgage market
(particularly, sub-prime and non-prime mortgages) and a decline in the credit
quality of mortgage backed securities.
These problems led to a slow-down in residential housing market
transactions, declining housing prices, delinquencies in non-mortgage consumer
credit and a general decline in consumer confidence. These conditions continued and worsened in
2008, causing a loss of confidence in the broader U.S. and global credit and
financial markets and resulting in the collapse of, and government intervention
in, major banks, financial institutions and insurers and creating a climate of
greater volatility, less liquidity, widening of credit spreads, a lack of price
transparency, increased credit losses and tighter credit conditions. Notwithstanding various actions by the U.S.
and foreign governments, concerns about the general condition of the capital
markets, financial instruments, banks, investment banks, insurers and other
financial institutions caused the broader credit markets to further deteriorate
and stock markets to decline substantially.
In addition, general economic indicators have deteriorated, including
declining consumer sentiment, increased unemployment and declining economic
growth and uncertainty about corporate earnings.
These unprecedented disruptions in the current credit
and financial markets have had a significant material adverse impact on a
number of financial institutions and have limited access to capital and credit
for many companies. These disruptions
could, among other things, make it more difficult for the Company to obtain, or
increase its cost of obtaining, capital and financing for its operations. The Companys access to additional capital
may not be available on terms acceptable to it or at all.
General economic conditions.
The recent unprecedented events in global financial
markets have had a profound impact on the global economy. Many industries, including the gold mining
industry, are impacted by these market conditions. Some of the key impacts of the current
financial market turmoil include contraction in credit markets resulting in a
widening of credit risk, devaluations and high volatility in global equity,
commodity, foreign exchange and precious metal markets, and a lack of market
liquidity. A continued or worsened
slowdown in the financial markets or other economic conditions, including but
not limited to, consumer spending, employment rates, business conditions,
inflation, fuel and energy costs, consumer debt levels, lack of available
credit, the state of the financial markets, interest rates, and tax rates may
adversely affect the Companys growth and profitability. Specifically:
·
the global
credit
/liquidity crisis
could impact the cost and availability of financing and the Companys overall
liquidity;
·
the volatility of
gold
prices may impact
the Companys revenues, profits and cash flow;
·
volatile energy
prices
, commodity and consumables
prices and currency exchange rates impact potential production costs; and
·
the devaluation and
volatility of global stock markets impacts the valuation of the Companys
equity securities.
These factors could have a material adverse effect on the
Companys financial condition and results of operations
.
13
DOCUMENTS INCORPORATED BY REFERNCE
The SEC allows the
Company to incorporate by reference information it files with the
SEC. This means that the Company can disclose important information
to you by referring you to those documents.
Any information the Company references in this manner is considered part
of this Prospectus. Information the Company files with the SEC after
the date of this Prospectus will automatically update and, to the extent
inconsistent, supersede the information contained in this Prospectus. Copies of the documents incorporated by
reference in this Prospectus may be obtained on written or oral request without
charge from the Secretary of the Company at 1200 Waterfront Centre, 200 Burrard
Street, Vancouver, British Columbia, V7X 1T2 (telephone: (604) 687-5744).
We incorporate by
reference the documents listed below and future filings we make with the SEC
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended (the Exchange Act) (excluding, unless otherwise
provided therein or herein, information furnished pursuant to Item 2.02 and
Item 7.01 on any Current Report on Form 8-K) after the date of the initial
filing of this registration statement on Form S-3 to which this Prospectus
relates until the termination of the offering under this Prospectus.
(a)
the Annual Report on Form 10-K of
the Company, for the year ended December 31, 2008, which report contains
the audited consolidated financial statements of the Company and the notes
thereto as at December 31, 2008 and 2007 and for the three years ended December 31,
2008, 2007, and 2006, together with the auditors report thereon, as filed on March 13,
2009;
(b)
amendment number one to the Companys
Annual Report on Form 10-K/A, for the fiscal year ended December 31,
2008, as filed on April 16, 2009;
(c)
the Companys Proxy Statement on Schedule
14A, dated March 30, 2009, in connection with the Companys May 4,
2009 annual general meeting of shareholders, including the information
specifically incorporated by reference into our Annual Report on Form 10-K
for the fiscal year ended December 31, 2008, as filed on April 2,
2009;
(d)
the Companys Current Reports on Form 8-K
filed January 13, 2009, January 27, 2009, March 17, 2009 and April 6,
2009;
(e)
the description of the Companys common
stock contained in its registration statement on Form 8-A filed on January 4,
1988, including any amendment or report filed for purposes of updating such
description; and
(f)
all other documents filed by us with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, after
the date of this Prospectus but before the end of the offering of the
securities made by this Prospectus.
14
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS
This Prospectus and the documents that are incorporated by reference in
this Prospectus contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 that are intended to be
covered by the safe harbor created by such legislation. All statements, other than statements of
historical facts, included in this Prospectus, and documents incorporated
herein by reference and filed with the SEC that address activities, events or
developments that the Company expects or anticipates will or may occur in the
future are forward-looking statements, including, but not limited to, such
things as those listed below:
·
financial and operating results and
estimates;
·
potential funding requirements and sources of
capital;
·
timing, performance and results of
feasibility studies;
·
timing and receipt of required land use,
environmental and other permits for the Paredones Amarillos gold project and
timing for starting and completion of drilling and testing programs at the
Paredones Amarillos gold project;
·
plans to confirm the validity of the Change
of Land Use Permit for the Paredones Amarillos gold project and timing and
outcome for confirmation of the status of this permit and timing and outcome
for the alternative application for an interim Change of Land Use Permit for
the drilling program and a new Change of Land Use Permit for the Paredones
Amarillos gold project;
·
timing and outcome for the application for the
Temporary Occupation Permit for mining activities at the Paredones Amarillos
gold project;
·
plans to purchase remaining surface land or
obtain rights-of-way required by the Paredones Amarillos gold project;
·
capital and operating cost estimates for the
Paredones Amarillos gold project, and anticipated timing of commencement of
construction at the Paredones Amarillos gold project;
·
plans for evaluation of the Mt. Todd
gold project, including estimates of silver, copper and gold resources;
·
preliminary assessment results and plans for
a pre-feasibility study at the Mt. Todd gold project;
·
results of drilling programs and prospects
for exploration and conversion of resources at the Mt. Todd
gold project;
·
potential for gold production at the
Amayapampa gold project, timing and receipt of future payments in connection
with the disposal of the Amayapampa gold project and status of legal
proceedings in Bolivia;
·
ongoing debt service requirements for
the Companys outstanding $30 million aggregate principal amount of the Notes
and potential redemption or conversion of the Notes;
·
future gold prices;
·
future business strategy, competitive
strengths, goals and expansion and growth of our business;
·
the Companys potential status as a producer;
·
plans and estimates concerning potential
project development including matters such as schedules, estimated completion
dates and estimated capital and operating costs;
·
plans and proposed timetables for exploration
programs and estimates of exploration expenditures;
·
estimates of mineral reserves and mineral
resources; and
15
·
future share price and valuation for the
Company and for marketable securities held by the Company.
The words estimate, plan, anticipate, expect, intend, believe,
will, may and similar expressions are intended to identify forward-looking
statements. These statements involve known and unknown risks, uncertainties,
assumptions and other factors which may cause the Companys actual results,
performance or achievements to be materially different from any results,
performance or achievements expressed or implied by such forward-looking
statements. These factors include risks such as:
·
the Companys likely status as a passive
foreign investment company for U.S. federal tax purposes;
·
feasibility study results and preliminary
assessment results and the estimates on which they are based;
·
economic viability of a deposit;
·
delays in commencement of construction on the
Paredones Amarillos gold project;
·
status of the Companys required governmental
permits for the Paredones Amarillos gold project;
·
increased costs that affect the Companys
financial condition;
·
a shortage of equipment and supplies;
·
whether the Companys acquisition,
exploration and development activities will be commercially successful;
·
fluctuations in the price of gold;
·
inherent hazards of mining exploration,
development and operating activities;
·
calculation of reserves and mineralized
material and the fluctuations thereto based on metal prices, inherent
vulnerability of the ore and recoverability of metal in the
mining process;
·
environmental regulations to which the
Companys exploration and development operations are subject;
·
the Companys receipt of future payments in
connection with our disposal of the Amayapampa gold project;
·
leverage as a result of the Notes;
·
intense competition in the mining industry;
·
the Companys potential inability to raise
additional capital on favorable terms, if at all;
·
conflicts of interest of some of our
directors as a result of their involvement with other natural resource
companies;
·
potential challenges to our title of our
mineral properties;
·
political and economic instability in Mexico,
Bolivia and Indonesia;
·
fluctuation in foreign currency values;
·
trading price of our Common Shares and our
ability to raise funds in new share offerings due to future sales of our Common
Shares in the public or private market;
·
difficulty in bringing actions or enforcing
judgments against us and certain of our directors or officers outside of the
Untied States;
·
recent market events and conditions; and
16
·
general economic conditions.
For a more detailed discussion of such risks and other important
factors that could cause actual results to differ materially from those in such
forward-looking statements please see Risk Factors and Uncertainties in this
Prospectus. Although we have attempted to identify important factors that could
cause actual results to differ materially from those described in
forward-looking statements, there may be other factors that cause results not
to be as anticipated, estimated or intended. There can be no assurance that
these statements will prove to be accurate as actual results and future events
could differ materially from those anticipated in the statements. Except as
required by law, we assume no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events
or otherwise.
We qualify all the forward-looking statements
contained in this Prospectus by the foregoing cautionary statements.
17
CAUTIONARY
NOTE TO U.S. INVESTORS REGARDING RESERVE AND RESOURCE ESTIMATES
The terms mineral
reserve, proven mineral reserve and probable mineral reserve are Canadian
mining terms as defined in accordance with Canadian National Instrument 43-101Standards
of Disclosure for Mineral Projects (NI 43-101) and the Canadian
Institute of Mining, Metallurgy and Petroleum (the CIM)
CIM Definition Standards on Mineral Resources and
Mineral Reserves
, adopted by the CIM Council, as amended. These
definitions differ from the definitions in the SEC Industry Guide 7 under the
Securities Act. Under SEC Industry Guide 7 standards, a final or bankable
feasibility study is required to report reserves, the three-year historical
average price is used in any reserve or cash flow analysis to designate
reserves and the primary environmental analysis or report must be filed with
the appropriate governmental authority.
In addition, the
terms mineral resource, measured mineral resource, indicated mineral
resource and inferred mineral resource are defined in and required to be
disclosed by NI 43-101; however, these terms are not defined terms under
SEC Industry Guide 7 and are normally not permitted to be used in reports and
registration statements filed with the SEC. Investors are cautioned not to
assume that any part or all of mineral deposits in these categories will ever
be converted into reserves. Inferred mineral resources have a great amount of
uncertainty as to their existence, and great uncertainty as to their economic
and legal feasibility. It cannot be assumed that all, or any part, of an
inferred mineral resource will ever be upgraded to a higher category. Under
Canadian rules, estimates of inferred mineral resources may not form the basis
of feasibility or pre-feasibility studies, except in rare cases. Investors are
cautioned not to assume that all or any part of an inferred mineral resource
exists or is economically or legally mineable. Disclosure of contained ounces
in a resource is permitted disclosure under Canadian regulations; however, the
SEC normally only permits issuers to report mineralization that does not
constitute reserves by SEC standards as in place tonnage and grade without
reference to unit measures.
Accordingly, information
contained in this Prospectus and the documents incorporated by reference herein
and any Prospectus Supplement contain descriptions of our mineral deposits that
may not be comparable to similar information made public by U.S. companies
subject to the reporting and disclosure requirements under the
United States federal securities laws and the rules and regulations
thereunder.
PRESENTATION OF FINANCIAL INFORMATION AND EXCHANGE RATE
DATA
Except as
otherwise indicated, all financial statements and financial data contained in,
or incorporated by reference into, this Prospectus have been prepared in
accordance with Canadian generally accepted accounting principles (GAAP),
which differ in certain significant respects from U.S. GAAP. For a description of the material differences
between Canadian GAAP and U.S. GAAP as they relate to the Companys financial
statements, see note 19 to the Companys audited consolidated financial
statements for the years ended December 31, 2008 and 2007, contained in
the Companys Annual Report on Form 10-K, which is incorporated by
reference into this Prospectus.
The following
table sets forth, for each period indicated, the exchange rates of the Canadian
dollar to the U.S. dollar for the end of each period indicated and the high,
low and average (based on the exchange rate on the last day of each month
during such period) exchange rates for each of such periods (such rates, which
are expressed in Canadian dollars are based on the noon buying rates for U.S.
dollars reported by the Bank of Canada).
|
|
Three Months
Ended
March 31,
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
Cdn$
|
1.2707
|
|
Cdn$
|
1.2372
|
|
Cdn$
|
1.1792
|
|
Cdn$
|
1.1671
|
|
Low
|
|
1.2364
|
|
0.9798
|
|
0.9499
|
|
1.1028
|
|
Average
|
|
1.2558
|
|
1.0716
|
|
1.0666
|
|
1.1308
|
|
End of Period
|
|
1.2602
|
|
1.2246
|
|
0.9881
|
|
1.1653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On April 16, 2009, the noon buying rate reported
by the Bank of Canada was $1.00 = Cdn$1.2062.
18
RECENT DEVELOPMENTS
Filing of Canadian Prospectus
On April 17, 2009, the Company filed a base shelf
short form prospectus with the securities regulatory authorities in the
provinces of
British Columbia,
Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia, New Brunswick, Prince
Edward Island and Newfoundland and Labrador and in the Yukon Territory, the
Northwest Territories and Nunavut, which upon final receipt, will permit the
Company to offer and sell the Securities for gross proceeds of
$200,000,000. The Securities that may be
sold in the provinces and territories of Canada named above, together with the
Securities to be sold in the United States pursuant to this Prospectus, is not
expected to exceed $200,000,000.
USE OF PROCEEDS
Unless otherwise
indicated in the applicable Prospectus Supplement, the net proceeds from the
sale of Securities will be used by the Company for development of existing or
acquired mineral properties and may also be used for acquisitions, working
capital requirements, to repay indebtedness outstanding from time to time or
for other general corporate purposes.
The Company may, from time to time, issue Common Shares or other
securities otherwise than through the offering of Securities pursuant to this
Prospectus.
RATIO
OF EARNINGS TO FIXED CHARGES
The Companys
ratio of earnings to fixed charges is as follows for the period indicated: (the
deficiency figures and coverage ratio have been calculated based on amounts
reported under Canadian GAAP)
FISCAL YEAR ENDED DECEMBER 31
|
|
2004
|
|
2005
|
|
2006
|
|
2007
|
|
2008
|
|
N/A(1)
|
|
N/A(1)
|
|
N/A(1)
|
|
N/A(1)
|
|
(2.77)
|
|
(1) The Company did not have any fixed charges during the
fiscal years ended December 31, 2004 through 2007.
The Companys interest expense requirements amounted to approximately
$2.48 million for the year ended December 31, 2008. The Companys net loss before interest expense
and income tax for the year ended December 31, 2008 was approximately $6.88
million, resulting in an interest coverage deficiency of approximately $9.36
million and a negative ratio of earnings to fixed charges of (2.77). Although
the Company has a negative ratio of earnings to fixed charges for the year
ended December 31, 2008, the Company had approximately $13.2 million in cash
and cash equivalents as at December 31, 2008.
As of the date of this Prospectus, the Company has approximately $20.0
million in cash and cash equivalents.
The Company has computed the ratio of fixed charges by dividing
earnings by fixed charges. For this purpose, earnings consist of
income/(loss) from operations before income tax, minority interest adjustments
and changes in accounting principles and fixed charges, and fixed charges
consists of the interest portion of rental expense and interest incurred. Please refer to Exhibit 12 filed with
the registration statement of which this Prospectus forms a part for additional
information regarding the ratio of earnings to cover fixed charges.
DESCRIPTION
OF COMMON SHARES
The Company is
authorized to issue an unlimited number of Common Shares, without par value, of
which 34,475,829 are issued and
outstanding as at the date of this Prospectus.
There are options outstanding to purchase up to 2,205,779 Common Shares
at prices ranging from $1.69 to $7.45. There
are 200,000 broker warrants outstanding to purchase up to 200,000 Common Shares
at a price of $6.00 per Common Share. Holders
of Common Shares are entitled to one vote per Common Share at all meetings of
shareholders, to receive dividends as and when declared by the board of
directors of the Company and to receive a
pro
rata
share of the assets of the Company available for distribution
to the shareholders in the event of the liquidation, dissolution or winding-up
of the Company. There are no
pre-emptive, conversion or redemption rights attached to the Common Shares.
DESCRIPTION
OF DEBT SECURITIES
In this
description of Debt Securities section only, Vista or the Company refer to
Vista Gold Corp. but not to its subsidiaries.
The Company may
issue Debt Securities in one or more series under an indenture (the Indenture),
to be entered into among the Company, Computershare Trust Company of Canada, as
Canadian trustee, and Computershare Trust Company N.A., as U.S. trustee. The
Indenture will be subject to and governed by the
United States Trust Indenture Act of 1939,
as amended (the Trust Indenture Act) and the
Business Corporation Act
(Yukon Territory). A copy of the form
of the Indenture will be filed with the SEC as an exhibit to the registration
statement of which this Prospectus
forms a part and will be filed on SEDAR.
The following description sets forth certain general terms and
provisions of the Debt Securities and is not intended to be complete. For a
more complete description, prospective
19
investors should
refer to the Indenture and the terms of the Debt Securities. If Debt Securities
are issued, the Company will describe in the applicable Prospectus Supplement
the particular terms and provisions of any series of the Debt Securities and a
description of how the general terms and provisions described below may apply
to that series of the Debt Securities. Prospective investors should rely on
information in the applicable Prospectus Supplement and not on the following
information to the extent that the information in such Prospectus Supplement is
different from the following information.
The Company will file as exhibits to the registration statement of which
this Prospectus is a part, or will incorporate by reference from a current
report on Form 8-K that the Company files with the SEC, any supplemental
indenture describing the terms and conditions of Debt Securities the Company is
offering before the issuance of such Debt Securities.
The Company may
issue debt securities and incur additional indebtedness other than through the
offering of Debt Securities pursuant to this Prospectus.
General
The Indenture will
not limit the aggregate principal amount of Debt Securities that the Company
may issue under the Indenture and will not limit the amount of other
indebtedness that the Company may incur. The Indenture will provide that the
Company may issue Debt Securities from time to time in one or more series and
may be denominated and payable in U.S. dollars, Canadian dollars or any foreign
currency. Unless otherwise indicated in the applicable Prospectus Supplement,
the Debt Securities will be unsecured obligations of the Company. The Indenture
will also permit the Company to increase the principal amount of any series of
the Debt Securities previously issued and to issue that increased principal
amount.
The applicable
Prospectus Supplement for any series of Debt Securities that the Company offers
will describe the specific terms of the Debt Securities and may include, but is
not limited to, any of the following:
·
the title of the
Debt Securities;
·
the aggregate
principal amount of the Debt Securities;
·
the percentage
of principal amount at which the Debt Securities will be issued;
·
whether payment
on the Debt Securities will be senior or subordinated to the Companys other
liabilities or obligations;
·
whether payment
of the Debt Securities will be guaranteed by any other person;
·
the date or
dates, or the methods by which such dates will be determined or extended, on
which the Company may issue the Debt Securities and the date or dates, or the
methods by which such dates will be determined or extended, on which the
Company will pay the principal and any premium on the Debt Securities and the
portion (if less than the principal amount) of Debt Securities to be payable
upon a declaration of acceleration of maturity;
·
whether the Debt Securities will bear
interest, the interest rate (whether fixed or variable) or the method of
determining the interest rate, the date from which interest will accrue, the
dates on which the Company will pay interest and the record dates for interest
payments, or the methods by which such dates will be determined or extended;
·
the place or
places the Company will pay principal, premium, if any, and interest and the
place or places where Debt Securities can be presented for registration of
transfer or exchange;
·
whether and
under what circumstances the Company will be required to pay any additional
amounts for withholding or deduction for Canadian taxes with respect to the
Debt Securities, and whether and on what terms the Company will have the option
to redeem the Debt Securities rather than pay the additional amounts;
20
·
whether the
Company will be obligated to redeem or repurchase the Debt Securities pursuant
to any sinking or purchase fund or other provisions, or at the option of a
holder and the terms and conditions of such redemption;
·
whether the
Company may redeem the Debt Securities prior to maturity and the terms and
conditions of any such redemption;
·
the
denominations in which the Company will issue any registered Debt Securities,
if other than denominations of US$1,000 and any multiple of US$l,000 and, if
other than denominations of US$5,000, the denominations in which any
unregistered debt security shall be issuable;
·
whether the
Company will make payments on the Debt Securities in a currency or currency
unit other than U.S. dollars or by delivery of the Companys common shares or
other property;
·
whether payments
on the Debt Securities will be payable with reference to any index, formula or
other method;
·
whether the
Company will issue the Debt Securities as global securities and, if so, the
identity of the depositary for the global securities;
·
whether the
Company will issue the Debt Securities as unregistered securities, registered
securities or both;
·
any changes or
additions to events of default or covenants whether or not such events of
default or covenants are consistent with the events of default or covenants in
the Indenture;
·
the
applicability of, and any changes or additions to, the provisions for
defeasance described under Defeasance below;
·
whether the
holders of any series of Debt Securities have special rights if specified
events occur;
·
the terms, if
any, for any conversion or exchange of the Debt Securities for any other
securities;
·
provisions as to
modification, amendment or variation of any rights or terms attaching to the
Debt Securities; and
·
any other terms,
conditions, rights and preferences (or limitations on such rights and preferences)
including covenants and events of default which apply solely to a particular
series of the Debt Securities being offered which do not apply generally to
other Debt Securities, or any covenants or events of default generally
applicable to the Debt Securities which do not apply to a particular series of
the Debt Securities.
Unless stated
otherwise in the applicable Prospectus Supplement, no holder of Debt Securities
will have the right to require the Company to repurchase the Debt Securities
and there will be no increase in the interest rate if the Company becomes
involved in a highly leveraged transaction or the Company has a change of
control.
The Company may
issue Debt Securities bearing no interest or interest at a rate below the
prevailing market rate at the time of issuance, and offer and sell the Debt
Securities at a discount below their stated principal amount. The Company may
also sell any of the Debt Securities for a foreign currency or currency unit,
and payments on the Debt Securities may be payable in a foreign currency or
currency unit. In any of these cases, the Company will describe certain
Canadian federal and U.S. federal income tax consequences and other special
considerations in the applicable Prospectus Supplement.
The Company may
issue Debt Securities with terms different from those of Debt Securities
previously issued and, without the consent of the holders thereof, the Company
may reopen a previous issue of a series of Debt Securities and issue additional
Debt Securities of such series (unless the reopening was restricted when such
series was created).
Ranking
and Other Indebtedness
Unless otherwise
indicated in an applicable Prospectus Supplement, the Debt Securities will be
unsecured obligations and will rank equally with all of the Companys other
unsecured and other subordinated debt from time to time outstanding and equally
with other Debt Securities issued under the Indenture. The Indenture will
provide that the Debt Securities will be subordinated to and junior in right of
payment to all present and future Senior
21
Indebtedness.
Senior Indebtedness will be defined in the Indenture as: (a) all
indebtedness of the Company in respect of borrowed money, other than: (i) indebtedness
evidenced by the Debt Securities; and (ii) indebtedness which, by the
terms of the instrument creating or evidencing it, is expressed to rank in
right of payment equally with or subordinate to the indebtedness evidenced by
the Debt Securities; (b) all obligations of the Company for the
reimbursement of amounts paid pursuant to any letter of credit, bankers
acceptance or similar credit transaction; and (c) all obligations of the
type referred to in paragraphs (a) through (b) above of other persons
for the payment of which the Company is responsible or liable as obligor,
guarantor or otherwise. For greater
certainty, Senior Indebtedness will include all indebtedness of the Company
for borrowed money which is outstanding as at the date of the Indenture.
The Companys
Board of Directors may establish the extent and manner, if any, to which
payment on or in respect of a series of Debt Securities will be senior or will
be subordinated to the prior payment of the Companys other liabilities and
obligations, other than Senior Indebtedness, and whether the payment of
principal, premium, if any, and interest, if any, will be guaranteed by any
other person and the nature and priority of any security.
Debt
Securities in Global Form
The Depositary and Book-Entry
Unless otherwise
specified in the applicable Prospectus Supplement, a series of the Debt
Securities may be issued in whole or in part in global form as a global
security and will be registered in the name of or issued in bearer form and be
deposited with a depositary, or its nominee, each of which will be identified
in the applicable Prospectus Supplement relating to that series. Unless and
until exchanged, in whole or in part, for the Debt Securities in definitive
registered form, a global security may not be transferred except as a whole by
the depositary for such global security to a nominee of the depositary, by a
nominee of the depositary to the depositary or another nominee of the
depositary or by the depositary or any such nominee to a successor of the
depositary or a nominee of the successor.
The specific terms
of the depositary arrangement with respect to any portion of a particular
series of the Debt Securities to be represented by a global security will be
described in the applicable Prospectus Supplement relating to such series. The
Company anticipates that the provisions described in this section will apply to
all depositary arrangements.
Upon the issuance
of a global security, the depositary therefor or its nominee will credit, on
its book entry and registration system, the respective principal amounts of the
Debt Securities represented by the global security to the accounts of such
persons, designated as participants, having accounts with such depositary or
its nominee. Such accounts shall be designated by the underwriters, dealers or
agents participating in the distribution of the Debt Securities or by the
Company if such Debt Securities are offered and sold directly by the Company.
Ownership of beneficial interests in a global security will be limited to
participants or persons that may hold beneficial interests through
participants. Ownership of beneficial interests in a global security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the depositary therefor or its nominee (with respect to
interests of participants) or by participants or persons that hold through
participants (with respect to interests of persons other than participants).
The laws of some states in the United States may require that certain
purchasers of securities take physical delivery of such securities in
definitive form.
So long as the
depositary for a global security or its nominee is the registered owner of the
global security or holder of a global security in bearer form, such depositary
or such nominee, as the case may be, will be considered the sole owner or
holder of the Debt Securities represented by the global security for all
purposes under the Indenture. Except as provided below, owners of beneficial
interests in a global security will not be entitled to have a series of the
Debt Securities represented by the global security registered in their names,
will not receive or be entitled to receive physical delivery of such series of
the Debt Securities in definitive form and will not be considered the owners or
holders thereof under the Indenture.
Any payments of
principal, premium, if any, and interest, if any, on global securities
registered in the name of a depositary or securities registrar will be made to
the depositary or its nominee, as the case may be, as the registered owner of
the global security representing such Debt Securities. None of the Company, any
trustee or any paying agent for the Debt Securities represented by the global
securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the global security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
22
The Company
expects that the depositary for a global security or its nominee, upon receipt
of any payment of principal, premium, if any, or interest, if any, will credit
participants accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global security
as shown on the records of such depositary or its nominee. The Company also
expects that payments by participants to owners of beneficial interests in a
global security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in street name, and will be the
responsibility of such participants.
Discontinuance of Depositarys Services
If a depositary
for a global security representing a particular series of the Debt Securities
is at any time unwilling or unable to continue as depositary or, if at any time
the depositary for such series shall no longer be registered or in good
standing under the Exchange Act, and a successor depositary is not appointed by
us within 90 days, the Company will issue such series of the Debt Securities in
definitive form in exchange for a global security representing such series of
the Debt Securities. If an event of default under the Indenture has occurred
and is continuing, Debt Securities in definitive form will be printed and
delivered upon written request by the holder to the appropriate trustee. In
addition, the Company may at any time and in the Companys sole discretion
determine not to have a series of the Debt Securities represented by a global
security and, in such event, will issue a series of the Debt Securities in definitive
form in exchange for all of the global securities representing that series of
Debt Securities.
Debt
Securities in Definitive Form
A series of the
Debt Securities may be issued in definitive form, solely as registered
securities, solely as unregistered securities or as both registered securities
and unregistered securities. Registered securities will be issuable in
denominations of US$1,000 and integral multiples of US$1,000 and unregistered
securities will be issuable in denominations of US$5,000 and integral multiples
of US$5,000 or, in each case, in such other denominations as may be set out in
the terms of the Debt Securities of any particular series. Unless otherwise
indicated in the applicable Prospectus Supplement, unregistered securities will
have interest coupons attached.
Unless otherwise
indicated in the applicable Prospectus Supplement, payment of principal,
premium, if any, and interest, if any, on the Debt Securities (other than
global securities) will be made at the office or agency designated by the
Company, or at the Companys option the Company can pay principal, interest, if
any, and premium, if any, by cheque mailed or delivered to the address of the
person entitled at the address appearing in the security register of the trustee
or electronic funds wire or other transmission to an account of persons who
meet certain thresholds set out in the Indenture who are entitled to receive
payments by wire transfer. Unless otherwise indicated in the applicable
Prospectus Supplement, payment of interest, if any, will be made to the persons
in whose name the Debt Securities are registered at the close of business on
the day or days specified by the Company.
At the option of
the holder of Debt Securities, registered securities of any series will be
exchangeable for other registered securities of the same series, of any
authorized denomination and of a like aggregate principal amount. If, but only
if, provided in an applicable Prospectus Supplement, unregistered securities
(with all unmatured coupons, except as provided below, and all matured coupons
in default) of any series may be exchanged for registered securities of the
same series, of any authorized denominations and of a like aggregate principal
amount and tenor. In such event, unregistered securities surrendered in a
permitted exchange for registered securities between a regular record date or a
special record date and the relevant date for payment of interest shall be
surrendered without the coupon relating to such date for payment of interest,
and interest will not be payable on such date for payment of interest in
respect of the registered security issued in exchange for such unregistered
security, but will be payable only to the holder of such coupon when due in
accordance with the terms of the Indenture. Unless otherwise specified in an
applicable Prospectus Supplement, unregistered securities will not be issued in
exchange for registered securities.
The applicable
Prospectus Supplement may indicate the places to register a transfer of the
Debt Securities in definitive form. Service charges may be payable by the
holder for any registration of transfer or exchange of the Debt Securities in
definitive form, and the Company may, in certain instances, require a sum
sufficient to cover any tax or other governmental charges payable in connection
with these transactions.
The Company shall
not be required to:
·
issue, register
the transfer of or exchange any series of the Debt Securities in definitive
form during a period beginning at the opening of 15 business days before any
selection of securities of that series of the
23
Debt Securities to be
redeemed and ending on the relevant date of notice of such redemption, as
provided in the Indenture;
·
register the
transfer of or exchange any registered security in definitive form, or portion
thereof, called for redemption, except the unredeemed portion of any registered
security being redeemed in part;
·
exchange any
unregistered security called for redemption except to the extent that such
unregistered security may be exchanged for a registered security of that series
and like tenor; provided that such registered security will be simultaneously
surrendered for redemption with written instructions for payment consistent
with the provisions of the Indenture; or
·
issue, register
the transfer of or exchange any of the Debt Securities in definitive form which
have been surrendered for repayment at the option of the holder, except the
portion, if any, of such Debt Securities not to be so repaid.
Merger,
Amalgamation or Consolidation
The Indenture will
provide that the Company may not amalgamate or consolidate with, merge into or
enter into any statutory arrangement with any other person or, directly or
indirectly, convey, transfer or lease all or substantially all of the Companys
properties and assets to another person, unless among other items:
·
the resulting, surviving or
transferee person is organized and existing under the laws of Canada, or any
province or territory thereof, the United States, any state thereof or the
District of Columbia, or, if the amalgamation, merger, consolidation, statutory
arrangement or other transaction would not impair the rights of holders, any
other country;
·
the resulting,
surviving or transferee person, if other than the Company, assumes all of the
Companys obligations under the Debt Securities and the Indenture; and
·
immediately
after the transaction, no default or event of default under the Indenture shall
have happened and be continuing.
When such a successor person assumes the Companys
obligations in such circumstances, subject to certain exceptions, the Company
shall be discharged from all obligations and covenants under the Debt
Securities and the Indenture.
Additional
Amounts
Unless otherwise
specified in the applicable Prospectus Supplement, all payments made by or on behalf
of the Company under or with respect to the Debt Securities of any series will
be made free and clear of and without withholding or deduction for or on
account of any present or future tax, duty, levy, impost, assessment or other
government charge (including penalties, interest and other liabilities related
thereto) imposed or levied by or on behalf of the Government of Canada or of
any province or territory thereof or by any authority or agency therein or
thereof having power to tax (Canadian Taxes), unless the Company is required
to withhold or deduct Canadian Taxes by law or by the interpretation or
administration thereof by the relevant government authority or agency.
If the Company is
so required to withhold or deduct any amount for or on account of Canadian
Taxes from any payment made under or with respect to the Debt Securities, the
Company will pay, unless otherwise specified, as additional interest such
additional amounts, (the Additional Amounts), as may be necessary so that the
net amount received by a holder of the Debt Securities after such withholding
or deduction will not be less than the amount such holder of the Debt
Securities would have received if such Canadian Taxes had not been withheld or
deducted (a similar payment will also be made to holders of the Debt
Securities, other than excluded holders (as defined herein), that are exempt
from withholding but required to pay tax under Part XIII of the
Income Tax Act
(Canada) (the Tax Act),
directly on amounts otherwise subject to withholding); provided, however, that
no additional amounts will be payable with respect to a payment made to a
holder (an excluded holder) if the Holder of the Debt Securities or the
beneficial owner of some or all of the payment to the Holder:
·
does not deal at
arms length with the Company (for purposes of the Tax Act) at the time of the
making of such payment;
24
·
is subject to
such Canadian Taxes by reason of the Debt Securities holders failure to comply
with any certification, identification, information, documentation or other
reporting requirement if compliance is required by law, regulation,
administrative practice or an applicable treaty as a precondition to exemption
from, or a reduction in the rate of deduction or withholding of, such Canadian
Taxes;
·
is subject to
such Canadian Taxes by reason of the Debt Securities holder being a resident,
domicile or national of, or engaged in business or maintaining a permanent
establishment or other physical presence in or otherwise having some connection
with Canada or any province or territory thereof otherwise than by the mere
holding of the Debt Securities or the receipt of payments thereunder; or
·
is subject to
such Canadian Taxes because it is not entitled to the benefit of an otherwise
applicable tax treaty by reason of the legal nature of such holder of the Debt
Securities.
The Company will
make such withholding or deduction and remit the full amount deducted or
withheld to the relevant authority as and when required in accordance with
applicable law. The Company will pay all taxes, interest and other liabilities
which arise by virtue of any failure of the Company to withhold, deduct and
remit to the relevant authority on a timely basis the full amounts required in
accordance with applicable law. The Company will furnish to the holder of the
Debt Securities, within 60 days after the date the payment of any Canadian
Taxes is due pursuant to applicable law, certified copies of tax receipts
evidencing such payment by the Company.
The foregoing
obligations shall survive any termination, defeasance or discharge of the
Indenture.
Tax
Redemption
If and to the
extent specified in the applicable Prospectus Supplement, the Debt Securities
of a series will be subject to redemption at any time, in whole but not in part,
at a redemption price equal to the principal amount thereof together with
accrued and unpaid interest to the date fixed for redemption, upon the giving
of a notice, if (1) the Company determines that (a) as a result of
any change in or amendment to the laws (or any regulations or rulings
promulgated thereunder) of Canada or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any change in position
regarding application or interpretation of such laws, regulations or rulings
(including a holding by a court of competent jurisdiction), which change or
amendment is announced or becomes effective on or after a date specified in the
applicable Prospectus Supplement if any date is so specified, the Company has
or will become obligated to pay, on the next succeeding date on which interest
is due, Additional Amounts with respect to any Debt Security of such series or (b) on
or after a date specified in the applicable Prospectus Supplement, any action
has been taken by any taxing authority of, or any decision has been rendered by
a court of competent jurisdiction in, Canada or any political subdivision or
taxing authority thereof or therein, including any of those actions specified
in (a) above, whether or not such action was taken or decision was
rendered with respect to the Company, or any change, amendment, application or
interpretation shall be proposed, which, in any such case, in the opinion of
counsel to the Company, will result in the Companys becoming obligated to pay,
on the next succeeding date on which interest is due, Additional Amounts with
respect to any Debt Security of such series and (2) in any such case, the
Company, in its business judgment, determines that such obligation cannot be
avoided by the use of reasonable measures available to it; provided however,
that (i) no such notice of redemption may be given earlier than 90 days
prior to the earliest date on which the Company would be obligated to pay such
Additional Amounts were a payment in respect of the Debt Securities then due,
and (ii) at the time such notice of redemption is given, such obligation
to pay such Additional Amounts remains in effect.
In the event that
the Company elects to redeem the Debt Securities of such series pursuant to the
provisions set forth in the preceding paragraph, the Company shall deliver to
the trustees a certificate, signed by an authorized officer, stating that the
Company is entitled to redeem the Debt Securities of such series pursuant to
their terms.
Provision
of Financial Information
The Company will
file with the trustees, within 20 days after it files or furnishes them with
the SEC, copies of the Companys annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company is
required to file or furnish with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act.
Notwithstanding
that the Company may not remain subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act or otherwise report on an annual and
25
quarterly basis on
forms provided for such annual and quarterly reporting pursuant to rules and
regulations promulgated by the SEC, the Company will continue to provide the
trustees:
·
within 20 days
after the time periods required for the filing or furnishing of such forms by
the SEC, annual reports on Form 40-F or 20-F or any successor form; and
·
within 20 days
after the time periods required for the filing of such forms by the SEC,
reports on Form 6-K (or any successor form), which, regardless of
applicable requirements shall, at a minimum, contain such information required
to be provided in quarterly reports under the laws of Canada or any province
thereof to security holders of a corporation with securities listed on the
Toronto Stock Exchange, whether or not the Company has any of the Debt
Securities listed on such exchange. Each of such reports, to the extent
permitted by the rules and regulations of the SEC, will be prepared in
accordance with Canadian disclosure requirements and generally accepted
accounting principles provided, however, that the Company shall not be
obligated to file or furnish such reports with the SEC if the SEC does not
permit such filings.
Events
of Default
Unless otherwise
specified in the applicable Prospectus Supplement relating to a particular
series of Debt Securities, the following is a summary of events which will,
with respect to any series of the Debt Securities, constitute an event of
default under the Indenture with respect to the Debt Securities of that series:
·
the Company
fails to pay principal of, or any premium on, or any Additional Amounts in
respect of, any Debt Security of that series when it is due and payable;
·
the Company
fails to pay interest (including Additional Amounts) payable on any Debt
Security of that series when it becomes due and payable, and such default
continues for 30 days;
·
the Company
fails to make any required sinking fund or analogous payment for that series of
Debt Securities;
·
the Company
fails to observe or perform any of its covenants or agreements in the Indenture
that affect or are applicable to the Debt Securities of that series for 90 days
after written notice to the Company by the trustees or to the Company and the
trustees by holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of that series;
·
a
default (as defined in any indenture or instrument under which the Company or
one of the Companys subsidiaries has at the date of the Indenture or will
thereafter have outstanding any indebtedness) has occurred and is continuing,
or the Company or any of its subsidiaries has failed to pay principal amounts
with respect to such indebtedness at maturity and such event of default or
failure to pay has resulted in such indebtedness under such indenture or
instrument being declared due, payable or otherwise being accelerated, in
either event so that an amount in excess of the greater of $15,000,000 and 2%
of the Companys shareholders equity will be or become due, payable and
accelerated upon such declaration or prior to the date on which the same would
otherwise have become due, payable and accelerated (the Accelerated
Indebtedness), and such acceleration will not be rescinded or annulled, or
such event of default or failure to pay under such indenture or instrument will
not be remedied or cured, whether by payment or otherwise, or waived by the
holders of such Accelerated Indebtedness, then (i) if the Accelerated Indebtedness
will be as a result of an event of default which is not related to the failure
to pay principal or interest on the terms, at the times, and on the conditions
set out in any such indenture or instrument, it will not be considered an event
of default for the purposes of the indenture governing the Debt Securities
until 30 days after such indebtedness has been accelerated, or (ii) if the
Accelerated Indebtedness will occur as a result of such failure to pay
principal or interest or as a result of an event of default which is related to
the failure to pay principal or interest on the terms, at the times, and on the
conditions set out in any such indenture or instrument, then (A) if such
Accelerated Indebtedness is, by its terms, non-recourse to the Company or its
subsidiaries, it will be considered an event of default for purposes of the
Indenture governing the Debt Securities; or (B) if such Accelerated
Indebtedness is recourse to the Company or its subsidiaries, any requirement in
connection with such failure to pay or event of default for the giving of
notice or the lapse of time or the happening of any further condition, event or
act under such indenture or instrument in connection with such failure to pay
or event of default will be applicable together with an additional seven days
before being considered an event of default for the purposes of the Indenture;
26
·
certain events involving the Companys
bankruptcy, insolvency or reorganization; and
·
any other event of default provided for
in that series of Debt Securities.
A default under
one series of Debt Securities will not necessarily be a default under another
series. A trustee may withhold notice to
the holders of the Debt Securities of any default, except in the payment of
principal or premium, if any, or interest, if any, if in good faith it
considers it in the interests of the holders to do so and so advises the
Company in writing.
If an event of
default (except for events involving the Companys bankruptcy, insolvency or
reorganization) for any series of Debt Securities occurs and continues, a
trustee or the holders of at least 25% in aggregate principal amount of the
Debt Securities of that series may require the Company to repay immediately:
·
the entire principal and interest of the Debt
Securities of the series; or
·
if the Debt Securities are discounted securities, that
portion of the principal as is described in the applicable Prospectus
Supplement.
If an event of
default relates to events involving the Companys bankruptcy, insolvency or
reorganization, the principal of all Debt Securities will become immediately
due and payable without any action by the trustee or any holder.
Subject to certain
conditions, the holders of a majority of the aggregate principal amount of the
Debt Securities of the affected series can rescind and annul an accelerated
payment requirement. If Debt Securities are discounted securities, the
applicable Prospectus Supplement will contain provisions relating to the
acceleration of maturity of a portion of the principal amount of the discounted
securities upon the occurrence or continuance of an event of default.
Other than its
duties in case of a default, a trustee is not obligated to exercise any of the
rights or powers that it will have under the Indenture at the request or
direction of any holders, unless the holders offer the trustee reasonable
security or indemnity. If they provide this reasonable security or indemnity,
the holders of a majority in aggregate principal amount of any series of Debt
Securities may, subject to certain limitations, direct the time, method and
place of conducting any proceeding for any remedy available to a trustee, or
exercising any trust or power conferred upon a trustee, for any series of Debt
Securities.
The Company will
be required to furnish to the trustees a statement annually as to its
compliance with all conditions and covenants under the Indenture and, if the
Company is not in compliance, the Company must specify any defaults. The
Company will also be required to notify the trustees as soon as practicable
upon becoming aware of any event of default.
No holder of a
Debt Security of any series will have any right to institute any proceeding
with respect to the Indenture, or for the appointment of a receiver or a
trustee, or for any other remedy, unless:
·
the holder has previously given to the trustees
written notice of a continuing event of default with respect to the Debt
Securities of the affected series;
·
the holders of at least 25% in principal amount of the
outstanding Debt Securities of the series affected by an event of default have
made a written request, and the holders have offered reasonable indemnity, to
the trustees to institute a proceeding as trustees; and
·
the trustees have failed to institute a proceeding,
and have not received from the holders of a majority in aggregate principal
amount of the outstanding Debt Securities of the series affected by an event of
default a direction inconsistent with the request, within 60 days after receipt
of the holders notice, request and offer of indemnity.
However, such
above-mentioned limitations do not apply to a suit instituted by the holder of
a Debt Security for the enforcement of payment of the principal of or any
premium, if any, or interest on such Debt Security on or after the applicable
due date specified in such Debt Security.
27
Defeasance
When the Company
uses the term defeasance, it means discharge from its obligations with
respect to any Debt Securities of or within a series under the Indenture.
Unless otherwise specified in the applicable Prospectus Supplement, if the
Company deposits with a trustee cash, government securities or a combination
thereof sufficient to pay the principal, interest, if any, premium, if any, and
any other sums due to the stated maturity date or a redemption date of the Debt
Securities of a series, then at the Companys option:
·
the Company will be discharged from the obligations
with respect to the Debt Securities of that series; or
·
the Company will no longer be under any obligation to
comply with certain restrictive covenants under the Indenture and certain
events of default will no longer apply to the Company.
If this happens,
the holders of the Debt Securities of the affected series will not be entitled
to the benefits of the Indenture except for registration of transfer and
exchange of Debt Securities and the replacement of lost, stolen, destroyed or
mutilated Debt Securities. These holders may look only to the deposited fund
for payment on their Debt Securities.
To exercise the
defeasance option, the Company must deliver to the trustees:
·
an opinion of counsel in the United States to the
effect that the holders of the outstanding Debt Securities of the affected
series will not recognize gain or loss for U.S. federal income tax purposes as
a result of a defeasance and will be subject to U.S. federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if the defeasance had not occurred;
·
an opinion of counsel in Canada or a ruling from the
Canada Revenue Agency to the effect that the holders of the outstanding Debt
Securities of the affected series will not recognize income, gain or loss for
Canadian federal, provincial or territorial income or other tax purposes as a
result of a defeasance and will be subject to Canadian federal, provincial or
territorial income tax and other tax on the same amounts, in the same manner
and at the same times as would have been the case had the defeasance not occurred;
and
·
a certificate of one of the Companys officers and an
opinion of counsel, each stating that all conditions precedent provided for
relating to defeasance have been complied with.
If the Company is
to be discharged from its obligations with respect to the Debt Securities, and
not just from the Companys covenants, the U.S. opinion must be based upon a
ruling from or published by the United States Internal Revenue Service or a
change in law to that effect.
In addition to the
delivery of the opinions described above, the following conditions must be met
before the Company may exercise its defeasance option:
·
no event of default or event that, with the passing of
time or the giving of notice, or both, shall constitute an event of default
shall have occurred and be continuing for the Debt Securities of the affected
series;
·
the Company is not an insolvent person
within the meaning of applicable bankruptcy and insolvency legislation; and
·
other customary conditions precedent are
satisfied.
Modification
and Waiver
Modifications and
amendments of the Indenture may be made by the Company and the trustees pursuant
to one or more Supplemental Indentures (a Supplemental Indenture) with the
consent of the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of each series affected by the modification.
However, without the consent of each holder affected, no such modification may:
·
change the stated maturity of the principal of,
premium, if any, or any instalment of interest, if any, on any Debt Security;
28
·
reduce the principal, premium, if any, or rate of
interest, if any, or change any obligation of the Company to pay any Additional
Amounts;
·
reduce the amount of principal of a debt security
payable upon acceleration of its maturity or the amount provable in bankruptcy;
·
change the place or currency of any payment;
·
affect the holders right to require the Company to
repurchase the Debt Securities at the holders option;
·
impair the right of the holders to institute a suit to
enforce their rights to payment;
·
adversely affect any conversion or exchange right
related to a series of Debt Securities;
·
reduce the percentage of Debt Securities required to
modify the Indenture or to waive compliance with certain provisions of the
Indenture; or
·
reduce the percentage in principal amount of
outstanding Debt Securities necessary to take certain actions.
The holders of a
majority in principal amount of outstanding Debt Securities of any series may
on behalf of the holders of all Debt Securities of that series waive, insofar
as only that series is concerned, past defaults under the Indenture and
compliance by the Company with certain restrictive provisions of the Indenture.
However, these holders may not waive a default in any payment of principal,
premium, if any, or interest on any Debt Security or compliance with a provision
that cannot be modified without the consent of each holder affected.
The Company may
modify the Indenture pursuant to a Supplemental Indenture without the consent
of any holders to:
·
evidence its successor under the Indenture;
·
add covenants or surrender any right or power for the
benefit of holders;
·
add events of default;
·
provide for unregistered securities to become
registered securities under the Indenture and make other such changes to
unregistered securities that in each case do not materially and adversely
affect the interests of holders of outstanding Debt Securities;
·
establish the forms of the Debt Securities;
·
appoint a successor trustee under the Indenture;
·
add provisions to permit or facilitate the defeasance
and discharge of the Debt Securities as long as there is no material adverse
effect on the holders;
·
cure any ambiguity, correct or supplement any
defective or inconsistent provision or make any other provisions in each case
that would not materially and adversely affect the interests of holders of
outstanding Debt Securities, if any;
·
comply with any applicable laws of the United States
and Canada in order to effect and maintain the qualification of the Indenture
under such laws to the extent they do not conflict with the applicable laws of
the United States; or
·
change or eliminate any provisions of the Indenture
where such change takes effect when there are no Debt Securities outstanding
under the Indenture.
29
Governing
Law
The Indenture and
the Debt Securities will be governed by and construed in accordance with the
laws of the State of New York, except that discharge by the Canadian trustee of
any of its rights, powers, duties or responsibilities hereunder shall be construed
in accordance with the laws of the Province of British Columbia and the federal
laws of Canada applicable thereto.
The
Trustees
Any trustee under
the Indenture or its affiliates may provide other services to the Company in
the ordinary course of their business.
If the trustee or any affiliate acquires any conflicting interest and a
default occurs with respect to the Debt Securities, the trustee must eliminate
the conflict or resign.
Resignation
and Removal of Trustee
A trustee may
resign or be removed with respect to one or more series of the Debt Securities
and a successor trustee may be appointed to act with respect to such series.
Consent
to Service
In connection with
the Indenture, the Company will irrevocably designate and appoint CT Corporation
System, 111 8
th
Avenue, 13
th
Floor, New York, New York 10011,
as its authorized agent upon which process
may be served in any suit or proceeding arising out of or relating to the
Indenture or the Debt Securities that may be instituted in any U.S. federal or
New York State court located in The Borough of Manhattan, in the City of New
York, or brought by the trustees (whether in their individual capacity or in
their capacity as trustees under the Indenture), and will irrevocably submit to
the non-exclusive jurisdiction of such courts.
Enforceability
of Judgments
Since all or
substantially all of the Companys assets, as well as the assets of most of the
directors of the Company, are outside the United States, any judgment obtained
in the United States against the Company or certain of its directors, including
judgments with respect to the payment of principal on the Debt Securities, may
not be collectible within the United States.
The Company has
been advised that the laws of the Province of British Columbia and the federal
laws of Canada applicable therein would permit an action to be brought against
the Company in the Supreme Court of British Columbia on any final and
conclusive monetary (or, in appropriate circumstances, non-monetary) judgment
in personam
of any federal or state court
located in the State of New York, with respect to the enforcement of the
Indenture and the Debt Securities, which was subsisting and unsatisfied, and
which was not impeachable as void or voidable under New York law if: (1) the
New York court rendering that judgment had jurisdiction over the Company under New
York law; (2) there was a real and substantial connection between the
parties, the cause of action and New York, or the Company had attorned to the
jurisdiction of the New York court (and submission by the Company in the
Indenture to the jurisdiction of the New York court will be such an
attornment), (3) the judgment was not obtained by fraud or in a manner
contrary to natural justice and the enforcement thereof would not be
inconsistent with public policy, as those terms are understood under the laws
of British Columbia and the federal laws of Canada applicable therein, or
contrary to any order made by the Attorney General of Canada under the
Foreign Extraterritorial Measures Act (Canada)
or the Competition Tribunal under the
Competition
Act (Canada)
; (4) the enforcement of that judgment would not be
contrary to the British Columbia laws of general application limiting the
enforcement of creditors rights, including bankruptcy, reorganization,
winding-up, moratorium and similar laws, and would not constitute, directly or
indirectly, the enforcement of foreign laws which the British Columbia court
would characterize as revenue, expropriatory or penal; (5) that judgment
did not contain a manifest error on its face; (6) the action to enforce
that judgment was commenced within the appropriate British Columbia limitation
period; (7) interest payable on the Debt Securities was not characterized
by the British Columbia court as interest payable at a criminal rate within the
meaning of s. 347 of the
Criminal Code
(Canada); and (8) that judgment
did not conflict with another final and conclusive judgment in the same cause
of action; except that the British Columbia court might stay the action to
enforce the New York judgment if an appeal of the New York judgment was pending
or time for an appeal had not expired; and except that the British Columbia
court would give judgment only in Canadian dollars.
30
The Company has
been advised that there is doubt as to the enforceability in Canada, by a court
in original actions or actions to enforce judgments of U.S. courts, of civil
liabilities predicated solely upon U.S. federal securities laws.
DESCRIPTION
OF WARRANTS
The following
description, together with the additional information the Company may include
in any applicable Prospectus Supplements and free writing prospectuses,
summarizes the material terms and provisions of the Warrants that the Company
may offer under this Prospectus, which may consist of Warrants to purchase
Common Shares or Debt Securities and may be issued in one or more series. Warrants may be offered independently or
together with Common Shares, Debt Securities or Subscription Receipts offered
by any Prospectus Supplement, and may be attached to or separate from those
Securities. While the terms the Company
has summarized below will apply generally to any Warrants that it may offer
under this Prospectus, the Company will describe the particular terms of any
series of Warrants that it may offer in more detail in the applicable
Prospectus Supplement and any applicable free writing prospectus. The terms of any Warrants offered under a
Prospectus Supplement may differ from the terms described below.
General
Warrants will be
issued under and governed by the terms of one or more warrant indentures (each
a Warrant Indenture) between the Company and a warrant trustee (the Warrant
Trustee) that the Company will name in the relevant Prospectus
Supplement. Each Warrant Trustee will be
a financial institution organized under the laws of Canada or any province
thereof and authorized to carry on business as a trustee.
This summary of
some of the provisions of the Warrants is not complete. The statements made in this Prospectus
relating to any Warrant Indenture and Warrants to be issued under this
Prospectus are summaries of certain anticipated provisions thereof and do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the applicable Warrant Indenture. Prospective investors should refer to the
Warrant Indenture relating to the specific Warrants being offered for the complete
terms of the Warrants. The Company will
file as exhibits to the registration statement of which this Prospectus is a
part, or will incorporate by reference from a current report on Form 8-K
that the Company files with the SEC, any Warrant Indenture describing the terms
and conditions of Warrants the Company is offering before the issuance of such
Warrants.
The applicable
Prospectus Supplement relating to any Warrants offered by the Company will
describe the particular terms of those Warrants and include specific terms
relating to the offering.
Equity
Warrants
The particular
terms of each issue of equity warrants (Equity Warrants) will be described in
the applicable Prospectus Supplement. This description will include, where
applicable:
·
the designation and aggregate number of Equity Warrants;
·
the price at which the Equity Warrants will be offered;
·
the
currency or currencies in which the Equity Warrants will be offered;
·
the
date on which the right to exercise the Equity Warrants will commence and the
date on which the right will expire;
·
the
number of Common Shares that may be purchased upon exercise of each Equity
Warrant and the price at which and currency or currencies in which the Common
Shares may be purchased upon exercise of each Equity Warrant;
·
the
designation and terms of any Securities with which the Equity Warrants will be
offered, if any, and the number of the Equity Warrants that will be offered
with each Security;
·
the
date or dates, if any, on or after which the Equity Warrants and the other
Securities with which the Equity Warrants will be offered will be transferable
separately;
·
whether
the Equity Warrants will be subject to redemption and, if so, the terms of such
redemption provisions;
31
·
whether
the Company will issue the Equity Warrants as global securities and, if so, the
identity of the depositary of the global securities;
·
whether
the Equity Warrants will be listed on any exchange;
·
material
United States and Canadian federal income tax consequences of owning the Equity
Warrants; and
·
any
other material terms or conditions of the Equity Warrants.
Debt
Warrants
The particular
terms of each issue of debt warrants (Debt Warrants) will be described in the
related Prospectus Supplement. This description will include, where applicable:
·
the
designation and aggregate number of Debt Warrants;
·
the
price at which the Debt Warrants will be offered;
·
the
currency or currencies in which the Debt Warrants will be offered;
·
the
date on which the right to exercise the Debt Warrants will commence and the
date on which the right will expire;
·
the
principal amount of Debt Securities that may be purchased upon exercise of each
Debt Warrant and the price at which and currency or currencies in which that
principal amount of Debt Securities may be purchased upon exercise of each Debt
Warrant;
·
the
designation and terms of any Securities with which the Debt Warrants will be
offered, if any, and the number of the Debt Warrants that will be offered with
each Security;
·
the
date or dates, if any, on or after which the Debt Warrants and the other
Securities with which the Debt Warrants will be offered will be transferable
separately;
·
the
terms and provisions of the Debt Securities issuable upon the exercise of the
Debt Warrants;
·
the
minimum or maximum amount of Debt Warrants that may be exercised at any one
time;
·
whether
the Debt Warrants will be subject to redemption, and, if so, the terms of such
redemption provisions;
·
whether
the Company will issue the Debt Warrants as global securities and, if so, the
identity of the depositary of the global securities;
·
whether
the Debt Warrants will be listed on any exchange;
·
material
United States and Canadian federal income tax consequences of owning the Debt
Warrants; and
·
any other
material terms or conditions of the Debt Warrants.
Rights
of Holders Prior to Exercise
Prior to the
exercise of their Warrants, holders of Warrants will not have any of the rights
of holders of the Common Shares or Debt Securities issuable upon exercise of
the Warrants.
Exercise
of Warrants
Each Warrant will
entitle the holder to purchase the Securities that the Company specifies in the
applicable Prospectus Supplement at the exercise price that the Company
describes therein. Unless the Company
otherwise specifies in the applicable Prospectus Supplement, holders of the
Warrants may exercise the Warrants at any time up to the specified time on the
expiration date that the Company sets forth in the applicable Prospectus
Supplement. After the close of business
on the expiration date, unexercised warrants will become void.
Holders of the
Warrants may exercise the Warrants by delivering the Warrant Certificate
representing the Warrants to be exercised together with specified information,
and paying the required amount to the Warrant Trustee in immediately available
funds, as provided in the applicable Prospectus Supplement. The Company will set forth on the Warrant
Certificate and in the applicable Prospectus Supplement the information that
the holder of the Warrant will be required to deliver to the Warrant Trustee.
32
Upon receipt of
the required payment and the Warrant Certificate properly completed and duly
executed at the corporate trust office of the Warrant Trustee or any other
office indicated in the applicable Prospectus Supplement, the Company will
issue and deliver the securities purchasable upon such exercise. If fewer than all of the Warrants represented
by the Warrant Certificate are exercised, then the Company will issue a new
Warrant Certificate for the remaining amount of Warrants. If the Company so indicates in the applicable
Prospectus Supplement, holders of the Warrants may surrender securities as all
or part of the exercise price for Warrants.
Anti-Dilution
The Warrant
Indenture will specify that upon the subdivision, consolidation,
reclassification or other material change of the Common Shares or Debt
Securities or any other reorganization, amalgamation, merger or sale of all or
substantially all of the Companys assets, the Warrants will thereafter
evidence the right of the holder to receive the securities, property or cash
deliverable in exchange for or on the conversion of or in respect of the Common
Shares or Debt Securities to which the holder of a Common Share or Debt
Security would have been entitled immediately after such event. Similarly, any distribution to all or
substantially all of the holders of Common Shares of rights, options, warrants,
evidences of indebtedness or assets will result in an adjustment in the number
of Common Shares to be issued to holders of Equity Warrants.
Global
Securities
The Company may
issue Warrants in whole or in part in the form of one or more global
securities, which will be registered in the name of and be deposited with a
depositary, or its nominee, each of which will be identified in the applicable
Prospectus Supplement. The global
securities may be in temporary or permanent form. The applicable Prospectus
Supplement will describe the terms of any depositary arrangement and the rights
and limitations of owners of beneficial interests in any global security. The
applicable Prospectus Supplement will describe the exchange, registration and
transfer rights relating to any global security.
Modifications
The Warrant
Indenture will provide for modifications and alterations to the Warrants issued
thereunder by way of a resolution of holders of Warrants at a meeting of such
holders or a consent in writing from such holders. The number of holders of Warrants required to
pass such a resolution or execute such a written consent will be specified in
the Warrant Indenture.
The Company may
amend any Warrant Indenture and the Warrants, without the consent of the
holders of the Warrants, to cure any ambiguity, to cure, correct or supplement
any defective or inconsistent provision, or in any other manner that will not
materially and adversely affect the interests of holders of outstanding
Warrants.
DESCRIPTION OF SUBSCRIPTION RECEIPTS
The Company may
issue Subscription Receipts, which will entitle holders to receive upon
satisfaction of certain release conditions and for no additional consideration,
Common Shares, Debt Securities, Warrants or any combination thereof. Subscription Receipts will be issued pursuant
to one or more subscription receipt agreements (each, a Subscription Receipt
Agreement), each to be entered into between the Company and an escrow agent
(the Escrow Agent), which will establish the terms and conditions of the
Subscription Receipts. Each Escrow Agent
will be a financial institution organized under the laws of Canada or a
province thereof and authorized to carry on business as a trustee. The Company will file as exhibits to the
registration statement of which this Prospectus is a part, or will incorporate
by reference from a current report on Form 8-K that the Company files with
the SEC, any Subscription Receipt Agreement describing the terms and conditions
of Subscription Receipts the Company is offering before the issuance of such
Subscription Receipts.
The following
description sets forth certain general terms and provisions of Subscription
Receipts and is not intended to be complete.
The statements made in this Prospectus relating to any Subscription
Receipt Agreement and Subscription Receipts to be issued thereunder are
summaries of certain anticipated provisions thereof and are subject to, and are
qualified in their entirety by reference to, all provisions of the applicable
Subscription Receipt Agreement and the Prospectus Supplement describing such
Subscription Receipt Agreement.
The Prospectus
Supplement relating to any Subscription Receipts the Company offers will
describe the Subscription Receipts and include specific terms relating to their
offering. All such terms will comply
with the requirements of the Toronto Stock Exchange and NYSE Amex relating to
Subscription Receipts. If underwriters
or agents are used
33
in the sale of
Subscription Receipts, one or more of such underwriters or agents may also be
parties to the Subscription Receipt Agreement governing the Subscription
Receipts sold to or through such underwriters or agents.
General
The Prospectus
Supplement and the Subscription Receipt Agreement for any Subscription Receipts
the Company offers will describe the specific terms of the Subscription
Receipts and may include, but are not limited to, any of the following:
·
the
designation
and aggregate
number of Subscription Receipts offered;
·
the price at
which the Subscription Receipts will be offered;
·
the currency or
currencies in which the Subscription Receipts will be offered;
·
the designation,
number and terms of the Common Shares, Debt Securities, Warrants or combination
thereof to be received by holders of Subscription Receipts upon satisfaction of
the release conditions, and the procedures that will result in the adjustment
of those numbers;
·
the conditions
(the Release Conditions) that must be met in order for holders of
Subscription Receipts to receive for no additional consideration Common Shares,
Debt Securities, Warrants or a combination thereof;
·
the procedures
for the issuance and delivery of Common Shares, Debt Securities, Warrants or a
combination thereof to holders of Subscription Receipts upon satisfaction of
the Release Conditions;
·
whether any
payments will be made to holders of Subscription Receipts upon delivery of the
Common Shares, Debt Securities, Warrants or a combination thereof upon
satisfaction of the Release Conditions (
e.g.
,
an amount equal to dividends declared on Common Shares by the Company to
holders of record during the period from the date of issuance of the
Subscription Receipts to the date of issuance of any Common Shares pursuant to
the terms of the Subscription Receipt Agreement, or an amount equal to interest
payable by the Company in respect of Debt Securities during the period from the
date of issuance of the Subscription Receipts to the date of issuance of the
Debt Securities pursuant to the terms of the Subscription Receipt Agreement);
·
the terms and
conditions under which the Escrow Agent will hold all or a portion of the gross
proceeds from the sale of Subscription Receipts, together with interest and
income earned thereon (collectively, the Escrowed Funds), pending
satisfaction of the Release Conditions;
·
the terms and
conditions pursuant to which the Escrow Agent will hold Common Shares, Debt
Securities, Warrants or a combination thereof pending satisfaction of the
Release Conditions;
·
the terms and
conditions under which the Escrow Agent will release all or a portion of the
Escrowed Funds to the Company upon satisfaction of the Release Conditions;
·
if the
Subscription Receipts are sold to or through underwriters or agents, the terms
and conditions under which the Escrow Agent will release a portion of the
Escrowed Funds to such underwriters or agents in payment of all or a portion of
their fees or commission in connection with the sale of the Subscription
Receipts;
·
procedures for
the refund by the Escrow Agent to holders of Subscription Receipts of all or a
portion of the subscription price for their Subscription Receipts, plus any
pro rata
entitlement to interest earned or
income generated on such amount, if the Release Conditions are not satisfied;
·
any contractual
right of rescission to be granted to initial purchasers of Subscription
Receipts in the event this Prospectus, the Prospectus Supplement under which
Subscription Receipts are issued or any amendment hereto or thereto contains a
misrepresentation;
·
any entitlement
of the Company to purchase the Subscription Receipts in the open market by
private agreement or otherwise;
·
whether the
Company will issue the Subscription Receipts as global securities and, if so,
the identity of the depositary for the global securities;
·
whether the
Company will issue the Subscription Receipts as bearer securities, registered
securities or both;
34
·
provisions as to
modification, amendment or variation of the Subscription Receipt Agreement or
any rights or terms attaching to the Subscription Receipts;
·
the identity of
the Escrow Agent;
·
whether the
Subscription Receipts will be listed on any exchange;
·
material United
States and Canadian federal tax consequences of owning the Subscription
Receipts; and
·
any other terms
of the Subscription Receipts.
The
holders of Subscription Receipts will not be shareholders of the Company. Holders of Subscription Receipts are entitled
only to receive Common Shares, Debt Securities, Warrants or a combination
thereof on exchange of their Subscription Receipts, plus any cash payments
provided for under the Subscription Receipt Agreement, if the Release
Conditions are satisfied. If the Release
Conditions are not satisfied, the holders of Subscription Receipts shall be
entitled to a refund of all or a portion of the subscription price therefor and
all or a portion of the
pro rata
share of interest earned or income generated thereon, as provided in the
Subscription Receipt Agreement.
Escrow
The Escrowed Funds
will be held in escrow by the Escrow Agent, and such Escrowed Funds will be
released to the Company (and, if the Subscription Receipts are sold to or
through underwriters or agents, a portion of the Escrowed Funds may be released
to such underwriters or agents in payment of all or a portion of their fees in
connection with the sale of the Subscription Receipts) at the time and under
the terms specified by the Subscription Receipt Agreement. If the Release Conditions are not satisfied,
holders of Subscription Receipts will receive a refund of all or a portion of
the subscription price for their Subscription Receipts plus their
pro rata
entitlement to interest earned or
income generated on such amount, in accordance with the terms of the
Subscription Receipt Agreement. Common
Shares, Debt Securities or Warrants may be held in escrow by the Escrow Agent,
and will be released to the holders of Subscription Receipts following satisfaction
of the Release Conditions at the time and under the terms specified in the
Subscription Receipt Agreement.
Anti-Dilution
The Subscription
Receipt Agreement will specify that upon the subdivision, consolidation,
reclassification or other material change of the Common Shares, Debt Securities
or Warrants or any other reorganization, amalgamation, merger or sale of all or
substantially all of the Companys assets, the Subscription Receipts will
thereafter evidence the right of the holder to receive the securities, property
or cash deliverable in exchange for or on the conversion of or in respect of
the Common Shares, Debt Securities or Warrants to which the holder of a Common
Share, Debt Security or Warrant would have been entitled immediately after such
event. Similarly, any distribution to
all or substantially all of the holders of Common Shares of rights, options,
warrants, evidences of indebtedness or assets will result in an adjustment in
the number of Common Shares to be issued to holders of Subscription Receipts
whose Subscription Receipts entitle the holders thereof to receive Common
Shares. Alternatively, such securities,
evidences of indebtedness or assets may, at the option of the Company, be
issued to the Escrow Agent and delivered to holders of Subscription Receipts on
exercise thereof. The Subscription
Receipt Agreement will also provide that if other actions of the Company affect
the Common Shares, Debt Securities or Warrants, which, in the reasonable
opinion of the directors of the Company, would materially affect the rights of
the holders of Subscription Receipts and/or the rights attached to the
Subscription Receipts, the number of Common Shares, Debt Securities or Warrants
which are to be received pursuant to the Subscription Receipts shall be
adjusted in such manner, if any, and at such time as the directors of the
Company may in their discretion reasonably determine to be equitable to the
holders of Subscription Receipts in such circumstances.
Rescission
The Subscription
Receipt Agreement will also provide that any misrepresentation in this
Prospectus, the Prospectus Supplement under which the Subscription Receipts are
offered, or any amendment thereto, will entitle each initial purchaser of
Subscription Receipts to a contractual right of rescission following the
issuance of the Common Shares, Debt Securities or Warrants to such purchaser
entitling such purchaser to receive the amount paid for the Subscription
Receipts upon surrender of the Common Shares, Debt Securities or Warrants, provided
that such remedy for rescission is exercised in the time stipulated in the
Subscription Receipt Agreement. This
right of rescission does not extend to holders of Subscription Receipts who
acquire such Subscription Receipts from an
35
initial purchaser,
on the open market or otherwise, or to initial purchasers who acquire
Subscription Receipts in the United States.
Global
Securities
The Company may
issue Subscription Receipts in whole or in part in the form of one or more
global securities, which will be registered in the name of and be deposited
with a depositary, or its nominee, each of which will be identified in the
applicable Prospectus Supplement. The global
securities may be in temporary or permanent form. The applicable Prospectus
Supplement will describe the terms of any depositary arrangement and the rights
and limitations of owners of beneficial interests in any global security. The
applicable Prospectus Supplement also will describe the exchange, registration
and transfer rights relating to any global security.
Modifications
The Subscription
Receipt Agreement will provide for modifications and alterations to the
Subscription Receipts issued thereunder by way of a resolution of holders of
Subscription Receipts at a meeting of such holders or a consent in writing from
such holders. The number of holders of
Subscriptions Receipts required to pass such a resolution or execute such a
written consent will be specified in the Subscription Receipt Agreement.
DESCRIPTION
OF UNITS
The following
description, together with the additional information the Company may include
in any applicable Prospectus Supplements, summarizes the material terms and
provisions of the Units that the Company may offer under this Prospectus. While the terms the Company has summarized
below will apply generally to any Units that the Company may offer under this
Prospectus, the Company will describe the particular terms of any series of
Units in more detail in the applicable Prospectus Supplement. The terms of any Units offered under a
Prospectus Supplement may differ from the terms described below.
The Company will
file as exhibits to the registration statement of which this Prospectus is a
part, or will incorporate by reference from a current report on Form 8-K
that the Company files with the SEC, the form of unit agreement (Unit
Agreement) between the Company and a unit agent (Unit Agent) that describes
the terms and conditions of the series of Units the Company is offering, and
any supplemental agreements, before the issuance of the related series of
Units. The following summaries of
material terms and provisions of the Units are subject to, and qualified in
their entirety by reference to, all the provisions of the Unit Agreement and
any supplemental agreements applicable to a particular series of Units. The Company urges you to read the applicable
Prospectus Supplements related to the particular series of Units that the
Company sells under this Prospectus, as well as the complete Unit Agreement and
any supplemental agreements that contain the terms of the Units.
General
The Company may
issue units comprising one or more of Common Shares, Debt Securities, Warrants
and Subscription Receipts in any combination.
Each Unit will be issued so that the holder of the Unit is also the
holder of each security included in the Unit.
Thus, the holder of a Unit will have the rights and obligations of a
holder of each included security. The
Unit Agreement under which a Unit is issued may provide that the securities
included in the Unit may not be held or transferred separately, at any time or
at any time before a specified date.
The Company will
describe in the applicable Prospectus Supplement the terms of the series of
Units, including:
·
the
designation and terms of the Units and of the securities comprising the Units,
including whether and under what circumstances those securities may be held or
transferred separately;
·
any
provisions of the governing Unit Agreement that differ from those described
below; and
·
any
provisions for the issuance, payment, settlement, transfer or exchange of the
Units or of the securities comprising the Units.
The provisions
described in this section, as well as those described under Description of
Common Shares, Description of Debt Securities, Description of Warrants,
and Description of Subscription Rights will apply to each Unit and to any
Common Share, Debt Security, Warrant or Subscription Receipt included in each
Unit, respectively.
36
Issuance
in Series
The Company may
issue Units in such amounts and in numerous distinct series as the Company
determines.
Enforceability
of Rights by Holders of Units
Each Unit Agent
will act solely as our agent under the applicable Unit Agreement and will not
assume any obligation or relationship of agency or trust with any holder of any
Unit. A single bank or trust company may
act as Unit Agent for more than one series of Units. A Unit Agent will have no duty or
responsibility in case of any default by the Company under the applicable Unit
Agreement or Unit, including any duty or responsibility to initiate any
proceedings at law or otherwise, or to make any demand upon the Company. Any holder of a Unit may, without the consent
of the related Unit Agent or the holder of any other Unit, enforce by
appropriate legal action its rights as holder under any security included in
the Unit.
The Company, the
Unit Agents, and any of their agents may treat the registered holder of any
Unit Certificate as an absolute owner of the Units evidenced by that
certificate for any purpose and as the person entitled to exercise the rights
attaching to the Units so requested, despite any notice to the contrary.
37
PLAN
OF DISTRIBUTION
General
The Company may
offer and sell the Securities, separately or together: (a) to one or more
underwriters or dealers; (b) through one or more agents; or (c) directly
to one or more other purchasers. The Securities offered pursuant to any
Prospectus Supplement may be sold from time to time in one or more transactions
at: (i) a fixed price or prices, which may be changed from time to time; (ii) market
prices prevailing at the time of sale; (iii) prices related to such
prevailing market prices; or (iv) other negotiated prices. The Company may only offer and sell the
Securities pursuant to a Prospectus Supplement during the 25-month period that
this Prospectus, including any amendments hereto, remains effective. The Prospectus Supplement for any of the
Securities being offered thereby will set forth the terms of the offering of
such Securities, including the type of Security being offered, the name or
names of any underwriters, dealers or agents, the purchase price of such
Securities, the proceeds to the Company from such sale, any underwriting
commissions or discounts and other items constituting underwriters
compensation and any discounts or concessions allowed or re-allowed or paid to
dealers. Only underwriters so named in
the Prospectus Supplement are deemed to be underwriters in connection with the
Securities offered thereby.
By
Underwriters
If underwriters
are used in the sale, the Securities will be acquired by the underwriters for
their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. Unless otherwise set forth in the Prospectus
Supplement relating thereto, the obligations of underwriters to purchase the
Securities will be subject to certain conditions, but the underwriters will be
obligated to purchase all of the Securities offered by the Prospectus
Supplement if any of such Securities are purchased. The Company may offer the Securities to the
public through underwriting syndicates represented by managing underwriters or
by underwriters without a syndicate. The
Company may agree to pay the underwriters a fee or commission for various
services relating to the offering of any Securities. Any such fee or commission will be paid out
of the general corporate funds of the Company.
The Company may use underwriters with whom it has a material
relationship. The Company will describe
in the Prospectus Supplement, naming the underwriter, the nature of any such
relationship.
By
Dealers
If dealers are
used, and if so specified in the applicable Prospectus Supplement, the Company
will sell such Securities to the dealers as principals. The dealers may then resell such Securities
to the public at varying prices to be determined by such dealers at the time of
resale. Any public offering price and
any discounts or concessions allowed or re-allowed or paid to dealers may be
changed from time to time. The Company
will set forth the names of the dealers and the terms of the transaction in the
applicable Prospectus Supplement.
By
Agents
The Securities may
also be sold through agents designated by the Company. Any agent involved will be named, and any
fees or commissions payable by the Company to such agent will be set forth, in
the applicable Prospectus Supplement.
Any such fees or commissions will be paid out of the general corporate
funds of the Company. Unless otherwise
indicated in the Prospectus Supplement, any agent will be acting on a best
efforts basis for the period of its appointment.
Direct
Sales
Securities may
also be sold directly by the Company at such prices and upon such terms as
agreed to by the Company and the purchaser.
In this case, no underwriters, dealers or agents would be involved in
the offering.
General
Information
Underwriters,
dealers and agents that participate in the distribution of the Securities
offered by this Prospectus may be deemed underwriters under the Securities Act,
and any discounts or commissions they receive from us and any profit on their
resale of the securities may be treated as underwriting discounts and
commissions under the Securities Act.
38
Underwriters,
dealers or agents who participate in the distribution of Securities may be
entitled under agreements to be entered into with the Company to
indemnification by the Company against certain liabilities, including
liabilities under Canadian provincial and territorial and United States
securities legislation, or to contribution with respect to payments which such
underwriters, dealers or agents may be required to make in respect
thereof. Such underwriters, dealers or
agents may be customers of, engage in transactions with, or perform services
for, the Company in the ordinary course of business.
We may enter into
derivative transactions with third parties, or sell securities not covered by
this Prospectus to third parties in privately negotiated transactions. If the
applicable Prospectus Supplement indicates, in connection with those
derivatives, the third parties may sell securities covered by this Prospectus
and the applicable Prospectus Supplement, including in short sale transactions.
If so, the third parties may use securities pledged by us or borrowed from us
or others to settle those sales or to close out any related open borrowings of
stock, and may use securities received from us in settlement of those
derivatives to close out any related open borrowings of stock. The third
parties in such sale transactions will be identified in the applicable
Prospectus Supplement.
One or more firms,
referred to as remarketing firms, may also offer or sell the Securities, if
the Prospectus Supplement so indicates, in connection with a remarketing
arrangement upon their purchase. Remarketing firms will act as principals for
their own accounts or as agents for us. These remarketing firms will offer or
sell the Securities in accordance with the terms of the Securities. The
Prospectus Supplement will identify any remarketing firm and the terms of its
agreement, if any, with us and will describe the remarketing firms
compensation. Remarketing firms may be deemed to be underwriters in connection
with the Securities they remarket.
In connection with
any offering of Securities, underwriters may over-allot or effect transactions
which stabilize or maintain the market price of the Securities offered at a
level above that which might otherwise prevail in the open market. Such transactions may be commenced,
interrupted or discontinued at any time.
CERTAIN
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. RESIDENTS
The following
summarizes certain Canadian federal income tax consequences generally
applicable under the
Income Tax Act
(Canada) and the regulations enacted thereunder (collectively, the Canadian
Tax Act) and the
Canada-United States
Income Tax Convention (1980)
(the Convention) to the holding
and disposition of Common Shares.
Comment is
restricted to holders of Common Shares each of whom, at all material times for
the purposes of the Canadian Tax Act and the Convention, (i) is
resident solely in the United States and is not resident in Canada, (ii) holds
all Common Shares solely as capital property, (iii) deals at arms length
with and is not affiliated with the Company, and (iv) does not use or hold
and is not deemed to use or hold, any Common Shares in a business carried on in
Canada, and none of whose Common Shares constitute taxable Canadian property
as defined in the Canadian Tax Act (each such individual, a U.S. Resident).
Generally, a
person will be considered to hold a Common Share as capital property provided
that the person acquired the shares as a long-term investment, is not a trader
or dealer in securities, did not acquire, hold or dispose of the share in a
transaction considered to be an adventure or concern in the nature of trade (
i.e.
speculation), and does not hold the Common Share
as inventory in the course of carrying on a business. Special rules, which are
not discussed below, may apply to a U.S. Resident who is an insurer that
carries on business in Canada and elsewhere.
Generally, a
non-resident persons Common Shares will not constitute taxable Canadian
property at a particular time provided that (i) the Common Shares are
listed on a designated stock exchange (which currently includes the Toronto
Stock Exchange) at that time, and (ii) neither the person nor one or more
other persons with whom the first person does not deal at arms length alone or
in any combination held, directly or indirectly, 25% or more of the issued
shares of any class in the capital stock of the Company at any time in the
60 months preceding the particular time.
Certain entities
that are fiscally transparent for United States federal income tax
purposes (including limited liability companies) do not qualify as residents of
the United States under the provisions of the Convention, according to the
published policy of the Canada Revenue Agency (the CRA).
This summary is
based on the current provisions of the Canadian Tax Act and the Convention
in effect on the date hereof, all specific proposals to amend the Canadian
Tax Act and Convention publicly announced by or on behalf of the Minister
of Finance (Canada) on or before the date hereof (the Tax Proposals),
and the current published administrative and assessing policies of the CRA. It
is assumed that all such amendments will be enacted as currently proposed, and
that there will be no other material change to any applicable law or
administrative practice,
39
although no
assurance can be given in these respects. Except as otherwise expressly
provided, this summary does not take into account any provincial, territorial
or foreign tax considerations.
This summary is of
a general nature only, is not exhaustive of all possible Canadian federal
income tax considerations, and is not and is not to be construed as legal or
tax advice to any particular holder or prospective holder of Common Shares.
Each holder or prospective holder of Common Shares is urged to consult his, her
or its own tax advisors for advice with respect to the holder or prospective
holders particular circumstances. The discussion below is qualified
accordingly.
This summary does
not address any Canadian federal income tax considerations in respect of the
transactions pursuant to the Arrangement by which shareholders of the Company
exchanged their old common shares and received, subject to applicable
withholding taxes, (i) new Common Shares of the Company and (ii) common
shares of Allied Nevada. Holders of Common Shares are referred to the
Management Information and Proxy Circular of the Company dated October 11,
2006 for a summary of the tax consequences related to these transactions.
Disposition
of Common Shares
A
U.S. Resident who disposes of a Common Share will not thereby incur any
liability for Canadian federal income tax.
Taxation
of Dividends on Common Shares
A
U.S. Resident who is or is deemed to be paid or credited a dividend on the
U.S. Residents Common Shares will be subject to Canadian withholding tax
equal to 15% or, if the U.S. Resident is a company that holds 10% or more
of the voting stock of the Company, 5%, of the gross amount of the dividend. A
U.S. Resident that is a qualifying religious, scientific, literary,
educational or charitable tax-exempt organization or a qualifying trust,
company, organization or arrangement operated exclusively to administer or
provide pension, retirement or employee benefits and is exempt from tax in the
United States may be exempt under the Convention from Canadian withholding
tax provided specific administrative procedures are complied with.
U.S. FEDERAL
INCOME TAX CONSEQUENCES
The following is a
summary of the anticipated material U.S. federal income tax consequences
to a U.S. Holder (as defined below) arising from and relating to the
acquisition, ownership, and disposition of the Companys Common Shares.
This summary is
for general information purposes only and does not purport to be a complete
analysis or listing of all potential U.S. federal income tax consequences
that may apply to a U.S. Holder as a result of the acquisition, ownership,
and disposition of Common Shares. In addition, this summary does not take into
account the individual facts and circumstances of any particular
U.S. Holder that may affect the U.S. federal income tax consequences
of the acquisition, ownership, and disposition of Common Shares. Accordingly,
this summary is not intended to be, and should not be construed as, legal or
U.S. federal income tax advice with respect to any U.S. Holder. Each
U.S. Holder should consult its own financial advisor, legal counsel, or
accountant regarding the U.S. federal, U.S. state and local, and
foreign tax consequences of the acquisition, ownership, and disposition of
Common Shares.
Scope
of this Disclosure
Authorities
This summary is
based on the Internal Revenue Code of 1986, as amended (the Code),
Treasury Regulations (whether final, temporary, or proposed), published rulings
of the Internal Revenue Service (IRS), published administrative positions of
the IRS, the Convention Between Canada and the United States of America
with Respect to Taxes on Income and on Capital, signed September 26, 1980,
as amended (the Canada-U.S. Tax Convention), and U.S. court
decisions that are applicable and, in each case, as in effect and available, as
of the date of this Prospectus. Any of the authorities on which this summary is
based could be changed in a material and adverse manner at any time, and any
such change could be applied on a retroactive basis. This summary does not
discuss the potential effects, whether adverse or beneficial, of any proposed
legislation that, if enacted, could be applied on a retroactive basis.
40
U.S. Holders
For purposes of
this summary, a U.S. Holder is a beneficial owner of Common Shares that,
for U.S. federal income tax purposes, is (a) an individual who is a
citizen or resident of the U.S., (b) a corporation, or any other entity
classified as a corporation for U.S. federal income tax purposes, that is
created or organized in or under the laws of the U.S. or any state in the U.S.,
including the District of Columbia, (c) an estate if the income of such
estate is subject to U.S. federal income tax regardless of the source of
such income, or (d) a trust if (i) such trust has validly elected to
be treated as a U.S. person for U.S. federal income tax purposes or (ii) a
U.S. court is able to exercise primary supervision over the administration
of such trust and one or more U.S. persons have the authority to control
all substantial decisions of such trust.
Non-U.S. Holders
For purposes of
this summary, a non-U.S. Holder is a beneficial owner of Common Shares
other than a U.S. Holder. This summary does not address the
U.S. federal income tax consequences of the acquisition, ownership, and
disposition of Common Shares to non-U.S. Holders. Accordingly, a
non-U.S. Holder should consult its own financial advisor, legal counsel,
or accountant regarding the U.S. federal, U.S. state and local, and
foreign tax consequences (including the potential application of and operation
of any tax treaties) of the acquisition, ownership, and disposition of
Common Shares.
U.S. Holders
Subject to Special U.S. Federal Income Tax Rules Not Addressed
This summary does
not address the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of Common Shares to U.S. Holders that are
subject to special provisions under the Code, including the following
U.S. Holders: (a) U.S. Holders that are tax-exempt
organizations, qualified retirement plans, individual retirement accounts, or
other tax-deferred accounts; (b) U.S. Holders that are financial
institutions, insurance companies, real estate investment trusts, or regulated
investment companies; (c) U.S. Holders that are dealers in securities
or currencies or U.S. Holders that are traders in securities that elect to
apply a mark-to-market accounting method; (d) U.S. Holders that have
a functional currency other than the U.S. dollar; (e) U.S. Holders
that are liable for the alternative minimum tax under the Code; (f) U.S. Holders
that own Common Shares as part of a straddle, hedging transaction, conversion
transaction, constructive sale, or other arrangement involving more than one
position; (g) U.S. Holders that acquired Common Shares in connection
with the exercise of employee stock options or otherwise as compensation for
services; (h) U.S. Holders that hold Common Shares other than as a
capital asset within the meaning of Section 1221 of the Code; or (i) U.S. Holders
that own, directly or indirectly, 10% or more, by voting power or value, of our
outstanding shares. U.S. Holders that are subject to special provisions
under the Code, including U.S. Holders described immediately above, should
consult their own financial advisor, legal counsel or accountant regarding the
U.S. federal, U.S. state and local, and foreign tax consequences of
the acquisition, ownership, and disposition of Common Shares.
If an entity that
is classified as partnership (or pass-through entity) for
U.S. federal income tax purposes holds Common Shares, the
U.S. federal income tax consequences to such partnership (or pass-through
entity) and the partners of such partnership (or owners of such pass-through
entity) generally will depend on the activities of the partnership (or pass-through
entity) and the status of such partners (or owners). Partners of entities
that are classified as partnerships (or owners of pass-through entities)
for U.S. federal income tax purposes should consult their own financial
advisor, legal counsel or accountant regarding the U.S. federal income tax
consequences of the acquisition, ownership, and disposition of Common Shares.
Tax
Consequences Other than U.S. Federal Income Tax Consequences Not Addressed
This summary does
not address the U.S. state and local, U.S. federal estate and gift,
or foreign tax consequences to U.S. Holders of the acquisition, ownership,
and disposition of Common Shares. Each U.S. Holder should consult its own
financial advisor, legal counsel, or accountant regarding the U.S. state
and local, U.S. federal estate and gift, and foreign tax consequences of
the acquisition, ownership, and disposition of Common Shares. (See Certain
Canadian Federal Income Tax Considerations for U.S. Residents above).
41
U.S. Federal
Income Tax Consequences of the Acquisition, Ownership, and Disposition of
Common Shares
Distributions
on Common Shares
General
Taxation of Distributions
A U.S. Holder
that receives a distribution, including a constructive distribution, with
respect to the Common Shares will be required to include the amount of such
distribution in gross income as a dividend (without reduction for any Canadian
income tax withheld from such distribution) to the extent of our current or
accumulated earnings and profits. To the extent that a distribution exceeds
our current and accumulated earnings and profits, such distribution will be
treated (a) first, as a tax-free return of capital to the extent of a
U.S. Holders tax basis in the Common Shares and, (b) thereafter, as
gain from the sale or exchange of such Common Shares. (See more detailed
discussion at Disposition of Common Shares below).
Reduced
Tax Rates for Certain Dividends
For taxable years
beginning before January 1, 2011, a dividend paid by the Company generally
will be taxed at the preferential tax rates applicable to long-term capital gains
if (a) we are a qualified foreign corporation (as defined below), (b) the
U.S. Holder receiving such dividend is an individual, estate, or trust,
and (c) such dividend is paid on Common Shares that have been held by such
U.S. Holder for at least 61 days during the 121-day period beginning
60 days before the ex-dividend date (
i.e.
, the
first date that a purchaser of such Common Shares will not be entitled to
receive such dividend).
The Company
generally will be a qualified foreign corporation under Section 1(h)(11)
of the Code (a QFC) if (a) the Company is eligible for the benefits
of the Canada-U.S. Tax Convention, or (b) the Common Shares are
readily tradable on an established securities market in the U.S. However,
even if the Company satisfies one or more of such requirements, we will not be
treated as a QFC if the Company is a passive foreign investment company (or PFIC,
as defined below) for the taxable year during which the Company pays a dividend
or for the preceding taxable year.
As discussed
below, the Company believes that it was a PFIC for the taxable year ended December 31,
2008. Whether the Company will be a PFIC for the taxable year ending December 31,
2009 depends on its assets and income over the course of such taxable year and,
as a result, cannot be predicted with certainty as of the date of this
Prospectus. (See more detailed discussion at Additional Rules that May Apply
to U.S. Holders below). There can be no assurance that the IRS will not
challenge the determination made by the Company concerning its PFIC status.
Accordingly, there can be no assurances that the Company will be a QFC for the
current or any future taxable year.
If the Company is
not a QFC, a dividend paid by the Company to a U.S. Holder, including a
U.S. Holder that is an individual, estate, or trust, generally will be
taxed at ordinary income tax rates (and not at the preferential tax rates
applicable to long-term capital gains). The dividend rules are complex,
and each U.S. Holder should consult its own financial advisor, legal
counsel, or accountant regarding the dividend rules.
Distributions
Paid in Foreign Currency
The amount of a
distribution paid to a U.S. Holder in foreign currency generally will be
equal to the U.S. dollar value of such distribution based on the exchange
rate applicable on the date of receipt. A U.S. Holder that does not
convert foreign currency received as a distribution into U.S. dollars on
the date of receipt generally will have a tax basis in such foreign currency equal
to the U.S. dollar value of such foreign currency on the date of receipt.
Such a U.S. Holder generally will recognize ordinary income or loss on the
subsequent sale or other taxable disposition of such foreign currency
(including an exchange for U.S. dollars).
Dividends
Received Deduction
Dividends paid on
the Common Shares generally will not be eligible for the dividends received
deduction. The availability of the dividends received deduction is subject to
complex limitations that are beyond the scope of this discussion, and a
U.S. Holder that is a corporation should consult its own financial
advisor, legal counsel, or accountant regarding the dividends received
deduction.
42
Disposition
of Common Shares
A U.S. Holder
will recognize gain or loss on the sale or other taxable disposition of Common
Shares in an amount equal to the difference, if any, between (a) the
amount of cash plus the fair market value of any property received and (b) such
U.S. Holders tax basis in the Common Shares sold or otherwise disposed
of. Subject to the passive foreign investment company rules discussed
below, any such gain or loss generally will be capital gain or loss, which will
be long-term capital gain or loss if the Common Shares are held for more than
one year. Gain or loss recognized by a U.S. Holder on the sale or other
taxable disposition of Common Shares generally will be treated as U.S. source
for purposes of applying the U.S. foreign tax credit rules, unless the
gain is subject to tax in Canada and resourced as foreign source gain under the
provisions of the Canada-U.S. Tax Convention and such U.S. Holder
makes an election under the Code to treat such gain as foreign source.
(See more detailed discussion at Foreign Tax Credit below).
Preferential tax
rates apply to long-term capital gains of a U.S. Holder that is an
individual, estate, or trust. There are currently no preferential tax rates for
long-term capital gains of a U.S. Holder that is a corporation. Deductions
for capital losses and net capital losses are subject to complex limitations.
For a U.S. Holder that is an individual, estate, or trust, capital losses
may be used to offset capital gains and up to US$3,000 of ordinary income. An
unused capital loss of a U.S. Holder that is an individual, estate, or
trust generally may be carried forward to subsequent taxable years, until such
net capital loss is exhausted. For a U.S. Holder that is a corporation,
capital losses may be used to offset capital gains, and an unused capital loss
generally may be carried back three years and carried forward five years from
the year in which such net capital loss is recognized.
Foreign
Tax Credit
A U.S. Holder
who pays (whether directly or through withholding) Canadian income tax with
respect to dividends paid on the Common Shares generally will be entitled, at
the election of such U.S. Holder, to receive either a deduction or a
credit for such Canadian income tax paid. Generally, a credit will reduce a
U.S. Holders U.S. federal income tax liability on a
dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holders
income subject to U.S. federal income tax. This election is made on a
year-by-year basis and applies to all foreign taxes paid (whether directly or
through withholding) by a U.S. Holder during a year.
Complex
limitations apply to the foreign tax credit, including the general limitation
that the credit cannot exceed the proportionate share of a U.S. Holders
U.S. federal income tax liability that such U.S. Holders foreign
source taxable income bears to such U.S. Holders worldwide taxable
income. In applying this limitation, a U.S. Holders various items of
income and deduction must be classified, under complex rules, as either foreign
source or U.S. source. In addition, this limitation is calculated
separately with respect to specific categories of income. Dividends paid by us
generally will constitute foreign source income and generally will be
categorized as passive income. The foreign tax credit rules are complex,
and each U.S. Holder should consult its own financial advisor, legal
counsel, or accountant regarding the foreign tax credit rules.
Information
Reporting; Backup Withholding Tax
Payments made
within the U.S., or by a U.S. payor or U.S. middleman, of dividends
on, and proceeds arising from certain sales or other taxable dispositions of,
Common Shares generally will be subject to information reporting and backup
withholding tax, at the rate of 28%, if a U.S. Holder (a) fails to
furnish such U.S. Holders correct U.S. taxpayer identification
number (generally on Form W-9), (b) furnishes an incorrect
U.S. taxpayer identification number, (c) is notified by the IRS that
such U.S. Holder has previously failed to properly report items subject to
backup withholding tax, or (d) fails to certify, under penalty of perjury,
that such U.S. Holder has furnished its correct U.S. taxpayer
identification number and that the IRS has not notified such U.S. Holder
that it is subject to backup withholding tax. However, U.S. Holders that
are corporations generally are excluded from these information reporting and
backup withholding tax rules. Any amounts withheld under the U.S. backup
withholding tax rules will be allowed as a credit against a
U.S. Holders U.S. federal income tax liability, if any, or will be
refunded, if such U.S. Holder furnishes required information to the IRS.
Each U.S. Holder should consult its own financial advisor, legal counsel,
or accountant regarding the information reporting and backup withholding
tax rules.
43
Additional
Rules that May Apply to U.S. Holders
If the Company is
a controlled foreign corporation, or a passive foreign investment company
(each as defined below), the preceding sections of this summary may not
describe the U.S. federal income tax consequences to U.S. Holders of
the acquisition, ownership, and disposition of Common Shares.
Controlled
Foreign Corporation
The Company
generally will be a controlled foreign corporation under Section 957 of
the Code (a CFC) if more than 50% of the total voting power or the total
value of its outstanding shares are owned, directly or indirectly, by citizens
or residents of the U.S., domestic partnerships, domestic corporations,
domestic estates, or domestic trusts (each as defined in Section 7701(a)(30)
of the Code), each of which own, directly or indirectly, 10% or more of the
total voting power of our outstanding shares (a 10% Shareholder).
If the Company is
a CFC, a 10% Shareholder generally will be subject to current U.S. federal
income tax with respect to (a) such 10% Shareholders pro rata share
of the subpart F income (as defined in Section 952 of the
Code) of the Company and (b) such 10% Shareholders pro rata share of
our earnings invested in United States property (as defined in Section 956
of the Code). In addition, under Section 1248 of the Code, any gain
recognized on the sale or other taxable disposition of Common Shares by a
U.S. Holder that was a 10% Shareholder at any time during the five-year
period ending with such sale or other taxable disposition generally will be
treated as a dividend to the extent of the earnings and profits of the
Company that are attributable to such Common Shares. If the Company is both a
CFC and a PFIC (as defined below), we generally will be treated as a CFC
(and not as a PFIC) with respect to any 10% Shareholder.
We do not believe
that we have previously been, or currently are a CFC. However, there can be no
assurance that we will not be a CFC for the current or any future
taxable year.
Passive
Foreign Investment Company
We generally will
be a PFIC under Section 1297 of the Code if, for a taxable year, (a) 75%
or more of our gross income for such taxable year is passive income or (b) 50%
or more of the assets held by us either produce passive income or are held for
the production of passive income, based on the fair market value of such assets
(or on the adjusted tax basis of such assets, if we are not publicly
traded and either is a controlled foreign corporation or makes an election). Passive
income includes, for example, dividends, interest, certain rents and
royalties, certain gains from the sale of stock and securities, and certain
gains from commodities transactions.
For purposes of
the PFIC income test and asset test described above, if we own, directly or
indirectly, 25% or more of the total value of the outstanding shares of another
foreign corporation, we will be treated as if it (a) held a proportionate
share of the assets of such other foreign corporation and (b) received
directly a proportionate share of the income of such other foreign corporation.
In addition, for purposes of the PFIC income test and asset test described
above, passive income does not include any interest, dividends, rents, or
royalties that are received or accrued by us from a related person
(as defined in Section 954(d)(3) of the Code), to the extent
such items are properly allocable to the income of such related person that is
not passive income.
We believe that we
were a PFIC for the taxable year ended December 31, 2008. Whether we will
be a PFIC for the taxable year ending December 31, 2009 depends on our
assets and income over the course of the taxable year ending December 31,
2009 and, as a result, cannot be predicted with certainty as of the date of
this Prospectus. In addition, there can be no assurance that the IRS will not
challenge our determination concerning our PFIC status or that we will not be a
PFIC for the current or any future taxable year.
Default
PFIC Rules Under Section 1291 of the Code
If we are a PFIC,
the U.S. federal income tax consequences to a U.S. Holder of the
acquisition, ownership, and disposition of Common Shares will depend on whether
such U.S. Holder makes an election to treat the Company as a qualified
electing fund or QEF under Section 1295 of the Code (a QEF
Election) or a mark-to-market election under Section 1296 of the Code (a Mark-to-Market
Election). A U.S. Holder that does not make either a QEF Election or a
Mark-to-Market Election will be referred to in this summary as a Non-Electing
U.S. Holder.
44
A Non-Electing
U.S. Holder will be subject to the rules of Section 1291 of the
Code with respect to (a) any gain recognized on the sale or other taxable
disposition of Common Shares and (b) any excess distribution paid on the
Common Shares. A distribution generally will be an excess distribution to the
extent that such distribution (together with all other distributions received
in the current taxable year) exceeds 125% of the average distributions received
during the three preceding taxable years (or during a U.S. Holders
holding period for the Common Shares, if shorter).
Under Section 1291
of the Code, any gain recognized on the sale or other taxable disposition of
Common Shares, and any excess distribution paid on the Common Shares, must be
rateably allocated to each day in a Non-Electing U.S. Holders holding
period for the Common Shares. The amount of any such gain or excess
distribution allocated to prior years of such Non-Electing U.S. Holders
holding period for the Common Shares (other than years prior to the first
taxable year of the Company during such Non-Electing U.S. Holders holding
period and beginning after December 31, 1986 for which we was not a PFIC)
will be subject to U.S. federal income tax at the highest tax applicable
to ordinary income in each such prior year. A Non-Electing U.S. Holder
will be required to pay interest on the resulting tax liability for each such
prior year, calculated as if such tax liability had been due in each such prior
year. Such a Non-Electing U.S. Holder that is not a corporation must treat
any such interest paid as personal interest, which is not deductible. The
amount of any such gain or excess distribution allocated to the current year of
such Non-Electing U.S. Holders holding period for the Common Shares will
be treated as ordinary income in the current year, and no interest charge will
be incurred with respect to the resulting tax liability for the
current year.
If we are a PFIC
for any taxable year during which a Non-Electing U.S. Holder holds Common
Shares, we will continue to be treated as a PFIC with respect to such
Non-Electing U.S. Holder, regardless of whether we cease to be a PFIC in
one or more subsequent years. A Non-Electing U.S. Holder may terminate
this deemed PFIC status by electing to recognize gain (which will be taxed
under the rules of Section 1291 of the Code discussed above) as if
such Common Shares were sold on the last day of the last taxable year for which
the Company was a PFIC.
QEF
Election
A U.S. Holder
that makes a QEF Election generally will not be subject to the rules of Section 1291
of the Code discussed above. However, a U.S. Holder that makes a QEF
Election will be subject to U.S. federal income tax on such
U.S. Holders pro rata share of (a) the net capital gain of the
Company, which will be taxed as long-term capital gain to such
U.S. Holder, and (b) and the ordinary earnings of the Company, which
will be taxed as ordinary income to such U.S. Holder. Generally, net
capital gain is the excess of (a) net long-term capital gain over (b) net
short-term capital loss, and ordinary earnings are the excess of (a) earnings
and profits over (b) net capital gain. A U.S. Holder that makes a
QEF Election will be subject to U.S. federal income tax on such amounts
for each taxable year in which we are a PFIC, regardless of whether such
amounts are actually distributed to such U.S. Holder by us. However, a
U.S. Holder that makes a QEF Election may, subject to certain limitations,
elect to defer payment of current U.S. federal income tax on such amounts,
subject to an interest charge. If such U.S. Holder is not a corporation,
any such interest paid will be treated as personal interest, which is
not deductible.
A U.S. Holder
that makes a QEF Election generally also (a) may receive a tax-free
distribution from us to the extent that such distribution represents earnings and
profits of the Company that were previously included in income by the
U.S. Holder because of such QEF Election and (b) will adjust such
U.S. Holders tax basis in the Common Shares to reflect the amount
included in income or allowed as a tax-free distribution because of such QEF
Election. In addition, a U.S. Holder that makes a QEF Election generally
will recognize capital gain or loss on the sale or other taxable disposition of
Common Shares.
The procedure for
making a QEF Election, and the U.S. federal income tax consequences of
making a QEF Election, will depend on whether such QEF Election is timely. A
QEF Election will be treated as timely if such QEF Election is made for the
first year in the U.S. Holders holding period for the Common Shares in
which we were a PFIC. A U.S. Holder may make a timely QEF Election by
filing the appropriate QEF Election documents at the time such U.S. Holder
files a U.S. federal income tax return for such first year. However,
if we were a PFIC in a prior year, then in addition to filing the QEF Election
documents, a U.S. Holder must elect to recognize (a) a gain (which
will be taxed under the rules of Section 1291 of the Code discussed
above) as if the Common Shares were sold on the qualification date or (b) if
we were also a CFC, such U.S. Holders pro rata share of the
post-1986 earnings and profits of the Company as of the qualification date.
The qualification date is the first day of the first taxable year in which we
were a QEF with respect to such U.S. Holder. The election to recognize
such gain or earnings and profits can only be made if such U.S. Holders
holding period for the Common Shares includes the qualification date. By
electing to recognize such gain or earnings and profits, such
U.S. Holder will be deemed to have made a
45
timely QEF
Election. In addition, under very limited circumstances, a U.S. Holder may
make a retroactive QEF Election if such U.S. Holder failed to file the QEF
Election documents in a timely manner.
A QEF Election
will apply to the taxable year for which such QEF Election is made and to all
subsequent taxable years, unless such QEF Election is invalidated or terminated
or the IRS consents to revocation of such QEF Election. If a U.S. Holder
makes a QEF Election and, in a subsequent taxable year, we cease to be a PFIC,
the QEF Election will remain in effect (although it will not be applicable)
during those taxable years in which we are not a PFIC. Accordingly, if we become
a PFIC in another subsequent taxable year, the QEF Election will be effective
and the U.S. Holder will be subject to the QEF rules described above
during any such subsequent taxable year in which we qualify as a PFIC. In
addition, the QEF Election will remain in effect (although it will not be
applicable) with respect to a U.S. Holder even after such U.S. Holder
disposes of all of such U.S. Holders direct and indirect interest in the
Common Shares. Accordingly, if such U.S. Holder reacquires an interest in
the Company, such U.S. Holder will be subject to the QEF rules described
above for each taxable year in which we are a PFIC.
Each
U.S. Holder should consult its own financial advisor, legal counsel, or
accountant regarding the availability of, and procedure for making, a QEF
Election. U.S. Holders should be aware that there can be no assurance that
we will satisfy record keeping requirements that apply to a QEF, or that we
will supply U.S. Holders with information that such U.S. Holders
require to report under the QEF rules, in event that we are a PFIC and a
U.S. Holder wishes to make a QEF Election.
Mark-to-Market
Election
A U.S. Holder
may make a Mark-to-Market Election only if the Common Shares are marketable
stock. The Common Shares generally will be marketable stock if the Common
Shares are regularly traded on (a) a national securities exchange that is
registered with the Securities and Exchange Commission, (b) the national
market system established pursuant to section 11A of the Exchange Act, or (c) a
foreign securities exchange that is regulated or supervised by a governmental
authority of the country in which the market is located, provided that (i) such
foreign exchange has trading volume, listing, financial disclosure, and other
requirements and the laws of the country in which such foreign exchange is
located, together with the rules of such foreign exchange, ensure that
such requirements are actually enforced and (ii) the rules of such
foreign exchange ensure active trading of listed stocks.
A U.S. Holder
that makes a Mark-to-Market Election generally will not be subject to the rules of
Section 1291 of the Code discussed above. However, if a U.S. Holder
makes a Mark-to-Market Election after the beginning of such U.S. Holders
holding period for the Common Shares and such U.S. Holder has not made a
timely QEF Election, the rules of Section 1291 of the Code discussed
above will apply to certain dispositions of, and distributions on, the
Common Shares.
A U.S. Holder
that makes a Mark-to-Market Election will include in ordinary income, for each
taxable year in which we are a PFIC, an amount equal to the excess, if any, of (a) the
fair market value of the Common Shares as of the close of such taxable year
over (b) such U.S. Holders tax basis in such Common Shares. A
U.S. Holder that makes a Mark-to-Market Election will be allowed a
deduction in an amount equal to the lesser of (a) the excess, if any, of (i) such
U.S. Holders adjusted tax basis in the Common Shares over (ii) the
fair market value of such Common Shares as of the close of such taxable year or
(b) the excess, if any, of (i) the amount included in ordinary income
because of such Mark-to-Market Election for prior taxable years over (ii) the
amount allowed as a deduction because of such Mark-to-Market Election for prior
taxable years.
A U.S. Holder
that makes a Mark-to-Market Election generally also will adjust such
U.S. Holders tax basis in the Common Shares to reflect the amount
included in gross income or allowed as a deduction because of such
Mark-to-Market Election. In addition, upon a sale or other taxable disposition
of Common Shares, a U.S. Holder that makes a Mark-to-Market Election will
recognize ordinary income or loss (not to exceed the excess, if any, of (a) the
amount included in ordinary income because of such Mark-to-Market Election for
prior taxable years over (b) the amount allowed as a deduction because of
such Mark-to-Market Election for prior taxable years).
A Mark-to-Market
Election applies to the taxable year in which such Mark-to-Market Election is
made and to each subsequent taxable year, unless the Common Shares cease to be marketable
stock or the IRS consents to revocation of such election. Each
U.S. Holder should consult its own financial advisor, legal counsel, or accountant
regarding the availability of, and procedure for making, a Mark-to-Market
Election.
46
Other
PFIC Rules
Under Section 1291(f) of
the Code, the IRS has issued proposed Treasury Regulations that, subject to
certain exceptions, would cause a U.S. Holder that had not made a timely
QEF Election to recognize gain (but not loss) upon certain transfers of
Common Shares that would otherwise be tax-deferred (
e.g.
, gifts
and exchanges pursuant to corporate reorganizations). However, the specific
U.S. federal income tax consequences to a U.S. Holder may vary based
on the manner in which Common Shares are transferred.
Certain additional
adverse rules will apply with respect to a U.S. Holder if we are a
PFIC, regardless of whether such U.S. Holder makes a QEF Election. For
example under Section 1298(b)(6) of the Code, a U.S. Holder that
uses Common Shares as security for a loan will, except as may be provided in
Treasury Regulations, be treated as having made a taxable disposition of such
Common Shares.
The PFIC rules are
complex, and each U.S. Holder should consult its own financial advisor,
legal counsel, or accountant regarding the PFIC rules and how the PFIC rules may
affect the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of Common Shares
INTERESTS
OF NAMED EXPERTS AND COUNSEL
None.
TRANSFER
AGENT AND REGISTRAR
Our registrar and
transfer agent for our common shares is Computershare Investor Services Inc. at
its principal offices in Vancouver and Toronto, Canada.
LEGAL
MATTERS
The law firms of Macdonald
&
c
ompany,
Borden Ladner
Gervais LLP and Dorsey &
Whitney LLP,
have
acted as the Companys counsel by providing opinions on the validity of the
securities offered in this Prospectus and applicable Prospectus Supplements and
counsel named in the applicable Prospectus Supplement will pass upon legal
matters for any underwriters, dealers or agents.
Certain legal matters
related to the Securities offered by this Prospectus will be passed upon on the
Companys behalf by Borden Ladner Gervais LLP, with respect to matters of
Canadian law, and Dorsey & Whitney LLP, with respect to matters of
United States law
EXPERTS
Information
relating to the Companys mineral properties in this Prospectus and the
documents incorporated by reference herein has been derived from reports,
statements or opinions prepared or certified by SRK Consulting (US), Inc.,
Golder Associates Inc., Gustavson Associates, LLC, Resource Development Inc., MWH
Australia Pty Ltd., MWH Americas, Inc., Tetra Tech MM, Inc., Pincock,
Allen & Holt, Mine Development Associates Inc., and this information
has been included in reliance on such companies expertise.
None of SRK
Consulting (US), Inc., Golder Associates Inc., Gustavson Associates, LLC,
Resource Development Inc., MWH Australia Pty Ltd., MWH Americas, Inc.,
Tetra Tech MM, Inc., Pincock, Allen & Holt, Mine Development
Associates Inc., each being companies who have prepared or certified the
preparation of reports, statements or opinions relating to the Companys
mineral properties, or any director, officer, employee or partner thereof, as
applicable, received or has received a direct or indirect interest in the
property of the Company or of any associate or affiliate of the Company. As at the date hereof, the aforementioned
persons, companies and persons at the companies specified above who
participated in the preparation of such reports, statements or opinions, as a
group, beneficially own, directly or indirectly, less than 1% of the Companys
outstanding Common Shares.
47
Our consolidated
financial statements as at December 31, 2008 and 2007, and for the years
ended December 31, 2008, 2007, and 2006, have been incorporated by
reference herein in reliance upon the report of PricewaterhouseCoopers, LLP independent registered public accounting
firm, given upon the authority of that firm as experts in accounting and
auditing.
WHERE
YOU CAN FIND MORE INFORMATION
The Company files
annual, quarterly and current reports, proxy statements and other information
with the SEC. Our SEC filings are
available to the public over the Internet at the SECs web site at
http://www.sec.gov.
This Prospectus is
part of a registration statement and, as permitted by SEC rules, does not
contain all of the information included in the registration
statement. Whenever a reference is made in this Prospectus to any of
our contracts or other documents, the reference may not be complete and, for a
copy of the contract or document, you should refer to the exhibits that are
part of the registration statement. You may call the SEC at
1-800-SEC-0330 for more information on the public reference rooms and their
copy charges. You may also read and copy any document we file with
the SEC at the SECs public reference rooms at:
100 F Street, N.E.
Room 1580
Washington, D.C.
20549
48
PROSPECTUS
VISTA GOLD CORP.
$200,000,000
Common Shares
Debt Securities
Warrants
Subscription Receipts
Units
April 17, 2009
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
14- OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
|
|
Amount
|
|
Securities and Exchange Commission Registration Fee
|
|
$
|
11,160
|
|
Legal Fees and Expenses
|
|
·
|
|
Accounting Fees and Expenses
|
|
·
|
|
Printing and Engraving Expenses
|
|
·
|
|
Miscellaneous Expenses
|
|
·
|
|
Total
|
|
$
|
·
|
|
ITEM
15- INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 7.1
of our By-law No. 1 provides that no director will be liable for acts,
receipts, neglects or defaults of any other director or any officer or
employee, or for any loss, damage or expense sustained by the Company through:
defects in title to any property acquired by the Company or on its behalf; or
for losses or damages sustained by the Company in connection with investment of
its funds or property (including losses or damages arising from bankruptcy,
insolvency or other tortious acts of an entity with which such funds or
property are deposited); or for any loss caused by an error of judgment or
oversight on the part of such director; or for any other liability that the
director may incur in his capacity as director, except for liabilities occasioned
by the directors own willful neglect or default. This Section also
provides that the Companys directors and officers must act in accordance with
the
Business Corporations Act
(Yukon Territory) (the Act) and regulations thereunder, and will not be
relieved from liability for any breach of such Act or regulations.
Section 7.2
of the Companys By-law No. 1 provides that, subject to limitations
contained in the Act, and provided the indemnitee is fairly and reasonably
entitled to be indemnified by it, the Company will indemnify its directors and
officers, including former directors and officers, or persons acting or having
acted at the request of the Company as a director or officer of a corporation
of which the Company is or was a shareholder or creditor (or a person who
undertakes or has undertaken any liability on behalf of the Company or any such
other corporation), and heirs and legal representatives of such persons,
against all costs, charges and expenses, including amounts paid to settle an action
or satisfy a judgment, reasonably incurred by such person in respect of any
civil, criminal or administrative action or proceeding to which such person is
made a party by reason of being or having been a director or officer of the
Company or any such other corporation, if:
(a)
|
|
he or she acted
honestly and in good faith with a view to the best interests of the Company;
and
|
(b)
|
|
in the case of a
criminal or administrative action or proceeding that is enforced by a
monetary penalty, he or she had reasonable grounds for believing that his
conduct was lawful.
|
Section 7.3
of our By-law No. 1 provides that, subject to limitations contained in the
Act, the Company may purchase and maintain insurance for its directors and
officers as determined by the Board of Directors. As discussed below, the
Company does maintain such insurance.
Subsection (1) of
Section 126 of the Act provides that except in respect of an action by or
on behalf of the corporation or body corporate to procure a judgment in its
favor, a corporation may indemnify a director or officer of the corporation, a
former director or officer of the corporation or a person who acts or acted at
the corporations request as a director or officer of a body corporate of which
the corporation is or was a shareholder or creditor, and his heirs and legal
representatives (collectively, a Person), against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
reasonably incurred by him in respect of any civil, criminal or administrative
action or proceeding to which he is made a party by reason of being or having
been a director or officer of that corporation or body corporate, if:
(a)
|
|
he or she acted
honestly and in good faith with a view to the best interests of the
corporation; and
|
(b)
|
|
in the case of a
criminal or administrative action or proceeding that is enforced by a
monetary penalty, he had reasonable grounds for believing that his conduct
was lawful.
|
II-1
A corporation may
with the approval of the Supreme Court of the Yukon Territory (the Court)
indemnify a Person in respect of an action by or on behalf of the corporation
or body corporate to procure a judgment in its favor, to which he is made a party
by reason of being or having been a director or an officer of the corporation
or body corporate, against all costs, charges and expenses reasonably incurred
by him in connection with the action if he fulfills the conditions set out in
paragraphs (1)(a) and (b) of Section 126 of the Act.
Notwithstanding
anything in Section 126 of the Act, a Person is entitled to indemnity from
the corporation in respect of all costs, charges and expenses reasonably
incurred by him in connection with the defense of any civil, criminal or
administrative action or proceeding to which he is made a party by reason of
being or having been a director or officer of the corporation or body
corporate, if the Person seeking indemnity:
(a)
|
|
was
substantially successful on the merits in his defense of the action or
proceeding;
|
(b)
|
|
fulfills the
conditions set out in paragraphs (1)(a) and (b) of Section 126
of the Act; and
|
(c)
|
|
is fairly and
reasonably entitled to indemnity.
|
A corporation may
purchase and maintain insurance for the benefit of any Person against any
liability incurred by him:
(a)
|
|
in his or her
capacity as a director or officer of the corporation, except when the
liability relates to his or her failure to act honestly and in good faith
with a view to the best interests of the corporation; or
|
(b)
|
|
in his capacity
as a director or officer of another body corporate if he acts or acted in
that capacity at the corporations request, except when the liability relates
to his failure to act honestly and in good faith with a view to the best
interests of the body corporate.
|
A corporation or a
Person may apply to the Court for an order approving an indemnity under Section 126
of the Act and the Court may so order and make any further order it thinks fit,
including an order that notice be given to any interested person.
The Company
indemnifies its directors and executive officers, as well as their heirs and
representatives, pursuant to indemnification agreements it has entered into
with each such director and executive officer, against all liabilities and
obligations, including legal fees and costs of investigation and defense of
claims, as well as amounts paid to settle claims or satisfy judgments, that
these directors and officers may incur in such capacities. While these agreements
provide that the Company will indemnify such director or officer regardless of
conduct or fault of that person, the agreements also provide that we may only
make such indemnification payments as permitted by applicable law. The
agreements provide that the Companys obligations under the agreements are not
diminished or otherwise affected by, among other things, any officers
liability insurance placed by or for the benefit of the indemnitee, the Company
or any entity related to either.
ITEM
16- EXHIBITS
Other than
contracts made in the ordinary course of business, the following are the
material contracts and other material exhibits as of the date of this
registration statement:
Exhibit
Number
|
|
Description
|
1.01
|
|
Form of
Underwriting Agreement*
|
|
|
|
3.01
|
|
Articles of
Continuation filed as Exhibit 2.01 to the Form 20-F for the
period ended December 31, 1997 and incorporated herein by reference
(File No. 1-9025)
|
|
|
|
3.02
|
|
By-Law
No. 1 of Vista Gold filed as Schedule B to the Management
Information and Proxy Circular as filed on Form 6-K as filed with the
SEC on April 9, 1998 and incorporated herein by reference
(File No. 1-9025)
|
|
|
|
3.03
|
|
Amended By-Law
No. 1 of Vista Gold filed as Schedule D to the Management
Information and Proxy Circular as filed with the SEC on April 7, 1999
and incorporated herein by reference (File No. 1-9025)
|
|
|
|
3.04
|
|
Articles of
Arrangement of Vista Gold Corp., dated May 10, 2007 filed as
Exhibit 3 to the
|
II-2
|
|
Corporations
Current Report on Form 8-K, dated May 10, 2007 and incorporated
herein by reference (File No. 1-9025)
|
|
|
|
4.01
|
|
Warrant
Indenture dated September 23, 2005 between Vista Gold Corp. and
Computershare Trust Company of Canada, as Trustee filed as Exhibit 4.1
to the Corporations Form 10-Q for the quarter ended
September 30, 2005 and incorporated herein by reference (File
No. 1-9025)
|
|
|
|
4.02
|
|
Form of
Broker Warrant dated September 23, 2005 issued by Vista Gold Corp. to
Quest Securities Corporation filed as Exhibit 4.2 to the
Corporations Form 10-Q for the quarter ended September 30, 2005
and incorporated herein by reference (File No. 1-9025)
|
|
|
|
4.03
|
|
Warrant
Indenture dated February 2, 2006 between Vista Gold Corp. and
Computershare Trust Company of Canada, as Trustee filed as Exhibit 4.1
to the Corporations Current Report on Form 8-K, dated
February 2, 2006 and incorporated herein by reference (File
No. 1-9025)
|
|
|
|
4.04
|
|
Form of
Agents Warrant Certificate, dated as of November 7, 2006 evidencing Agent
Warrants issued by Vista Gold Corp. to Sprott Securities Inc. and to GMP
Securities L.P. filed as Exhibit 4.1 to the Corporations
Form 10-Q for the quarter ended September 30, 2006 and incorporated
herein by reference (File No. 1-9025)
|
|
|
|
4.05
|
|
Note Indenture,
dated March 4, 2008, among Vista Gold Corp., Minera Paredones
Amarillos S.A. de C.V., as guarantor, HSBC Bank USA, N.A., as trustee
and HSBC México, S.A. De C.V., Institución de Banca Múltiple, Grupo
Financiero HSBC, División Fiduciaria, as collateral agent filed as
Exhibit 4.1 to the Corporations Current Report on Form 8-K
dated March 3, 2008 and incorporated herein by reference (File
No. 1-9025)
|
|
|
|
4.06
|
|
Form of
Indenture
|
4.07
|
|
Form of
Senior Debt Security*
|
4.08
|
|
Form of
Subordinate Debt Security*
|
4.09
|
|
Form of
Warrant Indenture*
|
4.10
|
|
Form of
Subscription Receipt Agreement*
|
4.12
|
|
Form of
Unit Agreement*
|
5.1
|
|
Opinion of Macdonald
& Company
|
5.2
|
|
Opinion of
Border Ladner Gervais LLP
|
5.3
|
|
Opinion of
Dorsey & Whitney LLP
|
12.1
|
|
Statement
Regarding Computation of Ratio of Earnings to Fixed Charges
|
23.1
|
|
Consent of
PricewaterhouseCoopers LLP, independent auditors
|
23.2
|
|
Consent of SRK
Consulting (US), Inc.
|
23.3
|
|
Consent of
Golder Associates, Inc.
|
23.4
|
|
Consent of
Gustavson Associates, LLC
|
23.5
|
|
Consent of Mine
Development Associates
|
23.6
|
|
Consent of MWH
Australia Pty Ltd
|
23.7
|
|
Consent of MWH
Americas Inc.
|
23.8
|
|
Consent of
Pincock, Allen & Holt
|
23.9
|
|
Consent of Tetra
Tech, Inc.
|
23.10
|
|
Consent of
Resource Development, Inc.
|
23.11
|
|
Consent of Macdonald
& Company (included in Exhibit 5.1)
|
23.12
|
|
Consent of Border
Ladner Gervais LLP (included in Exhibit 5.2)
|
23.13
|
|
Consent of Dorsey
& Whitney LLP (included in Exhibit 5.3)
|
24.1
|
|
Powers of
Attorney (included in signature page)
|
25.1
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939, as amended,
of Trustee under the Indenture*
|
*
To be filed as an exhibit to a current report on Form 8-K
and incorporated by reference herein in connection with a specific offering of
securities.
ITEM 17 UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement:
II-3
(i) To include any prospectus required
by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth 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 pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the Calculation of
Registration Fee table in the effective registration statement;
(iii) To include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement;
provided, however
, that the undertakings set forth in paragraphs (1)(i),
(1)(ii) and (1)(iii) above do not apply if the registration statement
is on Form S-3 or Form F-3 and the information required to be
included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statements or is contained in a
form of prospectus filed pursuant to Rule 424(b) that is part of the
registration statement.
(2) That, for the
purpose 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.
(3) To remove from
registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering.
(4) That, for the
purpose of determining liability under the Securities Act of 1933 to any
purchaser:
(i) Each prospectus filed by the
registrant pursuant to Rule 424(b)(3) shall be deemed to be part of
the registration statement as of the date the filed prospectus was deemed part
of and included in the registration statement; and
(ii) Each prospectus required to be filed
pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a
registration statement in reliance on Rule 430B relating to an offering
made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
providing the information required by Section 10(a) of the Securities
Act of 1933 shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is first used
after effectiveness or the date of the first contract of sale of securities in
the offering described in the prospectus.
As provided in Rule 430B, for liability purposes of the issuer and
any person that is at that date an underwriter, such date shall be deemed to be
a new effective date of the registration statement relating to the securities
in the registration statement to which that prospectus relates, and the
offering of such securities at that time shall be deemed to be the initial
bona fide
offering thereof.
Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to
a purchaser with a time of contract of sale prior to such effective date,
supersede or modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made in any such
document immediately prior to such effective date.
(5) That, for the
purpose of determining liability of the registrant under the Securities Act of
1933 to any purchaser in the initial distribution of the securities, the
undersigned registrant undertakes that in a primary offering of securities of
the undersigned 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 undersigned 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 undersigned 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 undersigned
registrant or used or referred to by the undersigned registrant; (iii) the
portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant; and (iv) any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
II-4
(6) That, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrants annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plans annual report pursuant to Section 15(d) of the Exchange Act)
that is incorporated by reference in the registration statement 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) That, to file an
application for the purpose of determining the eligibility of the trustee to
act under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Trust Indenture Act.
(8) Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant 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 registrant 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned thereunto duly authorized. The registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form S-3.
|
VISTA
GOLD CORP.
(Registrant)
|
|
|
Dated:
April 17, 2009
|
By:
|
/s/
Michael B. Richings
|
|
|
Michael B.
Richings,
|
|
|
Executive
Chairman and Chief Executive Officer
|
|
|
Dated:
April 17, 2009
|
By:
|
/s/
Gregory G. Marlier
|
|
|
Gregory G. Marlier
|
|
|
Chief Financial
Officer
|
POWER OF
ATTORNEY
Each person whose
signature appears below constitutes and appoints each of Michael B. Richings
and Gregory G. Marlier his attorney-in-fact and agent, with the full power of
substitution and resubstitution and full power to act without the other, for
them in any and all capacities, to sign any and all amendments, including
post-effective amendments, and any registration statement relating to the same
offering as this registration that is to be effective upon filing pursuant to Rule 462(b) under
the Securities Act of 1933, as amended, to this registration statement, and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorneys-in-fact, or their substitute or substitutes,
may do or cause to be done by virtue hereof.
Pursuant to the
requirements of the Securities Act of 1933, this registration statement has
been signed by the following persons on behalf of the Registrant in the
capacities and on the date indicated:
Signature
|
|
Capacity
|
|
Date
|
|
|
|
|
|
/s/
Michael B. Richings
|
|
Director and
Authorized Representative in the United States
|
|
April 17,
2009
|
Michael B.
Richings
|
|
|
|
|
|
|
|
|
|
/s/ John M.
Clark
|
|
Director
|
|
April 17,
2009
|
John M. Clark
|
|
|
|
|
|
|
|
|
|
/s/ C. Thomas
OrgyzloC.
|
|
Director
|
|
April 17,
2009
|
C. Thomas
Ogryzlo
|
|
|
|
|
|
|
|
|
|
/s/ Tracy
Stevenson
|
|
Director
|
|
April 17,
2009
|
Tracy Stevenson
|
|
|
|
|
|
|
|
|
|
/s/ W. Durand
Eppler
|
|
Director
|
|
April 17,
2009
|
W. Durand Eppler
|
|
|
|
|
II-6
/s/ Frederick H.
Earnest
|
|
Director
|
|
April 17,
2009
|
Frederick H.
Earnest
|
|
|
|
|
II-7
Exhibit Index
Exhibit Number
|
|
Description
|
4.06
|
|
Form of
Indenture
|
5.1
|
|
Opinion of Macdonald
& Company
|
5.2
|
|
Opinion of
Border Ladner Gervais LLP
|
5.3
|
|
Opinion of
Dorsey & Whitney LLP
|
12.1
|
|
Statement
Regarding Computation of Ratio of Earnings to Fixed Charges
|
23.1
|
|
Consent of
PricewaterhouseCoopers LLP, independent auditors
|
23.2
|
|
Consent of SRK
Consulting (US), Inc.
|
23.3
|
|
Consent of
Golder Associates, Inc.
|
23.4
|
|
Consent of
Gustavson Associates, LLC
|
23.5
|
|
Consent of Mine
Development Associates
|
23.6
|
|
Consent of MWH
Australia Pty Ltd
|
23.7
|
|
Consent of MWH
Americas Inc.
|
23.8
|
|
Consent of
Pincock, Allen & Holt
|
23.9
|
|
Consent of Tetra
Tech, Inc.
|
23.10
|
|
Consent of
Resource Development, Inc.
|
23.11
|
|
Consent of Macdonald
& Company (included in Exhibit 5.1)
|
23.12
|
|
Consent of Border
Ladner Gervais LLP (included in Exhibit 5.2)
|
23.13
|
|
Consent of Dorsey
& Whitney LLP (included in Exhibit 5.3)
|
24.1
|
|
Power of
Attorney (included with signature page)
|
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