SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of May , 2004.
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Commission File Number 0-30464
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IMA EXPLORATION INC.
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(Translation of registrant's name into English)
#709 - 837 West Hastings Street, Vancouver, British Columbia, V6C 3N6, Canada
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F: Form 20-F [ X ] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): _______
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [ X ]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3- 2(b): 82-_____________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
IMA EXPLORATION INC.
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(Registrant)
Date June 18, 2004 By /s/ Joseph Grosso
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(Signature)
Joseph Grosso,
President & CEO
PROXY (FOR SHAREHOLDERS)
THIS PROXY IS SOLICITED BY MANAGEMENT OF IMA EXPLORATION INC. (THE "COMPANY")
FOR USE AT THE ANNUAL AND SPECIAL MEETING OF SECURITYHOLDERS (THE "MEETING") TO
BE HELD ON THURSDAY, JUNE 24, 2004 AND ANY ADJOURNMENT THEREOF.
The undersigned registered shareholder of the Company hereby appoints JOSEPH
GROSSO, the President, Chief Executive Officer and a director of the Company, or
failing this person, SEAN HURD, a director of the Company, or in the place of
both of the foregoing, ______________________________ (PLEASE PRINT NAME), as
proxyholder for and on behalf of the undersigned, with power of substitution, to
attend, act and vote for and in the name of the undersigned at the Meeting and
at every adjournment thereof, with respect to all [or _______________ ] of the
common shares of the Company registered in the name of the undersigned. Unless
otherwise expressly stated herein by the undersigned, receipt of this proxy,
duly executed and dated, revokes any former proxy given to attend and vote at
the Meeting and at any adjournment thereof. UNLESS THE UNDERSIGNED DIRECTS
OTHERWISE, THE NOMINEE IS HEREBY INSTRUCTED TO VOTE THE COMMON SHARES OF THE
COMPANY HELD BY THE UNDERSIGNED AS FOLLOWS:
For Against For Against
1. To determine the number of directors at nine. |_| |_| 4. To consider, and if thought fit, to |_| |_|
pass an ordinary resolution to ratify,
confirm and approve the Company's
stock option plan approved by the
Shareholders on June 26, 2003.
2. To elect as a director: For Withhold 5. To consider, and if thought fit, to |_| |_|
pass a special resolution, with or
(a) Gerald Carlson...............................|_| |_| without amendment, that the Company's
(b) Joseph Grosso................................|_| |_| Notice of Articles be amended by
(c) Arthur Lang..................................|_| |_| deleting the Pre-Existing Company
(d) Nikolaos Cacos...............................|_| |_| Provisions set forth in Part 16 of the
(e) Sean Hurd....................................|_| |_| Regulations of the BUSINESS CORPORATIONS
(f) Robert Stuart (Tookie) Angus.................|_| |_| ACT (British Columbia) in their entirety.
(g) Chet Idziszek................................|_| |_|
(h) David Terry..................................|_| |_| 6. To consider, and if thought fit, to pass |_| |_|
(i) David Horton.................................|_| |_| a special resolution, with or without
amendment, that the Articles of the
Company be deleted in their entirety
and be replaced with the form of
Articles presented to the Meeting.
3. To appoint PricewaterhouseCoopers LLP as |_| |_| 7. To consider, pursuant to an interim order |_| |_|
auditors for the Company and to authorize of the Supreme Court of the Province of
the directors to fix their remuneration. British Columbia, and if thought fit, to
pass a special resolution, with or
without amendment, to authorize, approve
and adopt a statutory plan of arrangement
pursuant to sections 288-299 of the
BUSINESS CORPORATIONS ACT (British
Columbia).
THIS PROXY MUST BE SIGNED AND DATED. SEE IMPORTANT INSTRUCTIONS ON REVERSE.
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THE UNDERSIGNED REGISTERED SHAREHOLDER HEREBY REVOKES ANY PROXY PREVIOUSLY GIVEN
TO ATTEND AND VOTE AT THE MEETING.
SIGNATURE: _____________________________ NAME:______________________________ DATE: _____________________________
(PROXY MUST BE SIGNED AND DATED) (PLEASE PRINT)
If someone other than the named registered shareholder signs this Proxy on
behalf of such shareholder, documentation acceptable to the Chairman of the
Meeting must be deposited with this Proxy granting signing authority to the
person signing the proxy. TO BE USED AT THE MEETING, THIS PROXY MUST BE RECEIVED
AT THE OFFICES OF COMPUTERSHARE TRUST COMPANY OF CANADA BY MAIL OR BY FAX NO
LATER THAN 48 HOURS BEFORE THE MEETING. THE MAILING ADDRESS OF COMPUTERSHARE
TRUST COMPANY IS 9TH FLOOR, 100 UNIVERSITY AVENUE, TORONTO, ONTARIO, CANADA M5J
2Y1 AND ITS FAX NUMBER IS 1-866-249-7775. For shares held in a Canadian
brokerage account, TELEPHONE VOTING CAN BE COMPLETED AT 1-800-474-7493 (ENGLISH)
OR 1-800-474-7501 (FRENCH) AND INTERNET VOTING AT WWW.PROXYVOTECANADA.COM. For
shares held in a United States brokerage account, TELEPHONE VOTING CAN BE
COMPLETED AT 1-800-454-8683 AND INTERNET VOTING AT WWW.PROXYVOTE.COM.
1. IF THE REGISTERED SHAREHOLDER WISHES TO ATTEND THE MEETING TO VOTE ON
THE RESOLUTIONS IN PERSON, please register your attendance with the
Company's scrutineers at the Meeting.
2. IF A BENEFICIAL SHAREHOLDER'S SECURITIES ARE HELD BY AN INTERMEDIARY
(EG. A BROKER) AND THE SHAREHOLDER WISHES TO ATTEND THE MEETING TO VOTE
ON THE RESOLUTIONS, such shareholder may only do so if he, she or it
has instructed the intermediary to transfer the registration of such
securities under the name of such beneficial shareholder before the
record date, being May 12, 2004. Only registered shareholders as at the
record date are entitled to vote in person at the meeting, subject to
the provisions of the BUSINESS CORPORATIONS ACT (British Columbia).
3. IF THE REGISTERED SHAREHOLDER CANNOT ATTEND THE MEETING BUT WISHES TO
vote on the resolutions, the shareholder can APPOINT ANOTHER PERSON,
who need not be a shareholder of the Company, to vote according to the
shareholder's instructions. To appoint someone other than the nominees
named by management, please insert your appointed proxyholder's name in
the space provided, sign and date and return the Proxy. Where no choice
on a resolution is specified by the shareholder, this Proxy confers
discretionary authority upon the shareholder's appointed proxyholder to
vote for or against that resolution.
4. IF A REGISTERED SHAREHOLDER CANNOT ATTEND THE MEETING BUT WISHES TO
vote on the resolutions and to APPOINT ONE OF THE INDIVIDUALS NAMED BY
MANAGEMENT as proxyholder, please leave the wording appointing such
individual as shown, sign and date and return the Proxy. Where no
choice is specified by the shareholder on a resolution shown on the
Proxy, an individual appointed by management acting as proxyholder will
vote the securities as if the shareholder had specified an affirmative
vote.
5. The securities represented by this Proxy will be voted in accordance
with the instructions of the registered shareholder on any ballot of a
resolution that may be called for and, if the shareholder specifies a
choice with respect to any matter to be acted upon, the securities will
be voted accordingly. With respect to any amendments or variations in
any of the resolutions shown on the Proxy, or matters which may
properly come before the Meeting, the securities may be voted by the
individual appointed as the proxyholder, in its sole discretion, sees
fit.
6. If a registered shareholder votes by completing and returning the
Proxy, such shareholder may still attend the Meeting and vote in person
should such shareholder later decide to do so. To vote in person at the
Meeting, the shareholder must revoke the Proxy in writing as set forth
in the Management Proxy Circular.
7. This Proxy is not valid unless it is dated and signed by the
shareholder or by such shareholder's attorney duly authorized by such
shareholder in writing, or, in the case of a company, by its duly
authorized officer or attorney for the company. If the Proxy is
executed by an attorney for an individual shareholder or joint
shareholders or by an officer or an attorney of a corporate
shareholder, the instrument so empowering the officer or the attorney,
as the case may be, or a notarial copy thereof, must accompany the
Proxy.
8. A Proxy to be effective, must be deposited at the office of the
Company's registrar and transfer agent, Computershare Trust Company of
Canada, Proxy Department, 100 University Avenue, 9th Floor, Toronto,
Ontario M5J 2Y1, Fax (within North America): 1-866-249-7775 Fax
(outside North America): 416-263-9524, Email:
caregistryinfo@computershare.com, not less than 48 hours (excluding
Saturdays, Sundays and holidays) before the time for holding the
meeting or any adjournment thereof.
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SUPPLEMENTAL MAILING LIST RETURN CARD
(National Instrument 54-102)
NOTICE TO SHAREHOLDERS OF IMA EXPLORATION INC.
On June 3, 2002, the Minister of Finance gave approval to National Instrument
54-102 - Interim Financial Statement and Report Exemption (the "Instrument")
which essentially established a framework for communication between issuers and
their registered and non-registered shareholders.
Companies incorporated in British Columbia were formerly required to deliver
interim (semi-annual) financial statements only to their registered
shareholders. The Instrument now exempts companies from having to deliver these
statements to their registered shareholders if the companies send 1st, 2nd and
3rd quarter financial statements to those shareholders, whether registered or
not, who request in writing to receive them.
If you are a registered or non-registered shareholder, and wish to be placed on
a supplemental mailing list for the receipt of these financial statements, you
must complete and return the Supplemental Return Card below.
The supplemental mailing list will be updated each year and, therefore, a Return
Card will be required annually in order to receive quarterly financial
statements. All other shareholder mailings will continue to be mailed to
registered shareholders in the normal manner without the completion of a Return
Card.
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TO: IMA EXPLORATION INC. (the "Company")
The undersigned certifies that he/she/it is the owner of securities (other than
debt instruments) of the Company, and requests that he/she/it be placed on the
Company's Supplemental Mailing List in respect of its quarterly financial
statements.
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NAME (PLEASE PRINT)
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ADDRESS
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CITY/PROVINCE (OR STATE)/POSTAL CODE
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SIGNATURE OF SHAREHOLDER, OR IF SHAREHOLDER IS A DATED
COMPANY, SIGNATURE OF AUTHORIZED SIGNATORY.
PLEASE COMPLETE AND RETURN THIS DOCUMENT ALONG WITH YOUR PROXY IN THE ATTACHED
ENVELOPE OR AS INDICATED BELOW. AS THE SUPPLEMENTAL LIST WILL BE UPDATED EACH
YEAR, A RETURN CARD WILL BE REQUIRED FROM YOU ANNUALLY IN ORDER FOR YOUR NAME TO
REMAIN ON THE LIST.
Computershare Trust Company of Canada
100 University Avenue, 9th Floor
Toronto, Ontario M5J 2Y1
Tel: 1-800-564-6253
Fax: 1-866-249-7775
IMA EXPLORATION INC.
NOTICE OF
ANNUAL AND SPECIAL MEETING
OF
SECURITYHOLDERS
TO BE HELD ON JUNE 24, 2004
AND
MANAGEMENT PROXY CIRCULAR
MAY 14, 2004
IMA EXPLORATION INC.
Terminal City Club Tower
Suite 709, 837 West Hastings Street
Vancouver, BC V6C 3N6
Tel: 604-687-1818 Fax: 604-687-1858
May 14, 2004
Dear Securityholder:
On May 3, 2004, IMA announced its intention to proceed with a reorganization of
IMA which will have the result of dividing its present mineral resource assets
between two separate public companies. Upon implementation of the corporate
restructuring, IMA will continue to hold the Navidad silver-lead-copper project
and certain other mineral properties in central Chubut Province, Argentina,
while the newly created public company will hold the other resource assets of
IMA. Since the announcement, IMA has completed reviews of legal, tax, regulatory
and other matters and is now able to provide you with complete details of the
proposed reorganization in the accompanying Management Proxy Circular.
You are invited to attend a Special Meeting of shareholders and optionholders,
to be held in the Walker Room of the Terminal City Club in Vancouver, British
Columbia on Thursday, June 24, 2004 starting at 2:00 p.m., at which time you
will be asked to consider and vote upon the proposed reorganization. IMA will
also hold its Annual Meeting of Shareholders at the same time, thereby avoiding
any inconvenience to Shareholders of attending separate meetings which otherwise
would have fallen within a short period of time.
Under the reorganization, IMA's most advanced project, the Navidad
silver-lead-copper project and certain other Navidad area properties in central
Chubut Province, Argentina will remain in IMA, while IMA's other properties and
related assets and $750,000 cash will be transferred to a new public company to
be named "Golden Arrow Resources Corporation" ("Golden Arrow"). These two
separate public companies will be owned by the existing shareholders of IMA and
each will have a separate focus. Golden Arrow will be committed to grass roots
exploration while IMA will retain the Navidad project and focus on:
1. A significantly expanded drill program on the numerous targets within
Navidad;
2. More detailed regional exploration for Navidad style targets;
3. Pursuing a listing on a major US and Canadian stock exchange;
4. Completing a bankable feasibility study on the Navidad project in a
timely fashion; and
5. Exploring the Navidad related properties directly or through joint
ventures.
The remaining projects outside of Navidad will be held by Golden Arrow which
will have the same Board of Directors as IMA, and it is intended that Golden
Arrow be managed by the same management team as IMA. Golden Arrow will then be
free to focus on grass root exploration for economic mineral discoveries. The
market will then be required to fairly value these exploration assets.
The common shares of Golden Arrow will be distributed to shareholders of IMA in
proportion to their present shareholdings in IMA and on the basis of one Golden
Arrow share for every 10 IMA shares held. The reorganization is intended to
enhance shareholder value by enabling each company to focus on the development
of its own properties, and by allowing shareholders to hold an interest in
Golden Arrow which reflects the value of IMA's portfolio of exploration
projects.
The reorganization will be implemented by a Plan of Arrangement. Once IMA's
shareholders and optionholders have approved the Plan of Arrangement, the
Supreme Court of the Province of British Columbia will be requested to grant its
final approval. Details of the Plan of Arrangement are set out in the
accompanying Management Proxy Circular.
-2-
Also at the Meeting, IMA will be asking its shareholders to approve certain
changes to the constating documents of IMA as a result of changes to corporate
legislation in the Province of British Columbia. In March 2004, COMPANY ACT
(British Columbia) was replaced with the new BUSINESS CORPORATIONS ACT. The
BUSINESS CORPORATIONS ACT modernizes and streamlines company law in British
Columbia and removes the shortcomings and ambiguities of the old Company Act.
The new BUSINESS CORPORATIONS ACT recognizes the increased need for companies in
today's business environment to react and adapt to changing business conditions
quickly. All companies incorporated in British Columbia are now governed by the
new legislation. As IMA is a British Columbia company, IMA wishes to provide its
Shareholders with the benefits of the new law as soon as possible. Accordingly,
IMA is including in the business for the Special Meeting new Articles for IMA
for consideration by the IMA shareholders, designed to allow IMA to enjoy the
improvements offered by the new law.
We believe that the approval of the special resolutions being submitted to our
Shareholders at the Special Meeting, with respect to the amendment of IMA's
constating documents, will greatly improve IMA's ability to make corporate
decisions in a more timely and cost-effective manner.
IMA'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOUR OF THE
ARRANGEMENT AND ALL OTHER MATTERS TO BE CONSIDERED AT THE MEETING. Your
attention is directed to the section entitled "The Arrangement - Reasons for the
Arrangement" in the accompanying Management Proxy Circular where the Board of
Directors' reasons for recommending the Plan of Arrangement are summarized.
If you are unable to attend the Meeting in person, please complete and return
the enclosed forms of Proxy so that your shares and securities can be voted at
the Meeting in accordance with your instructions.
Yours truly,
/s/ JOSEPH GROSSO
Joseph Grosso
President and Chief Executive Officer
IMA EXPLORATION INC.
NOTICE OF ANNUAL AND SPECIAL MEETING OF SECURITYHOLDERS
NOTICE IS HEREBY GIVEN that the annual and special meeting (the "Meeting") of
the shareholders (the "Shareholders") of IMA Exploration Inc. ("IMA") and
holders of options to acquire common shares of IMA (the "Rightsholders") will
held in the Walker Room at the Terminal City Club at 837 West Hastings Street,
Vancouver, British Columbia, Canada on Thursday, June 24, 2004 at 2:00 p.m.
(Vancouver time), for the following purposes:
1. For the Shareholders to consider the following:
(a) To receive the audited consolidated financial statements of
IMA for the fiscal year ended December 31, 2003, together with
the report of the auditors thereon;
(b) To determine the number of Directors at nine;
(c) To elect Directors;
(d) To appoint Auditors and to authorize the Directors to fix
their remuneration;
(e) To consider, and if thought fit, to pass an ordinary
resolution to ratify, confirm and approve IMA's stock option
plan which was approved by the shareholders of IMA on June 26,
2003, and which makes a total of 10% of the issued and
outstanding shares of IMA available for issuance thereunder.
The full text of the ordinary resolution approving the stock
option plan is set out in paragraph 1 of Schedule "A" to the
accompanying Management Proxy Circular;
(f) To consider, and if thought fit, to pass a special resolution,
with or without amendment, that IMA's Notice of Articles be
amended by deleting the Pre-existing Company Provisions set
forth in Part 16 of the Regulations to the BUSINESS
CORPORATIONS ACT (British Columbia) in their entirety. The
full text of the special resolution amending the Notice of
Articles is set out in paragraph 2 of Schedule "A" to the
accompanying Management Proxy Circular; and
(g) To consider and, if thought fit, pass a special resolution,
with or without amendment, that the Articles of IMA be deleted
in their entirety and be replaced with the form of Articles
presented to the Meeting. The full text of the special
resolution deleting and replacing the Articles in their
entirety is set out in paragraph 3 of Schedule "A" to the
accompanying Management Proxy Circular; and
2. For the Shareholders and Rightsholders (collectively the
"Securityholders"), voting as two separate classes at the Meeting, to
consider, pursuant to an interim order (the "Interim Order") of the
Supreme Court of the Province of British Columbia, and if thought fit,
to pass a special resolution (the "Arrangement Resolution"), with or
without variation, to authorize, approve and adopt a statutory plan of
arrangement (the "Arrangement") pursuant to sections 288-299 of the
BUSINESS CORPORATIONS ACT (British Columbia). The full text of the
special resolution approving the Arrangement is set out in paragraph 4
of Schedule "A" to the accompanying Management Proxy Circular.
TAKE NOTICE that pursuant to the Interim Order, holders of common shares of IMA
may until 2:00 p.m. (Vancouver time) on Tuesday, June 22, 2004 give IMA a notice
of dissent by registered mail addressed to IMA at its head office, Suite 709,
837 West Hastings Street, Vancouver, British Columbia V6C 3N6, Attention: The
President, with respect to the Arrangement Resolution. As a result of giving a
notice of dissent, a shareholder may, on receiving a notice of intention to
proceed under the Interim Order, require IMA to purchase all of its shares. This
right is described in the accompanying Management Proxy Circular.
-2-
Accompanying this Notice of Meeting are a Management Proxy Circular which
contains IMA's audited consolidated financial statements for the fiscal year
ended December 31, 2003, forms of Proxy and an Annual Return Card Form. The
accompanying Management Proxy Circular provides information relating to the
matters to be addressed at the Meeting and is incorporated into this Notice.
Only Securityholders of record on May 12, 2004 are entitled to receive notice of
and vote at the Meeting.
In order for the Arrangement to become effective, it must be approved by a final
order of the Court. A copy of the Interim Order and the Notice of Hearing of
Petition for the final order of the Court are attached as Schedules "C" and "D",
respectively, to the accompanying Management Proxy Circular.
Securityholders are entitled to vote at the Meeting either in person or by
proxy. Those Securityholders who are unable to attend the Meeting in person are
requested to read, complete, sign and mail the enclosed forms of Proxy in
accordance with the instructions set out in the Proxy and the Management Proxy
Circular accompanying this Notice. Please advise IMA of any change in your
mailing address. A proxy will not be valid unless the completed form of proxy is
received by Computershare Trust Company of Canada, Attention: Proxy Department,
9th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, or by fax at
1-866-249-7775 not less than 48 hours (excluding Saturdays, Sundays and
holidays) before the time for holding the Meeting or any adjournment thereof.
The Proxy for Shareholders is printed on WHITE paper and the Proxy for
Rightsholders is printed on BLUE paper.
DATED at Vancouver, British Columbia, this 14th day of May, 2004.
BY ORDER OF THE BOARD
/s/ JOSEPH GROSSO
Joseph Grosso
President and Chief Executive Officer
TABLE OF CONTENTS
MANAGEMENT PROXY CIRCULAR...................................1 Mineral Properties of IMA..............................65
SUMMARY.....................................................I Description of Share Capital...........................65
GLOSSARY OF TERMS...........................................i Principal Indebtedness.................................65
GLOSSARY OF MINING TERMS...................................iv Principal Shareholders.................................65
CURRENCY AND EXCHANGE RATES...............................vii Rights to Purchase Securities..........................65
FINANCIAL INFORMATION AND ACCOUNTING PRINCIPLES...........vii Directors and Officers.................................66
TECHNICAL INFORMATION.....................................vii Material Contracts.....................................66
GENERAL PROXY INFORMATION...................................1 Selected Pro Forma Financial Information...............66
Solicitation of Proxies.................................1 INFORMATION CONCERNING GOLDEN ARROW.......................66
Appointment and Revocation of Proxies...................1 Incorporation..........................................66
Advice to Beneficial Securityholders....................1 Corporate Structure....................................66
Voting of Proxies.......................................2 Business and Mineral Properties of Golden Arrow........66
Voting Securities and Principal Holders Thereof.........2 Description of Share Capital...........................67
THE ARRANGEMENT.............................................3 Principal Indebtedness.................................67
General.................................................3 Principal Shareholders.................................67
Reasons for the Arrangement.............................3 Rights to Purchase Securities..........................67
Details of the Arrangement..............................4 Escrowed Shares........................................69
Arrangement Agreement...................................7 Prior Sales............................................69
Approvals Necessary for the Arrangement.................7 Dividend Record........................................69
Conditions to the Arrangement Becoming Effective........8 Directors and Officers.................................70
Effective Date..........................................9 Management Fees........................................70
Distribution of Share Certificates......................9 Legal Proceedings......................................70
Treatment of Fractional Interests.......................9 Auditors, Transfer Agent and Registrar.................70
Intentions of Management................................9 Material Contracts.....................................70
Recommendations of Board of Directors...................9 Selected Pro Forma Financial Information...............71
Stock Exchange Listings................................10 RISK FACTORS..............................................71
Effect of the Arrangement on Certain Outstanding ANNUAL MEETING BUSINESS...................................79
Securities of IMA..................................10 Election of Directors..................................79
Fees and Expenses......................................10 Appointment of Auditors................................80
Securities Laws Considerations.........................11 Executive Compensation.................................80
Income Tax Considerations..............................13 Management Contracts...................................83
RIGHTS OF DISSENT..........................................19 Corporate Cease Trade Orders or Bankruptcies...........83
Dissenters' Rights.....................................19 Penalties or Sanctions.................................84
INFORMATION CONCERNING IMA - Individual Bankruptcies................................84
BEFORE THE ARRANGEMENT.................................22 Conflicts of Interest..................................84
Incorporation..........................................22 PARTICULARS OF OTHER MATTERS
Corporate Structure....................................22 TO BE ACTED UPON.......................................84
Business Overview......................................23 Ratification of Approved Stock Option Plan.............84
General Development of the Business of IMA.............23 Transition Under Business Corportions Act
Principal Properties of IMA............................24 (British Columbis).....................................85
Description of Share Capital...........................54 INDEBTEDNESS OF DIRECTORS AND OFFICERS....................88
Principal Indebtedness.................................54 INTERESTS OF INSIDERS IN MATERIAL TRANSACTIONS............88
Principal Shareholders.................................54 INTEREST OF CERTAIN PERSONS IN
Rights to Purchase Securities..........................55 MATTERS TO BE ACTED UPON...............................89
Escrowed Shares........................................56 PARTICULARS OF OTHR MATTERS...............................89
Prior Sales............................................56 CONSENTS..................................................89
Price Range and Trading Volume.........................58 AUDITORS' CONSENT.........................................90
Dividend Record........................................58
Directors and Officers.................................58 INDEX OF SCHEDULES
Executive Compensation.................................58
Summary Financial Information..........................59 TEXT OF RESOLUTIONS......................................A-1
Management's Discussion and Analysis of Financial ARRANGEMENT AGREEMENT AND
Condition and Results of Operations................60 PLAN OF ARRANGEMENT...................................B-1
Legal Proceedings......................................64 INTERIM ORDER............................................C-1
Auditors, Transfer Agent and Registrar.................64 NOTICE OF HEARING OF PETITION
Material Contracts.....................................64 FOR FINAL ORDER.......................................D-1
INFORMATION CONCERNING IMA - FINANCIAL STATEMENTS.....................................E-1
AFTER THE ARRANGEMENT..................................65
Corporate Structure....................................65
NOTICE TO UNITED STATES SHAREHOLDERS
THE SECURITIES TO BE ISSUED PURSUANT TO THE ARRANGEMENT HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION ("SEC")
OR ANY SECURITIES REGULATORY AUTHORITIES OF ANY STATE OF THE UNITED STATES, NOR
HAS THE SEC OR SECURITIES REGULATORY AUTHORITY OF ANY STATE IN THE UNITED STATES
PASSED ON THE ACCURACY OR ADEQUACY OF THIS MANAGEMENT PROXY CIRCULAR. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
The solicitation and transactions contemplated herein are made in the United
States for securities of a Canadian issuer in accordance with Canadian corporate
and securities laws. Securityholders should be aware that requirements under
such Canadian laws may differ from requirements under United States corporate
and securities laws relating to United States corporations.
The financial statements and pro-forma and historical financial information
included herein have been prepared in accordance with Canadian generally
accepted accounting principles ("Canadian GAAP"), which differ from United
States generally accepted accounting principles ("US GAAP") in certain material
respects, and are subject to Canadian auditing and auditor independence
standards, and thus may not be comparable in all respects to financial
statements and pro-forma and historical financial information of United States
companies. However, IMA's audited financial statements contain a note which
summarizes the impact on the financial statements of all material differences
between Canadian GAAP and US GAAP.
See "The Arrangement - Income Tax Considerations - United States Federal Income
Tax Considerations" in this Management Proxy Circular for certain information
concerning tax consequences of the Arrangement for Shareholders who are United
States taxpayers.
The definitions of mineral reserves or of mineral resources used herein are
those used by Canadian securities regulatory authorities and United States
Securityholders should be aware that the definition standards differ in certain
respects from those set forth in the SEC Industry Guide 7, which contains the
definitions and parameters of disclosure for United States issuers engaged in
significant mining operations.
Enforcement by Securityholders of civil liabilities under the United States
securities laws may be affected adversely by the fact that IMA is organized
under the laws of a jurisdiction other than the United States, that all of its
officers and directors are residents of countries other than the United States,
that some or all of the experts named in this Management Proxy Circular may be
residents of countries other than the United States and that all or a
substantial portion of the assets of IMA and such persons may be located outside
the United States.
IMA EXPLORATION INC.
MANAGEMENT PROXY CIRCULAR
This Management Proxy Circular is being furnished in connection with the
solicitation of proxies by management of IMA for use at the annual and special
meeting of Shareholders and Rightsholders (collectively, the Securityholders")
to be held at 2:00 p.m. (Vancouver time) on Thursday, June 24, 2004 in the
Walker Room at the Terminal City Club at 837 West Hastings Street, Vancouver,
British Columbia, Canada, and at any adjournment thereof.
It is anticipated that this Management Proxy Circular and the accompanying forms
of Proxy will be distributed to Securityholders on or about May 19, 2004. Unless
otherwise indicated, information in this Management Proxy Circular is given as
at May 14, 2004.
SEE "RISK FACTORS" FOR CERTAIN CONSIDERATIONS RELEVANT TO SECURITYHOLDERS
REGARDING THE ARRANGEMENT AND THEIR INVESTMENT IN THE SECURITIES REFERRED TO IN
THIS MANAGEMENT PROXY CIRCULAR.
The date of this Management Proxy Circular is May 14, 2004.
No person is authorized to give any information or to make any representation
not contained in this Management Proxy Circular and, if given or made, such
information or representation should not be relied upon as having been
authorized. This Management Proxy Circular does not constitute an offer to sell,
or a solicitation of an offer to acquire, any securities, or the solicitation of
a proxy, by any person in any jurisdiction in which such an offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom it is unlawful
to make such an offer or proxy solicitation.
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THIS MANAGEMENT
PROXY CIRCULAR AND THE SCHEDULES ATTACHED HERETO. CAPITALIZED WORDS USED IN THIS
SUMMARY ARE DEFINED IN THE GLOSSARY OF TERMS. THIS SUMMARY IS PROVIDED FOR
CONVENIENCE OF REFERENCE ONLY. THIS SUMMARY SHOULD BE READ IN CONJUNCTION WITH,
AND IS QUALIFIED BY, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS
CONTAINED IN THE NOTICE OF MEETING AND THE BODY OF THIS MANAGEMENT PROXY
CIRCULAR AND THE SCHEDULES ATTACHED HERETO. SECURITYHOLDERS ARE URGED TO REVIEW
THIS MANAGEMENT PROXY CIRCULAR IN ITS ENTIRETY.
THE DISCLOSURE IN THIS MANAGEMENT PROXY CIRCULAR OF A SCIENTIFIC AND TECHNICAL
NATURE UNDER THE HEADING "INFORMATION CONCERNING IMA - BEFORE THE ARRANGEMENT -
MINERAL PROPERTIES OF IMA - NAVIDAD PROJECT" AND "INFORMATION CONCERNING IMA -
BEFORE THE ARRANGEMENT - MINERAL PROPERTIES OF IMA - LAGUNA DE LOS TOROS
PROPERTY" IS BASED ON THE TECHNICAL REPORTS (AS DEFINED HEREIN).
THE MEETING
TIME, DATE AND PLACE OF MEETING
The annual and special meeting (the "Meeting") of the Securityholders of IMA
Exploration Inc. will held on Thursday, June 24, 2004 in the Walker Room at the
Terminal City Club at 837 West Hastings Street, Vancouver, British Columbia
commencing at 2:00 p.m. (Vancouver time).
PURPOSE OF THE MEETING
At the Meeting, Shareholders will receive the audited financial statements of
IMA for the fiscal year ended December 31, 2003 and will be asked to consider,
and if thought fit, to pass resolutions approving or confirming the following
matters:
o Determining the number of Directors at nine
o Electing Directors
o Appointing Auditors and authorizing Directors to fix their remuneration
o Ratifying IMA's Stock Option Plan
o Amending IMA's Notice of Articles to delete the "Pre-Existing Company
Provisions"
o Adopting new Articles
At the Meeting, Securityholders will be asked to consider, and if thought fit,
to pass a Special Resolution approving the Arrangement. The Securityholders will
vote as two separate classes at the Meeting.
MEETING RECORD DATE
IMA has fixed May 12, 2004 as the record date for determining the
Securityholders entitled to receive notice of and vote at the Meeting.
-II-
THE ARRANGEMENT
GENERAL
Upon the Arrangement becoming effective, Shareholders of record on the Effective
Date will become shareholders of two separate publicly-traded companies: IMA and
Golden Arrow. Every Shareholder will receive one Golden Arrow Common Share for
every ten IMA Common Shares held on the Effective Date. See "The Arrangement -
Details of the Arrangement".
REASONS FOR THE ARRANGEMENT
The purpose of the Arrangement is to retain in IMA the Navidad
silver-lead-copper project and certain other Navidad area mineral properties in
central Chubut Province and to transfer into a separate public company, Golden
Arrow, all other projects. This reorganization is intended to enhance
shareholder value by allowing IMA to progress the Navidad silver-lead-copper
project through a bankable feasibility study and by allowing Golden Arrow to
focus on grass roots exploration for economic mineral discoveries. See "The
Arrangement - Reasons for the Arrangement".
APPROVALS NECESSARY FOR THE ARRANGEMENT
The Arrangement is subject to a number of approvals which must be obtained prior
to implementation, including the following:
SECURITYHOLDER APPROVAL
Pursuant to the Interim Order, the Arrangement requires the approval of the
Securityholders of IMA. In addition, Section 289 of the BCBCA requires that the
Arrangement be approved by the Shareholders. At the Meeting, the Securityholders
will be asked to consider, and if thought fit, to pass the Arrangement
Resolution, the full text of which is set out in paragraph 4 of Schedule "A" to
this Management Proxy Circular. Subject to any further order of the Court, the
Interim Order provides that the Arrangement Resolution must be passed by Special
Resolutions of the Shareholders and Rightsholders voting at the Meeting as two
separate classes on that resolution.
COURT APPROVAL
The implementation of the Arrangement is subject to approval by the Court. Prior
to the mailing of this Management Proxy Circular, IMA obtained the Interim
Order, a copy of which is attached as Schedule "C" to this Management Proxy
Circular. IMA intends to apply for the Final Order once the Arrangement has been
approved by the Securityholders. As set out in the Notice of Hearing of Petition
for the Final Order, the hearing in respect of the Final Order is scheduled to
take place at 9:45 a.m. (Vancouver time) on June 29, 2004, or so soon thereafter
as counsel may be heard, or at such other date and time as the Court may direct,
at the Law Courts, 800 Smithe Street, Vancouver, British Columbia. A copy of the
Notice of Hearing of Petition for the Final Order is attached as Schedule "D" to
this Management Proxy Circular. Any Securityholder of IMA has the right to
appear at such hearing and present evidence. At the hearing for the Final Order,
the Court will consider, among other things, the fairness of the Plan of
Arrangement and the Securityholders' approval.
REGULATORY APPROVAL
The Arrangement is subject to the prior approval of the TSX-V. See "The
Arrangement - Approvals Necessary for the Arrangement".
-III-
CONDITIONS TO THE ARRANGEMENT BECOMING EFFECTIVE
The implementation of the Arrangement is subject to a number of specified
conditions, including Securityholder, Court and regulatory approval. There can
be no assurance that such conditions will be fulfilled. The Arrangement
Agreement also provides that it may be terminated in certain circumstances prior
to the Effective Date, notwithstanding the approval of the Arrangement by the
Securityholders and the Court. See "The Arrangement - Conditions to the
Arrangement Becoming Effective".
EFFECTIVE DATE
The Arrangement will become effective once all of the conditions to proceeding
with the Arrangement have been satisfied or waived and IMA's board of directors
determines to make the Arrangement effective. If the requisite approvals of the
Securityholders are obtained and the Court grants the Final Order, then IMA
currently anticipates that the Effective Date will be on or about July 7, 2004.
See "The Arrangement - Effective Date'".
DISTRIBUTION OF SHARE CERTIFICATES
Upon the Arrangement becoming effective, certificates representing IMA Common
Shares will be deemed to represent New IMA Common Shares and no new certificates
will be issued for the New IMA Common Shares issued pursuant to the Arrangement.
Accordingly, it will not be necessary for holders of IMA Common Shares to
surrender their certificates representing IMA Common Shares. Holders of
certificates representing IMA Common Shares must retain their certificates as
evidence of their ownership of New IMA Common Shares.
Certificates representing Golden Arrow Common Shares will be mailed as soon as
practicable following the Effective Date to those persons whose names appear in
the register of holders of IMA Common Shares at the close of business on the
Effective Date. See "The Arrangement - Distribution of Share Certificates".
RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors of IMA has reviewed the terms and conditions of the
Arrangement and has unanimously concluded that the terms and conditions of the
Arrangement are fair and reasonable to, and are in the best interests of, IMA
and the Securityholders.
The Board of Directors unanimously recommends that the Securityholders vote in
favour of the Arrangement and all other matters to be considered at the Meeting.
See "The Arrangement - Recommendation of Board of Directors".
STOCK EXCHANGE LISTINGS
IMA
The IMA Common Shares are currently listed and traded on the TSX-V and the New
IMA Common Shares will continue to be listed and traded on the TSX-V, subject to
IMA complying with the listing requirements of the TSX-V. IMA is currently
classified as a Tier 1 issuer on the TSX-V and expects to continue to be
classified as a Tier 1 issuer after the Effective Date of the Arrangement. The
IMA Common Shares are also quoted on the Over-The-Counter Bulletin Board in the
United States and will continue to be quoted on the Over-The-Counter Bulletin
Board following the completion of the Arrangement.
GOLDEN ARROW
Golden Arrow has applied to have the Golden Arrow Common Shares issued pursuant
to the Arrangement listed and traded on the TSX-V under the Tier 2
classification. Management anticipates that Golden Arrow will seek to have its
common shares quoted on the Over-The-Counter Bulletin Board following completion
of the Arrangement. There are no assurances as to if, or when, the Golden Arrow
Common Shares will be listed or traded on the TSX-V or quoted on the
Over-The-Counter Bulletin Board, if ever.
-IV-
INCOME TAX CONSIDERATIONS
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
In general, a Canadian resident holder of IMA Common Shares who holds such
shares as capital property will not realize a capital gain or capital loss as a
result of the Arrangement. The adjusted cost base of the IMA Common Shares will
generally be allocated between the New IMA Common Shares and the Golden Arrow
Common Shares based upon the relative fair market values of such shares at the
time of the Arrangement. Following the Effective Date, IMA will advise holders
of an appropriate proportionate allocation.
In general, a non-resident holder of IMA Common Shares will not be subject to
tax in Canada as a result of the Arrangement, provided the IMA Common Shares are
not taxable Canadian property. See "Canadian Federal Income Tax Considerations".
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Subject to the discussion under "United States Federal Income Tax
Considerations", the receipt of the Golden Arrow Common Shares by a U.S.
Shareholder (as defined below under "United States Federal Income Tax
Considerations") should result in taxable income for United States federal
income tax purposes. See "The Arrangement - Income Tax Considerations - United
States Federal Income Tax Considerations".
Management has determined the taxable income to U.S. Shareholders to be US$0.05
per IMA Common Share.
SELECTED PRO FORMA FINANCIAL INFORMATION
The following table sets forth selected financial information for IMA and Golden
Arrow after giving effect to the Arrangement and should be read in conjunction
with the Pro-Forma Consolidated Financial Statements of IMA and Golden Arrow
attached hereto. See "Information Concerning IMA - After the Arrangement -
Selected Pro-Forma Financial Information" and "Information Concerning Golden
Arrow - Selected Pro-Forma Financial Information".
PRO FORMA AS AT DECEMBER 31, 2003
-----------------------------------------
IMA GOLDEN ARROW
------------------ ------------------
Current Assets........................................................... $10,262,787 $1,326,459
Mineral Properties and deferred exploration and development costs........ $1,291,226 $5,592,415
Capital Assets........................................................... $36,186 $4,286
Liabilities.............................................................. $418,234 $8,260
Shareholders' Equity..................................................... $11,171,965 $6,914,900
GLOSSARY OF TERMS
IN THIS MANAGEMENT PROXY CIRCULAR, UNLESS THERE IS SOMETHING IN THE SUBJECT
MATTER OR CONTEXT INCONSISTENT THEREWITH, THE FOLLOWING CAPITALIZED WORDS AND
TERMS SHALL HAVE THE FOLLOWING MEANINGS:
ARRANGEMENT The statutory arrangement involving IMA, its
Securityholders, IMA Holdco and Golden Arrow proposed
under the provisions of sections 288 to 299 of the
BCBCA, on the terms and conditions set out in the Plan
of Arrangement or any amendment or variation thereto
made in accordance with the terms of the Arrangement
Agreement.
ARRANGEMENT AGREEMENT The arrangement agreement made as of the 14th day of
May, 2004 among IMA, IMA Holdco and Golden Arrow, as
the same may be supplemented or amended from time to
time.
ARRANGEMENT RESOLUTION The Special Resolution approving the Arrangement, the
full text of which is set out in paragraph 4 of
Schedule "A" to this Management Proxy Circular, to be
considered, and if thought fit, passed by the
Securityholders, with Shareholders and Rightsholders
voting as two separate classes.
AUDITORS PricewaterhouseCoopers LLP, or such other auditors as
may be appointed, the auditors of IMA and Golden
Arrow.
BCBCA BUSINESS CORPORATIONS ACT (British Columbia), as
amended.
BOARD OF DIRECTORS The board of directors of IMA.
BUSINESS DAY A day which is not a Saturday, Sunday or statutory
holiday in British Columbia.
CASH $750,000 which will be transferred from IMA to Golden
Arrow pursuant to the Plan of Arrangement.
CONTRACTS All agreements to which IMA is a party, which pertain
to the Golden Arrow Properties which will be assigned
from IMA to Golden Arrow pursuant to the Plan of
Arrangement.
COURT The Supreme Court of the Province of British Columbia.
EFFECTIVE DATE July 7, 2004 or such other date a may be
determined by the Board of Directors in accordance
with the provisions of the BCBCA.
FINAL ORDER The final order of the Court approving the Arrangement
pursuant to the BCBCA.
GOLDEN ARROW Golden Arrow Resources Corporation, a corporation
incorporated pursuant to the BCBCA in order to
facilitate the Arrangement.
GOLDEN ARROW The common shares without par value in the capital of
COMMON SHARES Golden Arrow which are to be issued under the
Arrangement to holders of IMA Common Shares in
exchange for such IMA Common Shares, and having the
terms and conditions set out in Schedule D to the Plan
of Arrangement.
GOLDEN ARROW NOTE The demand, non-interest bearing promissory note to be
issued by Golden Arrow to IMA having a principal
amount and aggregate fair market value equal to the
aggregate fair market value of the Golden Arrow
Preferred Shares.
GOLDEN ARROW The Preferred Shares of Golden Arrow which are to be
PREFERRED SHARES issued under the Arrangement to IMA in exchange for
the Transferred Assets, which will have a value equal
to the Net Fair Market Value of the Transferred
Assets, and having the terms and conditions set out in
Schedule D to the Plan of Arrangement.
GOLDEN ARROW PROPERTIES All of IMA's mineral property interest in Argentina
and Peru, other than the Navidad Area Properties.
-ii-
IMA IMA Exploration Inc., a company incorporated under the
laws of the Province of British Columbia.
IMA COMMON SHARES The common shares without par value in the capital of
IMA.
IMA HOLDCO IMA Holdings Corp., a wholly owned subsidiary of IMA
incorporated under the laws of the Province of British
Columbia.
IMA HOLDINGS (BVI) Inversiones Mineras Argentinas Holdings (BVI) Inc., a
wholly-owned subsidiary of IMA Holdco which indirectly
owns or will own the Golden Arrow Properties located
in Argentina.
IMA NAVIDAD (BVI) IMA Navidad (BVI) Inc., a wholly-owned subsidiary of
IMA which indirectly owns and will, upon completion of
the Arrangement, continue to own the Navidad Area
Properties.
IMA NOTE The demand, non-interest bearing promissory note
to be issued by IMA to Golden Arrow in the principal
amount and fair market value equal to the aggregate
fair market value of the IMA Special Shares.
IMA OPTIONS The outstanding incentive stock options of IMA
entitling the holders to purchase IMA Common Shares in
accordance with the terms and conditions thereof.
IMA PREFERRED SHARES The preferred shares, issuable in series, without par
value in the capital of IMA.
IMA SPECIAL SHARES The special shares of IMA which IMA will be authorized
to issue upon the Arrangement becoming effective and
which are to be issued under the Arrangement to
holders of IMA Common Shares in exchange for such IMA
Common Shares, and having the terms and conditions set
out in Schedule B to the Plan of Arrangement.
IMA WARRANTS The outstanding common share purchase warrants of IMA
entitling the holders to purchase IMA Common Shares in
accordance with the terms and conditions thereof.
IMA USA Inversiones Mineras Australes S.A., an Argentina
company which will be a wholly owned subsidiary of
Golden Arrow upon the Effective Date of the
Arrangement.
IMPSA IMPSA Resources Corporation, an 80.69% subsidiary of
IMA Holdco.
IMPSA BVI IMPSA BVI Inc., a wholly-owned subsidiary of IMA and
IMA Holdco which indirectly owns mineral property
interests in Peru.
ITA The INCOME TAX ACT (Canada), as amended.
INTERIM ORDER The interim order of the Court dated May 14,
2004, a copy of which is attached as Schedule "C" to
this Management Proxy Circular.
MARKETABLE SECURITIES The common shares of Amera Resources Corporation,
Ballad Gold & Silver Ltd. and Cloudbreak Resources
Ltd. held by IMA which pertain to the Golden Arrow
Properties and which will be transferred from IMA to
Golden Arrow pursuant to the Plan of Arrangement.
MEETING The annual and special meeting of the Securityholders
of IMA to be held on June 24, 2004 and any adjournment
or postponement thereof.
MEETING RECORD DATE The date fixed by IMA for determining the Shareholders
and Rightsholders entitled to receive notice of and
vote at the Meeting, being May 12, 2004.
NAVIDAD AREA PROPERTIES The Navidad Project and certain other mineral
properties held indirectly by IMA in central Chubut
Province, Argentina.
-iii-
NAVIDAD PROJECT IMA's silver-lead-copper project located in Chubut
Province, Argentina.
NET FAIR MARKET VALUE An amount determined by the Board of Directors of IMA
as of the Effective Date, as being an amount equal to
the fair market value of the Transferred Assets.
NEW IMA Common Shares of IMA which IMA will be authorized to
COMMON SHARES issue upon the Arrangement becoming effective and
which are to be issued under the Arrangement to
holders of IMA Common Shares in exchange for such IMA
Common Shares.
OTC-BB Over-The-Counter Bulletin Board.
PLAN OF ARRANGEMENT The Plan of Arrangement involving IMA, Golden Arrow,
IMA Holdco and the Securityholders, a copy of which is
attached as Appendix I to the Arrangement Agreement,
and any amendment or variation thereto.
PROXY The forms of Proxy included with this Management Proxy
Circular.
RECEIVABLES Certain amounts owing to IMA by its subsidiaries in
respect of the Golden Arrow Properties.
REGISTRAR The Registrar of Companies for the Province of British
Columbia.
RIGHTSHOLDERS The holders of the IMA Options.
SECURITIES The IMA Common Shares and the IMA Options,
collectively.
SECURITYHOLDERS The Shareholders and Rightsholders collectively.
SHAREHOLDERS The holders of IMA Common Shares.
SPECIAL RESOLUTION A resolution passed by a majority of not less than
three-quarters of the votes cast by the
Securityholders who voted in respect of such
resolution at the Meeting with respect to a particular
matter.
TECHNICAL REPORTS The Technical Reports for the Navidad Project prepared
by Dr. Paul Lhotka, P. Geo. PH.D. and the Laguna de
los Toros property dated May 12, 2004, prepared by Dr.
Paul Lhotka, P. Geo. Ph.D., as the responsible
independent qualified person, and Keith Patterson, P.
Geo (B.C.), M.Sc., in accordance with National
Instrument 43-101 - Standards of Disclosure for
Mineral Projects.
TRANSFER AGENT Computershare Trust Company of Canada.
TRANSFERRED ASSETS The Cash, the Marketable Securities, the Contracts,
the common shares of IMA Holdings (BVI), the common
shares of IMPSA BVI, the common shares of IMPSA and
the Receivables, all of which will be transferred by
IMA to Golden Arrow pursuant to the Plan of
Arrangement.
TSX-V TSX Venture Exchange.
1933 ACT The UNITED STATES SECURITIES ACT OF 1933, as amended.
-iv-
GLOSSARY OF MINING TERMS
THE FOLLOWING IS A GLOSSARY OF CERTAIN MINING TERMS USED IN THIS MANAGEMENT
PROXY CIRCULAR:
Argillic Alteration: Development of secondary clay minerals by weathering
or hydrothermal activity.
Breccia: A rock containing generally angular fragments of
itself or some other rock.
Cateo: In Argentina, a cateo is an exploration concession
granted for a period of up to 1,100 days. In areas
where field work seasons are limited, only the
available field season will be considered in
determining the 1,100 days. A cateo gives the holder
the exclusive right to explore the area, subject to
certain pre-existing rights of owners of mines within
the area and abutting owners of cateos. Through the
process of exploration, the owner of the cateo may
make and file "manifestations" of discovery (see
below) and petition the mining authority for the
granting of mines (see below). A cateo may be up to
10,000 hectares in size. A single legal person may not
hold more than 20 cateos or 200,000 hectares of cateos
in any one province. When the cateo is officially
granted, a one time payment of about US $0.35 ( Pesos
$0.80 ) per hectare is required.
Clastic: Rock components consisting of fragments derived by
mechanical erosion of pre-existing rocks.
Color Anomaly: An atypical or unusual color pattern visible on air
photos or satellite images of rock outcrop areas,
often caused by hydrothermal alteration.
G/T: grams per tonne
Hydrothermal Those chemical and mineral changes resulting from the
Alteration: interaction of hot water solutions with pre-existing
solid mineral phases.
Intrusive Rocks: A body of rock, that while fluid, penetrated into or
between other rocks, but solidified before reaching
the surface.
Km: Kilometre
M: Meter
Mafic: Dark colored, generally iron or magnesium rich, rock
or mineral.
Manifestations: In Argentina, manifestations or "manifestaciones" of
discovery are official notices filed with the mining
authority indicating that the person filing (who must
be the owner of the cateo in an area covered by a
cateo) has made a discovery. The filing and acceptance
by the mining authority of such a notice, constitutes
the first step in converting a discovery to a mine
(see below). A manifestation of discovery may cover
one or more claims in the case of either a vein or
disseminated deposit. The size of the manifestations
and the annual payments required of the owner is the
same as those for a mine.
Mine: In Argentina, a mine or "mina" is a real property
interest. It is a right of exploration granted on a
permanent basis after the completion of an official
survey for as long as the right is diligently utilized
and semi-annual payments of US$17.50 (Pesos $40) per
claim are made. A mine may consist of one or several
claims or "pertinencias". In the case of vein
deposits, each claim is a maximum of 200 by 300 meters
or six hectares; for disseminated deposits, each claim
is up to one square kilometer or 100 hectares.
-v-
Porphyry: An igneous rock containing mineral crystals that are
visibly larger than other crystals of the same or
different composition.
Ppb: parts per billion
Ppm: parts per million
Satellite Imagery: Maps or images produced from data collected by
satellite displaying wavelength and intensity
variations of visible and infrared radiation reflected
from the Earth's surface.
Scree: A slope of loose rock debris at the base of a steep
incline or cliff.
Sedimentary Rocks: Descriptive term for a rock formed of sediment, namely
solid material both mineral and organic, deposited
from suspension in a liquid.
Stream Sediment A sample of fine sediment derived from the mechanical
Sample: action of the stream.
Skarn A style of alteration characterized by iron and
magnesium bearing aluminosilicate materials such as
garnet and diopside.
Sulfide: A compound of sulfur combined with one or more
metallic or semi-metallic elements.
Veins: An occurrence of minerals, having been intruded into
another rock, forming tabular shaped bodies.
Ag: Silver
As: Arsenic
Au: Gold
Ba: Barium
Co: Cobalt
Cu: Copper
Mo: Molybdenum
Pb: Lead
Sb: Antimony
Zn: Zinc
MINERALS:
Biotite: An iron and magnesium bearing mica mineral.
Carbonate: A mineral containing the radical CO3.
Chalcopyrite: A sulfide mineral containing copper and iron.
Feldspar: An aluminosilicate with variable amounts of potassium,
sodium and calcium.
-vi-
Hornblende: A complex hydrated aluminosilicate of magnesium, iron
and sodium.
Magnetite: A magnetic iron oxide mineral.
Pyroxene: An aluminosilicate of magnesium and iron.
Pyrrhotite: A magnetic sulfide of iron.
ROCK TYPES:
Andesite: A volcanic rock with the principal minerals being
plagioclase.
Conglomerate: A clastic sedimentary rock containing rounded
fragments of gravel or pebble size.
Dacite: A volcanic or shallow intrusive rock with the
principal minerals being plagioclase, quartz and one
or more mafic constituents.
Diorite: An intrusive rock composed essentially of sodic
plagioclase, hornblende, biotite, or pyroxene.
Limestone: A sedimentary rock consisting chiefly of calcium
carbonate.
Sandstone: A clastic sedimentary rock composed largely of
sand-sized grains, principally quartz.
Shale: A clastic sedimentary rock derived from very
fine-grained sediment (mud).
Siltstone: A clastic sedimentary rock similar to shale except
comprised of slightly coarser material (silt).
Tuff: A rock formed of compacted volcanic fragments,
generally smaller than 4mm in diameter.
-vii-
CURRENCY AND EXCHANGE RATES
Unless otherwise specified, in the Management Proxy Circular, all references to
"dollars" or to "$" are to Canadian dollars and all references to "U.S. dollars"
or to "US$" are to U.S. dollars.
The following table sets forth: (i) the rate of exchange for the Canadian
dollar, expressed in United States dollars in effect at the end of the periods
indicated, (ii) the average of exchange rates in effect on the last day of each
month during such periods, and (iii) the high and low exchange rates during such
periods based on the noon rate of exchange as reported by the Bank of Canada for
conversion of Canadian dollars into United States dollars.
YEAR ENDED DECEMBER 31
2003 2002 2001
U.S. Dollar per Canadian dollar:
Rate at end of period: US$.7617 US$.6413 US$.6278
Average rate for period: US$.7136 US$.6368 US$.6458
High for period: US$.7710 US$.6598 US$.6688
Low for period: US$.6338 US$.6179 US$.6230
The noon rate of exchange on May 13, 2004, as reported by the Bank of Canada for
the conversion of Canadian dollars into United States dollars was Canadian $1.00
equals US$0.7159.
FINANCIAL INFORMATION AND ACCOUNTING PRINCIPLES
The financial statements and summaries of financial information contained in
this Management Proxy Circular are reported in Canadian dollars. All such
financial statements have been prepared in accordance with Canadian generally
accepted accounting principles.
TECHNICAL INFORMATION
The disclosure in this Management Proxy Circular of a scientific or technical
nature with respect to the Navidad Project and the Laguna de los Toros property
under the headings "Information Concerning IMA - Before The Arrangement -
Mineral Properties of IMA - Navidad Project" and "Information Concerning IMA -
Before The Arrangement - Mineral Properties of IMA - Laguna de los Toros
Property" is based upon Technical Reports for the Navidad Project and the Laguna
de los Toros property dated May 12 2004, (the "Technical Reports"). The
Technical Report for the Navidad Project was prepared by Dr. Paul Lhotka, P.
Geo. PH.D. The Technical Report for the Laguna de los Toros property was
prepared by Dr. Lhotka, as the responsible independent qualified person, and
Keith Patterson, P. Geo (B.C.), M.Sc. Dr. Lhotka is a "qualified person" for the
purposes of National Instrument 43-101 - Standards of Disclosure for Mineral
Projects. The Technical Reports have been filed on the System for Electronic
Document Analysis and Referral at www.sedar.com.
GENERAL PROXY INFORMATION
SOLICITATION OF PROXIES
THIS INFORMATION CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF
PROXIES BY THE MANAGEMENT OF IMA FOR USE AT THE ANNUAL AND SPECIAL MEETING OF
SECURITYHOLDERS OF IMA (AND ANY ADJOURNMENT THEREOF) (THE "MEETING") TO BE HELD
ON THURSDAY, JUNE 24, 2004 AT THE TIME AND PLACE AND FOR THE PURPOSES SET FORTH
IN THE ACCOMPANYING NOTICE OF MEETING. While it is expected that the
solicitation will be primarily by mail, proxies may be solicited personally or
by telephone by the regular employees of IMA at nominal cost. All costs of
solicitation by management will be borne by IMA. In addition, IMA has retained
Allen Nelson & Co., a proxy solicitation firm based in Seattle, Washington as
the soliciting agent to assist in the dissemination of materials and the
solicitation of proxies on behalf of management for use at the Meeting. IMA will
pay Allen Nelson & Co. a fee estimated at US$7,500 for such services and will
reimburse it for its mailing costs and reasonable out-of-pocket expenses.
THE CONTENTS AND THE SENDING OF THIS INFORMATION CIRCULAR HAVE BEEN APPROVED BY
THE DIRECTORS OF IMA.
APPOINTMENT AND REVOCATION OF PROXIES
The individuals named in the accompanying form of proxy are Directors and/or
Officers of IMA. A form of Proxy will be sent with this Management Proxy
Circular to the Shareholders and a separate form of Proxy will be sent with this
Management Proxy Circular to the Rightsholders. The form of Proxy for
Shareholders is printed on WHITE paper. The form of Proxy for Rightsholders is
printed on BLUE paper. IF YOU ARE A HOLDER OF IMA COMMON SHARES AND ALSO HOLD
IMA OPTIONS, THEN YOU MUST COMPLETE BOTH FORMS OF PROXY IN ORDER TO HAVE ALL OF
YOUR SECURITIES REPRESENTED AT THE MEETING AND VOTED BY THE PERSONS NAMED IN
SUCH PROXIES AS PROXYHOLDER. A SECURITYHOLDER WISHING TO APPOINT SOME OTHER
PERSON (WHO NEED NOT BE A SECURITYHOLDER) TO REPRESENT HIM AT THE MEETING HAS
THE RIGHT TO DO SO, EITHER BY STRIKING OUT THE NAMES OF THOSE PERSONS NAMED IN
THE ACCOMPANYING FORM OF PROXY AND INSERTING THE DESIRED PERSON'S NAME IN THE
BLANK SPACE PROVIDED IN THE FORM OF PROXY OR BY COMPLETING ANOTHER FORM OF
PROXY.
A Securityholder who has given a proxy may revoke it by an instrument in writing
executed by the Securityholder or by his attorney authorized in writing or,
where the Securityholder is a corporation, by a duly authorized officer or
attorney of the corporation. A proxy will not be valid unless the completed form
of proxy is received by Computershare Trust Company of Canada, Attention: Proxy
Department, 9th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, or by
fax at 1-866-249-7775 (the "Transfer Agent") not less than 48 hours (excluding
Saturdays, Sundays and holidays) before the time for holding the Meeting or any
adjournment thereof. A revocation of a proxy does not affect any matter on which
a vote has been taken prior to the revocation.
ADVICE TO BENEFICIAL SECURITYHOLDERS
ONLY REGISTERED SECURITYHOLDERS OR DULY APPOINTED PROXYHOLDERS ARE PERMITTED TO
VOTE AT THE MEETING. SECURITYHOLDERS WHO DO NOT HOLD THEIR SHARES IN THEIR OWN
NAME (REFERRED TO HEREIN AS "NON-REGISTERED SECURITYHOLDERS") ARE ADVISED THAT
ONLY PROXIES FROM SECURITYHOLDERS OF RECORD CAN BE RECOGNIZED AND VOTED AT THE
MEETING. Non-Registered Securityholders who complete and return an instrument of
proxy must indicate thereon the person (usually a brokerage house) who holds
their shares as a registered Securityholder. Every intermediary (broker) has its
own mailing procedure, and provides its own return instructions, which should be
carefully followed. The instrument of proxy supplied to Non-Registered
Securityholders is identical to that provided to registered Securityholders.
However, its purpose is limited to instructing the registered Securityholder how
to vote on behalf of the beneficial Securityholder.
-2-
If Securities are listed in an account statement provided to a Securityholder by
a broker, then in almost all cases those Securities will not be registered in
such Securityholder's name on the records of IMA. Such shares will more likely
be registered under the name of the Securityholder's broker or an agent of that
broker. In Canada, the vast majority of such Securities are registered under the
name of CDS & Co. (the registration name for The Canadian Depository for
Securities, which company acts as nominee for many Canadian brokerage firms).
Securities held by brokers or their nominees can only be voted (for or against
resolutions) upon the instructions of the beneficial Securityholder. Without
specific instructions, brokers/nominees are prohibited from voting Securities
for their clients. The directors and officers of IMA do not know for whose
benefit the Securities registered in the name of CDS & Co. are held.
In accordance with National Instrument 54-101 - COMMUNICATION WITH BENEFICIAL
OWNERS OF SECURITIES OF A REPORTING ISSUER, IMA has distributed copies of the
Notice of Meeting, this Circular and the Proxy to the clearing agencies and
intermediaries for onward distribution to Non-Registered Securityholders.
Applicable regulatory policy requires intermediaries/brokers to seek voting
instructions from Non-Registered Securityholders in advance of Securityholders'
meetings unless the Non-Registered Securityholder has waived the right to
receive meeting materials. Every intermediary/broker has its own mailing
procedures and provides its own return instructions, which should be carefully
followed by Non-Registered Securityholders in order to ensure that their
Securities are voted at the Meeting. Often the form of proxy supplied to a
beneficial Securityholder by its broker is identical to the form of proxy
provided by IMA to the registered Securityholders. However, its purpose is
limited to instructing the registered Securityholder how to vote on behalf of
the beneficial Securityholder should a non-registered Securityholder receiving
such a form wish to vote at the Meeting, the Non-Registered Securityholder
should strike out the names of the Management Proxyholders named in the form and
insert the Non-Registered Securityholder's name in the blank provided and return
the materials to the broker as directed. The majority of brokers now delegate
responsibility for obtaining instructions from clients to ADP Investor
Communications ("ADP"). ADP typically applies a special sticker to the proxy
forms, mails those forms to the Non-Registered Securityholders and asks
Non-Registered Securityholders to return the proxy forms to ADP. ADP then
tabulates the results of all instructions received and provides appropriate
instructions respecting the voting of Securities to be represented at the
Meeting. A BENEFICIAL SECURITYHOLDER RECEIVING A PROXY WITH AN ADP STICKER ON IT
CANNOT USE THAT PROXY TO VOTE SECURITIES DIRECTLY AT THE MEETING - THE PROXY
MUST BE RETURNED TO ADP WELL IN ADVANCE OF THE MEETING IN ORDER TO HAVE THE
SHARES VOTED. All references to Securityholders in this Management Proxy
Circular and the accompanying Instrument of Proxy and Notice of Meeting are to
Securityholders of record unless specifically stated otherwise.
VOTING OF PROXIES
Securities represented by properly executed proxies in the accompanying forms
will be voted or withheld from voting in accordance with the instructions of the
Securityholder on any ballot that may be called for and, if the Securityholder
specifies a choice with respect to any matter to be acted upon at the Meeting,
the Securities represented by such proxies will be voted accordingly. IF NO
CHOICE IS SPECIFIED, THE PERSON DESIGNATED IN THE ACCOMPANYING FORM OF PROXY
WILL VOTE IN FAVOUR OF ALL MATTERS PROPOSED BY MANAGEMENT AT THE MEETING.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Issued and Outstanding: 40,805,653 Common shares without par value
3,821,000 IMA Options
Authorized Capital: 100,000,000 Common shares without par value
100,000,000 Preferred shares without par value
Only Shareholders and Rightsholders of record at the close of business on May
12, 2004 which is a day that is no fewer than thirty days prior to the date of
the Meeting (the "Record Date") who either personally attend the Meeting or who
have completed and delivered a form of proxy in the manner and subject to the
provisions described above shall be entitled to vote or to have their Securities
voted at the Meeting.
-3-
Pursuant to the Interim Order, in order for the Arrangement to be effective, it
must be approved by both the Shareholders and Rightsholders voting at the
Meeting as two separate classes. For purposes of obtaining the approval required
by the Interim Order, each Rightsholder will have the same number of votes with
respect to the Arrangement Resolution as if the Rightsholder had acquired
ownership of the IMA Common Shares he or she has the right to acquire as a
Rightsholder. This voting right is conferred on the Rightsholders only with
respect to the Arrangement Resolution. See "The Arrangement - Approvals
Necessary for the Arrangement".
To the knowledge of the directors and senior officers of IMA, no person or
company beneficially own, directly or indirectly or exercise control or
direction over, IMA Common Shares carrying more than 10% of the voting rights
attached to all outstanding IMA Common Shares.
THE ARRANGEMENT
GENERAL
The purpose of the Arrangement is to reorganize IMA and its present operations
into two separate public companies: IMA, which will continue to hold and advance
the Navidad Area Properties including the Navidad Project; and Golden Arrow,
which will hold IMA's other numerous exploration projects and, will focus on
grass roots exploration for economic mineral discoveries. On the Effective Date,
each of IMA and Golden Arrow will have the same shareholders and each
shareholder will have the same percentage interest in both IMA and Golden Arrow
as they had in IMA prior to the Effective Date.
Each Shareholder on the Effective Date will, as of the Effective Date, hold 10
New IMA Common Share and one Golden Arrow Common Share for each 10 IMA Common
Shares held by such Shareholder on the Effective Date.
REASONS FOR THE ARRANGEMENT
The Board of Directors has concluded that the proposed corporate reorganization
pursuant to the Arrangement is in the best interests of IMA and its
Securityholders, and is designed to enhance Securityholder value, for the
following reasons:
(a) Outside of IMA's 100% owned Navidad Project and certain other
mineral properties, held indirectly by IMA in central Chubut
Province, Argentina, IMA controls numerous exploration
projects. Considerable funds have been spent to advance these
projects that are now at various stages of development and
located in some of the most prolific mining districts in South
America (several in very close proximity to major
discoveries). Despite the advancement of many of these
projects, they are currently receiving little or no market
valuation due to the high profile of the Navidad Project;
(b) The Navidad Project is at a significantly more advanced stage
of development than any of IMA's other projects;
(c) Segregating the exploration projects into a separate public
company is expected to enhance the ability of Golden Arrow to
raise equity financing for such projects, without
corresponding dilution to the Shareholders;
(d) Absent segregating the exploration projects into a separate
public company, such projects may be underfunded, or not
funded at all, given the current financial demands of the
Navidad Project;
(e) Funding the exploration projects in a separate public company
will allow those projects to be advanced in a more timely
fashion and will allow the Canadian equity markets to focus
more specifically on such projects and ascribe an appropriate
value to them; and
(f) A development-stage company requires personnel with different
skills, technical training and expertise than those required
by an exploration company. IMA is presently in the process of
hiring such additional personnel, however, such costs are not
required to be incurred by an exploration stage company.
-4-
DETAILS OF THE ARRANGEMENT
The following is a summary of the steps necessary to effect the Arrangement, in
the sequence they will occur, and which will occur on the Effective Date without
any action on the part of the Securityholders:
(a) IMA's authorized share structure shall be amended by:
(i) altering the name of the 100,000,000 common shares
without par value to be 100,000,000 Class A Common
shares without par value; and
(ii) creating the following two new classes of shares:
(A) an unlimited number of common shares without par
value; and
(B) an unlimited number of special shares without
par value.
(b) Golden Arrow's authorized share structure shall be amended by
creating a new class of shares consisting of an unlimited
number of preferred shares without par value having the rights
and restrictions set out in Golden Arrow's Articles.
(c) Each IMA Common Share issued and outstanding on the Effective
Date (other than shares held by dissenting shareholders) will
be exchanged for one New IMA Common Share and one-tenth of one
IMA Special Share.
(d) The IMA Common Shares exchanged for the New IMA Common Shares
and the IMA Special Shares shall be cancelled;
(e) IMA Holdco will transfer to IMA, with good and marketable
title free and clear of all encumbrances, all of the shares of
IMA Holdings (BVI), IMPSA BVI and IMPSA held by it. As
consideration for such shares transferred to IMA, IMA will
reduce the debt owed to it by IMA Holdco by an amount equal to
the fair market value of such shares;
(f) Each holder of IMA Special Shares will transfer, with good and
marketable title free and clear of all encumbrances, all such
shares to Golden Arrow. As consideration for the IMA Special
Shares transferred to it, Golden Arrow will issue to such
holders, Golden Arrow Common Shares on the basis of one Golden
Arrow Common Share for every one whole IMA Special Share held
by a respective holder.
(g) IMA will sell and transfer the Transferred Assets to Golden
Arrow in consideration for the issuance by Golden Arrow of
1,000,000 Golden Arrow Preferred Shares having a collective
fair market value equal to the Net Fair Market Value.
(h) IMA will purchase for cancellation the IMA Special Shares held
by Golden Arrow in consideration for the issuance by IMA to
Golden Arrow of the IMA Note having a principal amount and
fair market value equal to the aggregate fair market value of
the IMA Special Shares purchased for cancellation.
(i) The authorized share structure of IMA shall be amended by
eliminating the 100,000,000 Class A Common Shares without par
value and the unlimited Special Shares without par value, none
of which are issued.
(j) Golden Arrow will purchase for cancellation the Golden Arrow
Preferred Shares held by IMA in consideration for the issuance
by Golden Arrow to IMA of the Golden Arrow Note having a
principal amount and fair market value equal to the aggregate
fair market value of the Golden Arrow Preferred Shares
purchased for cancellation.
-5-
(k) The authorized share structure of Golden Arrow shall be
amended by eliminating the unlimited preferred shares without
par value, none of which are issued.
(l) IMA will pay the principal amount of the IMA Note by
transferring to Golden Arrow the Golden Arrow Note which will
be accepted by Golden Arrow as full payment, satisfaction and
discharge of IMA's obligations under the IMA Note and
simultaneously, Golden Arrow will pay the principal amount of
the Golden Arrow Note by transferring to IMA, the IMA Note
which will be accepted by IMA as full payment, satisfaction
and discharge of Golden Arrow's obligation under the Golden
Arrow Note. The IMA Note and the Golden Arrow Note will both
thereupon be cancelled.
The effect of the Arrangement is illustrated by the following simplified
diagrams:
IMMEDIATELY PRIOR TO THE ARRANGEMENT
IMA Exploration Inc. Golden Arrow
/ |
/ |
/ 100%
/ |
/ IMA Holdings Corp
/ / | \ \
/ / | \ 80.69%
/ / | \ IMPSA Resources
/ / | \ Corporation
/ / | \
/ / | 100%
/ / | \
80% / | \
/ 20% | \
CANADA / / | \
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
/ / | \
/ / 100% \
/ / | \
/ / IMA Navidad (BVI) Inc. \
/ / | \ Inversiones Mineras
IMPSA BVI Inc. 100% Argentinas Holdings
| | (BVI) Inc.
| | |
| Inversiones Mineras |
100% Argentinas Inc. 100%
| | |
BVI/BARBADOS | |
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
ARGENTINA/PERU | |
| 100% |
| | |
Minera IMP - Peru Inversiones Mineras Inversiones Mineras
S.A.C. Argentinas S.A. Australes S.A.
| | |
| | |
| | |
| | |
Peru Properties Navidad Area Non-Navidad Area
Properties Properties Argentina
-6-
IMMEDIATELY AFTER THE ARRANGEMENT
IMA Exploration Inc. Golden Arrow
| / | \
| / | 80.69%
100% / |
| / | IMPSA Resources
IMA Holdings Corp. / | Corporation
| / \
CANADA | / \
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
100% 100% 100%
|
IMA Navidad (BVI) Inc. Inversiones Mineras IMPSA BVI Inc.
| Argentinas Holdings |
| (BVI) Inc. |
| | |
100% | |
| | |
Inversiones Mineras | |
Argentinas Inc. 100% 100%
| | |
BVI/BARBADOS | |
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
ARGENTINA/PERU | |
| | |
100% | |
| | |
Inversiones Mineras Inversiones Mineras Minera IMP - Peru
Argentinas S.A. Australes S.A. S.A.C.
| | |
| | |
Navidad Area Non-Navidad Peru Properties
Properties Area Properties
Argentina
-7-
ARRANGEMENT AGREEMENT
IMA has entered into the Arrangement Agreement for the purpose of carrying out
the Plan of Arrangement and consummating the transactions contemplated by the
Plan of Arrangement. The Arrangement Agreement contains covenants, conditions
and termination provisions by which the parties to the Arrangement Agreement are
bound. The parties to the Arrangement Agreement have also made certain
representations and warranties to each other and have agreed to certain other
terms and conditions which are standard in a transaction of the nature embodied
by the Arrangement. In addition, the Arrangement Agreement provides that it may
be amended by IMA before or after the Meeting without further notice to, or the
approval of, the Securityholders. The full text of the Arrangement Agreement is
attached as Schedule "B" to this Management Proxy Circular and the Plan of
Arrangement is attached as Appendix I to the Arrangement Agreement.
APPROVALS NECESSARY FOR THE ARRANGEMENT
SECURITYHOLDER APPROVAL
As provided in the Interim Order, in order for the Arrangement to become
effective, the Arrangement Resolution must be passed, with or without variation,
by the Securityholders pursuant to a Special Resolution with Shareholders and
Rightsholders voting at the Meeting as two separate classes on that resolution.
The full text of the Arrangement Resolution is substantially as set out in
paragraph 4 of Schedule "A" to this Management Proxy Circular.
COURT APPROVAL
A statutory arrangement under the BCBCA requires Court approval. Prior to the
mailing of this Management Proxy Circular, IMA obtained the Interim Order which,
among other things, provides for the calling and holding of the Meeting, and
certain other procedural matters, and caused to be issued a Notice of Hearing of
Petition for the Final Order to approve the Arrangement. The Interim Order does
not constitute approval of the Arrangement by the Court. A copy of the Interim
Order and the Notice of Hearing of Petition for the Final Order are set forth in
Schedules "C" and "D", respectively, to this Management Proxy Circular.
As set out in the Notice of Hearing of Petition, the hearing in respect of the
Final Order is scheduled to take place at 9:45 a.m. (Vancouver time), or so soon
thereafter as counsel may be heard, or at such other date and time as the Court
may direct, on June 29, 2004 at the Law Courts, 800 Smithe Street, Vancouver,
British Columbia, subject to the approval of the Securityholders of IMA of the
Arrangement. Any Securityholder of IMA has the right to appear at such hearing
and present evidence or argument, subject to the rules of the Court. The Interim
Order provides that any Securityholder wishing to appear in opposition to the
petition for the Final Order shall give IMA at least one weeks notice of the
Securityholder's intention to do so.
The authority of the Court is very broad under section 291 of the BCBCA. IMA has
been advised by its legal counsel that the Court may make any inquiry it
considers appropriate and may make any order it considers appropriate with
respect to the Arrangement. THE COURT WILL CONSIDER, AMONG OTHER THINGS, THE
FAIRNESS AND REASONABLENESS TO THE SECURITYHOLDERS OF THE ARRANGEMENT IN ITS
ENTIRETY. The Court may approve the Arrangement either as proposed or as amended
in any manner the Court may direct, subject to compliance with such terms and
conditions, if any, as the Court considers fit. The Court will be advised, prior
to the hearing, that the Court's approval of the Arrangement will form the basis
for an exemption from registration requirements of the 1933 Act pursuant to
Section 3(a)(10) thereof with respect to the New IMA Common Shares, the IMA
Special Shares and the Golden Arrow Common Shares to be distributed pursuant to
the Arrangement.
REGULATORY APPROVAL
The Arrangement is subject to the prior approval of the TSX-V.
CONSEQUENCES IF APPROVALS NOT OBTAINED
In the event that the Arrangement is not approved by the Securityholders or the
Court in the manner described above, the Arrangement will not be completed.
-8-
CONDITIONS TO THE ARRANGEMENT BECOMING EFFECTIVE
In addition to Securityholder, Court and regulatory approval, the Arrangement
Agreement provides that the implementation of the Arrangement is subject to the
satisfaction of various conditions on or prior to the Effective Date, certain of
which are summarized below:
(a) the Arrangement with or without amendment, shall have been
approved by the shareholders of IMA, IMA Holdco and Golden
Arrow;
(b) the TSX-V shall have conditionally accepted the Arrangement
and confirmed that immediately prior to the Effective Date,
the IMA Special Shares and the Golden Arrow Preferred Shares
issuable under the Arrangement will be listed on the TSX-V;
(c) all other consents, orders, rulings, approvals and assurances,
including regulatory and judicial approvals and orders
required, necessary or desirable for the Arrangement to become
effective shall have been obtained or received from the
persons, authorities or bodies having jurisdiction in the
circumstances, in a form acceptable to IMA;
(d) there shall not be in force any order or decree restraining or
enjoining the consummation of the transaction contemplated by
the Arrangement Agreement;
(e) IMA shall provide to Golden Arrow, on or before the Effective
Date, an indemnity in form and substance acceptable to Golden
Arrow for any costs or losses incurred by Golden Arrow in
respect of the legal action commenced by a subsidiary of
Aquiline Resources Inc. against IMA;
(f) notices of dissent have not been delivered by Shareholders
holding greater than 1% of the outstanding IMA Common Shares;
(g) the Arrangement Agreement shall not have been terminated as
provided for therein;
(h) IMA and IMA Holdco shall have completed a transition pursuant
to section 436 of the BCBCA; and
(i) Prior to the Effective Date, all of the Golden Arrow
Properties located in Argentina, shall be indirectly held by
IMA Holdings (BVI).
Certain of the foregoing conditions may be waived.
Management of IMA believes that all material consents, orders, rulings,
approvals and assurances required for the completion of the Arrangement will be
obtained prior to the Effective Date in the normal course upon application
therefore, however, there can be no assurance that all of the conditions to the
Arrangement will be fulfilled prior to the Effective Date. The fulfillment of
certain of the conditions may be waived by mutual agreement of IMA, IMA Holdco
and Golden Arrow.
Notwithstanding the fulfilment, or waiver, of the foregoing and other
conditions, the Board of Directors may decide at any time before or after the
Meeting and prior to the Effective Date not to proceed with the Arrangement, in
which event the Arrangement Agreement will be terminated without any further
action on the part of the Securityholders or the Court. The Board of Directors
considers it appropriate to retain the flexibility not to proceed with the
Arrangement should some event occur prior to the Arrangement becoming effective
which in the opinion of the Board of Directors makes it inappropriate to
complete the Arrangement. The Arrangement Resolution to be considered and passed
by both the Shareholders and Rightsholders at the Meeting authorizes such action
by the Board of Directors.
-9-
EFFECTIVE DATE
Upon receipt of Securityholder, Court and regulatory approvals, and satisfaction
of all other conditions set forth in the Arrangement Agreement, the Board of
Directors intends to make the Arrangement effective. Making the Arrangement
effective will be subject to obtaining the Final Order of the Court. If the
Final Order approving the Arrangement is granted on June 29, 2004, it is
expected that the Effective Date will be on or about July 7, 2004. IMA will
announce the Effective Date through the media following receipt of the Final
Order.
DISTRIBUTION OF SHARE CERTIFICATES
Upon the Arrangement becoming effective, the share certificates representing IMA
Common Shares will be deemed to represent New IMA Common Shares and no new share
certificates will be issued for the New IMA Common Shares issued pursuant to the
Arrangement. ACCORDINGLY, IT WILL NOT BE NECESSARY FOR HOLDERS OF IMA COMMON
SHARES TO SURRENDER THEIR CERTIFICATES IN CONNECTION WITH THE ARRANGEMENT.
Holders of certificates representing IMA Common Shares must retain their
certificates as evidence of their ownership of New IMA Common Shares.
Certificates representing Golden Arrow Common Shares will be delivered or mailed
as soon as practicable following the Effective Date to those persons whose names
appear in the register of holders of IMA Common Shares at the close of business
on the Effective Date.
TREATMENT OF FRACTIONAL INTERESTS
Under the Arrangement, no fractional shares will be issued and fractional
interests in IMA Special Shares (which will be exchanged for Golden Arrow Common
Shares) will be rounded down to the nearest whole IMA Special Share.
INTENTIONS OF MANAGEMENT
All of the directors and officers of IMA have indicated their intention to vote
all of their IMA Common Shares and IMA Options in favour of the Arrangement and
the other business to be transacted at the Meeting.
RECOMMENDATIONS OF BOARD OF DIRECTORS
The Board of Directors has reviewed the terms and conditions of the Arrangement
and has unanimously concluded that the terms of the Arrangement are fair and
reasonable to, and are in the best interests of IMA and the Securityholders.
In arriving at their recommendation, the Board of Directors considered, among
other matters:
(a) the conclusions of the Board of Directors and management of
IMA with respect to the increase in shareholder value. See
"The Arrangement - Reasons for the Arrangement";
(b) the terms of the Arrangement, which will result in
Shareholders continuing to own immediately after the
Arrangement no less than their current proportionate voting
and equity interest in all of the assets currently held by IMA
through their ownership in all of the outstanding common
shares of both IMA and Golden Arrow;
(c) the procedures by which the Arrangement will be approved,
including the three-quarters majority approval required by
Securityholders at the Meeting, with Shareholders and
Rightsholders voting as two separate classes, and the
requirement of Court approval; and
(d) the tax treatment of Securityholders under the Arrangement.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SECURITYHOLDERS VOTE IN FAVOUR OF THE ARRANGEMENT RESOLUTION AND ALL OTHER
MATTERS TO BE CONSIDERED AT THE MEETING.
-10-
STOCK EXCHANGE LISTINGS
The IMA Common Shares are currently listed and called for trading on the TSX-V
and the New IMA Common Shares will continue to be listed and called for trading
on the TSX-V, subject to IMA complying with the listing requirements of the
TSX-V. IMA is currently classified as a Tier 1 issuer on the TSX-V and expects
to continue to be classified as a Tier 1 issuer after the Effective Date of the
Arrangement. The Arrangement is subject to the prior approval of the TSX-V, and
the conditional approval of the TSX-V of the listing of the Golden Arrow Common
Shares upon compliance with the usual requirements of the TSX-V.
The IMA Common Shares are also quoted on the OTC-BB and will continue to be
quoted on the OTC-BB following the completion of the Arrangement. Management
anticipates that Golden Arrow will seek to have its common shares quoted on the
Over-The-Counter Bulletin Board following completion of the Arrangement;
however, there are no assurances as to if, or when, the Golden Arrow Common
Shares will be quoted on the Over-The-Counter Bulletin Board, if ever.
EFFECT OF THE ARRANGEMENT ON CERTAIN OUTSTANDING SECURITIES OF IMA
SHARE PURCHASE WARRANTS
All outstanding IMA Warrants contain standard anti-dilution provisions that will
be triggered by the implementation of the Arrangement. Under the Arrangement,
each whole IMA Warrant outstanding on the Effective Date will, upon exercise of
such IMA Warrant after the Effective Date, entitle the holder thereof to receive
one New IMA Common Share and one tenth of a Golden Arrow Common Share at the
exercise price per share provided for in the certificate representing such IMA
Warrant, subject to the terms and conditions of such certificate.
HOLDERS OF IMA WARRANTS WILL NOT BE PERMITTED TO EXERCISE IMA WARRANTS TO
PURCHASE EITHER IMA COMMON SHARES OR GOLDEN ARROW COMMON SHARES SEPARATELY FROM
EACH OTHER. A holder of IMA Warrants who partially exercises such IMA Warrants
after the Effective Date will be requested to exercise such IMA Warrants in
multiples of ten to avoid subscriptions for fractions of Golden Arrow Common
Shares.
The net proceeds from the exercise of any IMA Warrants after the Effective Date
will be split between IMA and Golden Arrow in proportion to the relative market
capitalizations of IMA and Golden Arrow calculated using the weighted average
market price of New IMA Common Shares and Golden Arrow Common Shares for the
first five trading days commencing when the Golden Arrow Common Shares commence
trading on the TSX-V, provided that in no event will Golden Arrow receive less
than $0.50 per Golden Arrow Common Share issued. IMA will, forthwith upon
exercise of an IMA Warrant, pay to Golden Arrow on behalf of the holder of IMA
Warrants, the amount to which Golden Arrow is entitled. Upon receipt of such
funds, Golden Arrow will issue and deliver to the IMA Warrant holder the
certificate representing Golden Arrow Common Shares to which such IMA Warrant
holder is entitled. The price at which the Golden Arrow Common Shares will be
issued will be calculated by dividing the amount of cash received by Golden
Arrow from IMA, by the number of Golden Arrow Common Shares issued.
STOCK OPTIONS
After the Effective Date, all outstanding IMA Options will remain as constituted
immediately prior to the Effective Date, and upon exercise, will entitle the
holders to acquire the number of New IMA Common Shares equal to the number of
IMA Common Shares they would have acquired had they exercised the options prior
to the Effective Date.
The board of directors of Golden Arrow may grant incentive stock options to
purchase Golden Arrow Common Shares to its directors, officers, employees and
consultants in amounts to be determined by the board of directors of Golden
Arrow at exercise prices in compliance with the requirements of the TSX-V.
FEES AND EXPENSES
All costs relating to the Arrangement, including technical, accounting and legal
fees, will be borne by IMA.
-11-
SECURITIES LAWS CONSIDERATIONS
CANADIAN SECURITIES LAWS
The issue of the New IMA Common Shares, the IMA Special Shares and the Golden
Arrow Common Shares, including the issuance of Golden Arrow Common Shares upon
the exercise of IMA Options after the Effective Date, pursuant to the
Arrangement will be made pursuant to exemptions from the registration and
prospectus requirements contained in applicable provincial securities
legislation or, where required, exemption orders or rulings from various
securities commissions and regulatory authorities in the provinces and
territories of Canada where registered Shareholders of IMA are resident. IMA is
currently a "reporting issuer" under the applicable securities legislation in
the Provinces of British Columbia, Alberta and Ontario. Under applicable
provincial securities laws the New IMA Common Shares and Golden Arrow Common
Shares received by Shareholders, holders of IMA Options or holders of IMA
Warrants in connection with the Arrangement may be resold in the Provinces of
British Columbia, Alberta and Ontario without hold period restriction (provided
that no unusual effort is made to prepare the market or create a demand for
these securities and no extraordinary commission or consideration is paid in
respect of the sale). Resales of New IMA Common Shares and Golden Arrow Common
Shares will be subject to resale restrictions where the sale is made from either
the holdings of any person, company or combination of persons or companies
holding a sufficient number of New IMA Common Shares or Golden Arrow Common
Shares, as the case may be, to affect materially the control of IMA or Golden
Arrow respectively.
Holders of New IMA Common Shares or Golden Arrow Common Shares should seek legal
advice prior to any resale of such securities to ensure that such resale is in
compliance with the requirements of applicable securities legislation. Resales
of securities acquired in connection with the Arrangement may be required to be
made through properly registered securities dealers.
UNITED STATES SECURITIES LAWS
The issue of the New IMA Common Shares, the IMA Special Shares and the Golden
Arrow Common Shares in connection with the Arrangement will not be registered
under the 1933 Act or the securities laws of any state of the United States and
will be effected in reliance upon the exemption from registration provided by
Section 3(a)(10) of the 1933 Act and exemptions provided under the securities
laws of each state of the United States. Section 3(a)(10) of the 1933 Act
exempts from registration a security which is issued in exchange for outstanding
securities where the terms and conditions of such issuance and exchange are
approved, after hearing upon the fairness of such terms and conditions at which
all persons to whom it is proposed to issue securities in such exchange have a
right to appear, by a court or by a governmental authority expressly authorized
by law to grant such approval. Accordingly, the Final Order will, if granted,
constitute the basis for the exemption from the registration requirements of the
1933 Act with respect to the above-named securities issued in connection with
the Arrangement.
The New IMA Common Shares and the Golden Arrow Common Shares issuable upon
exercise of the IMA Warrants after the Effective Date have not been registered
under the 1933 Act. As a result, such IMA Warrants may not be exercised by or on
behalf of a U.S. person or in the United States, as these terms are defined in
Rule 902 of Regulation S under the 1933 Act, unless the New IMA Common Shares
and the Golden Arrow Common Shares issuable upon exercise of such IMA Warrants
are registered under the 1933 Act and the securities laws of all applicable
states of the United States or an exemption from such registration is available.
Unless the New IMA Common Shares and the Golden Arrow Common Shares issuable
upon exercise of the IMA Warrants are registered or exempt under the 1933 Act,
holders of the IMA Warrants who are U.S. persons or resident in the United
States must either resell the IMA Warrants to persons outside the United States
or permit the IMA Warrants to expire.
The New IMA Common Shares issuable upon exercise of IMA Options after the
Effective Date have not been registered under the 1933 Act. As a result, such
IMA Options may not be exercised by or on behalf of a U.S. person or in the
United States, as these terms are defined in Rule 902 of Regulation S under the
1933 Act, unless the New IMA Common Shares issuable upon exercise of such IMA
Options are registered under the 1933 Act and the securities laws of all
applicable states of the United States or an exemption from such registration is
available. Unless the New IMA Common Shares issuable upon exercise of IMA
Options are registered or exempt under the 1933 Act, holders of IMA Options who
are U.S. persons or resident in the United States may not be able to exercise
their IMA Options and may be required to permit their IMA Options to expire.
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The New IMA Common Shares and the Golden Arrow Common Shares received pursuant
to the Arrangement will not be registered under the 1933 Act in reliance upon
the exemption provided by Section 3(a)(10) thereof. The restrictions on resale
imposed by the 1933 Act will depend on whether the holder of IMA or Golden Arrow
securities, respectively, is or, following the Arrangement, will be an
"affiliate" of the issuer of such securities. As defined in Rule 144 under the
1933 Act, an "affiliate" of an issuer is a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, such issuer.
Persons who are not and following the Arrangement will not be affiliates of IMA
or Golden Arrow, respectively, may resell their securities of such issuer in the
United States without restriction under the 1933 Act.
Persons who are or after the Arrangement will be an affiliate of IMA or Golden
Arrow, respectively, may not resell their securities of such issuer in the
absence of registration under the 1933 Act, unless such sales comply with the
exemption from registration contained in Rule 145(d) under the 1933 Act, or
unless registration is not required pursuant to the exclusion from registration
provided by Regulation S under the 1933 Act.
In general, under Rule 145(d) as currently in effect, persons who are or after
the Arrangement will be affiliates of IMA or Golden Arrow, respectively, will be
entitled to resell in the United States during any three-month period that
number of securities of the issuer that does not exceed the greater of one
percent of the then outstanding class of securities or, if such securities are
listed on a United States securities exchange or traded on Nasdaq, the average
weekly trading volume of such securities during the four-week period preceding
the date of sale, subject to certain restrictions on manner of sale, aggregation
rules and the availability of public information about the issuer. Affiliates of
IMA or Golden Arrow, respectively, who are not affiliates of the issuer
following the Arrangement, and who hold their securities of such issuer for a
period of one year after the Arrangement, may resell such securities without
regard to the volume and manner of sale limitations set forth in the preceding
sentence, subject to the availability of certain public information about the
applicable issuer. Affiliates of IMA or Golden Arrow, respectively, who are not
affiliates of the issuer following the Arrangement, have not been affiliates
during the three months preceding the date of sale, and who hold their
securities of such issuer for a period of two years after the Arrangement, may
resell such securities without any restrictions.
Subject to certain limitations, all holders of New IMA Common Shares, Golden
Arrow Common Shares and the IMA Warrants outstanding after the Effective Date
may immediately resell such securities outside the United States without
registration under the 1933 Act pursuant to Regulation S under the 1933 Act.
Generally, subject to certain limitations, holders of IMA or Golden Arrow
securities following the Arrangement who are not affiliates of the respective
issuer, or who are affiliates of such issuer solely by virtue of their status as
an officer or director of the issuer may, under the securities laws of the
United States, resell their securities of such issuer in an "offshore
transaction" (which would include a sale through the TSX-V) if neither the
seller, an affiliate of the seller, nor any person acting on their behalf
engages in any "directed selling efforts" in the United States. For the purposes
of Regulation S, "directed selling efforts" means "any activity undertaken for
the purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for any of the securities being
offered" in the resale transaction. Certain additional restrictions and
qualifications are applicable to a holder of IMA or Golden Arrow securities who
are affiliates of such issuer.
The New IMA Common Shares and the Golden Arrow Common Shares issuable upon
exercise of IMA Warrants after the Effective Date have not been registered under
the 1933 Act or the securities laws of any state of the United States and may
not be offered or sold in the United States unless registered under the 1933 Act
and the securities laws of all applicable states of the United States or an
exemption from such registration requirements is available.
The New IMA Common Shares issuable upon exercise of IMA Options after the
Effective Date have not been registered under the 1933 Act or the securities
laws of any state of the United States and may not be offered or sold in the
United States unless registered under the 1933 Act and the securities laws of
all applicable states of the United States or an exemption from such
registration requirements is available.
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INCOME TAX CONSIDERATIONS
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following general summary fairly describes the principal Canadian federal
income tax consequences associated with the Arrangement to Shareholders of IMA
whose shares constitute capital property for the purposes of the Income Tax Act
(Canada) (the "ITA") and who deal at arm's length with IMA.
This summary is based on the current provisions of the ITA, the Regulations
thereunder in force on the date hereof, any proposed amendments to the ITA, or
the Regulations which have been previously publicly announced by the federal
Minister of Finance, and the current written administrative and assessing
policies of the Canada Revenue Agency. This description is not exhaustive of all
possible Canadian federal income tax consequences and does not take into account
or anticipate any changes in law, whether by legislative, government or judicial
action, other than any proposed amendments to the ITA or Regulations which have
been publicly announced by the federal Minister of Finance as of the date
hereof. This description also does not take into account any provincial or
foreign tax considerations other than those expressly discussed herein.
THIS SUMMARY IS OF GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, NOR SHOULD IT
BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY SHAREHOLDER, AND NO
REPRESENTATION WITH RESPECT TO THE CANADIAN INCOME TAX CONSEQUENCES TO ANY SUCH
SHAREHOLDER IS MADE. ACCORDINGLY, SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS FOR ADVICE WITH RESPECT TO THE CANADIAN INCOME TAX CONSEQUENCES
ASSOCIATED WITH THE ARRANGEMENT.
SHAREHOLDERS RESIDENT IN CANADA
The shares of IMA will generally constitute capital property to a Shareholder
unless the Shareholder is a trader or dealer in securities or is engaged in an
adventure in the nature of trade with respect to such shares. A Canadian
resident Shareholder, other than a trader or dealer in securities, whose shares
might not otherwise qualify as capital property may be entitled to obtain such
qualification by making an irrevocable election pursuant to the provisions of
subsection 39(4) of the ITA. A NON-RESIDENT CANNOT ELECT UNDER SUBSECTION 39(4)
OF THE ITA. SHAREHOLDERS CONTEMPLATING MAKING SUCH AN ELECTION SHOULD FIRST
CONSULT THEIR OWN TAX ADVISORS AS SUCH AN ELECTION WILL AFFECT THE INCOME TAX
TREATMENT FOR OTHER CANADIAN SECURITIES HELD.
THE CONSEQUENCES OF THE ARRANGEMENT TO SHAREHOLDERS WHOSE SHARES DO NOT
CONSTITUTE CAPITAL PROPERTY WILL BE SIGNIFICANTLY DIFFERENT THAN THOSE DESCRIBED
BELOW AND SUCH SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THIS
MATTER.
EXCHANGE OF IMA COMMON SHARES FOR NEW IMA COMMON SHARES AND IMA SPECIAL SHARES
Under the Arrangement, a Shareholder will receive one New IMA Common Share and
one-tenth of one IMA Special Share in exchange for each IMA Common Share
currently held.
A Shareholder who acquires New IMA Common Shares and IMA Special Shares as a
consequence of the Arrangement, will be deemed to have disposed of the
Shareholder's existing IMA Common Shares for the proceeds of disposition equal
to the adjusted cost base of such shares at the time of the exchange.
Accordingly, neither a capital gain nor a capital loss will be realized on the
exchange.
The cost of the New IMA Common Shares and IMA Special Shares received by a
Shareholder will be equal, in aggregate, to the adjusted cost base of the IMA
Common Shares exchanged by that Shareholder but apportioned between the New IMA
Common Shares and the IMA Special Shares.
EXCHANGE OF IMA SPECIAL SHARES FOR GOLDEN ARROW COMMON SHARES
Pursuant to the terms of the Arrangement, the holders of IMA Special Shares will
sell such shares to Golden Arrow in exchange for consideration consisting solely
of one Golden Arrow Common Share for one whole IMA Special Share so transferred.
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A Shareholder who exchanges his IMA Special Shares pursuant to the Arrangement,
and who does not include in computing his income for the year any portion of the
gain or loss, as otherwise determined from the disposition of the IMA Special
Shares, will be deemed to have disposed of the Shareholder's IMA Special Shares
for proceeds of disposition equal to the adjusted cost base of such shares the
time of the exchange. Accordingly, provided the IMA Special Shares are held as
capital property, no gain or loss will result.
The Golden Arrow Common Shares received by a holder of IMA Special Shares,
pursuant to the Arrangement, will be deemed to have been acquired at a cost
equal to the aggregate adjusted cost base of the Shareholder's former IMA
Special Shares at the time of the exchange. The adjusted cost base of each
Golden Arrow Common Share owned by a Shareholder after the Arrangement will be
an amount equal to the aggregate adjusted cost base of the Golden Arrow Common
Shares acquired pursuant to the Arrangement divided by the total number of
Golden Arrow Common Shares owned after the arrangement.
CONSEQUENCES OF HOLDING NEW IMA COMMON SHARES AND GOLDEN ARROW COMMON SHARES
Any dividends received by an individual resident in Canada on New IMA Common
Shares or Golden Arrow Common Shares following the completion of the Arrangement
will be included in computing the Shareholder's income as a taxable dividend
from a taxable Canadian corporation and will be subject to the normal gross-up
and dividend tax credit rules. A Shareholder that is a Canadian resident
corporation will generally be entitled in computing its taxable income for a
taxation year to a deduction equal to the amount of the taxable dividend
received by it on a share in a year. However, such dividends will generally be
subject to refundable Part IV tax if received by a Canadian private corporation.
SHAREHOLDERS NOT RESIDENT IN CANADA
The following portion of this summary is applicable to a Shareholder of IMA
Common Shares who, for the purposes of the ITA, has not been a resident of
Canada at any time while the Shareholder held IMA Common Shares and to whom the
IMA Common Shares are not taxable Canadian property.
The IMA Common Shares will generally not be taxable Canadian property provided
that:
1. the Shareholder does not use or hold, and is not deemed to use or hold,
these shares in connection with a business carried on in Canada; and
2. the Shareholder and non-arm's length persons, either alone or together,
have not owned (or had the option to acquire) 25% or more of the issued
shares of any class or series of IMA at any time within the five year
period immediately before the Effective Date.
A non-resident Shareholder of IMA Common Shares that arte not considered taxable
Canadian property will not be subject to Canadian income tax in respect of the
events occurring as a consequence of the Arrangement.
If the IMA Common Shares were taxable Canadian property, then the New IMA Common
Shares and the Golden Arrow Common Shares will also be taxable Canadian
property. The exchange by Shareholders of IMA Common Shares for New IMA common
and IMA Special Shares, and the subsequent exchange of IMA Special Shares for
Golden Arrow Common Shares will not eliminate the New IMA Common Shares and
Golden Arrow Common Shares from being considered taxable Canadian property.
CONSEQUENCES OF HOLDING IMA WARRANTS
The following portion of this summary is applicable to Canadian resident holders
of IMA Warrants whose IMA Warrants constitute capital property for the purposes
of the ITA and who deal at arm's length with IMA.
This portion of the summary assumes that the current contractual rights to a
warrant holder are not disposed of in any way as a consequence of the
Arrangement.
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The IMA Warrants' current contractual agreements include provisions that adjust
the terms of the IMA Warrants upon IMA completing certain transactions such as
the Arrangement. As a result, after the Arrangement a holder of a IMA Warrant
who chooses to exercise such IMA Warrant will receive one New IMA Common Share
and one tenth of a Golden Arrow Common Share.
Because the contractual rights to the IMA Warrants are not disposed of in any
manner pursuant to the Arrangement, a warrant holder should not have a
disposition of the IMA Warrants held as a consequence of the Arrangement.
Upon exercise of the IMA Warrants, the New IMA Common Shares and the Golden
Arrow Shares acquired by the holder will have an aggregate adjusted cost base
equal to the sum of the initial cost and the exercise price of the IMA Warrants
to the warrant holder. This aggregate adjusted cost base should be allocated
between the IMA Common Shares and the Golden Arrow Common Shares. The ITA does
not define an appropriate allocation method. Shareholders should consult their
tax advisors as to an appropriate allocation method.
WARRANT HOLDERS NOT RESIDENT IN CANADA
The following portion of this summary is applicable to holders of IMA Warrants
who, for the purposes of the ITA, has not been a resident of Canada at any time
while holding IMA Warrants and to whom the IMA Warrants are not taxable Canadian
property.
The IMA Warrants will generally not be taxable Canadian property provided that:
1. the holder does not use or hold, and is not deemed to use or hold,
these IMA Warrants in connection with a business carried on in Canada;
and
2. the holder and non-arm's length persons, either alone or together, have
not owned (or had the option to acquire) 25% or more of the issued
shares of any class or series of IMA at any time within the five year
period immediately before the Effective Date.
A non-resident holder of IMA Warrants that are not considered taxable Canadian
property will not be subject to Canadian income tax in respect of the events
occurring as a consequence of the Arrangement.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
This section summarizes the material anticipated United States federal income
tax consequences of the Arrangement to persons ("U.S. Shareholders") who:
1. for purposes of the U .S. Internal Revenue Code of 1986 (the "Code"),
are U.S. persons and, for purposes of the ITA and the Canada-United
States Income Tax Convention, are citizens or residents of the United
States and not resident in Canada; and
2. hold IMA Common Shares as capital assets for purposes of the Code.
The tax consequences of the Arrangement to persons who are not U.S. Shareholders
may differ materially from the tax consequences discussed in this section.
This discussion is based upon the current provisions of:
1. the Code and Treasury Regulations under the Code;
2. the Canada-United States Income Tax Convention;
3. the administrative policies published by the U.S. Internal Revenue
Services; and
4. judicial decisions,
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all of which are subject to change either prospectively or retroactively. We do
not take into account the tax laws of the various state and local jurisdictions
of the U.S. or foreign jurisdictions.
THIS DISCUSSION IS INTENDED TO BE A DESCRIPTION OF THE MATERIAL U.S. FEDERAL
INCOME TAX CONSIDERATIONS RELATING TO THE ARRANGEMENT. THIS DISCUSSION DOES NOT
ADDRESS ALL POSSIBLE FEDERAL, STATE, LOCAL OR FOREIGN TAX CONSEQUENCES RELATING
TO THE ARRANGEMENT OR OWNERSHIP OF IMA COMMON SHARES. THE DISCUSSION
SPECIFICALLY DOES NOT ADDRESS CONSEQUENCES PECULIAR TO A U.S. SHAREHOLDER IF THE
U.S. SHAREHOLDER IS SUBJECT TO SPECIAL PROVISIONS OF U.S. INCOME TAX LAW
(INCLUDING, WITHOUT LIMITATION, DEALERS IN SECURITIES OR FOREIGN CURRENCY,
TAX-EXEMPT ENTITIES, BANKS, INSURANCE COMPANIES OR OTHER FINANCIAL INSTITUTIONS,
PERSONS THAT HOLD IMA COMMON SHARES AS PART OF A "STRADDLE," "HEDGE" OR
"CONVERSION TRANSACTION," REAL ESTATE INVESTMENT TRUSTS, REGULATED INVESTMENT
COMPANIES AND PERSONS THAT HAVE A "FUNCTIONAL CURRENCY" OTHER THAN THE U.S.
DOLLAR, TAX-EXEMPT ORGANIZATIONS, QUALIFIED RETIREMENT PLANS, INDIVIDUAL
RETIREMENT ACCOUNTS AND OTHER TAX-DEFERRED ACCOUNTS AND PERSONS THAT OWN IMA
COMMON SHARES THROUGH PARTNERSHIPS OR OTHER PASS-THROUGH ENTITIES). IMA HAS
NEITHER REQUESTED NOR WILL IT RECEIVE AN ADVANCE RULING FROM THE U.S. INTERNAL
REVENUE SERVICE ("IRS") AS TO THE TAX CONSEQUENCES OF THE ARRANGEMENT. IN VIEW
OF THE INDIVIDUAL NATURE OF EACH SHAREHOLDER'S TAX SITUATION AND THE SUMMARY
NATURE OF THIS DISCUSSION, THE U.S. SHAREHOLDERS OF IMA ARE URGED TO CONSULT
THEIR TAX ADVISORS AS TO THE TAX CONSEQUENCES TO THEM OF THE ARRANGEMENT.
This discussion is based upon certain understandings and assumptions with
respect to the business, assets and shareholders of IMA and its subsidiaries,
including the following: IMA and its subsidiaries are not, have not at any time
been and will not be (a) "controlled foreign corporations" as defined in Section
957(a) of the Code, (b) "foreign investment companies" as defined in Section
1246(b) of the Code, or (c) "foreign personal holding companies" as defined in
Section 552 of the Code. Additionally, this discussion assumes that IMA and its
subsidiaries are "passive foreign investment companies" ("PFICs") as defined in
Section 1297 of the Code. In the event that one or more of such understandings
or assumptions proves to be inaccurate, the following discussion may not apply
and material adverse U.S. federal income tax consequences may result to U.S.
Shareholders.
SUMMARY
The Arrangement is likely to be characterized for U.S. federal income tax
purposes as
o A distribution by IMA Holdco of IMPSA BVI, IMA Holdings (BVI) and IMPSA
("the Subsidiaries Shares") to IMA;
o A transfer of the Subsidiaries Shares from IMA to Golden Arrow;
o A distribution of Golden Arrow Common Shares by IMA to the U.S.
Shareholders; and
o Management of IMA has determined the taxable income to U.S.
Shareholders to be US$0.05 per IMA Common Share.
The U.S. Shareholders would likely be taxed under the PFIC rules, as set out
below, on their pro rata share of the fair market value of Golden Arrow Common
Shares received as a result of the Arrangement.
GENERAL RULES FOR DISTRIBUTIONS
A U.S. Shareholder would generally include in income as a dividend the fair
market value of the property distributed to them to the extent of the
distributing company's current or accumulated earnings and profits as computed
under U.S. income tax principles. To the extent the fair market value of the
distributed property exceeds the distributing company's current or accumulated
earnings and profits, such excess will be treated first as a return of capital
up to a U.S. Shareholder's adjusted tax basis in the distributing company
shares, and then as gain from the sale or exchange of such shares.
However, these rules may be overridden by the PFIC rules discussed below if the
distributing company is a PFIC.
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PASSIVE FOREIGN INVESTMENT COMPANY RULES
Section 1297 of the Code defines a PFIC as a corporation that is not formed in
the U.S. and, for any taxable year, either (a) 75% or more of its gross income
is "passive income" or (b) the average percentage, by fair market value of its
assets that produce or are held for the production of "passive income", is 50%
or more. "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. However, gains resulting from
commodities transactions are generally excluded from the definition of passive
income if "substantially all" of a merchant's, producer's or handler's business
is as an active merchant, producer or handler of such commodities.
For purposes of the PFIC income test and the assets test, if a foreign
corporation owns (directly or indirectly) at least 25% by value of the stock of
another corporation, such foreign corporation shall be treated as if it (a) held
a proportionate share of the assets of such other corporation, and (b) received
directly its proportionate share of the income of such other corporation. Also,
for purposes of such PFIC tests, passive income does not include any interest,
dividends, rents or royalties that are received or accrued from a "related"
person to the extent such amount is properly allocated to the income of such
related person which is not passive income. For these purposes, a person is
related with respect to a foreign corporation if such person "controls" the
foreign corporation or is controlled by the foreign corporation or by the same
persons that control the foreign corporation. For these purposes, "control"
means ownership, directly or indirectly, of stock possessing more than 50% of
the total voting power of all classes of stock entitled to vote or of the total
value of stock of a corporation.
Whether IMA and its subsidiaries are PFICs in any year and the tax consequences
relating to PFIC status will depend on the composition of income and assets,
including cash. A determination of the PFIC status of IMA and its subsidiaries
has not been taken. However, because IMA and its subsidiaries have nominal
operating revenue, it is likely that IMA and its subsidiaries are PFICs.
Distributions from a PFIC received by a U.S. Shareholder in any taxable year
that are greater than 125% of the average annual distributions received by such
U.S. Shareholder in the three preceding taxable years (or the U.S. Shareholder's
holding period for the shares, if shorter) constitute "excess distributions"
under the PFIC rules. In contrast to the general rules for dividend
distributions noted above, the amount of a distribution that may be considered
an "excess distribution" is not limited by the PFIC's earnings and profits. As
well, any gain from the disposition of stock in a PFIC will constitute an
"excess distribution", and not a capital gain.
Distributions which constitute "excess distributions" from a PFIC are subject to
the following special rules: (1) the "excess distributions" would be allocated
rateably over a U.S. Shareholder's holding period for the shares, (2) the amount
allocated to the current taxable year and any taxable year prior to the first
taxable year in which IMA or any of its subsidiaries is a PFIC would be treated
as ordinary income in the current taxable year, and (3) the amount allocated to
each of the other taxable years would be subject to the highest rate of tax on
ordinary income in effect for that year and to an interest charge based on the
value of the tax deferred during the period during which the shares are owned.
Where a U.S. Shareholder owns stock in a PFIC indirectly through another entity,
any disposition of the lower tier PFIC stock by the entity directly owning the
PFIC stock ("the direct PFIC shareholder") is generally treated as a disposition
to the U.S. Shareholder (an "indirect disposition"). In addition, any
distribution by the lower tier PFIC to the direct PFIC shareholder is generally
treated as a distribution to the U.S. Shareholder (an "indirect distribution").
To the extent that an actual distribution to the U.S Shareholder or an actual
disposition of PFIC stock by the U.S. Shareholder consists of amounts previously
taxed as gains on indirect distributions or dispositions, such amount generally
should not be subject to additional U.S. tax.
Any distribution from a PFIC that is not an excess distribution is subject to
the general rules of the Code. Pursuant to Section 1291(b)(2)(B) of the Code,
the distribution will not be considered to be an "excess distribution" in the
taxation year that the U.S. Shareholder's holding period in the PFIC stock
begins.
U.S. Shareholders can avoid the adverse tax consequences of PFIC status
discussed above by making an election to treat the PFIC as a Qualified Electing
Fund ("QEF"). A valid election would generally include certain financial
information with respect to the PFIC. In certain cases a separate election to
recognize any gain in the shares will have to be made as well as the QEF
election. If QEF status is elected, the U.S. Shareholder must, under the general
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rule, include in taxable income each year their pro rata share of the PFIC's
ordinary earnings and net capital gains. The U.S. Shareholder may, however,
defer payment of these taxes until they receive a distribution from the PFIC. In
this case, the U.S. Shareholder will be required to pay interest on the tax
liability to take into account the benefit of the deferral.
Alternatively, U.S. Shareholders who actually or constructively own "marketable
stock" in a PFIC may make an election under Section 1296 of the Code to mark
those shares to market annually, rather than being subject to the excess
distribution rules described above. Amounts included in or deducted from income
under this mark-to-market election and actual gains and losses realized upon
disposition, subject to specific limitations, should be treated as ordinary
income or losses.
THE U.S. SHAREHOLDERS ARE URGED TO CONTACT THEIR OWN TAX ADVISORS REGARDING THE
AVAILABILITY AND ADVISABILITY OF THESE ELECTIONS.
The PFIC rules are extremely complex and subject to interpretation. The
implementation of certain aspects of the PFIC rules requires the issuance of
Treasury Regulations which in many instances have not been promulgated and which
may be promulgated and which may have retroactive effect. There can be no
assurance that any of these proposals will be enacted or promulgated, and if so,
the form they will take or the effect that they may have on this discussion.
ACCORDINGLY, AND DUE TO THE COMPLEXITY OF THE PFIC RULES, U.S. SHAREHOLDERS ARE
STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE IMPACT OF THESE
RULES ON THEIR INVESTMENT IN THE IMA SHARES.
THE DISTRIBUTION OF IMPSA BVI, IMA HOLDINGS (BVI) AND IMPSA ("THE
SUBSIDIARIES SHARES") FROM IMA HOLDCO TO IMA
As a result of the distribution of the Subsidiaries Shares from IMA Holdco to
IMA, and given that the Subsidiaries Shares are likely PFIC shares, the U.S.
Shareholders would generally be treated as having indirectly disposed of the
Subsidiaries Shares under Section 1.1291-3(e)(2)(i) of the Proposed Treasury
Regulations. Any gain would be taxed in its entirety as an "excess distribution"
as discussed above.
IMA Holdco also would generally be treated as making an indirect distribution to
the U.S. Shareholders under Section 1.1291-2(f)(1) of the Proposed Treasury
Regulations. This distribution would ordinarily subject the U.S. Shareholders to
tax under the general rules for distributions as discussed above. However, given
that IMA Holdco is likely a PFIC, this distribution, or a portion thereof, may
be treated as an "excess distribution" under the PFIC rules. To the extent that
the amount of the distribution has previously been taxed under the PFIC rules,
such amounts should not be subject to additional U.S. tax.
If the IRS were to find that the distribution of the Subsidiaries Shares
constituted a distribution described in Section 355 of the Code, pursuant to
Section 1.1291-3(b)(1) of the Proposed Treasury Regulations the U.S.
Shareholders would likely be treated as having indirectly disposed of all their
shares in IMA Holdco. However, it is unlikely that the distribution would
qualify under Section 355 of the Code, because the so called "active trade or
business" requirement would likely not be satisfied.
THE TRANSFER OF THE SUBSIDIARIES SHARES FROM IMA TO GOLDEN ARROW
As a result of the transfer of the Subsidiaries Shares from IMA to Golden Arrow
and given that the Subsidiaries Shares are likely PFIC shares, the U.S.
Shareholders would likely be treated as having indirectly disposed of the
Subsidiaries Shares under Section 1.1291-3(e)(2)(i) of the Proposed Treasury
Regulations. The U.S. Shareholders generally would be subject to U.S. tax on the
"indirect disposition" and any gain would be taxed in its entirety as an "excess
distribution" as discussed above. However, to the extent that the amount of any
gain has previously been taxed under the PFIC rules, such amounts should not be
subject to additional U.S. tax.
THE DISTRIBUTION OF GOLDEN ARROW COMMON SHARES TO SHAREHOLDERS OF IMA
As a result of the distribution of Golden Arrow Common Shares to U.S.
Shareholders of IMA and given that the Golden Arrow shares are likely PFIC
shares, the U.S. Shareholders would likely be treated as having indirectly
disposed of the Golden Arrow Common Shares under Section 1.1291-3(e)(2)(i) of
the Proposed Treasury Regulations. The U.S. Shareholders generally would be
subject to U.S. tax on the "indirect disposition" and any
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gain would be taxed in its entirety as an "excess distribution" as discussed
above. However, to the extent that the amount of any gain has previously been
taxed under the PFIC rules, such amounts should not be subject to additional
U.S. tax.
The distribution of the Golden Arrow Common Shares to U.S. Shareholders of IMA
would ordinarily subject the U.S. Shareholders to U.S. tax under the general
rules for distributions discussed above on their pro-rata share of the fair
market value of Golden Arrow Common Shares received. However, given that IMA is
likely a PFIC, this distribution, or a portion thereof, may be treated as an
"excess distribution" under the PFIC rules. To the extent that the amount of the
distribution has previously been taxed under the PFIC rules, such amount should
not be subject to additional U.S. tax.
The adjusted tax basis of the Golden Arrow Common Shares distributed to the U.S.
Shareholders will be equal to the fair market value of such shares, and the
holding period for such shares will commence on the date of distribution.
OTHER MATTERS
On the assumption that IMA Holdco and its subsidiaries are PFICs in the current
or prior year, they will not be qualified foreign corporations as defined in
Section 1(h)(11)(C) of the Code, and accordingly dividends received directly or
as "indirect distributions" by U.S. Shareholders who are individuals, estates or
complex trusts would not be eligible for the preferred long term capital gains
tax rate.
Dividends paid by IMA and its subsidiaries directly or as "indirect
distributions" generally will likely constitute foreign source dividend income
and "passive income" for purposes of the foreign tax credit (which could reduce
the amount of foreign tax credit available to a U.S. Shareholder). The Code
applies various limitations on the amount of foreign tax credits that may be
available to a U.S. Shareholder. BECAUSE OF THE COMPLEXITY OF THOSE LIMITATIONS,
U.S. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISOR WITH RESPECT TO THE
AVAILABILITY OF FOREIGN TAX CREDITS.
The distributions from IMA and its subsidiaries generally should not be eligible
for the dividends received deduction.
Management has determined the taxable income to U.S. Shareholders to be US$0.05
per IMA Common Share.
RIGHTS OF DISSENT
DISSENTERS' RIGHTS
The BCBCA does not contain a provision requiring IMA to purchase IMA Common
Shares from Shareholders who dissent from the Arrangement. However, pursuant to
the terms of the Interim Order and the Plan of Arrangement, IMA has granted the
Shareholders who object to the Special Resolution the right to dissent (the
"Dissent Right") in respect of the Arrangement. The Dissent Right is granted in
Article 6 of the Plan of Arrangement and is summarized below. The terms of such
Dissent Right are similar to the dissenting shareholder provisions of the BCBCA.
THE FOLLOWING IS A SUMMARY ONLY AND SHAREHOLDERS ARE REFERRED TO ARTICLE 6 OF
THE PLAN OF ARRANGEMENT FOR THE COMPLETE DISSENT RIGHTS.
A Shareholder who wishes to exercise his or her Dissent Right (a "Dissenting
Shareholder") must give written notice of his or her dissent (a "Notice of
Dissent") to IMA by depositing such Notice of Dissent with IMA, or mailing it to
IMA by registered mail, at its head office at Suite 709, 837 West Hastings
Street, Vancouver, British Columbia V6C 3N6, marked to the attention of the
President not later than two days before the Meeting. A Shareholder who wishes
to dissent must prepare a separate notice of dissent for (i) the Shareholder, if
the Shareholder is dissenting on its own behalf and (ii) each person who
beneficially owns shares in the Shareholder's name and on whose behalf the
Shareholder is dissenting. To be valid, a Notice of Dissent must:
(a) identify in each Notice of Dissent the person on whose behalf
dissent is being exercised;
(b) set out the number of IMA Common Shares in respect of which
the Shareholder is exercising the Dissent Right (the "Notice
Shares"), which number cannot be less than all of the IMA
Common Shares held by the beneficial holder on whose behalf
the Dissent Right is being exercised;
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(c) if the Notice Shares constitute all of the shares of which the
Dissenting Shareholder is both the registered owner and
beneficial owner and the Dissenting Shareholder owns no other
IMA Common Shares as beneficial owner, a statement to that
effect;
(d) if the Notice Shares constitute all of the shares of which the
Dissenting Shareholder is both the registered and beneficial
owner but the Dissenting Shareholder owns other IMA Common
Shares as beneficial owner, a statement to that effect, and
(i) the names of the registered owners of those other
shares,
(ii) the number of those other shares that are held by each
of those registered owners, and
(iii) a statement that Notices of Dissent are being or have
been sent in respect of all those other shares;
(e) if dissent is being exercised by the Dissenting Shareholder on
behalf of a beneficial owner who is not the Dissenting
Shareholder, a statement to that effect, and
(i) the name and address of the beneficial owner, and
(ii) a statement that the Dissenting Shareholder is
dissenting in relation to all of the shares
beneficially owned by the beneficial owner that are
registered in the Dissenting Shareholder's name.
The giving of a Notice of Dissent does not deprive a Dissenting Shareholder of
his or her right to vote at the Meeting on the Special Resolution. A vote
against the Special Resolution or the execution or exercise of a proxy does not
constitute a Notice of Dissent. A Shareholder is not entitled to exercise a
Dissent Right with respect to any IMA Common Shares if the Shareholder votes (or
instructs or is deemed, by submission of any incomplete proxy, to have
instructed his or her proxyholder to vote) in favour of the Arrangement
Resolution. A Dissenting Shareholder, however, may vote as a proxy for a
Shareholder whose proxy required an affirmative vote, without affecting his or
her right to exercise the Dissent Right.
If IMA intends to act on the authority of the Arrangement Resolution, it must
send a notice (the "Notice to Proceed") to the Dissenting Shareholder promptly
after the later of:
(a) the date on which IMA forms the intention to proceed, and
(b) the date on which the Notice of Dissent was received.
If IMA has acted on the Arrangement Resolution it must promptly send a Notice to
Proceed to the Dissenting Shareholder. The Notice to Proceed must be dated not
earlier than the date on which it is sent and state that IMA intends to act or
has acted on the authority of the Arrangement Resolution and advise the
Dissenting Shareholder of the manner in which dissent is to be completed.
On receiving a Notice to Proceed, the Dissenting Shareholder is entitled to
require IMA to purchase all of the IMA Common Shares in respect of which the
Notice of Dissent was given.
A Dissenting Shareholder who receives a Notice to Proceed is bound to sell its
IMA Common Shares to IMA and must send to IMA within one month after the date of
the Notice to Proceed:
(a) a written statement that the Dissenting Shareholder requires
IMA to purchase all of the Notice Shares;
(b) the certificates representing the Notice Shares; and
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(c) if dissent is being exercised by the Shareholder on behalf of
a beneficial owner who is not the Dissenting Shareholder, a
written statement signed by the beneficial owner setting out
whether the beneficial owner is the beneficial owner of other
shares of IMA and if so, setting out:
(i) the names of the registered owners of those other
shares,
(ii) the number of those other share that are held by each
of those registered owners, and
(iii) that dissent is being exercised in respect of all of
those other shares,
whereupon IMA is bound to purchase them in accordance with the
Notice of Dissent.
IMA and the Dissenting Shareholder may agree on the amount of the payout value
of the Notice Shares and in that event, IMA must either promptly pay that amount
to the Dissenting Shareholder or send a notice to the Dissenting Shareholder
that IMA is unable lawfully to pay Dissenting Shareholders for their shares as
IMA is insolvent or if the payment would render IMA insolvent.
If IMA and the Dissenting Shareholder do not agree on the amount of the payout
value of the Notice Shares, the Dissenting Shareholder or IMA may apply to the
court and the court may:
(a) determine the payout value of the Notice Shares or order that
the payout value of the Notice Shares be established by
arbitration or by reference to the registrar or a referee of
the court;
(b) join in the application each Dissenting Shareholder who has
not agreed with IMA on the amount of the payout value of the
Notice Shares; and
(c) make consequential orders and give directions it considers
appropriate.
Promptly after a determination of the payout value of the Notice Shares has been
made, IMA must either pay that amount to the Dissenting Shareholder or send a
notice to the Dissenting Shareholder that IMA is unable lawfully to pay
Dissenting Shareholders for their shares as IMA is insolvent or if the payment
would render IMA insolvent. If the Dissenting Shareholder receives a notice that
IMA is unable to lawfully pay Dissenting Shareholders for their shares the
Dissenting Shareholder may with in 30 days after receipt, withdraw his or her
Notice of Dissent. If the Notice of Dissent is not withdrawn the Dissenting
Shareholder remains a claimant against IMA to be paid as soon as IMA is lawfully
able to do so or, in a liquidation, to be ranked subordinate to the rights of
creditors of IMA but in priority to its shareholders.
Any notice required to be given by IMA or a Dissenting Shareholder to the other
in connection with the exercise of the Dissent Right will be deemed to have been
given and received, if delivered, on the day of delivery, or, if mailed, on the
earlier of the date of receipt and the second business day after the day of
mailing, or, if sent by telecopier or other similar form of transmission, the
first business day after the date of transmittal.
A Shareholder who:
(a) properly exercises the Dissent Right by strictly complying
with all of the procedures ("Dissent Procedures") required to
be complied with by a Dissenting Shareholder, will
(i) be bound by the Dissent Rights set forth in Article 6
of the Plan of Arrangement,
(ii) be deemed not to have participated in the Arrangement,
and
(iii) cease to have any rights as a Shareholder other than
the right to be paid the fair value of the IMA Common
Shares by IMA in accordance with the Dissent
Procedures, or
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(b) seeks to exercise the Dissent Right, but
(i) who for any reason does not properly comply with each
of the Dissent Procedures required to be complied with
by a Dissenting Shareholder, or
(ii) subsequent to giving his or her Notice of Dissent,
acts inconsistently with such dissent,
will be deemed to have participated in the Arrangement on the
same basis as each non-dissenting Shareholder and will receive
his or her pro rata portion of the Golden Arrow Common Shares
based upon the number of IMA Common Shares of which such
Dissenting Shareholder is the registered holder. IMA may in
its sole discretion, waive any non-compliance by a Shareholder
with any of the provisions of Article 6 of the Plan of
Arrangement in order to give effect to a Shareholders' Dissent
Rights.
A Dissenting Shareholder may not withdraw a Notice of Dissent without the
consent of IMA. A Dissenting Shareholder may, with the written consent of IMA,
at any time prior to the payment to the Dissenting Shareholder of the full
amount of money to which the Dissenting Shareholder is entitled under Article 6
of the Plan of Arrangement, abandon such Dissenting Shareholder's dissent to the
Arrangement by giving written notice to IMA, withdrawing the Notice of Dissent,
by depositing such notice with IMA, or mailing it to IMA by registered mail, at
its head office at Suite 709, 837 West Hastings Street, Vancouver, British
Columbia V6C 3N6, marked to the attention of the President and will then be
deemed to have participated in the Arrangement on the same basis as each
non-dissenting IMA Shareholder and will receive such number of Golden Arrow
Shares, to which he or she is entitled.
If a Shareholder exercises the Dissent Right, IMA shall on the Effective Date
set aside and not distribute that portion of the Golden Arrow Common Shares
which is attributable to the IMA Common Shares for which Dissent Rights have
been exercised. If an IMA Shareholder exercises the Dissent Right, but does not
properly comply with the Dissent Procedures as set out above, or subsequent to
giving his or her Notice of Dissent, acts inconsistently with such dissent, then
IMA shall distribute to such Shareholders his or her pro rata portion of the
Golden Arrow Common Shares. If a Shareholder duly complies with the Dissent
Procedures, then IMA shall retain the portion of the Golden Arrow Common Shares
attributable to such Shareholder (the "Non-Distributed Golden Arrow Shares"),
and the Non-Distributed Golden Arrow Common Shares will be dealt with as
determined by the Board of Directors of IMA in its discretion.
SHAREHOLDERS SHOULD CONSULT THEIR LEGAL ADVISORS WITH RESPECT TO THE LEGAL
RIGHTS AVAILABLE TO THEM IN RELATION TO THE ARRANGEMENT AND THE DISSENT RIGHTS.
INFORMATION CONCERNING IMA - BEFORE THE ARRANGEMENT
INCORPORATION
IMA was incorporated under COMPANY ACT (British Columbia, Canada) (the "Company
Act") on September 17, 1979, as Gold Star Resources Ltd. On May 1, 1990, IMA
filed an Altered Memorandum to reflect its name change to EEC Marketing Corp. On
January 13, 1992, IMA filed an Altered Memorandum to reflect its name change to
Amera Industries Corp. IMA filed another Altered Memorandum on February 9, 1995
to reflect its name change to International Amera Industries Corp. On February
20, 1996, IMA filed an Altered Memorandum, changing its name to IMA Resource
Corporation. On July 7, 1998, IMA filed an Altered Memorandum, changing its name
to IMA Exploration Inc.
CORPORATE STRUCTURE
See "The Arrangement - Details of the Arrangement" for a simplified corporate
chart setting forth all of IMA's material subsidiaries, their jurisdictions of
incorporation, the percentage of voting securities or ownership held by IMA and
the principal mineral resource properties held by each of them.
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BUSINESS OVERVIEW
IMA is a natural resource company engaged in the business of acquisition and
exploration of mineral properties in South America, principally in Argentina and
Peru. IMA's strategy and primary corporate objective is to acquire properties
for the purpose of mineral exploration and exploitation in known mining areas
adjacent to, or in close proximity to, known major discoveries. IMA, therefore,
expects these properties to command higher acquisition, maintenance and vendor
participation fees, where these higher fees are deemed reasonable to attempt to
reduce the overall risks associated with mineral exploration. In the event IMA
discovers mineralization capable of economic production, it intends to seek a
joint venture partner and/or to sell all or a portion of its interest in the
subject property to finance the development of such property. The secondary
corporate objective is to identify new frontiers through the evaluation of
available historic and satellite data and acquire large parcels of land in
undeveloped regions with the potential to host mineral deposits. There are no
assurances that IMA's strategies will achieve the desired results and IMA may
acquire interests in properties at higher prices, due to the properties'
proximities to other discoveries and may have to write-off all or a portion of
the value of such properties if they prove uneconomic. At present, IMA has no
producing properties and consequently has no current operating income or cash
flow. As of the date of this Management Proxy Circular, IMA is an exploration
stage company and has not generated any revenues from mining operations. There
is no assurance that a commercially viable mineral deposit exists on any of
IMA's properties. Further exploration will be required before a final evaluation
as to the economic and legal feasibility of any of the properties is determined.
GENERAL DEVELOPMENT OF THE BUSINESS OF IMA
IMA has been active in Peru and Argentina since 1993 acquiring and exploring
mineral properties.
In August 1999 IMA completed a private placement with Barrick Gold Corporation
("Barrick"). Barrick was granted an option to earn an interest in either the
Potrerillos or Rio de Taguas property. The funds were spent on the drilling
program on the Potrerillos property. Subsequent proceeds were spent on further
exploration of IMA's properties in the Valle de Cura region of San Juan
Province, Argentina from October 2000 to March 2001. As a result of the private
placement Barrick became IMA's largest shareholder. During September 2003
Barrick reduced its shareholding to 1,000,000 shares.
IMA agreed to spend a minimum of $1,125,000 on its Valle de Cura properties out
of the proceeds from the Barrick private placement. As of December 31, 2003 this
requirement had been met. On December 15, 2003 Barrick served notice that it
would not be exercising the option and IMA has begun pursuing other partners for
the continued exploration of these drill ready projects.
In March 2001, IMA granted Rio Tinto Mining and Exploration Limited ("Rio
Tinto") an option to acquire a majority interest in the Mogote property in the
Valle de Cura region of San Juan Province, Argentina. This agreement was
terminated by Rio Tinto in December 2001. In March 2003 IMA granted Amera
Resources Corporation ("Amera") an option to acquire a 51% interest, later
amended to 75%, in the Mogote property. Recent exploration results from Amera's
work has been encouraging.
IMA granted Cloudbreak Resources Ltd. ("Cloudbreak") an option to acquire a 50%
interest in the Gollette property located in the Valle de Cura. Cloudbreak can
increase its interest to 75% by funding additional work expenditures and
development costs.
IMA acquired the Peruvian property known as Rio Tabaconas in 1997 by way of an
option. In addition IMA owns claims which surround and overlie the optioned
concessions. Mine workings in the Rio Tabaconas area are believed to be on the
order of 100 to 150 years old. The first modern examination of what is now the
Rio Tabaconas property was conducted in the late 1980s when a government-funded
Peruvian-German consortium re-opened the old mine workings on Cerro Tablon and
carried out experimental geochemical and geological studies in the mine area.
Since that time, the property has been briefly examined and sampled by a number
of companies at IMA's invitation. IMA had spent $3,164,554 on Rio Tabaconas to
the end of December 2003.
On June 28, 2002 IMA suspended further exploration activities at the Rio
Tabaconas project. IMA has deferred any further exploration until an agreement
with the local community has been finalized. IMA has declared force majeure, as
allowed under the option agreement. IMA and the optionor have revised the timing
of the remaining
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option payments. IMA is working to ensure that all local cultural, developmental
and environmental concerns in the region have been addressed which may pertain
to mining activities. Upon acceptance by the community of a Community Agreement
between IMA and the local community, IMA plans to proceed with the next phase of
the diamond drill program. A detailed 3,000 metre drill plan has been drafted
based upon evaluation of geological, geochemical and geophysical information.
The next phase of the exploration program is expected to be completed after
finalizing the Community Agreement.
In 2002 IMA began to acquire properties in Chubut Province, Argentina. In 2003
IMA significantly increased its focus on activities in the Chubut region. IMA
has entered into a number of joint venture agreements which resulted in the
farm-out of several of its non-core properties.
In early 2003 IMA focused its efforts on its Navidad Area Properties in Chubut
Province located in southern Argentina. The preliminary results of its initial
exploration efforts were very encouraging. A Phase I drilling program commenced
in November 2003 and continued into March 2004. A second phase is scheduled to
commence in May 2004. IMA believes that the Navidad Project is worthy of its
primary interest and accordingly has focused the majority of its available
resources on this project and expects to continue to do so.
PRINCIPAL PROPERTIES OF IMA
NAVIDAD PROJECT
On February 3, 2003 IMA announced the discovery of high-grade silver-lead
mineralization on its 100% owned 10,000 hectare (24,700 acres) Navidad Project
in north central Chubut Province, Argentina. The mineralization had been
discovered by prospecting on December 10, 2002 and was a new discovery as there
were no recorded occurrences of silver mineralization in the area. This was
surprising due to the fact that high-grade, structurally-controlled
mineralization and the moderate-grade replacement style mineralization with
abundant visible lead and copper mineralization outcrops and subcrops over a
strike length of thousands of meters. There was no evidence of prior prospecting
or sampling activity anywhere despite the area being inhabited.
CHUBUT (PATAGONIA) AREA PROPERTIES
Since 2001 IMA has acquired a 100% interest in a number of claims in western
Chubut Province. These properties include the Laguna de los Toros property,
Evelina (Las Bayas) property, Toros II property, Victoria properties (several),
Costa properties. Lago Pico property, Corcovado property, Loma Alto property,
Ruto property, Alberto property, Rolando property, Cecilia property, Pedro
property, Fernando property, Ivan property and Daniel property. Together they
cover an area of approximately 86,000 hectares. A number of these properties
have been sold or farmed-out to joint venture partners. All of these Chubut
properties are in the exploration stage.
VALLE DE CURA AREA PROPERTIES
IMA has acquired 100% interests in a number of properties in the Valle de Cura
area totaling approximately 34,000 hectares. Beginning in 1999 IMA entered into
an option agreement with Barrick pursuant to which Barrick could acquire an
interest in the properties. Both Barrick and IMA have fulfilled all their
obligations under this agreement and Barrick notified IMA on December 15, 2003
that they would not be exercising their option. Accordingly this agreement has
terminated and IMA is pursuing other partners for these drill ready projects.
One of these properties has been farmed-out to another joint venture partner.
NORTHWEST SAN JUANAREA PROPERTIES
IMA has acquired 100% interests in a number of properties in the Northwest area
of San Juan province totaling approximately 20,000 hectares. The Arturo or
Mogote property is under option to IMA and is currently the subject of a joint
venture agreement with Amera whereby Amera can earn up to a 75% interest in the
property. There are no current plans for work on the other properties in this
area.
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GUALCAMAYO AREA PROPERTIES
IMA has also acquired interests in properties in other mining areas of interest
in San Juan province totaling approximately 50,000 hectares. There are no
current plans for work on the properties in this area.
RIO TABACONAS PROPERTY (PERU)
The 9,000 hectare Rio Tabaconas property is located in northwestern Peru,
approximately 35 kilometers south of the southernmost tip of Ecuador in the
District of Tabaconas, Province of San Ignacio, Department of Cajamarca. IMA has
an option to purchase three claims covering a 2,890 hectare area within the
central part of the property and holds 100% ownership, with no outstanding
royalties, on the remainder of the property. In June 2002 IMA announced it would
take a more measured approach to exploration on the project to ensure that local
cultural, developmental and environmental concerns pertaining to mining
activities in the region would be addressed. All exploration activities have
been deferred until an agreement with the local community of Tamborapa can be
finalized. IMA has declared force majeure, as allowed under the property option
agreement. A Company Community plan has been prepared with the aid of several
Peruvian social economic consultants and has been presented for discussion to
the community leaders, government officials and interested party leaders and as
of the date of this report no agreement has been reached. Thus IMA will continue
to work with the various social economic consultants to develop a plan which
will be acceptable to all parties in the community of Tabaconas. Upon acceptance
by the community of the Company Community plan IMA plans to proceed with the
next phase of a diamond drill program.
During the fiscal years ending December 31, 2003, 2002 and 2001 IMA had
capitalized and expensed costs on all of its properties as follows:
GENERAL EXPLORATION AGGREGATE AMOUNT
FISCAL YEAR ENDING AMOUNT CAPITALIZED WRITEN-OFF IN FISCAL YEAR EXPENSED IN FISCAL YEAR
December 31, 2001 $4,581,172 $109,875 $ 21,483
December 31, 2002 $5,847,727 $180,321 $ Nil
December 31, 2003 $6,883,641 $226,956 $776,626
NAVIDAD PROJECT
On February 3, 2003 IMA announced the discovery of high-grade silver-lead-copper
mineralization at its 100% owned 10,000 hectare (24,700 acres) Navidad Project
in north central Chubut, Argentina. The mineralization had been discovered by
prospecting on December 10, 2002 and was a new discovery as there were no
recorded occurrences of silver mineralization in the area. This was surprising
due to the fact that high-grade, structurally-controlled mineralization and the
moderate-grade replacement style mineralization with abundant visible lead and
copper mineralization outcrops and subcrops over a strike length of thousands of
meters. There was no evidence of prior prospecting or sampling activity anywhere
despite the area being inhabited. Furthermore a fence line passes through the
central part of the outcropping high-grade mineralization and blocks of rock
containing obvious green copper oxides had been used to prop up fence posts.
PROPERTY DESCRIPTION AND LOCATION
The Navidad Project comprises 10,000 hectares consisting of one individual claim
(cateo) in the Gastre Department of the Province of Chubut. It is centered at
approximately 42.415 decimal degrees south latitude and 68.82 decimal degrees
west longitude in the Campo Inchauspe datum. The above point has been located in
the field by professional surveyors and has the coordinates 2,514,856.53 east
and 5,304,454.84 north in Gauss Kruger Campo Inchauspe zone 2 and was assigned
the local grid coordinates 50,000E, 10,000N with an elevation of 1218.18 m
(Height Above Ellipsoid WGS1984). The local grid is rotated 30 degrees to the
east of Gauss Kruger north.
MINERAL TITLES INCLUDED IN THE NAVIDAD PROJECT:
-------------------------------------------------------------------------------
FILE NUMBER YEAR DATE TYPE NAME HECTARES
-------------------------------------------------------------------------------
13984 2002 December 6, 2002 CATEO Gan 10,000
-------------------------------------------------------------------------------
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ACCESSIBILITY AND INFRASTRUCTURE
The property is located in the north-central part of the Province of Chubut
within the prominent Gastre structural lineament in a somewhat uplifted area.
Minimum elevation within the Gan cateo is 1060m while the maximum elevation is
1460m. Relief is gentle with minor local exceptions.
Vegetation is sparse and comprises grasses and low brush. Trees are absent. The
climate is characterized as continental semi-arid with moderate temperatures in
summer often accompanied by high winds. Winters are cold with temperatures often
dipping below zero Celsius, but are generally not characterized by extended
sub-zero periods. Most of the precipitation falls in winter as both rain and
snow and as such conditions may not favor field work in the winter, but
depending on the year, work may be possible even during winter.
Access to the property is possible year around by two-wheel drive pick-up truck
except in very wet periods. Gastre is the nearest town some 40km to the west and
the town of Gan Gan is about the same distance to the east; both are along Route
4 a gravel highway. The nearest airport with scheduled (rare) service is in
Esquel four hours drive to the southwest by gravel road. To the north about two
hours drive, in the province of Rio Negro, is the town of Ingenerio Jacobacci
which is larger than Gastre and has much better services including banking. From
Ingenerio Jacobacci it is another three and a half hours to the west to
Bariloche, a city with multiple daily flights and a centre for tourism year
around. From Gastre to the Atlantic Coast it is approximately seven hours drive
virtually all on gravel roads. Along the coast infrastructure is much better
with paved, roads, ports and airports and larger population centers.
During normal road conditions the trip from Gastre to the Navidad Project is
about 30 minutes.
A high voltage power line running from the Futaleufu site to an aluminum smelter
at Puerto Madryn passes roughly 50km south of the Navidad Project. The
government has announced a contract tendered to construct this power line to the
national power grid at Choele Choel in Rio Negro to the north in order to
facilitate expansion of the aluminum smelter and other projects. Construction of
the connection will bring the national power grid with easy reach of Navidad.
HISTORY
The Navidad Project has no known exploration history and there is no indication
that any of the showings were previously discovered or sampled. A prospecting
discovery of this type seems unthinkable in the exploration industry in this day
and age, especially within a few hundred meters of a provincial highway, except
for the lack of mining and prospecting tradition in Patagonia. Proof of this
lack of mining tradition is that the posts of the fence line that passes through
the central part of the outcropping high grade mineralization had been propped
up with blocks of rock containing obvious green copper oxides.
The only nearby sign of previous mining activity lies about 3km north west of
Navidad Hill where some barite veins were opened up by trenches presumably with
the idea of selling barite as an industrial mineral to the petroleum industry.
Sampling during the surface work showed these veins have very low values of
silver, copper and lead. Verbal reports suggest the trenching was done about 20
years ago.
Effectively the exploration history of Navidad Project began on December 10,
2002 with the discovery of outcropping mineralization by an IMA geologist.
Subsequent surface work comprised extensive geological mapping, rock sampling,
soil sampling and geophysics including magnetic, induced polarization and
gravity surveys.
REGIONAL AND LOCAL GEOLOGY
According to the preliminary map 4369-II at 1:250,000 scale of SEGEMAR, the
national geological service of Argentina, the Navidad Project mineralization is
mapped as part of the Upper Jurassic Canadon Asfalto Formation.
Province wide geological maps of Chubut by the same organization indicate that
the Canadon Asfalto is restricted to the central part of Chubut. The type
section of the formation is located along the Rio Chubut southwest of the
project area between Paso Sapo and Paso de Indios.
-27-
Much of the remainder of the Navidad Project is underlain by the Lonco Trapial
Formation of Lower Jurassic age and finally older, poorly age-defined basement
granitic rocks of Paleozoic age.
The Canadon Asfalto Formation comprises fine sandstones, limestones and
volcanics of continental and lacusterine environment. It appears significant
regional variations in composition and depositional environment are present
within the formation as currently defined. Both fossils and a K/Ar radiometric
age of 173 +/-4 Ma indicate a middle to upper Jurassic age.
The Lonco Trapial Formation, including Tacquetren Formation and other
equivalents, is more widely distributed in Chubut excluding the Andean portion.
The formation is volcanic dominant and appears to be the first phase of infill
of local grabens in the developing San Jorge Basin. Again, significant regional
variability in composition and depositional facies is indicated, with
compositions ranging from felsic to mafic.
Apparently one of the controlling features of the San Jorge Basin is the
long-lived, major structure known as the Gastre Fault. This fault is a wide,
northwest-trending zone of fracturing that appears to have controlled deposition
of units and then dismembered them from the Jurassic through the present.
Faulting related to the Gastre Fault is present in the Navidad Project area, but
the most striking structural elements in the area are a series of northwest
trending folds.
DIAMOND DRILLING PROGRAM
Connors Argentina S. A. ("Connors") of Mendoza Argentina commenced drilling on
November 26, 2003 and finished drilling on March 10, 2004, including a 29 day
break during the Christmas/New Years holidays. During the program 8853.58m were
drilled in 53 holes for an average of 118m per day including moves and
breakdowns and excepting only the holiday break noted above.
All but one of the holes recovered HQ diameter (61mm) core. The exception was
NV03-04 which was cored to 244.20m with HQ and then recovered NQ core to the end
of the hole at 284.98m. The drill supplied was containerized and mounted on a
tracked undercarriage capable of moving itself. Water for drilling was brought
to the drilling sites by a water truck of 9,000 liters that was subcontracted by
Connors. The water was trucked from several local sources under agreement with
local surface land owners.
Down hole surveys of the holes were done on all but one hole using a Tropari
instrument. This instrument is a magnetic compass and inclinometer with a timing
mechanism that blocks the instrument once it has stabilized in the hole. It is
then retrieved and read by the geologist. In general the holes had little
deviation because of the relatively large diameter of the drill string and the
relatively short lengths of the holes.
SURVEYED COORDINATES AND ORIENTATIONS OF NAVIDAD DRILLHOLES
------------------------------------------------------------------------------------------------------------------
dip
Hole ID local E local N E GK faja 2 N GK faja 2 elevation Az wrt down length (m)
(Campo (Campo GK CI from
Inchauspe) Inchauspe) m HAE north vertical
------------------------------------------------------------------------------------------------------------------
NV03-01 50,000.6 10,005.0 2,514,819.5 5,304,458.8 1,219.5 210.0 -45.0 109.50
------------------------------------------------------------------------------------------------------------------
NV03-02 50,000.0 9,971.1 2,514,802.0 5,304,429.8 1,211.2 30.0 -45.0 154.50
------------------------------------------------------------------------------------------------------------------
NV03-03 51,160.5 9,660.1 2,515,651.6 5,303,580.3 1,178.4 210.0 -45.0 178.50
------------------------------------------------------------------------------------------------------------------
NV03-04 51,160.1 9,669.6 2,515,655.9 5,303,588.6 1,178.6 30.0 -45.0 284.98
------------------------------------------------------------------------------------------------------------------
NV03-05 51,160.1 9,802.1 2,515,722.2 5,303,703.3 1,176.6 30.0 -60.0 217.70
------------------------------------------------------------------------------------------------------------------
NV03-06 49,961.7 9,972.3 2,514,769.5 5,304,449.9 1,218.4 30.0 -45.0 136.20
------------------------------------------------------------------------------------------------------------------
NV03-07 49,919.7 9,965.9 2,514,729.9 5,304,465.4 1,222.2 30.0 -45.0 108.90
------------------------------------------------------------------------------------------------------------------
NV03-08 49,959.8 10,016.3 2,514,789.8 5,304,489.0 1,226.4 210.0 -45.0 146.00
------------------------------------------------------------------------------------------------------------------
NV03-09 49,919.9 10,027.4 2,514,760.8 5,304,518.6 1,231.4 210.0 -45.0 106.10
------------------------------------------------------------------------------------------------------------------
NV03-10 49,961.9 9,953.4 2,514,760.2 5,304,433.5 1,215.1 30.0 -45.0 150.70
------------------------------------------------------------------------------------------------------------------
NV03-11 49,625.2 10,040.0 2,514,511.9 5,304,676.8 1,209.2 120.0 -45.0 133.20
------------------------------------------------------------------------------------------------------------------
-28-
------------------------------------------------------------------------------------------------------------------
dip
Hole ID local E local N E GK faja 2 N GK faja 2 elevation Az wrt down length (m)
(Campo (Campo GK CI from
Inchauspe) Inchauspe) m HAE north vertical
------------------------------------------------------------------------------------------------------------------
NV04-12 51,160.6 9,577.9 2,515,610.5 5,303,509.0 1,155.4 30.0 -65.0 220.00
------------------------------------------------------------------------------------------------------------------
NV04-13 50,876.5 10,015.0 2,515,583.1 5,304,029.5 1,179.4 30.0 -45.0 142.70
------------------------------------------------------------------------------------------------------------------
NV04-14 50,997.6 9,911.7 2,515,636.3 5,303,879.6 1,178.1 210.0 -70.0 158.00
------------------------------------------------------------------------------------------------------------------
NV04-15 51,159.8 9,910.5 2,515,776.1 5,303,797.4 1,167.0 30.0 -60.0 139.55
------------------------------------------------------------------------------------------------------------------
NV04-16 51,161.0 9,451.4 2,515,547.6 5,303,399.2 1,138.2 30.0 -55.0 250.50
------------------------------------------------------------------------------------------------------------------
NV04-17 50,998.8 9,614.4 2,515,488.6 5,303,621.4 1,156.7 30.0 -85.0 164.20
------------------------------------------------------------------------------------------------------------------
NV04-18 51,001.3 9,364.5 2,515,365.9 5,303,403.8 1,137.0 30.0 -55.0 274.70
------------------------------------------------------------------------------------------------------------------
NV04-19 51,001.9 9,826.2 2,515,597.2 5,303,803.4 1,181.7 210.0 -80.0 188.10
------------------------------------------------------------------------------------------------------------------
NV04-20 50,801.6 9,897.6 2,515,459.5 5,303,965.3 1,163.0 210.0 -70.0 70.90
------------------------------------------------------------------------------------------------------------------
NV04-21 50,997.6 9,948.5 2,515,654.7 5,303,911.4 1,174.2 30.0 -45.0 198.10
------------------------------------------------------------------------------------------------------------------
NV04-22 50,998.5 9,977.9 2,515,670.2 5,303,936.4 1,171.9 210.0 -75.0 193.75
------------------------------------------------------------------------------------------------------------------
NV04-23 51,000.7 9,713.6 2,515,540.0 5,303,706.4 1,177.3 210.0 -85.0 191.10
------------------------------------------------------------------------------------------------------------------
NV04-24 50,804.7 10,023.1 2,515,524.9 5,304,072.4 1,173.8 30.0 -50.0 145.60
------------------------------------------------------------------------------------------------------------------
NV04-25 51,204.1 9,014.3 2,515,366.4 5,302,999.1 1,140.0 210.0 -45.0 199.80
------------------------------------------------------------------------------------------------------------------
NV04-26 50,802.1 9,728.9 2,515,375.6 5,303,818.9 1,153.5 32.0 -75.0 134.00
------------------------------------------------------------------------------------------------------------------
NV04-27 50,100.7 9,719.0 2,514,763.2 5,304,161.1 1,164.0 30.0 -45.0 181.50
------------------------------------------------------------------------------------------------------------------
NV04-28 51,164.5 9,865.2 2,515,757.6 5,303,755.8 1,170.6 30.0 -60.0 158.00
------------------------------------------------------------------------------------------------------------------
NV04-29 51,299.1 9,847.6 2,515,865.4 5,303,673.3 1,157.6 210.0 -80.0 158.00
------------------------------------------------------------------------------------------------------------------
NV04-30 51,300.4 9,765.7 2,515,825.5 5,303,601.7 1,159.8 210.0 -80.0 209.00
------------------------------------------------------------------------------------------------------------------
NV04-31 51,160.7 9,666.8 2,515,655.1 5,303,585.9 1,178.5 30.0 -80.0 296.00
------------------------------------------------------------------------------------------------------------------
NV04-32 50,598.0 10,088.9 2,515,378.9 5,304,232.8 1,154.7 30.0 -45.0 154.50
------------------------------------------------------------------------------------------------------------------
NV04-33 50,598.4 10,016.4 2,515,343.0 5,304,169.8 1,154.8 210.0 -80.0 149.00
------------------------------------------------------------------------------------------------------------------
NV04-34 50,180.9 9,955.5 2,514,950.9 5,304,325.8 1,180.0 30.0 -45.0 228.20
------------------------------------------------------------------------------------------------------------------
NV04-35 51,199.5 9,251.1 2,515,480.9 5,303,206.5 1,134.2 30.0 -80.0 293.00
------------------------------------------------------------------------------------------------------------------
NV04-36 50,898.2 9,988.0 2,515,588.3 5,303,995.3 1,176.5 210.0 -80.0 77.00
------------------------------------------------------------------------------------------------------------------
NV04-37 50,899.9 9,914.7 2,515,553.2 5,303,931.0 1,173.8 210.0 -80.0 102.50
------------------------------------------------------------------------------------------------------------------
NV04-38 50,897.2 9,819.7 2,515,503.3 5,303,850.0 1,164.4 30.0 -80.0 107.00
------------------------------------------------------------------------------------------------------------------
NV04-39 50,400.2 9,982.9 2,515,154.5 5,304,239.9 1,157.1 210.0 -80.0 215.00
------------------------------------------------------------------------------------------------------------------
NV04-40 50,399.8 10,098.9 2,515,212.2 5,304,340.5 1,155.9 30.0 -45.0 127.20
------------------------------------------------------------------------------------------------------------------
NV04-41 51,080.8 9,943.4 2,515,724.2 5,303,865.4 1,174.9 30.0 -45.0 145.20
------------------------------------------------------------------------------------------------------------------
NV04-42 51,080.4 9,938.8 2,515,721.5 5,303,861.6 1,174.5 210.0 -80.0 187.90
------------------------------------------------------------------------------------------------------------------
NV04-43 51,080.4 9,853.2 2,515,678.7 5,303,787.4 1,180.3 210.0 -75.0 230.60
------------------------------------------------------------------------------------------------------------------
NV04-44 51,079.3 9,750.3 2,515,626.3 5,303,698.9 1,188.1 210.0 -75.0 232.90
------------------------------------------------------------------------------------------------------------------
NV04-45 51,230.9 9,861.1 2,515,813.0 5,303,719.1 1,164.0 210.0 -80.0 167.00
------------------------------------------------------------------------------------------------------------------
NV04-46 51,232.3 9,760.2 2,515,763.8 5,303,630.9 1,168.6 210.0 -80.0 239.00
------------------------------------------------------------------------------------------------------------------
NV04-47 51,236.7 9,681.0 2,515,728.1 5,303,560.2 1,176.6 30.0 -75.0 236.00
------------------------------------------------------------------------------------------------------------------
NV04-48 51,302.3 9,980.9 2,515,934.8 5,303,787.1 1,147.2 30.0 -45.0 67.50
------------------------------------------------------------------------------------------------------------------
NV04-49 51,301.0 9,915.2 2,515,900.8 5,303,730.8 1,150.5 30.0 -80.0 82.80
------------------------------------------------------------------------------------------------------------------
NV04-50 51,159.9 9,954.9 2,515,798.5 5,303,835.8 1,165.7 30.0 -80.0 113.00
------------------------------------------------------------------------------------------------------------------
NV04-51 51,159.1 9,971.9 2,515,806.2 5,303,850.9 1,165.5 30.0 -45.0 100.50
------------------------------------------------------------------------------------------------------------------
NV04-52 50,896.0 9,948.4 2,515,566.7 5,303,962.1 1,173.4 30.0 -45.0 100.50
------------------------------------------------------------------------------------------------------------------
NV04-53 50,796.8 9,954.7 2,515,483.9 5,304,017.1 1,169.2 30.0 -50.0 97.50
------------------------------------------------------------------------------------------------------------------
Total m 8853.58
------------------------------------------------------------------------------------------------------------------
-29-
All core designated for sampling was cut with an electric-powered table saw with
a diamond tipped blade. The core was sawn in half and one half was sampled and
the remainder was stored in the core box. In a few areas the core was broken or
rubbley and could not be sawn. In such cases the recovered material was sampled
by spoon and if necessary was split with a knife or chisel. Rarely, due to hard
core or problems with the saw, core was split with a mechanical splitter.
Alex Stewart (Assayers) Argentina S.A. ("Alex Stewart") of Mendoza, Argentina
was the primary lab for all drill core samples. All samples are weighed on
receipt in the sample bag prior to drying and this weight is reported with the
analytical data. Sample preparation comprised drying at 90(degree) C for up to
40 hours, followed by crushing of the entire sample to #10 mesh. Next the sample
was split down to 1.5 kg with a riffle splitter for pulverization to 85% passing
#200 mesh. Between each sample the crusher and the pulverizor were cleaned with
barren quartz.
All drill core samples were submitted for 30 gram fire-assay for silver with
gravimetric finish and also a fire assay for Au (with AAS finish). The lab is
required to report all sample weights used in fire assays.
In addition, all samples were analyzed by Alex Stewart's ICP-ORE technique which
uses a strong multi-acid attack on a sample size of 0.2 grams. The method has
been optimized to handle a wide range or concentrations of base and other
metals, but with some sacrifice in the higher than normal detection limits for
typical ICP analyses. Elements included in the package are Ag, As, Bi, Ca, Cd,
Co, Cu, Fe, Hg, Mg, Mn, Mo, Ni, P, Pb, S, Sb, Tl and Zn. Extensive testing was
undertaken by IMA on the ICP-ORE technique that confirmed its suitability for
the Navidad mineralization. That testing included a precision test on 30 samples
as well as a blind duplicate pulp test on 32 samples both with satisfactory
results. Furthermore, ICP-ORE was used in characterization of the in-house
standards developed (see below) and was found to correlate well with methods
used by other labs. In fact all of the ICP-ORE results for Cu and Pb lay within
the two standard deviation limit and hence were used in the definition of the
accepted values for the standards.
QUALITY CONTROL
A comprehensive quality control and quality assurance program for analyses of
drill core was put in place well prior to the start of the drilling campaign.
This program comprises controls including blind certified standards, blanks and
core duplicates and a secondary laboratory. The primary laboratory for all
drilling samples was Alex Stewart and the secondary lab was ALS-Chemex La Serena
and/or Vancouver. In each set of 42 samples sent to the primary lab blind
high-grade, low-grade, blank and duplicate core sample were included in
randomized positions.
In addition to the above, a systematic program of reanalysis of pulps by a
second independent lab has been used throughout the program. Randomly
pre-selected samples are sent from the primary laboratory and they include
blanks and standards. Two samples form each set of 42 samples, or 4.8% percent
of the pulps are therefore being checked. At the time of this writing results
were available for 144 duplicates.
The purpose of this work is to confirm the reproducibility of the analytical
method at a second lab.
Results of the control by the secondary lab and through the inclusion of blanks,
standards, and duplicates confirm the high quality of the data generated in the
drilling program.
CHAIN OF CUSTODY
Core is delivered to the core shack by the drill contractor or picked-up by IMA
employees and stored in the core shack in Gastre. The core shack is kept under
lock and key when IMA employees are not present.
Core cutting is supervised by the geologist logging core who ensures that the
sequence of blanks, duplicates and standards is followed. Cut core is placed
into clean new transparent plastic sample bags into which two pre-printed custom
sample tickets are placed. The lab uses one of these for the pulp bag and one
for the reject bag. A third sample ticket is stapled into the core tray along
with the meterage represented by the sample. The fourth and final sample ticket
remains in the sample tag book with the hole numbers and meterages filled in.
Once samples have been cut and bagged the bags are double sealed with two
zip-strips. The first ordinary zip strip will close the bag around the neck of
the bag under as much tension as it will support. A second, custom printed
zip-strip seal with IMA's name and the matching sample number to the sample
ticket inside will be affixed to the bag above the zip-
-30-
strip under tension. The numbered seal will pierce the bag above the neck of the
bag where it is sealed by the first zip strip so as to make it impossible to
slip the ordinary zip-strip over the neck of the back. The lab is required to
notify IMA if the samples do not arrive with the IMA seals intact. All seals are
being stored by the assay lab to present as proof of use.
Sealed sample bags are placed in rice sacks in sequence for shipment to the lab.
A record of all samples shipped is kept by the geologist sending the sample
shipment. Samples are transported by a company contracted to transport samples
directly from the core shack in Gastre to the assay laboratory in Mendoza (some
1500km). They are not allowed to carry other cargo or make other stops.
GENERAL GEOLOGICAL UNDERSTANDING
Drilling of the Navidad Hill, Galena Hill and intervening areas has greatly
increased the geological understanding of the main geological units and their
relationships. Most of the new information was gained by drilling at Galena Hill
as that is where the drilling was concentrated, but advances were made at
Navidad and Esperanza as well.
Stratigraphy at Galena Hill is comprised of four primary sedimentary and
volcanic units, from lowest to uppermost these are: a "lower" cycle comprised of
epiclastic, volcaniclastic and volcanic rocks which are unmineralized and
unaltered that dips toward grid south. This is overlain by a volcanic cycle
comprising latitic volcanic rocks, generally with quartz eyes, that is altered
and mineralized with silver and lead. The latite sequence comprises massive
flows, amygdaloidal flows, flow breccias and volcaniclastic breccias. The
latites are in turn overlain by pelitic mudstones and limestones of which the
lowermost portion may be highly mineralized with silver and lead. The latites
form a steadily thickening wedge towards grid south. It is unclear whether the
geometry of the uppermost sediments indicates tectonic folding or perhaps just
local slumping.
The contact between the lower volcanic cycle and the latite cycle is of great
interest due to the dramatic change between unaltered and unmineralized rocks
below and high mineralized rocks above. The upper part of the lower cycle is
generally reddish as if affected by a lateritic weathering. On some sections
such as 51,160E the contact is quite planar whereas on others it is quite
irregular, possible due to faulting or paleotopography. In some cases a dark
grey, soft material with an unusual texture and structure of partings and slip
surfaces is present below the latites on the contact. This could be interpreted
as fault gouge or a paleosol.
The latite sequence dramatically thickness towards grid south (southwest
relative to true north). It is absent to the north and thickens to over 220m
within some 500m. While the capping sedimentary sequence varies in thickness
from zero to about 40m in thick on top of Galena Hill in hole NV04-35 it attains
a thickness of about 140m on section 51,200E but 200m further grid south than
NV04-16 shown in figure 23. In hole NV04-35 the latite sequence is at least 150m
thick, but the base was not intersected.
GALENA HILL DRILLING RESULTS
Results of the initial drilling at Galena Hill have been very positive. The
amount and continuity and grade of the mineralization in the subsurface exceeded
even the expectations that existed based on the surface work.
The geometry of the mineralization, a gently-dipping, exposed to
shallowly-buried zone of significant thickness suggests potential for bulk
mining. Hence in determining how to select the mineralized intercepts for
tabulation and data manipulation is was decided to use a minimum of about 50 g/t
silver irrespective of the copper, lead and zinc grades. The minimum grade was
not strictly applied to the selection of the intercepts as samples with
sub-fifty gram per tonne silver values were permitted for several samples in
some instances. In some cases where there were long intercepts of mineralization
somewhat below 50 g/t silver, but where there were significant lead values these
intercepts were also listed below. At this time definitive "cut-off" grade can
not be established since metallurgical and engineering parameters have not been
determined. The following intercepts reflect the potential of Galena Hill in a
bulk mining scenario. Some higher grade intercept are also shown. These higher
grades tend to occur at or near the upper contact of the latite sequence with
the overlying mudstones, or even in the lower part of the mudstones.
In total, 35 drill holes have been drilled into the Galena Hill deposit. These
holes outline a silver-lead deposit ranging in vertical thickness from about 10
to 115 metres with horizontal dimensions of approximately 400 by 500 metres at
generally greater than 50 g/t silver. The top of the mineralized body is exposed
at surface in some areas
-31-
and in other areas is covered by as much as 40 metres of barren sedimentary cap
rock. The shape and aspect of the mineralized body suggests that it could be
bulk mineable. Grade distributions show a zone of high-grade silver values with
lesser copper and relatively low lead values along the northeastern boundary of
the deposit; this area is interpreted to be the source or feeder zone for
mineralizing fluids which created the deposit. Moving to the southwest from this
feeder zone, lead:silver ratios increase and are interpreted as more distal
portions of the deposit.
MINERALIZED INTERCEPTS FROM DRILLHOLES AT THE GALENA HILL DEPOSIT
---------------------------------------------------------------------------------------------------------------
composite vertical
DDH from to length thickness g/t % % %
- - - - Silver Copper Lead Zinc
inclination metres metres metres metres LWA LWA LWA LWA
===============================================================================================================
NV03-03 -45 3.00 178.50 175.50 124.61 26.2 0.00 1.35 0.04
---------------------------------------------------------------------------------------------------------------
including 3.00 128.30 125.30 88.96 33.0 0.00 1.68 0.05
---------------------------------------------------------------------------------------------------------------
including 72.50 107.50 35.00 24.85 49.9 0.01 3.47 0.06
---------------------------------------------------------------------------------------------------------------
including 86.20 95.45 9.25 6.57 76.8 0.01 5.43 0.06
===============================================================================================================
NV03-04 -45 2.80 266.70 263.90 187.37 74.1 0.00 2.04 0.08
---------------------------------------------------------------------------------------------------------------
including 2.80 203.00 200.20 142.14 92.3 0.00 2.49 0.11
---------------------------------------------------------------------------------------------------------------
including 39.60 176.45 136.85 97.16 117.3 0.00 2.99 0.14
---------------------------------------------------------------------------------------------------------------
including 39.60 121.25 81.65 57.97 141.5 0.00 3.15 0.14
---------------------------------------------------------------------------------------------------------------
including 39.60 94.70 55.10 39.12 164.3 0.00 2.97 0.10
---------------------------------------------------------------------------------------------------------------
including 65.00 94.70 29.70 21.09 189.5 0.00 3.06 0.10
---------------------------------------------------------------------------------------------------------------
including 65.00 83.50 18.50 13.14 241.2 0.00 3.40 0.10
===============================================================================================================
NV03-05 -60 43.30 126.25 82.95 72.17 229.2 0.01 4.24 0.20
---------------------------------------------------------------------------------------------------------------
including 46.70 113.25 66.55 57.90 271.8 0.01 4.82 0.20
---------------------------------------------------------------------------------------------------------------
including 46.70 55.90 9.20 8.00 578.9 0.04 6.82 0.36
---------------------------------------------------------------------------------------------------------------
including 89.00 107.25 18.25 15.88 503.0 0.01 11.19 0.36
===============================================================================================================
NV04-12 -65 18.80 27.80 9.00 8.19 41.6 0.00 8.01 2.56
---------------------------------------------------------------------------------------------------------------
including 27.80 35.45 7.65 6.96 70.8 0.00 9.60 0.54
---------------------------------------------------------------------------------------------------------------
combined 18.80 35.45 16.65 15.15 55.0 0.00 8.74 1.64
---------------------------------------------------------------------------------------------------------------
within 18.80 60.60 41.80 38.04 35.5 0.00 4.46 0.68
===============================================================================================================
NV04-13 -45 20.00 64.70 44.70 31.74 223.4 0.16 0.56 0.09
===============================================================================================================
NV04-14 -70 27.70 142.80 115.10 109.35 453.6 0.08 5.26 0.50
---------------------------------------------------------------------------------------------------------------
including 27.70 75.10 47.40 45.03 775.6 0.17 6.42 0.92
---------------------------------------------------------------------------------------------------------------
including 32.70 50.70 18.00 17.10 1421.2 0.42 5.24 1.69
===============================================================================================================
NV04-15 -60 46.55 115.65 69.10 60.12 113.5 0.02 1.46 0.13
---------------------------------------------------------------------------------------------------------------
including 47.05 55.55 8.50 7.40 461.7 0.08 6.54 0.49
===============================================================================================================
NV04-16 -55 63.45 72.45 9.00 7.56 34.2 0.00 2.47 0.07
===============================================================================================================
NV04-17 -85 21.20 40.20 19.00 18.81 96.7 0.01 7.79 0.70
---------------------------------------------------------------------------------------------------------------
including 30.20 40.20 10.00 9.90 161.6 0.02 12.98 0.42
===============================================================================================================
NV04-18 -55 232.0 244.00 12.00 9.96 70.1 0.06 0.40 0.01
===============================================================================================================
NV04-19 -80 24.00 90.50 66.50 65.17 100.3 0.00 2.74 0.14
---------------------------------------------------------------------------------------------------------------
including 25.10 37.10 12.00 11.76 165.2 0.02 3.20 0.34
---------------------------------------------------------------------------------------------------------------
including 49.35 57.75 8.40 8.23 177.4 0.02 4.22 0.14
---------------------------------------------------------------------------------------------------------------
-32-
---------------------------------------------------------------------------------------------------------------
composite vertical
DDH from to length thickness g/t % % %
- - - - Silver Copper Lead Zinc
inclination metres metres metres metres LWA LWA LWA LWA
===============================================================================================================
including 74.00 81.55 7.55 7.40 174.0 0.00 4.69 0.11
===============================================================================================================
NV04-20 -70 35.50 40.60 5.10 4.79 54.8 0.02 1.82 0.03
===============================================================================================================
NV04-21 -45 42.45 126.00 83.55 56.81 321.7 0.23 0.47 0.21
---------------------------------------------------------------------------------------------------------------
including 49.95 70.50 20.55 13.97 703.0 0.47 0.54 0.40
===============================================================================================================
NV04-22 -75 38.65 101.65 63.00 61.11 418.4 0.15 1.82 0.32
---------------------------------------------------------------------------------------------------------------
including 42.50 55.60 13.10 12.71 923.3 0.26 1.70 0.56
===============================================================================================================
NV04-23 -85 48.40 71.20 22.80 22.57 26.3 0.00 0.47 0.02
===============================================================================================================
NV04-24 -50 3.00 5.65 2.65 1.88 917.9 0.28 1.13 0.18
===============================================================================================================
NV04-26 -75 none 0.00
===============================================================================================================
NV04-28 -60 45.70 134.75 89.05 77.47 120.4 0.01 1.77 0.32
---------------------------------------------------------------------------------------------------------------
including 45.70 67.75 22.05 19.18 23.0 -0.01 0.65 0.90
---------------------------------------------------------------------------------------------------------------
including 67.75 134.75 67.00 58.29 152.5 0.01 2.14 0.12
---------------------------------------------------------------------------------------------------------------
including 68.10 71.55 3.45 3.00 760.9 0.05 10.96 0.60
===============================================================================================================
NV04-29 -80 28.50 38.65 10.15 9.95 71.8 0.00 1.84 0.05
===============================================================================================================
NV04-30 -80 44.80 52.70 7.90 7.74 47.8 0.00 1.11 0.04
===============================================================================================================
NV04-31 -80 3.05 23.85 20.80 20.38 51.7 0.00 1.25 0.05
---------------------------------------------------------------------------------------------------------------
and 47.35 78.45 31.10 30.48 71.0 0.00 2.62 0.31
---------------------------------------------------------------------------------------------------------------
including 73.85 75.95 2.10 2.06 618.6 -0.01 18.82 3.58
===============================================================================================================
NV04-36 -80 8.00 57.90 49.90 48.90 179.1 0.08 1.21 0.17
---------------------------------------------------------------------------------------------------------------
including 35.30 49.30 14.00 13.72 209.5 0.10 0.97 0.15
===============================================================================================================
NV04-37 -80 12.80 89.10 76.30 74.77 139.4 0.04 1.28 0.12
---------------------------------------------------------------------------------------------------------------
including 13.80 17.70 3.90 3.82 597.4 0.02 7.23 0.58
===============================================================================================================
NV04-38 -80 20.70 61.20 40.50 39.69 104.5 0.04 0.40 0.10
---------------------------------------------------------------------------------------------------------------
including 34.10 52.55 18.45 18.08 166.8 0.07 0.15 0.13
===============================================================================================================
NV04-41 -45 58.10 129.00 70.90 50.34 78.5 0.08 0.33 0.20
===============================================================================================================
NV04-42 -80 48.35 161.55 113.20 110.94 150.8 0.03 1.98 0.11
---------------------------------------------------------------------------------------------------------------
including 67.90 121.90 54.00 52.92 239.1 0.04 3.04 0.16
---------------------------------------------------------------------------------------------------------------
including 148.90 161.55 12.65 12.40 121.6 0.04 1.74 0.11
===============================================================================================================
NV04-43 -75 44.20 127.25 83.05 81.39 153.2 0.01 5.48 0.90
---------------------------------------------------------------------------------------------------------------
including 44.20 89.00 44.80 43.90 216.9 0.01 6.81 1.06
===============================================================================================================
NV04-44 -75 13.35 103.90 90.55 88.74 177.8 0.01 5.33 0.22
---------------------------------------------------------------------------------------------------------------
including 13.35 28.90 15.55 15.24 445.3 0.02 8.77 0.14
===============================================================================================================
NV04-45 -80 43.00 69.85 26.85 26.31 355.4 0.00 5.34 0.33
---------------------------------------------------------------------------------------------------------------
including 43.00 51.05 8.05 7.89 958.4 0.01 15.31 0.87
===============================================================================================================
NV04-46 -80 30.40 167.00 136.60 133.87 30.9 0.00 1.06 0.05
---------------------------------------------------------------------------------------------------------------
including 30.40 65.00 34.60 33.91 61.8 0.00 1.51 0.06
===============================================================================================================
NV04-47 -75 12.90 131.00 118.10 113.38 36.6 0.00 2.06 0.13
---------------------------------------------------------------------------------------------------------------
-33-
---------------------------------------------------------------------------------------------------------------
composite vertical
DDH from to length thickness g/t % % %
- - - - Silver Copper Lead Zinc
inclination metres metres metres metres LWA LWA LWA LWA
===============================================================================================================
including 84.50 116.00 31.50 30.24 59.5 0.00 4.31 0.25
===============================================================================================================
NV04-48 -45 16.50 32.85 16.35 11.61 30.6 0.00 0.53 0.18
---------------------------------------------------------------------------------------------------------------
including 26.70 31.80 5.10 3.62 49.7 0.01 0.54 0.25
===============================================================================================================
NV04-49 -80 63.45 82.80 19.35 18.96 31.6 0.00 0.38 0.05
===============================================================================================================
NV04-50 -80 20.80 101.00 80.20 78.60 254.7 0.14 0.93 0.19
---------------------------------------------------------------------------------------------------------------
including 20.80 65.00 44.20 43.32 391.0 0.23 0.44 0.26
===============================================================================================================
NV04-51 -45 64.50 81.85 17.35 12.32 185.9 0.05 2.37 0.46
===============================================================================================================
NV04-52 -45 16.50 62.55 46.05 32.70 270.6 0.10 0.62 0.21
===============================================================================================================
NV04-53 -50 15.70 30.80 15.10 10.72 52.0 0.04 0.72 0.85
===============================================================================================================
Notes:
1. All length weighted average (LWA) results are "uncut"
2. Vertical thicknesses are calculated considering the dip of the drill holes
and assuming flat lying body.
NAVIDAD HILL DRILLING RESULTS
Much less drilling has been done at Navidad Hill than at Galena Hill. The
results of the eight holes drilled to date are listed below: all have
intersections of silver mineralization. Seven of these holes were drilled on
three sections separated at 40m intervals while the eighth is located some 300m
to the northwest. Holes at Navidad Hill were drilled at close-spacing and as
"scissors" crossing each other from opposite sides of the mineralized zone to
determine the dip and continuity of the narrow high grade structures that hosted
the mineralization at surface.
While these holes did confirm that the dip of the structures is near vertical
two somewhat unexpected aspects were encountered: firstly, significant amounts
of clay alteration (argillic) are present; secondly, in between the known
structures there are many areas with minor veins and stockwork veinlets. High
silver grades were intersected in some of the structures in the drill holes (see
table below); however, in general the grades in the drill holes are
significantly less than the average grades of the structures on surface which
were often in the range of 5,000 to 20,000 grams per tonne silver. This
combination of the features suggests that Navidad Hill should be considered a
bulk target rather than as individual high grade vein targets. Like Galena Hill,
intercepts have been calculated at a 50 g/t silver minimum grade again somewhat
loosely applied at this early stage. All of the seven holes in the main area
drilled have significant intercepts ranging from 48.0 to 143.5 m in core length
with 97.8 to 246.9 g/t silver with the best individual intercept being NV03-07
83.65m of 246.9 g/t silver with minor copper and lead values. Assuming vertical
dips the true width of the mineralized intercept ranges from about 34 to 101m in
width. In most cases holes were started within the mineralized zone and the full
true width was not crossed by single holes and is only seen when considering the
scissor pair. Despite the high base metal grades of the individual structures in
the detailed surface sampling and in the core samples the grades of copper and
lead over the width of the bulk zone are generally less than 0.3%. This marks a
significant difference from the central part of the Galena Hill deposit.
Mineralization in the main group of Navidad Hill drill holes is hosted by
massive latite to latite breccias that generally appear to be massive flows or
flow domes. No internal stratigraphy has been recognized to date. None of the
holes penetrated the base of the latite sequence nor cut any obvious sedimentary
or volcaniclastic units with it. Mineralized structures appear to be of two main
types; firstly, sharp-walled structures filled with brecciated and re-brecciated
clasts of gangue and mineral and secondly, veinlets and stockwork of gangue and
mineral. Gangue minerals include: calcite which ranges from massive crystalline
to finely banded; quartz as chalcedonic to crystalline silica; and crystalline
barite. "Ore" minerals visible by eye include minor amounts of sulphides
included pyrite, a grey sulphide (tetrahedrite or chalcocite), minor galena,
rare native copper, green copper oxides (probably mainly malachite) and black
copper oxides (probably mainly neotocite or copper wad). No native silver was
observed by
-34-
eye or hand lens. No clear division between oxide mineralization and sulphide
mineralization can be made with depth. Minor amounts of sulphides are present at
surface and are also present a depth. Copper oxides are present at surface and
to the bottom of the zone tested to date (about 80m below surface).
MINERALIZED INTERCEPTS FROM THE NAVIDAD HILL DRILLING
-----------------------------------------------------------------------------------------------------------------------
composite
DDH from to length true width g/t % % %
- - - - Silver Copper Lead Zinc
location inclination metres metres metres metres LWA LWA LWA LWA
=======================================================================================================================
NV03-01 Navidad Hill -45 3.05 61.45 58.40 41.29 111.1 0.22 0.06 0.07
-----------------------------------------------------------------------------------------------------------------------
including 10.10 31.35 21.25 15.03 233.3 0.35 0.09 0.11
-----------------------------------------------------------------------------------------------------------------------
including 10.10 17.50 7.40 5.23 535.6 0.81 0.07 0.14
-----------------------------------------------------------------------------------------------------------------------
including 15.70 16.50 0.80 0.57 2677.6 3.07 0.30 0.24
=======================================================================================================================
NV03-02 Navidad Hill -45 2.50 50.50 48.00 33.94 97.8 0.15 0.06 0.05
-----------------------------------------------------------------------------------------------------------------------
including 6.45 6.70 0.25 0.18 858.0 8.07 0.26 0.02
-----------------------------------------------------------------------------------------------------------------------
including 17.60 25.00 7.40 5.23 227.1 0.25 0.16 0.09
-----------------------------------------------------------------------------------------------------------------------
including 40.40 41.45 1.05 0.74 1320.3 0.82 0.28 0.14
=======================================================================================================================
NV03-06 Navidad Hill -45 3.00 63.20 60.20 42.57 161.6 0.26 0.10 0.06
-----------------------------------------------------------------------------------------------------------------------
including 23.30 28.80 5.50 3.89 424.7 0.74 0.20 0.10
=======================================================================================================================
NV03-07 Navidad Hill -45 3.00 86.65 83.65 59.15 246.9 0.32 0.27 0.05
-----------------------------------------------------------------------------------------------------------------------
including 3.00 40.75 37.75 26.69 474.9 0.54 0.35 0.07
-----------------------------------------------------------------------------------------------------------------------
including 3.00 6.90 3.90 2.76 1997.9 0.92 0.32 0.07
-----------------------------------------------------------------------------------------------------------------------
including 30.85 33.25 2.40 1.70 2129.6 3.34 0.60 0.09
=======================================================================================================================
NV03-08 Navidad Hill -45 2.50 146.00 143.50 101.47 146.0 0.20 0.19 0.04
-----------------------------------------------------------------------------------------------------------------------
including 2.50 71.10 68.60 48.51 274.5 0.35 0.40 0.06
-----------------------------------------------------------------------------------------------------------------------
including 26.10 40.15 14.05 9.93 1084.2 1.25 1.69 0.11
-----------------------------------------------------------------------------------------------------------------------
including 26.10 28.40 2.30 1.63 2660.7 1.64 2.63 0.16
-----------------------------------------------------------------------------------------------------------------------
including 35.45 37.20 1.75 1.24 3042.6 4.31 0.86 0.11
=======================================================================================================================
NV03-09 Navidad Hill -45 2.50 84.30 81.80 57.84 125.4 0.12 0.10 0.04
-----------------------------------------------------------------------------------------------------------------------
including 21.00 21.70 0.70 0.49 5067.5 0.36 1.41 0.04
-----------------------------------------------------------------------------------------------------------------------
including 65.25 66.20 0.95 0.67 1440.7 1.62 0.86 0.07
=======================================================================================================================
NV03-10 Navidad Hill -45 3.50 78.50 75.00 53.03 111.1 0.23 0.05 0.04
-----------------------------------------------------------------------------------------------------------------------
including 3.50 9.40 5.90 4.17 669.7 1.25 0.09 0.06
=======================================================================================================================
NV03-11 Navidad -45 1.52 12.10 10.58 n/a 98.3 0.53 0.02 0.12
Hill West
=======================================================================================================================
Notes
1. All length weighted average (LWA) results are "uncut"
2. True widths are calculated assuming -45 degree drill holes and vertical
structures.
-35-
OTHER AREAS DRILLING RESULTS
Eight drill holes were collared in areas outside of Galena or Navidad Hills.
These holes were drilled to test stratigraphy or suspected mineralization in
additional zones.
MINERALIZED INTERCEPTS FROM DRILLING OTHER TARGETS
--------------------------------------------------------------------------------------------------------------------------
composite true
DDH from to length width g/t % % %
- - - - Silver Copper Lead Zinc
location inclination metres metres metres metres LWA LWA LWA LWA
==========================================================================================================================
==========================================================================================================================
NV04-32 Connector -45 46.50 96.05 49.55 35.04 77.9 0.04 0.14 0.03
Zone
==========================================================================================================================
NV04-33 Connector -80 none
Zone
==========================================================================================================================
NV04-34 Connector -45 10.50 29.20 18.70 13.22 75.1 0.01 0.70 0.05
Zone
==========================================================================================================================
NV04-39 Connector -80 none
Zone
==========================================================================================================================
NV04-40 Connector -45 43.20 91.20 48.00 33.94 108.5 0.04 0.22 0.16
Zone
--------------------------------------------------------------------------------------------------------------------------
including 67.20 88.20 21.00 14.85 160.4 0.08 0.19 0.09
==========================================================================================================================
NV04-25 Esperanza -45 162.70 170.65 7.95 5.62 303.4 0.03 0.31 0.05
Trend
==========================================================================================================================
NV04-35 recce -80 none
==========================================================================================================================
NV04-27 recce -45 7.00 7.73 0.73 unknown 61.5 0.01 0.56 2.25
--------------------------------------------------------------------------------------------------------------------------
and 66.90 68.10 1.20 unknown 377.2 0.01 0.10 0.05
==========================================================================================================================
Notes
1. All length weighted average (LWA) results are "uncut".
2. True widths are calculated assuming -45 degree drill holes and vertical
structures.
PLANNED FUTURE WORK
Planned and ongoing work at the Navidad Project includes a resource estimate at
Galena Hill, metallurgical work on representative samples from Galena Hill,
additional drilling on outlying zones, additional surface work on outlying
zones, and additional geophysical work.
A resource estimate is currently being prepared by Snowden Mining Industry
Consultants Inc. This resource will include only the Galena Hill area as
drilling to date has not sufficiently tested other zones in order to allow a
resource estimate. It is expected that the results of this estimate will be
available in late May.
An additional 8,000 to 10,000 metres of drilling is planned for the Navidad
Project. This work will concentrate on zones peripheral to the Galena Hill
deposit such as: Barite Hill, Navidad Hill, the Esperanza Trend, and Calcite
Hill. It is expected that work will be ongoing throughout May, June and July.
Additional surface work will include: soil sampling, geological mapping, rock
chip sampling and pole-dipole I.P. geophysics. This work will continue as far
into the southern winter as is practical.
A preliminary budget of approximately $2,120,000 has been estimated for the work
recommended in the next stage of exploration on the Navidad Project. The budget
is based on experience from exploration already carried out on the Navidad
Project.
-36-
NAVIDAD AREA PROPERTIES (OTHER THAN THE NAVIDAD PROJECT)
The following properties are 100% owned by IMA unless stated otherwise.
TAQUETREN PROPERTY
The Taquetren claim (File Number: 14015/03; 10,000 hectares) is located directly
east of the Rio Chubut, approximately 70 kilometres to the southwest of Navidad.
The area is mapped as being underlain by Jurassic Canadon Asphalto and Lonco
Trapial Formation volcanic and sedimentary rocks similar to those that host the
Navidad discovery. Very preliminary prospecting and stream sediment sampling has
shown anomalous values of antimony; no source has yet been located for this
anomaly. Regional mapping and terrain analysis shows an important northwest
trending structure to bisect the Taquetren property; this orientation is similar
to structures that control mineralization at the Navidad Project.
REGALO PROPERTY
The Regalo claim (File Number: 14016/03; 10,000 hectares) covers ground mapped
as prospective Jurassic Canadon Asphalto and Lonco Trapial Formation rocks and
includes several regionally-important northwest trending structures. Preliminary
stream-sediment sampling has returned highly anomalous gold values. Gold values
from nine stream sediment samples, along 6 kilometres of one drainage (and
adjoining tributaries), range in value from 134 to 831 ppb. IMA has entered into
an option agreement with Consolidated Pacific Bay Minerals Ltd. ("Consolidated
Pacific Bay") whereby Consolidated Pacific Bay can acquire up to a 70-per-cent
interest in the Regalo mineral claim through the issuance of 900,000 shares of
Consolidated Pacific Bay to IMA, and work expenditures totalling US$625,000 over
three years. Consolidated Pacific Bay must issue all 900,000 shares and expend
US$50,000 on the property by Aug. 12, 2004, in order to earn a 51-per-cent
interest in the claims. A further 19-per-cent interest in the claims can be
earned by Pacific Bay it completes a feasibility study and finances the property
to production. A second cateo (Regalo II) has been staked to the north of the
primary Regalo claim, adding another 10,000 hectares to the property subject to
IMA's agreement with Consolidated Pacific Bay.
NOEL PROPERTY
The Noel claim (File Number: 14036/03; 10,000 hectares) is adjacent to the
Regalo and Trucha claims and also contains a significant, multi-sample,
gold-in-stream sediment anomaly. Government maps show the claim to be underlain
primarily by Canadon Asphalto Formation sedimentary and volcanic rocks, with
overlying Cretaceous sandstone along the eastern side of the claim. Five stream
sediment samples taken from two drainages over approximately 5 kilometres range
in value from 114 to 1,570 ppb gold. The apparent source area for these
extremely anomalous values is has not been prospected to date and is considered
a high-priority target for follow-up work.
TRUCHA PROPERTY
The Trucha claim (File Number: 14014/03; 10,000 hectares) is contiguous with the
Regalo and Noel claims and also includes a stream sediment sample highly
anomalous in gold (single sample, 556 ppb Au). Regional mapping shows the claim
to be underlain by prospective Jurassic Canadon Asphalto and Lonco Trapial
Formation rocks, cut by several regional-scale structures. In conjunction with
evaluation of the Noel claims, the Trucha claim requires detailed prospecting to
identify the source of gold producing the high stream-sediment values.
MARA PROPERTY
The Mara claim (File Number: 14018/03; 9,945 hectares) is located approximately
95 kilometres to the south-southwest of Navidad. Regional mapping shows the
property to be underlain by Jurassic Canadon Asphalto and Lonco Trapial
Formation rocks, which unconformably overly granitic basement rocks. Several
mapped and interpreted northwest-trending structures are present on the property
and are considered to be prospective for both Navidad-style mineralization and
traditional low-sulphidation gold veins. No fieldwork has been carried out to
date on the property.
-37-
CONDOR AND ALAMO PROPERTIES
The Condor claim (File Number: 14017/03; 10,000 hectares) and Alamo claim (file
number: 14032/03; 10,000 hectares) are located directly south of the
Regalo/Noel/Trucha claims and were staked based on prospective stratigraphy,
structure and the presence of known barite occurrences. The known barite
together with Navidad-age stratigraphy and similar structure makes these claims
highly prospective for Navidad-style mineralization. No fieldwork has been
completed on these claims to date; a first-pass evaluation is warranted.
NINA AND CARLOTA PROPERTIES
The Nina claim (file number: 14018/03; 9,945 hectares) and Carlota claim (file
number: 14018/03; 9,945 hectares) were staked based on the presence of
prospective Canadon Asphalto stratigraphy and regional northwest trending
structures. No fieldwork has been completed to date on these claims; a
first-pass evaluation is warranted.
PAMPA 3 PROPERTY
The Pampa 3 claim (File Number: 14004/03; 2,500 hectares) is located adjacent to
the Navidad Project, along trend and immediately to the southeast. Although
predominantly covered with recent alluvium, it is interpreted to be underlain by
the Canadon Asphalto Formation limestone and volcaniclastic rocks which host
mineralization at Navidad (figs. 2 and 3). Work to date has been minimal with
only two stream-sediment samples collected, both of which drain areas peripheral
to the claim.
COLONIA PROPERTY
The Colonia claim (File Number: 14005/03; 10,000 hectares) covers a large area
of highly prospective ground directly along strike from the Navidad discovery.
Most of the 10,000 hectare claim is underlain by prospective Canadon Asphalto
Formation rocks. Preliminary stream-sediment sampling has defined highly
anomalous values of antimony, an important "pathfinder" element at the Navidad
discovery. Minor prospecting (four rock samples collected) has not yet unveiled
the source of these stream-sediment values, significant additional work is
warranted.
JULIE PROPERTY
The Julie claim (File Number: 14035/03; 5,675 hectares) lies at the regional
contact between granitic rocks that underlie the prospective Jurassic
stratigraphy, and Jurassic volcanic rocks. Several important LandSat-interpreted
structures are present on this claim; regional structure has been shown to be of
critical importance at the Navidad discovery. Preliminary stream-sediment
sampling shows anomalous values of copper and antimony, although strongly
warranted, no significant follow-up work has been done.
SIERRA 1 PROPERTY
The Sierra 1 claim (File Number: 14006/03; 10,000 hectares) covers a large of
prospective Canadon Asphalto Formation rocks and the underlying volcanic rocks
and a portion of the granitic basement. Significant areas of LandSat-interpreted
alteration are present in the northeastern portion of the claim, the imagery
shows patterns very similar to those seen in the area of the Navidad discovery.
Preliminary stream-sediment sampling has shown anomalous copper values, these
results have yet to be followed up on.
SIERRA 2 PROPERTY
The Sierra 2 claim (File Number: 14007/03; 10,000 hectares) covers an
interesting area of complex geology in the hinge zone of a regional-scale
anticline. Mapped rock units include the Canadon Asphalto Formation and
overlying Cretaceous sandstone. Essentially no work has been done in the central
portions of this claim as the local land owners could not be contacted to gain
permission for entry onto their land.
Mina Yanquetreu is a small abandoned barite mine in the central portions of the
claim. This occurrence is highly encouraging as both strataform (exhalative) and
vein-controlled barite is intimately associated with the Navidad system. This
area is considered highly prospective and warrants a significant early-stage
exploration program.
-38-
SIERRA 3 PROPERTY
The Sierra 3 claim (File Number: 14008/03; 10,000 hectares) covers the
southwestern portions of mapped Canadon Asphalto Formation rocks in the Navidad
area. Also present on the claim are Jurassic volcanic rocks and underlying
granitic basement. Major LandSat-interpreted structures are present as are
possible zones of alteration. Preliminary stream-sediment sampling has returned
strongly anomalous copper values of up to 105 ppm. No follow-up prospecting or
rock sampling has been undertaken to date. The Sierra 3 claim is considered
highly prospective and warrants considerable follow-up work.
OTHER CHUBUT PROVINCE PROPERTIES
LAGUNA DE LOS TOROS PROPERTY
LOCATION AND ACCESS
This property is located just to the east of the continental divide forming the
border between Chile and Argentina. In this area the continental divide is quite
subdued in elevation and is not marked by high mountainous peaks. Elevations on
the property reach about 750m and relief within the property is only slightly
more than fifty meters. Vegetation is sparse and comprises grasses and low
brush. Trees are absent. The climate is characterized as continental semi-arid
with moderate temperatures in summer often accompanied by high winds. Winters
are cold with temperatures often dipping below zero celsius, but are generally
not characterized by extended sub-zero periods. Most of the precipitation falls
in winter as both rain and snow and as such, conditions may not favor fieldwork
in the winter.
Access to the property is possible year around by two-wheel drive pick-up truck
as provincial route 40 bisects the property. Gobernador Costa is the nearest
significant sized town. It has no air service: the nearest airport with
scheduled service is Esquel four hours drive to the north by mostly paved road.
From Gobernador Costa access to Las Bayas is by provincial route #40 south
approximately 50 road kilometres. During good road conditions the trip from town
to the property is less that one hour.
Gobernador Costa has basic services including fuel, food and lodging as well as
a bank with an automatic teller machine.
MINERAL TITLES INCLUDED IN THE LOS TOROS PROPERTY
The Los Toros property comprises 11,612 hectares consisting of three individual
claims, two of which are categorized as "cateos" and one as a "manifestacion"
located in the Tehuelches Department of the Province of Chubut. The property is
100% owned by IMA. It is centered at approximately 44.36 decimal degrees south
latitude and 70.65 degrees west longitude in the Campo Inchauspe datum.
----------------------------------------------------------------------------------------------------------------
FILE NUMBER YEAR DATE OBTAINED TYPE NAME HECTARES
----------------------------------------------------------------------------------------------------------------
13645 2001 January 24, 2001 Cateo Unnamed 2,262
----------------------------------------------------------------------------------------------------------------
13928 2002 September 12, 2002 Cateo Toros II 2,950
----------------------------------------------------------------------------------------------------------------
14038 2003 March 18, 2003 Manifestacion Lucia 6,400
Total 11,612
----------------------------------------------------------------------------------------------------------------
REGIONAL AND LOCAL GEOLOGY
The Los Toros Property lies in western Chubut at the margin of the Andean
cordillera volcano-plutonic complex with the continental volcanic-sedimentary
sequences. The oldest rocks are upper Paleozoic volcanics of continental
affinity and are overlain by Jurassic volcanic rocks of the Lago La Plata
Formation which are in turn overlain by mainly sandstone units of the Lower
Cretaceous Apeleg Formation. Known and postulated mineralization is hosted by
the Jurassic volcanic rocks.
-39-
EXPLORATION HISTORY
A total of 233 rock samples and 435 soil samples have been collected within the
limits of the current property boundaries for IMA. There are no known historical
mining or exploration environmental liabilities associated with the property.
DETAILED EXPLORATION - MORGUL NORTH
The Morgul North area was mapped and sampled in detail at 1:1000 scale in order
to assess it's potential to host economic gold and/or silver mineralization and
to permit planning for a significant drill program. The Morgul North structure
is a classic, high-level, low-sulphidation epithermal vein. It trends
north-south and dips approximately 45(0) to the east. It has been mapped over a
strike length of approximately 800 metres and, including the silicified and
altered envelope around the actual vein, has widths of less than 2 metres to
over 20 metres. Silicification is predominantly a replacement of volcanic rock
rather than a true open space filling vein, however, mapped and petrographically
defined textures are consistent with a high-level position in the epithermal
system, potentially above the important gold-rich boiling zone.
Fifty-one rock samples were collected from the Morgul North vein, these were
predominantly measured chip samples across the structure, however rare grab
samples were also taken. In general gold values are anomalous but low (0.005 to
2.17 g/t), while arsenic, antimony, and mercury values are highly elevated. This
distribution of low gold and high arsenic, antimony, and mercury is typical of
the upper levels of mineralized low-sulphidation epithermal systems. One sample
(M2373) contained abundant coarse grained galena and returned 1.36% lead which
is very odd given the interpreted high-level setting of the Morgul North vein.
Generally, higher values of lead are expected lower in an epithermal system, as
yet, no clear explanation for this value is apparent.
DETAILED EXPLORATION - MORGUL SOUTH
The Morgul South Vein was mapped and sampled in similar detail (1:1,000 scale)
to the Morgul North Vein. Sixty-two rock samples were taken, of these, 40 were
measured chip samples across silicified or altered structures.
The Morgul South Vein is actually a series of structures which coalesce into one
north-trending structure in its northern extents. To the south, structures
appear to "horse-tail" out into more east and southeast trending splays off the
main north-trending vein. In general, better gold grades (up to 1.1 g/t) were
returned from these smaller "splays" in the southeastern portions of the mapped
system. Although measured vein orientations are more erratic at Morgul South
than at Morgul North, the overall trend is close to north-south and dips are
generally in the range of 45(0) to 75(0) to the east.
Overall strike length of the Morgul South vein (including areas of no outcrop
where the presence of the vein is inferred) is approximately 1,250 metres.
Measured widths vary from less than 1 metre to greater than 25 metres. Similar
to the Morgul North vein, results from the Morgul South vein generally show low
gold values (<5 to 1170 ppb) and highly elevated arsenic (9 to 3899 ppm),
antimony (<5 to 90 ppm), and mercury (180 to 21500 ppb) values. Again, these
values are consistent with levels of exposure which are above the "boiling zone"
and hence above the postulated zone of gold deposition.
DETAILED EXPLORATION - NAZGUL
The Nazgul structure is a new discovery as a result of the most recent phase of
property-wide exploration. It consists of a zone of silicification and open
space filling chalcedonic quartz within a wider zone of argillic alteration with
quartz stockworking. It has been mapped over a strike length of approximately
260 metres and has widths of approximately 8 to greater than 30 metres including
the enveloping argillic alteration and quartz stockwork. The structure trends
towards 220(0) (northwest); dips are not known due to the relatively limited
exposure.
Gold grades returned from the 23 samples taken from this zone are uniformly low
(<5 to 14 ppb), while arsenic (15 to 357 ppm), antimony (<2 to 30 ppm), and
mercury (1150 to 20300 ppb) values are high, again supporting the thesis that
elevated gold grades may be present at depth below the present levels of
exposure.
-40-
SOIL SAMPLE GRID - MORGUL NORTH AND SOUTH
East-west oriented lines of soil samples were collected over the Morgul North
and South prospects in order to further characterize the structures and to test
for additional zones that may not outcrop. Sixteen lines were run, generally
with 100 metre spacing between lines but with up to 300 metre spacing at the
north and south extremities of the grid. Samples were collected every 25 metres
along lines. Four hundred sixteen (416) original soil samples were collected in
this program in addition to the 19 duplicate samples for a total of 435 samples.
Gold values returned from the soil samples are, as is often the case, rather
erratic. In the Morgul North area there is no clear correlation between higher
gold values and the known vein. Most of the most strongly anomalous values
(greater than10-15 ppb) were returned from single sample sites (as opposed to
multi-sample anomalies that generally are a more reliable indicator of
mineralization) and can not be correlated with known mineralization. At the
Morgul South area, there is a better correlation with mapped mineralization over
portions of the vein structure, but there are still many single point anomalies
that are not clearly explained by the known mineralization. Gold values range
from less than 1 ppb to 249 ppb and return an arithmetic mean of 3.1 ppb.
In general, Arsenic values show a much more interpretable pattern. At Morgul
South, arsenic values correlate well with the known structures, generally
returning values of over 100 ppm over several sample sites near known
structures. At Morgul North, there is a strong bias with highly anomalous
samples to the east of the structure and markedly lower values to the west. One
possible explanation for this distribution of arsenic lies in the 45(0) east dip
of the Morgul North structure. High arsenic values associated with the structure
near surface may be "leaking" to surface through a series of smaller vertical
dipping veinlets. Alternatively, the predominant winds which blow from the west
may have selectively redistributed the arsenic. Arsenic values in the soil
samples vary from 3 to 252 ppm with an arithmetic mean of 23.1 ppm.
While it was hoped that the soils would locate additional covered veins the data
failed to do so convincingly.
FUTURE WORK
Based on the results to date, a program of diamond drilling at the Morgul North,
South, and Nazgul prospects is warranted. A 2,500 metre drilling campaign with
drillholes testing all three areas has been recommended.
Prior to drilling, a review should be made of the data collected to date and a
field visit made to select the final drill hole locations. Minor road
construction will be necessary in order to get people and equipment to the drill
sites, although if a track mounted drill rig is used this will be kept to a
minimum. At this time significant trenching or geophysical work is not
recommended.
A preliminary budget of $350,000 has been estimated for the recommended work
based on the costs of similar programs in the region.
LAS BAYAS/VICTORIA PROPERTY
The Las Bayas/Victoria Property property is located in west central Chubut
Province, Argentina, 40 kilometres north of the town of Alto Rio Senguer and 200
kilometres northwest of the port of Comodoro Rivadavia. The property comprises
seven cateos including Evelina (Las Bayas) (File Number: 14131, 3,450.3
hectares), Victoria 1 (File Number 13801, 5,400 hectares), Victoria 3 (File
Number 13808, 6,509 hectares) and Victoria 6 (File Number: 13883, 9932.44
hectares)., all of which are 100% owned by IMA Preliminary reconnaissance
geological mapping and rock sampling in 2001 indicated that host strata at Las
Bayas is cut by a series of subparallel epithermal quartz veins exposed over a
minimum one kilometre strike length. Subsequent surface work in 2002 included
over 700 rock chip samples and 1,200 soil samples which defined a 4 kilometre by
1.5 kilometre area of outcropping low-sulphidation epithermal quartz veins.
Geochemistry indicated potentially economic gold and silver values and anomalous
arsenic, antimony, and mercury. Results of the 2002 surface work led to a 1,953
metre diamond drill campaign in February, 2003. This program tested
approximately 900 linear metres of the total 15,000 linear metres of quartz
veins mapped on the property.
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IMA completed a 19 hole, 1,953 metre diamond drill program on the Las Bayas
project on March 3, 2003. Eighteen of the 19 drill holes completed intersected
the targeted low-sulphidation quartz veins; these intersections ranged in width
from 0.4 to 22.1 metres of vein material. This drilling tested approximately 900
metres of the mapped 15,000 metre strike length of veins exposed at Las Bayas
Hill. Highlight of the drill results are as follows:
----------------------------------------------------------------------------------------------------------
DDH Length (m) Gold (g/t) Silver (g/t) Gold Equivalent (g/t)
(Au+Ag/70)
----------------------------------------------------------------------------------------------------------
LB03-01 5.1 0.96 36.9 1.48
----------------------------------------------------------------------------------------------------------
Including 1.3 2.62 33.0 3.09
----------------------------------------------------------------------------------------------------------
LB03-05 5.0 0.73 51.5 1.47
----------------------------------------------------------------------------------------------------------
Including 2.0 1.48 101.9 2.93
----------------------------------------------------------------------------------------------------------
LB03-07 0.7 1.02 n/a n/a
----------------------------------------------------------------------------------------------------------
FUTURE WORK
No work is currently planned for the Las Bayas project. Due to the large size of
the mineralized system exposed at Las Bayas, IMA's geologists feel the project
has significant exploration potential.
COSTA PROPERTY
The Costa property is located immediately south of the town of Gobernador Costa
in western Chubut. The property comprises three cateos including Costa (File
Number: 13886-02, 4660.50 hectares), Costa I (File Number 13890-02, 3825
hectares) and Costa II (File Number 13982-02, 6467 hectares), all of which are
owned by IMA. The cateos were acquired based on structural interpretation,
correlative Landsat-interpreted alteration, and geologic setting similar to that
of known mineralization in the nearby Cherque area. Northwest-trending linear
features with associated Landsat-interpreted alteration zones, with a strike
length in excess of 5 kilometres, are present on the Costa property. The
property is underlain by prospective Jurassic volcanic rocks which are intruded
by Upper Cretaceous granitic intrusions. Although the property is at a very
early stage, it is considered to have good potential for epithermal gold
deposits.
CORCOVADO PROPERTY
The Corcovado property is located approximately 50 kilometres south of Esquel,
10 kilometres northwest of the town of Corcovado. The property is 100% owned by
IMA. The property comprises one cateo (File Number 13892-02, 10,000 hectares)
and was staked to cover an area of prospective Jurassic volcanic rocks which are
cut by Upper Cretaceous granitic intrusions that are located along the same
trend as the Esquel deposit. Regional prospecting in the area returned several
samples with multi-gram gold values ranging up to 20.6 g/t. Airborne
reduced-to-pole magnetics show a prominent magnetic high in the southwest part
of the property which is related to mapped intrusive rocks. Northwest- and
northeast-trending linears emanating from the magnetic high are suggestive of
structures which could control mineralization. No work is planned for the
property in the immediate future, however, the property is considered to have
excellent exploration potential.
PENASCUDO PROPERTY
The Penascudo property is located in the southwestern corner of Chubut Province.
The property comprises seven adjacent Mine Concessions (Minas) including:
Alberto, 1,100 hectares; Rolando, 1,300 hectares; Cecilia, 1,400 hectares;
Pedro, 1,300 hectares; Fernando, 1,300 hectares; Ivan, 1,300 hectares; and
Daniel, 1,300 hectares. IMA holds a 100% interest in the properties. Pursuant to
an option agreement dated June 11, 2003 between IMA and Ballad Gold & Silver
Ltd. (formerly Ballad Venture Ltd.) ("Ballad") Ballad can earn, subject to a
1.5% NSR, an initial 70% interest in the property by incurring US$1.8 million in
expenditures over five years, making a one time US$300,000 payment to exercise
the option, and issuing 500,000 shares on approval of the option by the TSX-V
and a further 500,000 shares upon exercise of the option. Ballad Venture Ltd.
can increase its interest to 85% by funding a feasibility study.
Low sulphidation epithermal quartz veins with high-grade gold and silver, and
locally visible gold, are hosted by a 5-square kilometre rhyolite dome on the
property. Sampling by IMA of brecciated quartz veins, located 200 metres apart,
returned assays of 18.7 g/t gold over 0.45 metres and 216.6 g/t gold over 0.4
metres. Ballad has reported
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high-grade assays from chip sampling of the El REY ("The King") Zone of up to
1,102.99 g/t gold and 704.7 g/t Ag over 0.35 metres from their initial work on
the property.
SAN JUAN PROVINCE PROPERTIES - VALLE DE CURA AREA
The Valle de Cura region of northwest Argentina lies at the northern end of the
well-defined El Indio metallogenic belt which straddles the Chile-Argentina
border between approximately 29(degree) to 30.5(degree) South. This belt is
defined by world-class high-sulphidation epithermal deposits, such as:
Pascua-Lama, Veladero, and El Indio-Tambo. Large-scale hydrothermal alteration
and mineralization in the El Indio belt is associated with Miocene to Recent
rhyolitic to dacitic volcanism; known ore is predominantly hosted within these
volcanic rocks. Large colour anomalies are present in areas of strong argillic
and advanced argillic alteration, these colour anomalies are easily
distinguished in aerial photographs and Landsat images and are generally present
in areas of significant mineralization.
In a 1997 agreement with IMA, Barrick subscribed to a $1.5 million private
placement in IMA, of which IMA had to spend a minimum of $1,125,000 on its Valle
de Cura properties in northwestern Argentina before August 17, 2000. An August
1999 agreement granted Barrick an option to earn a 50% interest in EITHER the
Rio de las Taguas or Potrerillos properties in the Valle de Cura region for a
US$250,000 payment and exploration expenditure commitments. In 2000, Barrick
exercised warrants for net proceeds to IMA of $2.25 million, part of which were
used to fund IMA's exploration program in the Valle de Cura region from October
2000 to March 2001. In December 2003, Barrick served notice that they would not
be exercising the option to earn a 50% interest in either the Rio de las Taguas
or Potrerillos properties.
RIO DE LAS TAGUAS PROPERTY
LOCATION AND ACCESS
The Rio de las Taguas property is located in northwestern San Juan province
approximately six kilometres due east of Barrick Gold's Pascua-Lama project
which straddles the Chile-Argentina border. The property is roughly bisected by
the Arroyo de los Amerillos, a tributary to the Rio de las Taguas, and is
accessible by 4WD truck along Arroyo de los Amerillos. Elevations range from
3,800 metres at the mouth of the Arroyo de los Amerillos to over 4,600 metres on
the western boundary.
MINERAL TITLES INCLUDED IN RIO DE LAS TAGUAS
The Rio de las Taguas property comprises one cateo (File Number 0638-S-95, 1820
hectares).
AGREEMENTS
IMA holds a 100% interest in the property. The property was the subject of an
option agreement with Barrick between 1999 and 2003 (see above).
EXPLORATION HISTORY
IMA commenced a program of geochemical sampling and geological mapping in late
1999. Three target zones were identified by this program. The Ridge Zone is a
350 meter long northeast-trending zone of strongly clay-altered volcanics with
grab samples returning anomalous values in gold and arsenic. The Central Breccia
Zone covers an area of silicification, quartz veining and brecciation measuring
approximately 400 meters by 300 meters, while the Valley Shear is a linear,
southeast-trending overburden covered valley which parallels the trend of the
mineralized Pascua Fault.
A Phase II program consisting of gridding, ground geophysics, detailed
geological mapping, PIMA sampling and geochemical sampling over the three target
areas was carried out in early 2001. This work identified the Ridge Zone as the
highest priority target. Further geophysical work consisting of induced
polarization surveying was completed in April 2000 and outlined a large (600 x
300 meters) chargeability zone under scree cover adjacent to the Ridge Zone.
-43-
In November 2000, a program of road construction and bulldozer trenching was
carried out on the Ridge Zone to provide better access and rock exposure for
detailed geological mapping and rock sampling. Approximately 3.5 kilometres of
road were constructed, of which approximately 500 meters was in bedrock. Mapping
and sampling of the new exposures and surrounding area were completed in late
2000. The geologic mapping showed the area to consist of a lower andesitic
volcanic unit overlain by dacitic to rhyolitic pyroclastics. Alteration exposed
in the road cuts is mainly sericite-clay ranging from weak to moderate in
intensity. The strongest alteration effects appear to be associated with local
structures of limited extent.
The geochemical sampling consisted of 140 rock samples and eight talus fines
samples. The results confirmed low order anomalies in a number of elements, most
notably gold and arsenic. Gold values in rock range from <0.01 g/t to 0.09 g/t,
and in talus fines from 0.01 g/t to 0.4 g/t. Silver values in rock range from
<0.1 g/t to 3.8 g/t, and in talus fines from 0.2 g/t to 0.4 g/t. Arsenic values
in rock range from <5 ppm to 622 ppm, and in talus fines from 52 ppm to 120 ppm.
PLANNED FUTURE WORK
A series of exploration programs from 1999 to 2001 have defined significant
potential for high-sulphidation epithermal mineralization at the Rio de las
Taguas property. IMA is currently pursuing other partners for continued
exploration of this drill-ready property.
POTRERILLOS PROPERTY
LOCATION AND ACCESS
The Potrerillos property is located north of the Despoblado flats and east of
the Rio de las Taguas in northwest San Juan province, approximately 10 km due
east of Barrick's Veladero deposit. Elevations range from 4,000 metres to over
5,100 metres in the northeast corner of the property. Access to most parts of
the property is possible using 4WD trucks from the Veladero-Lama and El Toro
roads.
MINERAL TITLES INCLUDED IN POTRERILLOS
The Potrerillos property comprises one cateo (File Number: 546010-L-94, 4,000
hectares).
AGREEMENTS
Potrerillos forms part of a group of three properties, which jointly have
payments pending to the property vendor of $US 70,000 (Dec 20/04) and $US
170,000 (Dec 20/05) in addition to a one time payment of $US 1 million upon a
positive feasibility study. The property was the subject of an option agreement
between IMA and Barrick between 1999 and 2003 (see above).
EXPLORATION HISTORY
Coast Mountain Geological Ltd. ("CMG") conducted a reconnaissance geological
mapping and sampling program in early 1999. The geological mapping indicates
that Tertiary age volcanic rocks occur over much of the property. A total of 83
rock samples were collected for geochemical analysis, and 26 of these were also
submitted for Portable Infrared Mineral Analyzer ("PIMA") analysis to identify
the alteration mineralogy. Anomalous gold values (nil to 0.23 g/t) along with
scattered anomalous basemetal, silver and arsenic values were returned, mainly
from the central northwest portion of the property. The PIMA study showed that
four samples from the same area contain alunite, a key indicator mineral for
high level epithermal gold mineralization.
IMA commenced a Phase I program of detailed geochemical sampling and geological
mapping in late 1999. Phase I program identified three targets for detailed
follow-up work. The Panorama Zone in the central part of the property has
returned grab samples assaying from nil to 0.63 g/t Au and from 1 g/t to 276 g/t
Ag from a north-trending zone of quartz veining and silicification which has
been traced for approximately 1 kilometre along strike. The Fabriana Extension
zone, located on the western portion of the property, consists of a large area
(800 meters x 300 meters) of altered volcanic rocks with grab samples returning
strongly anomalous values in arsenic and scattered anomalous
-44-
gold values. The Narelle Zone, on the northeastern part of the property, is a
large (1.5 x 1 kilometre) zone of strongly silicified felsic volcanics with
variably anomalous mercury and gold values.
In February 2000, a Phase II program consisting of ground geophysics (CSAMT),
detailed geochemical sampling and geological mapping was commenced on the
Fabriana Extension zone. The geophysical surveys outlined an east-west trending
resistivity anomaly at least 500 meters in length which underlies felsic
volcanic breccias with strong alunite alteration, strongly anomalous arsenic,
and erratic anomalous gold values. In April-May 2000, a reverse-circulation
drilling program was completed over the Fabriana Extension target. Nine holes
totalling 1,785 meters were completed
Six of the holes were sited to test a resistivity feature defined by ground
geophysical surveys. The anomaly trends east-west, and was interpreted to
underlie surface outcrops of felsic breccias containing abundant alunite
alteration and anomalous arsenic and lead values. The drilling intersected
shallow dipping Tertiary volcanics consisting of a felsic sequence up to 40
meters thick of breccias and interbedded flows overlying several hundred meters
of porphyritic andesites. Within the andesites, a number of narrow intervals
with anomalous gold values were intersected, associated with (i) quartz veining
or (ii) clay-altered fault zones. The mineralized quartz-veined intervals are
generally associated with strongly anomalous mercury values. Three additional
holes were drilled to the south of the resistivity anomaly on targets defined by
surface geological mapping and induced polarization surveying. All holes drilled
into the andesite succession, and encountered several clay altered fault zones
and alunite veining. These zones returned variably anomalous arsenic values, but
only background gold. The results confirm the existence of a high
sulphidation-style alteration system. Management believes further work is
necessary to better characterize the alteration encountered in the drilling as
well as additional geophysical modeling of the induced polarization and CSAMT
results.
Between November 2000 and February 2001, IMA carried out further exploration on
the Potrerillos property consisting of bulldozer trenching, geological mapping,
and rock chip and talus fines goechemical sampling. This work concentrated on
the Narelle zone, with some additional work on the Panorama zone
At Narelle, seven bulldozer trenches totaling approximately 1,750 meters were
excavated. Talus fines geochemical sampling (113 samples) and rock geochemical
sampling (50 samples) was conducted to better define the extent and strength of
the gold-mercury anomaly detected in the previous season. Gold values in the
talus fines ranged from <0.01 g/t to 0.37 g/t, with mercury ranging from <0.02
ppm to 68.4 ppm. Gold values in the rock sampling ranged from <0.01 g/t to 0.02
g/t, with mercury ranging from <0.02 ppm to 10.8 ppm. The high values in both
sample media concentrate in an area approximately 200 meters in diameter in the
same location as the anomalous results from the 1999 - 2000 program. The
mineralization, hosted by rhyolitic pyroclasitic rocks, may be related to
intersecting NE and NNW-trending structures.
At Panorama, 15 rock samples were collected from the northern continuation of
the zone from the area sampled in the 1999 - 2000 season through to the northern
property boundary. Five of the fifteen samples returned strongly anomalous to
very high gold and/or silver values, with the overall range in gold values being
from <0.01 g/t to 15.4 g/t and in silver from 0.1 g/t to 2,900 g/t. Elevated
mercury values ranging from <0.02 ppm to 4.93 ppm were also present.
PLANNED FUTURE WORK
A series of exploration programs from 1999 to 2001 have defined significant
potential for high-sulphidation epithermal mineralization at the Potrerillos
property. IMA is currently pursuing other partners for continued exploration of
this drill-ready property.
GOLLETE
The Gollete property is located along the Pascua-Lama lineament in the Valle de
Cura region, 25 km southeast of Barrick's Veladero gold deposit and 250 km
northwest of San Juan. The Gollete property comprises one cateo (File
Number:545243-L-94, 10,000 hectares).
-45-
Gollete is one of a group of three properties that IMA is earning a 100%
interest in by making further payments to the property vendor of $70,000 (Dec
20/04) and $170,000 (Dec 20/05) in addition to a one time payment of
US$1,000,000 upon a positive feasibility study. Pursuant to an option agreement
dated September 22, 2003, as amended, between IMA and Cloudbreak, IMA granted to
Cloudbreak an option to earn a 50% interest in Gollote in consideration for the
issuance of 500,000 common shares of Cloudbreak to IMA, subject to TSX-V
acceptance, an additional 350,000 shares by October 1, 2004, and exploration
expenditures of US$1,000,000 over three years, with US$150,000 being spent in
the first year, US$350,000 in the second year and US$500,000 in the third. There
will be the option to increase the interest to 75 per cent by making additional
exploration expenditures of US$1,000,000 in the fourth year; US$1,500,000 in the
fifth year; issuing an additional 1,000,000 shares; and providing a
comprehensive report on the results of the work performed up to the date of the
report.
Initial work in 1999 on Gollete outlined areas of argillic and advanced argillic
alteration, associated with anomalous gold geochemistry. Three potentially
important areas of hydrothermal alteration, with features characteristic of
high-sulfidation epithermal systems have been mapped on the property. Sampling
returned anomalous gold values of up to 168 ppb in rocks and up to 2.61 ppb in
BLEG samples, as well as anomalous As, Cu and Zn results. In early 2000 IMA
completed additional rock and stream sediment sampling confirming the presence
of potentially important alteration in the northern part of the property at the
Condor Zone. Widespread argillic alteration and advanced argillic alteration
occurs within an approximate 2.0 x 0.7 km area. A combination of hydrothermal
alteration and favorable structure, as well as proximity to the Pascua-Lama and
Veladero deposits, makes Gollete a significant target for epithermal precious
metal mineralization.
ORTIGUITA PROPERTY
The Ortiguita property (File Number: 546369-L-94, 3600 hectares) is located
approximately 35 kilometers east-north-east of Barrick's Veladero gold deposit.
Ortiguita forms part of a group of three properties, which jointly have payments
pending to the property vendor of US$70,000 (Dec 20/04) and US$170,000 (Dec
20/05) in addition to a one time payment of US$1,000,000 upon a positive
feasibility study. In early 2001, a short reconnaissance program was carried
out, mainly directed at checking several color anomalies visible on satellite
imagery. Eight rock and four stream sediment samples were collected; none
returned anomalous values in gold or silver; anomalous Cu, Pb, Zn, As and Hg
values were identified in stream sediment samples. Given the limited work
completed at Ortiguita and the projects proximity to Barrick's Veladero deposit,
further work is recommended.
EL TORRO (PASO DE SOBERADO) PROPERTY
IMA holds a 100% unencumbered interest in the El Torro (Paso del Soberado)
property (File Number: 546083-M-94, 873 hectares) located approximately 20
kilometres north-northeast of Barrick's Veladero gold deposit. The property was
examined in early 2001. Several alteration zones were identified and 25 rock and
stream sediment geochemical samples collected. Three of the rock samples
returned anomalous gold values ranging from 0.26 to 0.51 g/t. All of the
anomalous samples are of float material, with two of the three shedding from a
NE-trending breccia zone containing quartz and alunite. Additional work to
determine the extent of the mineralized breccia zone will be undertaken in the
future.
DESPOBLADOS PROPERTY
Despoblados comprises two properties (File Number: 542242-L-94, 1260 hectares)
in the Valle de Cura region of northwestern San Juan Province. IMA holds a 100%
interest in the property subject to the cateo being advanced to an exploitation
phase. A payment of US$800,000 is due to Lirfer S.A after completion of a
positive feasibility study. The western claim is located 15 km southeast of
Barrick's Veladero deposit along the Pascua-Lama-Veladero lineament. Limited
reconnaissance sampling and mapping has been completed on the western claim,
while no work has been carried out on the eastern property. Favourable location
and limited previous work indicate that the property warrants further
evaluation.
BANITOS (RONCHIETTO) PROPERTY
The Banitos property consists of one cateo (File Number: 546604-R-94, 5,230
hectares) in the Valle de Cura region of northwestern San Juan Province
immediately northeast of Penoles' Jaguelita property, where a 0.7 million ounces
gold equivalent resource has reportedly been defined. IMA holds a 100% interest
in the property; in the event of
-46-
exploitation of the property, the property is subject to a royalty of US$960,000
paid in eight instalments to V. Ronchietto. Initial reconnaissance prospecting,
geological mapping and geochemical sampling during 1999 and 2000 on Banitos have
identified anomalous gold and pathfinder elements in rock and sediment samples.
PIMA analyses have identified illite/smectite and kaolinite alteration minerals.
In early 2002, CMG carried out a reconnaissance geological mapping and sampling
program. This work indicated that much of the property is underlain by Tertiary
age volcanic and sedimentary rocks which overlie gently dipping Permian age
sedimentary rocks. Most of the 29 rock samples collected were of float material,
and returned weakly anomalous gold values ranging from nil to a maximum of 0.04
g/t. The property merits further evaluation due to its proximity to the 0.7
million ounce gold resource on the Jaguelita property.
VELADERO PROPERTY
IMA holds a 100% unencumbered interest in the Veladero property in the Valle de
Cura area. The property comprises two separate claim blocks (File Number:
0477-S-95, 129.34 hectares) located contiguous with the Chilean border 10-15
kilometres south of Barrick's Veladero gold deposit. Alteration is evident on
satellite images of the northern claim area. No groundwork has been carried out
on the property and none is planned in the immediate future.
SAN JUAN PROVINCE PROPERTIES - NORTHWEST SAN JUAN
MOGOTE (ARTURO'S) PROPERTY
LOCATION AND ACCESS
The property is located in the Departament Iglesia, Macho Muerto zone, in the
San Juan Province close to the northern border with La Rioja Province,
approximately 300 kilometers northwest of the city of San Juan, and bordering
Chile.
MINERAL TITLES INCLUDED IN MOGOTE PROPERTY
The Mogote (Arturo's) property consists of one cateo and three discoveries of
8,009 hectares (19,790 acres) and five Minas. In 2004, Amera staked a number of
claims adjoining the northwestern part of the Mogote project on the Chilean side
of the border.
----------------------------------------------------------------------------------------
NAME FILE NUMBER TYPE OWNER HECTARES
----------------------------------------------------------------------------------------
- 338579-R-92 Cateo IMSA 2259
----------------------------------------------------------------------------------------
Adela #1 425-098-A-2000 Discovery N. Arturo 2000
----------------------------------------------------------------------------------------
Mogotes Norte 520-0275-R097 Discovery R. Viviani 1650
----------------------------------------------------------------------------------------
Mogotes Sur 520-0274-R-97 Discovery R. Viviani 2100
----------------------------------------------------------------------------------------
Mogote 1 156.277-S-76 Mina IMSA 48
----------------------------------------------------------------------------------------
Mogote 9 156.285-S-76 Mina N. Arturo 48
----------------------------------------------------------------------------------------
Mogote 14 156.290-S-76 Mina IMSA 48
----------------------------------------------------------------------------------------
Mogote 4 156.280-S-76 Mina IMSA 48
----------------------------------------------------------------------------------------
Mogote 5 156.280-S-76 Mina IMSA 48
----------------------------------------------------------------------------------------
AGREEMENTS
Under an option agreement dated June 7, 2000 among IMA, Inversiones Mineras
Argentinas S.A. and Nestor Arturo, as amended August 3, 2000, and September 1,
2000, IMA may acquire a 100% interest in the property by making cash payments
totalling $280,000. To date IMA has paid US$59,100. Subsequent payments are
US$20,000 on June 6, 2004, US$80,000 on December 6, 2004 (when the option is
exercised); and US$110,000 on June 6, 2005. The balance to US$280,000 ($10,900)
have been written off by the effect of the "pesifications" of debts in Argentina
(debt obligation are paid in pesos instead of the original dollars at a rate of
exchange which is no longer peso 1/ $ but a much higher average value of peso
3.5/ $). The vendors will have the right to receive a royalty of 0.5% NSR, up to
a maximum of US$500,000.
-47-
In March 2001 IMA entered into an option agreement with Rio Tinto, whereby Rio
Tinto could acquire up to a 70% interest in the property by meeting certain work
commitments and cash payments to IMA. At the end of 2001, Rio Tinto elected not
to continue with the option agreement due to budgetary constraints.
IMA signed a letter of Intent on March 6, 2003 with Amera, pusraunt to which
Amera could earn an undivided 51 % interest in the Mogote (Arturo's) Property.
To earn a 51 % interest in the property, Amera must issue 1,650,000 common
shares to IMA and incur US$1,250,000 of expenditures, including work programs
and underlying option payments, all over five years.
In an agreement announced on April 13, 2004 Amera acquired an option to earn an
additional 24% interest (for a total of 75% interest) in the Mogote property.
Under the terms of this new agreement, Amera may exercise its option by issuing
IMA an additional 300,000 shares and completing work expenditures totaling
US$3,000,000 over a three-year period. Amera has committed to spend the initial
US$1,000,000 by May 30, 2005. Amera received approval from the TSX-V for this
transaction on April 22, 2004. Joseph Grosso and Nikolaos Cacos, both directors
and officers of IMA, are also directors of Amera.
REGIONAL AND LOCAL GEOLOGY
The property is underlain by basement rocks of the Permian age Choiyoi Group,
which are faulted against and overlain by Tertiary age volcanic rocks.
EXPLORATION HISTORY
A brief geological reconnaissance took place in March-April 2000, during which
21 rock and talus samples were collected. Gold values ranged from nil to 0.13
g/t, with most of the anomalous samples coming from zones argillic and/or
ferruginous alteration.
In November-December 2000, a reconnaissance geological and geochemical sampling
program was carried out over the property. This work outlined an area measuring
approximately 3 kilometers E-W near the northern property boundary which
returned a high proportion of anomalous copper and gold results in both rock and
sediment samples.
During January 2003 IMA carried out a four week detailed surface exploration
program to establish drill targets for a Phase I drill program. The results
significantly expanded the gold-copper exploration potential of the project.
During the period November 17 through December 14, 2003 Amera carried out an
exploration program comprising detailed geologic mapping, ground magnetics,
Induced Polarization ("IP"), trench sampling, and surface geochemistry in the
northern part of the property. The work was focused on two major zones of
copper-gold mineralization, Filo Este and Filo Central, and one zone of high
sulphidation alteration, Zona Colorada. The copper-gold mineralization is
characterized by strongly anomalous values in copper and gold related to
potassic alteration of a Miocene diorite porphyry system. The high sulphidation
alteration is the upper level expression of a separate, but similar diorite
porphyry. The work indicated the presence of a major mineralized porphyry
beneath the Filo Este zone of potassic and propylitic alteration. Mineralization
is hosted within Oligocene volcanic breccias and phases of the Miocene diorite
porphyry which have undergone moderate to strong biotite, potassium feldspar,
magnetite, and quartz vein alteration. Hypogene mineralization consisted of
chalcopyrite and bornite within quartz veins and as wallrock disseminations.
Recent supergene oxidation has altered the primary copper minerals to various
copper oxide and sulphate minerals to include malachite and antlerite.
A 600 metre trench was excavated over the Filo Este zone of potassic alteration
and encountered 510 meters of continuous mineralization that averaged 0.196%
copper and 0.331 ppm gold. Mineralization consisted of fracture controlled
sulfates and oxides and as disseminations in wallrock and A-type quartz veins.
Copper minerals were approximately 80% oxide and 20% sulfides with the sulfides
consisting of chalcopyrite and bornite. Ground magnetics suggest a shallow
porphyry system underlying Filo Este ridge with strong magnetite alteration that
covers an area of at least 1.5 kilometres by 800 meters. The shallow depth of
intrusion is indicated by a steep magnetic gradient and is consistent with the
level of exposure of alteration and mineralization. Two other distinct magnetic
sources were encountered at Filo Central and underlying the East Cirque area.
The IP indicates several distinct copper sulfide bodies of 2-4% sulfide that are
coincident with magnetite alteration on Filo Este.
-48-
FILO ESTE DRILLING
In March, 2004 Amera carried out a 1475 metre, 5 hole dimond drill program and
conduced further geological mapping and talus fine sampling on the northern part
of the Mogote property. The drilling tested a portion of the Filo Este porphyry
target to a depth of up to 495 metres over a strike length of 860 metres and a
width of approximately 250 metres. Hole MOG-04-1 had to be abandoned at 71.6
metres and hole MOG-04-1A was drilled from the same location to target depth.
Highlights of the drill results are provided in table form below.
------------------------------------------------------------------------------------------------------------
g/t g/t %
------------------------------------------------------------------------------------------------------------
Drillhole Total Depth From To Interval Gold Silver Copper
------------------------------------------------------------------------------------------------------------
(metres) (metres) (metres) (metres) (LWA) (LWA) (LWA)
------------------------------------------------------------------------------------------------------------
MOG-04-1 71.6 2.0 70.0 68.0 0.43 13.9 0.244
------------------------------------------------------------------------------------------------------------
MOG-04-1A 495.3 6.0 495.3 489.3 0.23 2.6 0.170
------------------------------------------------------------------------------------------------------------
including 258.0 424.0 166.0 0.19 2.2 0.243
------------------------------------------------------------------------------------------------------------
and 308.0 396.0 88.0 0.20 1.9 0.290
------------------------------------------------------------------------------------------------------------
MOG-04-2 315.4 2.0 315.4 313.4 0.16 1.9 0.171
------------------------------------------------------------------------------------------------------------
including 196.0 315.4 119.4 0.21 2.8 0.248
------------------------------------------------------------------------------------------------------------
MOG-04-3 300.0 6.0 300.0 294.0 0.11 1.3 0.078
------------------------------------------------------------------------------------------------------------
MOG-04-4 292.9 2.0 292.9 290.9 0.23 3.1 0.104
------------------------------------------------------------------------------------------------------------
PLANNED FUTURE WORK
Amera is continuing to compile the data from the 2004 spring program to guide
the next phase of exploration on the Mogote project.
LAS FLECHAS SOUTH 1-3
Las Flechas South is located approximately 60 km northeast of the Pascua-Lama
and Veladero gold deposits, in northwestern San Juan province, and is
approximately 340 km northwest of San Juan City. The property is located between
the Maricunga Au-Cu belt to the north and the El Indio-Pascua-Lama-Veladero
Au-Ag-Cu belt to the south. IMA holds a 100% unencumbered interest in the the
Las Flechas 1-3 cateos (339258-G-92, 339259-S-92 and 295858-G-90) and Adela
discovery (1796-G-95).
Las Flechas South formed part of an extensive land package in the area held by
IMA and Viceroy Resource Corp. ("Viceroy"). Work completed to date at Las
Flechas South has been limited to first-pass sampling and geological mapping.
The claims, predominantly underlain by Tertiary volcanic rocks, cover a very
prominent, large silicic-argillic hydrothermal alteration zone 15 square
kilometres in size. In 1995 a 10-day program of prospecting, rock, silt and soil
sampling and reconnaissance geological mapping was carried out. Silt samples
collected in 1995 from creeks draining this anomaly returned elevated gold
values of up to 122 ppb. Rock samples assayed up to 0.8 g/t gold. Las Flechas
South represents an excellent exploration opportunity, which has seen only
cursory work. Further work has been strongly recommended.
ARROYO CAJON DE LA BREA
The Arroyo Cajon de la Brea property is located east of Mina Macho Muerto, a
historic copper occurrence along the Cajon de la Brea belt. IMA holds a 100%
unencumbered interest in the Arroyo Cajon de la Brea property which comprises a
single claim (File Number: 0617-S95, 4440 hectares). Mineralization in the belt
is characterized by vein and tourmaline-breccia related copper deposits. Copper
mineralization and gold enrichment are related to distinct granitic and
rhyolitic host rocks cut by quartz-feldspar porphyry dykes. A date from one of
these dykes yielded an Eocene age (52 Ma). Initial rock and stream sediment
sampling on Arroyo Cajon de la Brea identified anomalous As, Zn, Ba, V and Sr
values. No work has been completed on the project since 1997 and none is planned
in the immediate future.
-49-
SAN JUAN PROVINCE PROPERTIES - GUALCAMAYO AREA
Gold Mineralization in the Gualcamayo area is spatially and genetically related
to porphyritic Tertiary intrusive rocks including small stocks, plugs, and
dykes. Mineralization occurs as proximal skarn (Magdelena, Emilia Innes, General
Belgrano) and as distal disseminated sediment-replacement bodies (Quebrada del
Diablo, Omar, Pirrotina) both of which are hosted within limestone and
calcareous siltstone units. The Quebrada del Diablo (1.35 million ounces gold @
1.2 g/t) and several other important exploration targets were discovered during
the late 1990's by a joint venture partnership between Viceroy and IMA. IMA has
since divested its portion of the joint venture agreement, but retains a 2%
N.S.R. on the deposits.
QUEBRADA DEL DURANZO
IMA holds a 100% interest in the Quebrada del Duranzo property (File Number
339149-L-93, 8000 hectares) in the Gualcamayo area of the Pre-Cordillera. The
property is subject to a payment of US$800,000 after completion of a positive
feasibility study to Lirfer S.A.. The property covers geological environments
prospective for gold and copper-gold skarn or carbonate replacement
mineralization.
SIERRA PESCADO I & II
The Sierra Pescado property comprises Sierra Pescado I (File Number:
338073-E-92, 800 hectares) and Sierra Pescado II (File Number: 425-185-2001,
2080 hectares). IMA holds a 100% interest in the property subject to a payment
of US$800,000 after completion of a positive feasibility study to Lirfer S.A..
Prospecting and geochemical sampling was carried out in late 1999 on the Sierra
Pescado I and II claims. The results from this preliminary examination indicate
the presence of skarn-style alteration associated with anomalous gold values
which range up to 0.19 g/t gold.
SIERRA YANSO
The Sierra Yanso cateo (File Number: 546145--L-94, 9997 hectares) is located to
the southeast of the Quebrada del Durazno property. IMA holds a 100% interest in
the property subject to a payment of US$800,000 after completion of a positive
feasibility study to Lirfer S.A.
SAN JUAN PROVINCE PROPERTIES - OTHER AREAS
CHINGUILLOS
The Chinguillos property a cateo (File Number: 0616-S-95, 3,610 hectares) +
manifestation, is located in the Pre-Cordillera of northern San Juan Province,
approximately 215 kilometers north of the city of San Juan. IMA holds a 100%
unencumbered interest in the property. In the southwestern part of the property,
strong argillic alteration is developed over a one by two kilometre area
underlain by dacite intrusive. Thin carbonate veins occur within the alteration
zone and samples of the vein material are strongly anomalous in copper, arsenic,
nickel and cobalt. Gold values range from nil to 0.04 g/t. Initial rock samples
have returned values of up to 1.4 % Cu, 2998 ppm As, 271 ppm Sb, 980 ppm Ni, 432
ppm Co and 135 ppm Zn. Additional follow-up mapping and sampling are recommended
for the property.
CERRO LA SAL
The Cerro la Sal property (100% owned by IMA) consists of one cateo (File
Number: 0975-C-95, 4,864 hectares) located 25 kilometers west of the city of San
Juan. The main geological feature is a Miocene age dacitic intrusive which cuts
Miocene and Devonian age sedimentary rocks. The five rock samples collected did
not return any anomalous values. No work is planned on the property in the
immediate future.
GUARDIA VIEJA
The Guardia Vieja propert comprises one claim (File Number: 0294-F-18-95, 3407
hectares) located 150 kilometers northwest of San Juan city and 75 kilometres
south-southeast of the El Indio mine. IMA holds a 100% unencumbered interest in
the property. To date only a short visit has been make to the property by
Company
-50-
geologists but initial evaluation of satellite imagery indicates the presence of
a color anomaly associated with a linear structure that cuts across the property
in a northeast-southwest direction. A field evaluation of the property is
warranted.
ARROYO DE LOS DIFUNTOS
The Arroyo de los Difuntos property is located 140 kilometers southwest of the
city of San Juan, in the Cordillera Principal, and comprises one cateo (File
Number: 0224-F18-95, 3,125 hectares). IMA holds a 100% unencumbered interest the
property. Arroyo de los Difuntos was visited by Apex Geoscience Ltd. in March
1997. Apex reported localized zones of hydrothermal alteration and skarning, and
anomalous lead, nickel, cadmium, manganese, barium and vanadium in rock grab
samples collected near the southern claim boundary. Additional sampling and
prospecting to evaluate the alteration zones is warranted.
PORTEZUELO DE AGUA NEGRA
IMA holds a 100% unencumbered interest in the property that is located northwest
of San Juan and south of the Valle de Cura area, 50 km south-southeast of the El
Indio mine. The property comprises one Cateo (File Number: 0855-M-95, 1424.2
hectares). No groundwork has been carried out on the property to date by IMA and
an evaluation is recommended.
FILO DE LAS OPENAS
IMA holds a 100% unencumbered interest in the Filo de las Openas property,
located in northern San Juan province, 50 kilometres by road from the town of
Rodeo. The property comprises one Cateo (File Number: 0639-S-95, 5410 hectares).
Gold-bearing quartz veins occur at Mina Las Openas, located immediately east of
the Filo de las Openas property. The property covers the contact between altered
host sedimentary rocks and the Permian Colanguil muscovite-granite pluton, which
is host to the veins at Mina Las Openas. A 1997 reconnaissance program of the
property by Apex Geoscience Ltd. Identified a 500 x 200 metre alteration zone on
the northwestern quadrant of the claim returned anomalous Au (23 ppb), Ag, Ba,
Cu, Zn, Mo, Ni, Co, Cd, As, Sb and Te. Rock samples from the area returned
anomalous Cu, Ni, Co, As and Cr results. No further groundwork has been carried
out on the property to date by IMA.
PORTEZUELO TORTOLAS
The Portezuelo Tortolas property is located in central western San Juan
province, approximately 25 kilometres southeast of the El Indio mine and 15 km
southeast of Tambo. IMA holds a 100% unencumbered interest in the property which
comprises one Cateo (File Number: 0224-F18-95, 4500 hectares). No groundwork has
been carried out on the property to date by IMA, however a reconnaissance
evaluation is warranted.
CERRO DEL SALADO
The Cerro del Salado property is located east of the Valle de Cura,
approximately 70 km southeast of Barrick's Veladero project. Company holds a
100% unencumbered interest in the property which comprises one cateo (File
Number: 295687-G-90, 2413 hectares). The claim covers the contact between a
Permian granitic pluton and host Carboniferous clastic sedimentary rocks.
Exploration targets include gold and base metal veins. Initial evaluation of the
project was carried out in 1995. Results from stream sediment samples collected
on the project ranged up to 93 ppb Au. No groundwork has been carried out on the
property since 1995 but follow-up of anomalous geochemistry is recommended.
PELAMBRES 2
The Pelambres 2 property (100% owned by IMA) is located along the
Chilean-Argentine border in the southwestern corner of San Juan province. It is
a type of tenure called a discovery (File Number: 520-0626-97, 345 hectares) and
was staked to cover extensions of prospective rocks onto open ground. No work is
currently planned on this property.
-51-
PERUVIAN PROPERTIES
RIO TABACONAS PROPERTY
PROPERTY DESCRIPTION, LOCATION, AND ACCESS
The 9,000 hectare (22,230 acres) Rio Tabaconas property is located in
northwestern Peru, approximately 35 kilometres south of the southernmost tip of
Ecuador and 760 kilometers NNW of Lima. Access to the property is by road from
the city of Chiclayo, approximately a 12-hour trip.
Pursaunt to an option agreement dated January 24, 1997 between IMA and Sociedad
Minera de Responsabilidad Limitado Nova JJ de Piura and Sociedad Minear de
Responsabilidad Limitada (SMR Ltda) Don Alberto JJ de Piura, IMA has an option
to purchase three claims covering a 2,890 hectares (7,138 acres) area within the
central part of the property and holds 100% ownership, with no outstanding
royalties, on the remainder of the property.
GEOLOGICAL SETTING
Rocks exposed at the Tabaconas property are dominated by volcanic flows, tuffs,
and coarse pyroclastic rocks assigned to the Oyotun Formation, of Jurassic age.
This formation also includes tuffaceous sedimentary rocks and volcanic sediments
with intercalated limestone in the higher parts of the volcanic sequence.
Plutonic rocks of Cretaceous-Tertiary age intrude all the supracrustal rocks in
the region except for the youngest Tertiary volcanic sequences. The dominant
intrusive type in the area of the Tamborapa property is porphyritic granite of
the Paltashaco pluton.
The Rio Tabaconas property lies within the Cajamarca copper-gold metallogenic
belt, which extends from Michiquillay, near the city of Cajamarca, northwards
into Ecuador. This belt is defined by a number of important gold and copper-gold
deposits hosted by Tertiary volcanic and intrusive rocks and Mesozoic
sedimentary rocks. Two of the most significant deposits in the belt are
Yanacocha and La Granja. Other important deposits in the belt include the
Michiquillay, Tantahuatay, Cerro Corona, Canariaco, Pena Verde, and Lanchipampa
porphyry systems and the La Zanja, Jehuamarca and Las Huaquillas volcanic or
sedimentary-hosted gold and polymetallic deposits. The deposits in the belt are
typically of Tertiary age and genetically linked to heat engines or convective
hydrothermal systems associated with Tertiary intrusive and volcanic centers.
EXPLORATION HISTORY
The first modern examination of what is now the Tabaconas property was conducted
in the late 1980s when a government-funded Peruvian-German consortium re-opened
the old mine workings on Cerro Tablon and carried out experimental geochemical
and geological studies in the mine area. IMA acquired the property in January
1997.
IMA carried out brief property examinations in 1997 and 1999. During mid-2000,
IMA carried out a four-week exploration program. In November 2000, a
helicopter-borne electromagnetic ("EM") and magnetic survey was flown over the
property. The magnetic results provided a structural framework for the whole
property, and showed the presence of a number of well-defined
east-northeast-trending magnetic features. This east-northeast structural trend
is an important element at some large mineral deposits in northern Peru,
including Yanacocha, Antamina and Magistral.
In July 2001 a pre-drilling surface exploration program was carried out and in
September 2001, a 33 hole, 1,600-meter diamond drill program was undertaken. The
drill program tested three areas (Tablon, Tablon West and La Union Ridge) on
Cerro Tablon. Other exploration conducted simultaneously included grid-based
soil sampling, geological mapping and trenching. The most recently completed
work program was conducted from February to March of 2002. The program
incorporated IP-resistivity and magnetometer surveys, detailed geological and
structural mapping, and rock, soil, and stream sediment geochemical sampling.
The results of this program allowed facilitated preparation of the proposed
3000-metre drill program. This program was put on hold due to unresolved issues
with the local communities.
-52-
MINERALIZATION AND PROPERTY GEOLOGY
Several distinct styles of intrusive-related gold mineralization are present in
fifteen named zones at the Rio Tabaconas property. Known mineralization at Cerro
Tablon consists of gold-rich massive sulphide bodies
(pyrrhotite-pyrite-sphalerite-galena-chalcopyrite) which replace limestone and
occur as stratabound, fault-related, and intrusive contact-related bodies. In
addition to these carbonate-replacement bodies, Cerro Tablon also hosts
potential for structurally-controlled mineralization at the North and La Union
Zones. On Cerro Las Minas, bulk-tonnage, disseminated gold mineralization is
associated with strong to intense phyllic alteration at the West Breccia and
Peak Zones, while high-grade (up to 62.9 g/t Au) lode-gold occurs within quartz
vein/shear zones at Minas Sur and La Catedral. Elsewhere on the property,
anomalous rock, soil, and silt samples demonstrate potential for additional
discoveries.
Stratified rocks exposed at Cerro Tablon include, from oldest to youngest,
footwall andesite, massive limestone, bedded limestone, and tuffaceous
siltstone; all of which are assigned to the Jurassic Oyotun Formation. These
units are cut by two related intrusive phases: feldspar-hornblende porphyry and
intrusive breccia.
On Cerro Las Minas, three stratified rock units and five intrusive rock units
have been identified. Stratified rocks include, from oldest to youngest,
quartzite breccia, lithic tuff, and pebble to cobble conglomerate. The Cerro Las
Minas intrusive complex hosts disseminated mineralization and includes three
related phases: fine-grained felsic intrusion, flow-banded felsic intrusion, and
intrusive breccia. Other intrusive rocks exposed on Cerro Las Minas include
quartz-feldspar porphyry dykes and larger bodies of diorite to quartz diorite.
CERRO TABLON MINERALIZATION
There are seven named targets at Cerro Tablon, six of which have been classified
as drill-ready. These are, in order of importance: the Tablon Main, Tablon West,
Tablon South, Tablon Southwest Extension, La Union, North, and Sphalerite Creek
Zones. Gold-rich massive sulphide boulders (22 samples average 9.3 g/t Gold)
derived from the Tablon Main and West zones now lie at the base of Cerro Tablon
in Quebrada de las Minas. These boulders originally drew the attention of IMA
geologists and led to the discovery of outcropping mineralization on Cerro
Tablon.
TABLON MAIN ZONE
The Tablon Main Zone is comprised of numerous outcropping massive sulphide
bodies and was the primary focus of the 2001 drill program. The Tablon Main Zone
is important to the Tabaconas property not only for its significant
intersections and high gold grades, but also as a model for mineralization that
may be present at the Tablon South, Tablon West, and Tablon Southwest Extension
Zones.
Mineralization at the Tablon Main Zone consists of massive to semi-massive,
fine- to medium-grained pyrrhotite, pyrite, sphalerite, galena, and
chalcopyrite. Gold grades commonly range from several grams per tonne to
approximately 30 g/t with rare intervals returning up to 118 g/t Au. Sulphide
bodies are generally massive to semi-massive and often include sulphide veinlet
or "stringer" zones below the massive sulphide body. Visible gold has been noted
within veinlet-style mineralization. Massive sulphides (mantos) at the
limestone/footwall andesite contact are commonly several metres thick (up to
7m). Fault related and intrusive contact related mineralization is quite
variable in size and morphology; drillhole intersections range up to 16.4
metres. Significant intersections from the 2001 drill program include:
--------------------------------------------------------------------------------
DDH From (m) To (m) Length (m) Gold (g/t)
--------------------------------------------------------------------------------
RT01-06 9.07 30.48 21.41 3.10
--------------------------------------------------------------------------------
RT01-07 10.08 30.00 19.92 2.41
--------------------------------------------------------------------------------
RT01-11 15.54 18.20 2.66 14.20
--------------------------------------------------------------------------------
RT01-13 13.41 38.83 25.42 8.78
--------------------------------------------------------------------------------
RT01-15 17.68 19.36 1.68 5.47
--------------------------------------------------------------------------------
RT01-16 16.17 20.07 3.9 13.18
--------------------------------------------------------------------------------
RT01-21 1.52 10.97 9.45 5.08
--------------------------------------------------------------------------------
RT01-22 47.44 50.3 2.86 15.22
--------------------------------------------------------------------------------
-53-
--------------------------------------------------------------------------------
RT01-29 34.85 51.25 16.4 17.99
--------------------------------------------------------------------------------
RT01-29 42 44.15 2.15 118.10
--------------------------------------------------------------------------------
TABLON WEST ZONE
Approximately 300 metres southwest of the Tablon Main Zone, massive sulphides
with significant gold grades outcrop at the Tablon West Zone. This zone was
drill-tested by holes RT01-23 to 27 during the 2001 drill program. The drilled
massive sulphides at Tablon West are hosted by the tuffaceous siltstone which
occurs stratigraphically above the more prospective limestone/footwall andesite
contact. This contact remains largely untested below the known mineralization.
Significant drill intersections at the Tablon West Zone include:
--------------------------------------------------------------------------------
DDH From (m) To (m) Length (m) Gold (g/t)
--------------------------------------------------------------------------------
RT01-25 33.00 36.10 3.10 12.97
--------------------------------------------------------------------------------
RT01-26 0.00 6.00 6.00 6.95
--------------------------------------------------------------------------------
RT01-26 1.00 2.00 1.00 17.37
--------------------------------------------------------------------------------
RT01-27 9.76 12.00 2.24 1.49
--------------------------------------------------------------------------------
In addition to the drilled zone at Tablon West, a newly discovered sulphide body
is located approximately 150 metres to the southeast and is named the Cliff
Zone. This zone is situated approximately 60 metres stratigraphically below the
sulphides at Tablon West. Massive and semi-massive sulphides at the Cliff Zone
occur along an intrusive contact and grade up to 8.79 g/t over 2.0 metres. The
Cliff Zone is significant in that it shows the potential for additional
Tablon-style massive sulphide mineralization stratigraphically below Tablon
West.
CERRO LAS MINAS TARGETS
The Cerro Las Minas area contains four known mineralized zones with significant
concentrations of gold. Three of the four zones (Peak Zone, West Breccia Zone,
and Minas Sur) have been mapped, sampled, and tested by geophysical surveys with
positive results. Styles of gold mineralization vary significantly between the
different zones on Cerro Las Minas (disseminated gold within phyllic alteration,
shear-zone hosted lode gold), but it is interpreted that all are related to a
single intrusion-related mineralizing event.
Geophysical results on Cerro Las Minas correlate extremely well with the known
mineralized zones and suggest that mineralization extends further than
previously known. The West Breccia and Peak zones are defined by high
chargeability responses and are connected by a zone of moderate chargeability.
The Minas Sur Zone occurs at the southeast end of a strong, linear chargeability
anomaly which extends at least 500 metres to the northwest and is open in that
direction. Minas Sur is considered to be a high priority drill target.
FUTURE WORK PLANNED
IMA has continued to maintain the Rio Tabaconas properties in Peru in good
standing, although the "force majeur" provision of the contact has been invoked
until a resolution of the local cultural, developmental and environmental
concerns pertaining to mining activities in the region can be addressed. Upon
reaching an agreement with the local communities IMA plans to proceed with a
Phase II diamond drill program. This program will include drilling of targets on
Cerro Tablon, Cerro Las Minas and possibly other areas of the property.
Management expects to revise the term of the option agreement upon resolution of
this issue.
ALTO CHICAMA PROPERTIES
During 2002, IMA acquired, through staking, 8,000 hectares (19,760 acres) of
mining property in the Alto Chicama area, La Libertad Department. After a brief
geological evaluation IMA has decided not to carry out any further work on the
properties.
-54-
DESCRIPTION OF SHARE CAPITAL
The authorized share capital of IMA consists of 200,000,000 shares divided into
100,000,000 Common Shares without par value and 100,000,000 Preferred Shares
without par value, of which 18,283,053 have been designated as Preferred Shares,
Series 1.
COMMON SHARES
All of the issued IMA Common Shares are fully paid and non-assessable. All IMA
Common Shares issued rank equally as to dividends, voting rights (one vote per
share) and distribution of assets on winding up or liquidation, subject to the
prior rights of the holders of Preferred Shares. Shareholders have no
pre-emptive rights, nor any right to convert their common shares into other
securities. There are no existing indentures or agreements affecting the rights
of shareholders other than the Notice of Articles and Articles of IMA.
PREFERRED SHARES
The IMA Preferred Shares are issuable in one or more series. The Preferred
Shares are entitled to priority over the IMA Common Shares with respect to the
payment of dividends and distributions in the event of the dissolution,
liquidation or winding-up of IMA. The IMA Preferred Shares rank equally within
their class as to dividends, voting rights, participation and assets in all
other respects. The issued IMA Preferred Shares are not subject to call or
assessment nor pre-emptive or conversion rights. The holders of the IMA
Preferred Shares as a class are not entitled to receive notice of, to attend or
to vote at any meeting of the Shareholders. The Preferred Shares are subject to
the rights and restrictions attached to the IMA Preferred Shares set out in the
Articles of IMA.
PREFERRED SHARES, SERIES 1
The Preferred Shares, Series 1 are entitled to receive non-cumulative dividends
in an amount determined by the board of directors from time to time. IMA may
redeem at any time on payment in cash or property for each share of an amount
equal to the Redemption Amount (as that term is defined within the special
rights and restrictions attached to the Preferred Shares, Series 1) together
with all declared and unpaid dividends thereon. The holder of the Preferred
Shares, Series 1 may require IMA to redeem the shares at any time upon giving
notice. The holders of the Preferred Shares, Series 1 as a class are not
entitled to receive notice of, to attend or to vote at any meeting of the
shareholders of IMA.
As at May 12, 2004, IMA's share capital is as follows:
NUMBER OUTSTANDING AS NUMBER OUTSTANDING AS
DESIGNATION OF SECURITY AMOUNT AUTHORIZED OF DECEMBER 31, 2003 AT MAY 12, 2004
Common Shares(1) 100,000,000 36,381,452 40,805,653
Preferred Shares(2) 100,000,000 18,283,053 18,283,053
(1) A total of 9,173,727 IMA Common Shares are also reserved for issuance
pursuant to the exercise of IMA Options, IMA Warrants and other rights
to acquire IMA Common Shares. See "Rights to Purchase Securities".
(2) 18,283,053 of the IMA Preferred Shares are designated as Preferred
Shares, Series 1, all of which are outstanding and held by Inversiones
Mineras Argentinas Inc. a wholly owned subsidiary of IMA.
PRINCIPAL INDEBTEDNESS
IMA has no long-term debt.
PRINCIPAL SHAREHOLDERS
To the best of the knowledge of management of IMA, there are no persons
beneficially own, directly or indirectly, or exercise control or direction over,
more than 10% of the issued and outstanding IMA Common Shares.
-55-
RIGHTS TO PURCHASE SECURITIES
A summary of all IMA Options and IMA Warrants outstanding as of the date of this
Management Proxy Circular is set forth below:
OPTIONS
All IMA Options granted by IMA to its directors, officers, employees and
consultants outstanding as of the date of this Management Proxy Circular are as
follows:
DESIGNATION OF OPTIONEES NUMBER OF OPTIONS EXERCISE PRICE EXPIRY DATE
Executive Officers 200,000 $0.40 July 19, 2006
(6 persons) 125,000 $0.50 May 2, 2007
400,000 $1.87 August 27, 2008
475,000 $3.10 March 24, 2009
Directors who are not Executive Officers 300,000 $0.90 May 30, 2008
(2 persons) 100,000 $1.87 August 27, 2008
245,000 $3.10 March 24, 2009
Employees 10,000 $0.40 July 19, 2006
(11 persons) 15,000 $0.84 March 7, 2008
330,000 $1.87 August 27, 2008
115,000 $3.10 March 24, 2009
Consultants 229,000 $0.50 May 2, 2007
(8 persons) 100,000 $0.84 March 7, 2008
550,000 $1.87 August 27, 2008
627,000 $3.10 March 24, 2009
Total: 3,821,000
=========
(1) The exercise price for each IMA Option was determined by the Board of
Directors based upon the closing market price of the IMA Common Shares
on the day preceding the date of grant.
(2) The closing market price of the IMA Common Shares on May 13, 2004 was
$2.07.
All IMA Options are non-transferable and terminate on the earlier of the expiry
date and on the 30th day following the day on which the director, officer,
employee or consultant, as the case may be, ceases to be either a director,
officer, employee or consultant of IMA.
SHARE PURCHASE WARRANTS
All IMA Warrants issued by IMA outstanding as at the date of this Management
Proxy Circular are as follows:
NUMBER OF EXERCISE
WARRANTS PRICE EXPIRY DATE
Warrants(1)................... 1,012,778 $0.60 May 23, 2004
Warrants(2)................... 1,059,322 $0.75 Sept. 15, 2004
Warrants(3)................... 1,051,960 $0.60 Sept. 27, 2004
Warrants(4)................... 750,000 $3.70 Feb. 23, 2005
Warrants(5)................... 200,000 $3.25 Feb. 23, 2005
Warrants(6)................... 100,000 $0.75 April 19, 2005
Warrants(7)................... 1,178,667 $0.90 March 16, 2005
---------
Total......................... 5,352,727
=========
-56-
(1) During the year ended December 31, 2002, IMA issued by way of a brokered
private placement a total of 1,722,222 Units at a price of $0.45 per Unit.
Each Unit consists of one IMA Common Share and One IMA Warrant. Each IMA
Warrant entitles the holder to acquire one IMA Common Share at an exercise
price of $0.60 per IMA Common Share until May 23, 2004.
(2) During the year ended December 31, 1999, IMA issued by way of a private
placement a total of 1,563,000 Units at a price of $0.60 per Unit. Each
Unit consisted of one IMA Common Share and one IMA Warrant. Each IMA
Warrant entitles the holder to acquire one IMA Common Share at an exercise
price of $0.75 until September 15, 2006.
(3) During the year ended December 31, 2002, IMA issued by way of a brokered
private placement a total of 1,554,915 Units at a price of $0.60 per Unit.
Each Unit consisted of one IMA Common Share and one IMA Warrant. Each IMA
Warrant entitles the holder to acquire one IMA Common Share at an exercise
price of $0.60 per IMA Common Share until September 27, 2004.
(4) On February 23, 2004, IMA issued by way of a brokered private placement a
total of 1,500,000 Units at a price of $3.10 per Unit. Each Unit consisted
of one IMA Common Share and one-half of one IMA Warrant. Each whole IMA
Warrant entitles the holder to acquire one additional IMA Common Share at
an exercise price of $3.70 per IMA Common Share until February 23, 2005.
(5) On February 23, 2004, in connection with the brokered private placement
referred to in Note (4) above, IMA issued 200,000 Agents' Compensation
Units. Each Agents' Compensation Unit is exercisable into one IMA Common
Share and one-half of one IMA Warrant. Each whole IMA Warrant is
exercisable into one IMA Common Share at a price of $3.70 per IMA Common
Share.
(6) During the year ended December 31, 2000, IMA issued by way of a private
placement a total of 637,000 Units at a price of $0.60 per Unit. Each Unit
consisted of one IMA Common Share and one IMA Warrant. Each IMA Warrant
entitles the holder to acquire one IMA Common Share at an exercise price
of $0.75 until April 19, 2005.
(7) During the year ended December 31, 2000, IMA issued by way of a private
placement a total of 1,397,167 Units at a price of $0.60 per Unit. Each
Unit consisted of one IMA Common Share and one IMA Warrant. Each IMA
Warrant entitles the holder to acquire one IMA Common Share at an exercise
price of $0.90 until March 16, 2005.
ESCROWED SHARES
As of the date of this Management Proxy Circular, IMA has no performance, escrow
or pooled shares outstanding.
PRIOR SALES
During the 12 months preceding the date of this Management Proxy Circular, IMA
has issued the following IMA Common Shares:
NO. OF IMA ISSUE PRICE
COMMON SHARES PER
MONTH OF ISSUE DESCRIPTION OF ISSUE ISSUED IMA COMMON SHARE GROSS PROCEEDS
April 2003 exercise of warrants 100,000 $0.53 $53,000
exercise of warrants 223,152 $0.54 $120,502
exercise of warrants 40,000 $0.55 $22,000
exercise of warrants 5,000 $0.75 $3,750
exercise of options 142,000 $0.40 $56,800
exercise of options 160,000 $0.50 $80,000
private placement 2,900,000 $0.90 $2,610,000
May 2003 exercise of warrants 55,555 $0.53 $29,444
exercise of warrants 85,000 $0.55 $46,750
exercise of options 4,250 $0.40 $1,700
exercise of options 20,500 $0.50 $10,250
June 2003 exercise of warrants 25,000 $0.55 $13,750
exercise of warrants 149,933 $0.75 $112,450
exercise of options 518,500 $0.40 $207,400
exercise of options 70,500 $0.50 $35,250
July 2003 exercise of warrants 54,000 $0.55 $29,700
exercise of warrants 501,434 $0.75 $376,076
exercise of warrants 50,000 $0.90 $45,000
exercise of options 100,000 $0.40 $40,000
-57-
NO. OF IMA ISSUE PRICE
COMMON SHARES PER
MONTH OF ISSUE DESCRIPTION OF ISSUE ISSUED IMA COMMON SHARE GROSS PROCEEDS
exercise of options 10,000 $0.50 $5,000
August 2003 exercise of warrants 18,468 $0.50 $9,234
exercise of warrants 55,000 $0.55 $30,250
exercise of warrants 69,477 $0.75 $52,108
exercise of warrants 93,500 $0.90 $84,150
exercise of warrants 5,888 $1.10 $6,477
exercise of options 14,400 $0.40 $5,760
September 2003 exercise of warrants 17,698 $0.50 $8,849
exercise of warrants 63,000 $0.55 $34,650
exercise of warrants 25,000 $0.75 $18,750
exercise of warrants 77,800 $0.90 $70,020
exercise of warrants 110,000 $1.10 $121,000
exercise of options 322,600 $0.40 $129,040
exercise of options 70,000 $0.50 $35,000
exercise of options 7,000 $0.84 $5,880
October 2003 exercise of warrants 12,500 $0.75 $9,375
exercise of warrants 28,130 $0.90 $25,317
exercise of warrants 45,478 $1.10 $50,026
exercise of options 14,600 $0.40 $5,840
exercise of options 235,000 $0.50 $117,500
exercise of options 21,500 $0.84 $18,060
November 2003 exercise of warrants 175,000 $0.60 $105,000
exercise of warrants 161,667 $0.75 $121,250
exercise of warrants 15,000 $1.10 $16,500
December 2003 exercise of warrants 364,444 $0.60 $218,666
exercise of warrants 27,500 $0.75 $20,625
exercise of warrants 34,000 $1.10 $37,400
exercise of options 10,000 $0.40 $4,000
exercise of options 100,000 $0.50 $50,000
January 2004 exercise of warrants 32,000 $0.60 $19,200
exercise of warrants 157,333 $1.10 $173,066
exercise of options 10,000 $0.40 $4,000
exercise of options 30,000 $0.50 $15,000
exercise of options 50,000 $0.84 $42,000
February 2004 exercise of warrants 120,000 $0.60 $72,000
exercise of warrants 7,500 $0.75 $5,625
exercise of warrants 75,000 $0.90 $67,500
exercise of warrants 299,700 $1.10 $329,670
exercise of options 6,250 $0.40 $2,500
private financing 1,500,000 $3.10 $4,650,000
March 2004 exercise of warrants 73,667 $0.75 $55,250
exercise of warrants 4,000 $0.90 $3,600
exercise of warrants 197,040 $1.10 $216,744
exercise of options 5,000 $1.87 $9,350
April 2004 exercise of warrants 799,556 $0.60 $479,734
exercise of warrants 100,000 $0.75 $75,000
exercise of warrants 185,820 $0.90 $167,238
exercise of warrants 683,435 $1.10 $751,779
exercise of warrants 10,000 $1.87 $18,700
exercise of options 27,900 $0.40 $11,160
exercise of options 30,000 $0.84 $25,200
No IMA Common Shares were issued during the period May 1 to May 12, 2004.
-58-
PRICE RANGE AND TRADING VOLUME
The IMA Common Shares are listed and posted for trading on the TSX-V. The
following table sets out, for the periods indicated, the high and low sales
price and the volume of trading for the IMA Common Shares during the periods
indicated:
PERIOD HIGH LOW VOLUME
2002
First Quarter................................................. $0.56 $0.39 2,690,980
Second Quarter................................................ $0.94 $0.42 9,503,396
Third Quarter................................................. $0.55 $0.34 2,360,296
Fourth Quarter................................................ $0.56 $0.35 2,753,752
2003
First Quarter................................................. $1.06 $0.49 13,712,400
Second Quarter................................................ $1.65 $0.78 9,170,600
Third Quarter................................................. $2.54 $1.32 12,946,600
Fourth Quarter................................................ $2.37 $1.42 14,026,200
2004
January 2004.................................................. $2.50 $1.73 3,755,800
February 2004................................................. $3.81 $2.46 5,687,200
March 2004.................................................... $3.60 $2.13 6,103,600
April, 2004................................................... $3.57 $2.39 2,507,000
May 1 to May 13, 2004......................................... $2.70 $2.05 1,084,332
The closing market price of the IMA Common Shares on the TSX-V on May 13, 2004
was $2.07.
DIVIDEND RECORD
IMA has not paid any dividends on the IMA Common Shares since its incorporation,
nor has it any present intention of paying dividends, as it anticipates that all
available funds will be used to undertake exploration and development programs
on its mineral properties as well as for the acquisition of additional mineral
properties.
DIRECTORS AND OFFICERS
The names, countries of residence, positions held with IMA and principal
occupation of the directors and officers of IMA are as set out under the heading
"Annual Meeting Business - Election of Directors".
EXECUTIVE COMPENSATION
See "Annual Meeting Matters - Executive Compensation".
-59-
SUMMARY FINANCIAL INFORMATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The selected consolidated financial information presented below should be read
in conjunction with "Management's Discussion and Analysis" below and the
consolidated financial statements and notes thereto which are incorporated by
reference in, and form a part of, this Management Proxy Circular. The
information below has been prepared in accordance with Canadian generally
accepted accounting principles.
YEAR ENDED DECEMBER 31
(Audited)
2003 2002 2001
---- ---- ----
INCOME STATEMENT DATA
Total Revenue Nil Nil Nil
Income (loss) from Continuing Operations (3,418,418) (1,440,106) (881,875)
General and Administrative Expenses 3,164,216 1,458,276 945,685
Net Income (Loss) (3,418,418) (1,440,106) (881,875)
Net Income (Loss) per Common Share basic and diluted $(0.11) $(0.06) $(0.06)
Dividends Nil Nil Nil
QUARTERLY INFORMATION
The following is a summary of certain selected unaudited financial information
for the most recent eight fiscal quarters comprising IMA's preceding two fiscal
years:
QUARTER ENDED - UNAUDITED
QUARTERLY
FINANCIAL INFORMATION MARCH 31, 2003 JUNE 30, 2003 SEPT. 30, 2003 DEC. 31, 2003
2003
Revenues Nil Nil Nil Nil
Net income (loss) before income (309,032) (407,386) (563,502) (2,138,498)
taxes
Net income (loss): (309,032) (407,386) (563,502) (2,138,498)
Earnings (loss) per share: (0.01) (0.01) (0.02) (0.07)
Fully diluted earnings (loss) (0.01) (0.01) (0.02) (0.07)
per share:
-60-
QUARTER ENDED - UNAUDITED
QUARTERLY
FINANCIAL INFORMATION MARCH 31, 2002 JUNE 30, 2002 SEPT. 30, 2002 DEC. 31, 2002
2002
Revenues Nil Nil Nil Nil
Net income (loss) before income (232,679) (436,351) (284,128) (486,948)
taxes
Net income (loss): (232,679) (436,351) (284,128) (486,948)
Earnings (loss) per share: (0.01) (0.02) (0.01) (0.02)
Fully diluted earnings (loss) per (0.01) (0.02) (0.01) (0.02)
share:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
CRITICAL ACCOUNTING POLICIES
Reference should be made to the change in accounting policy and significant
accounting policies contained in notes 2 and 3 of the December 31, 2003
consolidated financial statements of IMA attached hereto. These accounting
policies can have a significant impact of the financial performance and
financial position of IMA.
USE OF ESTIMATES
The preparation of financial statements in conformity with Canadian GAAP
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the period. Significant areas requiring the use of
management estimates relate to the determination of environmental obligations
and impairment of mineral properties and deferred costs. Actual results may
differ from these estimates.
MINERAL PROPERTIES AND DEFERRED COSTS
Consistent with IMA's accounting policy disclosed in Note 3 of the consolidated
financial statements attached hereto, direct costs related to the acquisition
and exploration of mineral properties held or controlled by it have been
capitalized on an individual property basis. It is IMA's policy to expense any
exploration associated costs not related to specific projects or properties.
Management periodically reviews the recoverability of the capitalized mineral
properties. Management takes into consideration various information including,
but not limited to, results of exploration activities conducted to date,
estimated future metal prices and reports and opinions of outside geologists,
mine engineers and consultants. When it is determined that a project or property
will be abandoned or its carrying value has been impaired, a provision is made
for any expected loss on the project or property.
IMA's operations and results are subject to a number of different risks at any
given time. These factors, include but are not limited to disclosure regarding
exploration, additional financing, project delay, titles to properties, price
fluctuations and share price volatility, operating hazards, insurable risks and
limitations of insurance, management, foreign country and regulatory
requirements, currency fluctuations and environmental regulations risks.
IMA's consolidated financial statements were prepared on a going concern basis
which assumes that it will be able to realize assets and discharge liabilities
in the normal course of business.
-61-
RESULTS OF OPERATIONS
The following discussion of the results of operations of IMA for the fiscal
years ended December 31, 2003, 2002 and 2001 should be read in conjunction with
the consolidated financial statements of IMA attached hereto and related notes
included therein.
YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002
IMA reported a consolidated loss of $3,418,418 ($0.11per share) in 2003, an
increase of $1,978,312 from the loss of $1,440,106 ($0.06 per share) in 2002.
The increase in the loss experienced by IMA in 2003, compared to 2002, was due
to a number of factors of which $1,705,940 can be attributed to operating
expenses and $272,372 to non-operating items.
In early 2003 IMA focused its efforts on its Navidad Project in Chubut Province
located in southern Argentina. The preliminary results of its initial
exploration efforts were very encouraging. Phase I of a drilling program
commenced in November 2003 and continued into March 2004. A second phase is
scheduled to commence in May 2004. IMA believes that the Navidad Project is
worthy of its primary interest and accordingly has focused the majority of its
available resources on this project and expects to continue to do so. IMA has
continued to maintain the Rio Tabaconas properties in Peru in good standing,
although the "force majeur" provision of the contact has been invoked until a
resolution of the local cultural, developmental and environmental concerns
pertaining to mining activities in the region can be addressed. On December 15,
2003 Barrick served notice that they would not be exercising their option on the
Potrerillos or Rio de las Taguas properties and IMA is pursuing other partners
for the continued exploration of these drill ready projects. IMA entered into a
number of joint venture agreements which resulted in the farm-out of several of
its properties.
On March 5, 2004 Minera Aquiline Argentina SA, a subsidiary of Aquiline,
commenced an action against IMA seeking a constructive trust over the Navidad
Area Properties. IMA believes the Aquiline legal action is without merit and
will vigorously defend itself. A Statement of Defence has been filed. The trial
has been set for October 11, 2005 in Vancouver, British Columbia. At this date
the outcome is not determinable.
IMA's 2003 operating expenses were $3,164,216 an increase of $1,705,940 from
2002. A significant portion of the increase for 2003 is attributed to IMA's
application of the fair value method of accounting for stock options granted to
its employees and directors. As permitted, IMA has elected prospective
application, effective January 1, 2003. Previously options granted to IMA's
directors and employees were only disclosed on a pro forma basis in the notes to
IMA's consolidated financial statements. During 2003 IMA recorded a non-cash
compensation expense of $1,487,235 relating to stock options granted to IMA's
employees, directors and consultants. In 2002, IMA recorded an expense of
$128,260 for stock options granted to its consultants and disclosed a pro forma
charge of $140,840 for stock options granted to its directors and employees. Had
IMA applied retroactive treatment it would have recorded an expense of $269,100
for 2002. Much of the balance of the increase in the operating expenses can be
attributed to the Navidad Project program: (1) Corporate development and
investor relations increased $103,333; (2) General exploration increased
$46,638; (3) Travel increased $25,465. The increase of $124,935 in professional
fees is primarily due to legal costs incurred in connection with the Aquiline
legal action.
IMA recorded a gain of $481,779 on the optioning of properties to Ballad and
Amera.
IMA wrote down the value of its mineral properties and deferred costs by
$776,626 in 2003. This adjustment of property values reflects the expiration of
the agreement with Barrick on IMA's Valle de Cura area properties. In 2002 IMA
did not write off any mineral properties and deferred costs.
Interest and other income was $66,561 in 2003, an increase of $39,976 from 2002,
primarily as a result of an increase of funds on deposit.
In 2003 IMA received cash proceeds of $6,467,245 from the sale of common shares
less costs of $188,850. IMA's total assets increased from $7,432,489 at December
31, 2002 to $12,097,844 at December 31, 2003. IMA's cash position at December
31, 2003 was $4,454,241 an increase of $3,018,117 from December 31, 2002.
-62-
On May 3, 2004 IMA announced a proposed corporate reorganization (the
"Reorganization"). The effect of the Reorganization will be to transfer the
Transferred Assets to Golden Arrow. IMA will retain the Navidad Area Properties
and will be responsible for IMA's accounts payable. The IMA Shareholders will
receive Golden Arrow Common Shares which will result in an identical percentage
ownership by the IMA Shareholders before and after the Reorganization.
YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001
IMA reported a consolidated loss of $1,440,106 ($0.06 per share) in 2002, an
increase of $558,231 from the loss of $881,875 ($0.06 per share) in 2001. The
increase in the loss experienced by IMA in 2002, compared to 2001, was due to a
number of factors of which $512,591 can be attributed to operating expenditures
and $45,640 to non-operating items.
As a result of adopting the new section of the Canadian Institute of Chartered
Accountants' Handbook Section 3870 effective January 1, 2002 IMA has recognized
compensation expense of $128,260 for stock options granted to consultants which
is included in the increased operating expenditures.
As a result of extremely encouraging results from Phase I drilling in the fall
of 2001, IMA continued to focus its main exploration activities on the Rio
Tabaconas project in Peru for the first half of 2002 by carrying out extensive
pre-drill work to further define drill targets on the property's most advanced
gold zones, Tablon and Cerro Las Minas. As a result of the pre-drill program the
potential size of the mineralized zone was significantly expanded. A substantial
follow up Phase II drill program was developed to test the identified drill
targets. In order to obtain financing for the work. IMA proceeded with an
extensive market awareness program and investor relations campaign throughout
North America and Europe with the assistance of several consultants. During the
first six months of 2002 IMA raised net equity proceeds of $1,659,827 for
further exploration and property payments in Peru and Argentina and general
working capital.
By the middle of the year IMA acquired an additional 8,000 ha (10,851.3 acres)
in Northern Peru and increased its properties in the Patagonia region in
southern Argentina during the remainder of the year to a total of 91,423 ha
(124,007 acres) as compared to 7,650.3 ha (10,377 acres in 2001).
As a result of the Provincial and Municipal elections in Peru held in November
2002 and the substantial investment required to advance the Rio Tabaconas
project through the next exploration stage, in June 2002 IMA announced its
intention to take a more measured approach to exploration on the Rio Tabaconas
project to ensure that all local cultural, developmental and environmental
concerns in the region have been addressed . IMA intends to conduct further
exploration only after an agreement with the local community of Tamborapa has
been finalize.
In the meantime, IMA devoted its attention to aggressively assessing its grass
roots properties, acquiring and advancing some of the exciting projects in
Argentina such as Las Bayas and lately the Navidad Project.
Through out the year exploration on the Potrerillos and Rio de las Taguas
properties was on hold pending a resumption of exploration and development
activities at the nearby Pascua-Lama and Veladero deposits by Barrick. The
property option agreement due to expire on November 30, 2002, was extended by
mutual consent to allow Barrick's technical team to review additional properties
of IMA. Subsequent to the year end, Barrick and IMA agreed to extend the
Selection Notice Period in the option agreement from November 30, 2002 to
December 30, 2003. In return for the extension Barrick paid US$65,000 which will
be used to make payments to maintain the option properties in good standing.
As a result of the above corporate activities there were increases in to the
following expenses: (i) Administration and management services - $4,218; (ii)
Bank charges and interest - $3,028; (iii) Corporate development and investor
relations - $161,175 of which $51,417 reflects the cost of full time investor
relations staff, $51,906 for investor relations consultant, $30,223 for various
media advertising and $25,323 for international and other conferences; ( iv)
General exploration - $70,446 as a result of an aggressive examination of
grassroots properties mainly in the Patagonia region; ( v ) Printing - $10,171
mainly for investor presentation material; ( vi) Professional fees - $67,776
which relates to the ongoing North America and European market awareness
program; ( vii ) Salaries and employee benefits - $998 reflects a slight
increase in administration wages and benefits cost; (viii) Stock based
compensation - $128,260 for stock options granted to consultants, as required by
the CICA Handbook Section 3870
-63-
effective January 1, 2002; ( ix ) Telephone and utilities - $ 9,230 due to the
increase in correspondence with Europe, North America and South America; ( x )
Transfer agent and regulatory fees - $20,235 as a result of the increase in
equity financings; (xi) Travel and accommodation - $42,745 mainly due to the
European market awareness and investor relations program and trips to Peru and
Argentina for property negotiations.
The following expenses decreased for the year (i) Amortization and depreciation
- $1,885; and (ii) Office and sundry - $3,052 as a result of cost recovery from
a private company sharing office space; (iii) Rent, parking and storage - $754
as a result of cost recovery from a private company sharing office space;
During 2002 IMA did not write-off of mineral claims and deferred costs, compared
to a write off of $21,483 in 2001. The mineral claims written off during 2001
were 100 % owned by IMA.
Interest and miscellaneous income reported for 2002 was $26,585 a decrease of
$70,695 from $97,280 reported in 2001 as a result of lower interest rates paid
on funds on deposit and no overhead charge for the exploration expenditures on
the Valle de Cura property allowed under the Barrick agreement.
During 2002, IMA did not dispose of any common shares of Viceroy. IMA sold
100,000 Viceroy shares in 2001 for cash proceeds of $16,966 resulting in a loss
or $6,534. No provision was required for Marketable Securities for the year
ended 2002 as compared to $22,483 in 2001.
IMA's total assets increased from $5,487,374 at December 31, 2001 to $7,432,489
at December 31, 2002. The increase is attributed to the equity financing
conducted by IMA through four private placements and exercise of warrants and
stock options issuing 7,958,387 common shares for proceeds of $3,458,382 before
deducting share issue costs of $194,056.
LIQUIDITY AND CAPITAL RESOURCES
IMA's cash position at December 31, 2003 was $4,454,241 an increase of
$3,018,117 from December 31, 2002. Total assets increased from $7,432,489 at
December 31, 2002 to $12,097,844 at December 31, 2003 funded primarily from the
issue of common shares for net proceeds of $6,352,774. During the year ended
December 31, 2003 IMA completed a brokered private placement for 2,900,000 units
at a price of $0.90 per unit, for cash proceeds of $2,421,150, net of share
issue costs of $188,850 which closed in April 2003. Each unit consisted of one
common share and one-half non-transferable common share purchase warrant. One
whole warrant entitles the holder to purchase one common share for the exercise
price of $1.10 per share on or before April 28, 2004. In addition, options and
warrants were exercised which resulted in cash proceeds of $3,931,624 to IMA
during the year.
In February 2004 IMA completed a brokered private placement of 1,500,000 units
at $3.10 per unit, for proceeds of $4,307,500 net of costs of $342,500. In
addition IMA has received $2,308,105 from the exercise of warrants and options
from January 1 to April 27, 2004.
IMA has capitalized expenditures of approximately $1,500,000 subsequent to
December 31, 2003 on the Navidad Project related to the Phase I drilling program
which continued into March 2004. This expenditure is not reflected in the Pro
Forma Consolidated Financial Statements of IMA attached hereto. See "Information
Concerning IMA - After the Arrangement - Selected Pro-Forma Financial
Information".
As at April 30, 2004 IMA had working capital of approximately $7,500,000.
IMA considers that it has adequate resources to maintain its ongoing operations
but currently does not have sufficient working capital to fund all of its
planned exploration work and property commitments. A Phase II budget for the
Navidad Project has been approved in the amount of $2,100,000. IMA will continue
to rely on successfully completing additional equity financing and/or conducting
joint venture arrangements to further exploration on its properties. There can
be no assurance that IMA will be successful in obtaining the required financing
or negotiating joint venture agreements. The failure to obtain such financing or
joint venture agreements could result in the loss of or substantial dilution of
its interest in its properties.
-64-
IMA's management may elect to acquire new projects, at which time additional
equity financing may be required to fund overhead and maintain its interests in
current projects, or may decide to relinquish certain of its properties. These
decisions will be based on the results of ongoing exploration programs and the
response of equity markets to the projects and business plan.
IMA does not know of any trends, demand, commitments, events or uncertainties
that will result in, or that are reasonably likely to result in, its liquidity
either materially increasing or decreasing at present or in the foreseeable
future. Material increases or decreases in liquidity are substantially
determined by the success or failure of the exploration programs or the
acquisition of projects.
IMA does not now and does not expect to engage in currency hedging to offset any
risk of currency fluctuations.
LEGAL PROCEEDINGS
In March 2004, Minera Aquiline Argentina S.A., a wholly-owned subsidiary of
Aquiline, commenced a legal proceeding against IMA asserting that IMA unlawfully
used confidential information, and is seeking a constructive trust over the
Navidad Area Properties and damages. IMA is defending this action. The trial has
been set for October 11, 2005 in Vancouver, British Columbia.
IMA commenced an action against Aquiline Resources Inc. by way of Writ of
Summons filed on October 15, 2003 in the Supreme Court of British Columbia
Vancouver Registry Action No. S035507. In the action, IMA alleges that Aquiline
wrongfully interfered with a "bought deal" private placement financing scheduled
to close on October 2, 2003 through the issuance of a letter which falsely
asserted that IMA had misused confidential information belonging to Aquiline or
its subsidiary in staking its Navidad mineral claims. Aquiline filed an
Appearance to the claim on October 24, 2003. To date, no further steps have been
taken in the action.
AUDITORS, TRANSFER AGENT AND REGISTRAR
The auditors of IMA are PricewaterhouseCoopers LLP, 7th Floor, 250 Howe Street,
Vancouver, British Columbia V6C 3S7.
The registrar and transfer agent of IMA is Computershare Trust Company of
Canada, 2nd Floor, 510 Burrard Street, Vancouver, British Columbia V6C 3B9.
MATERIAL CONTRACTS
Except for contracts entered into in the ordinary course of business, the
following are the only contracts entered into by IMA, or its subsidiaries,
within a two year period preceding the date of this Management Proxy Circular
which may reasonably be regarded as presently material.
1. Consulting Services Agreement between Oxbow International Marketing Corp.
("Oxbow") and IMA Resource Corporation, dated January 1, 1999 and amended
on July 1, 1996, July 1, 1999, July 1, 2001, and July 1, 2002. See
"Annual Meeting Matters - Executive Compensation - Management Contracts".
2. Leter of Intent dated March 6, 2003, as subsequently amended, among IMA,
Inversiones Mineras Argentinas S.A. and Amera. See "Information
Concerning IMA - Before the Arrangement - Principal Properties - Arturo's
Property (Mogote)".
3. Arrangement Agreement. See "The Arrangement - The Arrangement Agreement."
4. Indemnity Agreement to be entered into between IMA and Golden Arrow in
connection with the Arrangement. See "The Arrangement - Conditions to the
Arrangement Becoming Effective" and "Information Concerning IMA - Before
the Arrangement - Legal Proceedings".
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INFORMATION CONCERNING IMA - AFTER THE ARRANGEMENT
The following pro forma information concerning IMA assumes the completion of and
gives effect to the Arrangement.
CORPORATE STRUCTURE
For a simplified corporate chart setting forth all of IMA's material
subsidiaries, their jurisdictions of incorporation, the percentage of voting
securities or ownership held by IMA and the principal mineral resource
properties held by each of them as of the Effective Date, see "The Arrangement -
Details of the Arrangement".
MINERAL PROPERTIES OF IMA
As of the Effective Date, IMA will hold interests in the Navidad Area
Properties, including the Navidad Project. For a description of the properties,
see "Information Concerning IMA - Before the Arrangement - Mineral Properties -
Navidad Project".
DESCRIPTION OF SHARE CAPITAL
As of the Effective Date, the authorized capital of IMA will consist of an
unlimited number of New IMA Common Shares and 100,000,000 IMA Preferred Shares.
All of the New IMA Common Shares will be fully paid and not subject to any
future call or assessment. All of the New IMA Common Shares will rank equally as
to voting rights, participation in a distribution of the assets of IMA on a
liquidation, dissolution or winding-up of IMA and the entitlement to dividends.
Shareholders will be entitled to receive notice of all shareholder meetings and
to attend and vote at such meetings. Each New IMA Common Share will carry with
it the right to one vote. See "Information Concerning IMA - Description of Share
Capital - Preferred Shares - Preferred Shares, Series 1" for a description of
the special rights and restrictions attached to the IMA Preferred Shares and the
Preferred Shares, Series 1.
As of the Effective Date, IMA's share capital will be as follows:
NUMBER OUTSTANDING
DESIGNATION OF SECURITY AMOUNT AUTHORIZED AS AT THE EFFECTIVE DATE
Common Shares unlimited 40,805,653(1)
Preferred Shares 100,000,000 18,283,053
(1) A total of 8,160,949 New IMA Common Shares will also be reserved for
issuance pursuant to the exercise of IMA Options, IMA Warrants and other
rights to acquire IMA Common Shares. See "Information Concerning IMA -
Before the Arrangement - Rights to Purchase Securities". These figures
assume no further IMA Common Shares are issued between the date hereof
and the Effective Date and that 1,012,778 IMA Warrants expire on May 23,
2004.
PRINCIPAL INDEBTEDNESS
As of the Effective Date, IMA will have no long-term debt.
PRINCIPAL SHAREHOLDERS
To the best of the knowledge of management of IMA, that no persons which
beneficially own, directly or indirectly, or exercise control or direction over,
more than 10% of the issued and outstanding New IMA Common Shares as of the
Effective Date.
RIGHTS TO PURCHASE SECURITIES
For a summary of all options, warrants and other rights to acquire securities of
IMA as of the Effective Date, see "The Arrangement - Effect of the Arrangement
on Certain Outstanding Securities of IMA".
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DIRECTORS AND OFFICERS
As of the Effective Date, and subject to being elected at the Meeting, the
Directors and Officers of IMA will be as set forth under "Information Concerning
IMA - Annual Meeting Matters - Election of Directors and Officers".
MATERIAL CONTRACTS
As of the Effective Date, IMA or its subsidiaries will remain a party to all
material contracts described under "Information Concerning IMA - Before the
Arrangement - Material Contracts", except for those material contracts
pertaining to the Golden Arrow Properties which will be transferred or assumed
by Golden Arrow or its subsidiaries as described under "Information Concerning
Golden Arrow - Material Contracts".
SELECTED PRO FORMA FINANCIAL INFORMATION
The following table sets forth selected pro forma financial information for IMA
after giving effect to the Arrangement and should be read in conjunction with
the Pro Forma Consolidated Financial Statements of IMA and Golden Arrow included
in Schedule "E" to this Management Information Circular.
AS AT
DECEMBER 31, 2003
Current Assets $10,262,787
Mineral Properties and deferred exploration
and development costs $1,291,226
Capital Assets $36,186
Liabilities $418,234
Shareholders' Equity $11,171,965
INFORMATION CONCERNING GOLDEN ARROW
The following pro forma information concerning Golden Arrow assumes the
completion of and gives effect to the Arrangement.
INCORPORATION
Golden Arrow was incorporated on May 11, 2004 under the laws of the Province of
British Columbia under the name "Golden Arrow Resources Corporation". Golden
Arrow's registered office is located at Suite 3350, Four Bentall Centre, 1055
Dunsmuir Street, PO Box 49222, Vancouver, British Columbia V7X 1L2 and its
executive offices are located at 709-837 West Hastings Street, Vancouver,
British Columbia.
CORPORATE STRUCTURE
For a simplified corporate chart setting forth all of Golden Arrow's material
subsidiaries, their jurisdictions of incorporation, the percentage of voting
securities or ownership held by Golden Arrow and the principal mineral resource
properties held by each of them as of the Effective Date, see "The Arrangement -
Details of the Arrangement".
BUSINESS AND MINERAL PROPERTIES OF GOLDEN ARROW
As of the Effective Date, Golden Arrow, together with its subsidiaries, will be
engaged in the acquisition, exploration and development of precious metals
mineral resource properties in South America, principally in Peru and Argentina.
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As of the Effective Date, Golden Arrow will hold interests in the Golden Arrow
Properties. For a description of these projects, see "Information Concerning IMA
- Before the Arrangement - Mineral Properties of IMA - Non-Navidad Projects".
DESCRIPTION OF SHARE CAPITAL
As of the Effective Date, the authorized capital of Golden Arrow will consist of
an unlimited number of Golden Arrow Common Shares. All of the issued and
outstanding Golden Arrow Common Shares will be fully paid and not subject to any
future call or assessment. All of the Golden Arrow Common Shares will rank
equally as to voting rights, participation in a distribution of the assets of
Golden Arrow on a liquidation, dissolution or winding-up of Golden Arrow and the
entitlement to dividends. The Golden Arrow shareholders will be entitled to
receive notice of all shareholder meetings and to attend and vote at such
meetings. Each Golden Arrow Common Share will carry with it the right to one
vote.
As of the Effective Date, Golden Arrow's share capital will be as follows:
NUMBER OUTSTANDING
DESIGNATION OF SECURITY AMOUNT AUTHORIZED AS AT EFFECTIVE DATE
Common Shares unlimited 4,080,565(1)
(1) This figure assumes that no IMA Common Shares are issued between the date
of this Management Proxy Circular and the Effective Date. Under the
Arrangement, each whole IMA Warrant outstanding on the Effective Date
will, upon exercise of such IMA Warrant after the Effective Date, entitle
the holder thereof to receive one New IMA Common Share and one tenth of
one Golden Arrow Common Share at the exercise price per share provided
for in the certificate representing such IMA Warrant, subject to the
terms and conditions of such certificate. An aggregate of 1,012,778 IMA
Warrants will expire, if not exercised, on May 23, 2004. Accordingly,
assuming that no IMA Warrants are exercised prior to the Effective Date
and that all IMA Warrants that are due to expire on May 23, 2004 expire
on that date, Golden Arrow will on the Effective Date have common share
purchase warrants outstanding that entitle the holders to purchase an
aggregate of 433,995 Golden Arrow Common Shares.
PRINCIPAL INDEBTEDNESS
As of the Effective Date, Golden Arrow will have no long-term debt.
PRINCIPAL SHAREHOLDERS
As of the Effective Date, any person who currently beneficially owns, directly
or indirectly, or exercise control or direction over, more than 10% of the
issued and outstanding IMA Common Shares will retain the same percentage
ownership in Golden Arrow Common Shares.
RIGHTS TO PURCHASE SECURITIES
A summary of all options, warrants and other rights to acquire securities of
Golden Arrow as of the Effective Date is set forth below.
OPTIONS
As of the Effective Date, there will be no options outstanding. The board of
directors of Golden Arrow may grant incentive stock options to purchase Golden
Arrow Common Shares to its directors, officers, employees and consultants in
amounts to be determined by the board of directors of Golden Arrow at exercise
prices in compliance with the requirements of the TSX-V pursuant to a stock
option plan, the terms of which are summarized below.
Golden Arrow has implemented an incentive stock option plan (the "Stock Option
Plan"). The TSX-V requires all Exchange listed companies adopt stock options
plans, and such plans must contain certain provisions. The Stock Option Plan is
subject to approval by the TSX-V. The Stock Option Plan is expected to benefit
Shareholders by enabling Golden Arrow to attract and retain high calibre
personnel by offering to them an opportunity to share in any increase in value
of the Golden Arrow Common Shares resulting from their efforts. The purpose of
the Stock
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Option Plan is to provide incentive to Golden Arrow's employees, officers,
directors, and consultants responsible for the continued success of Golden
Arrow. The following is a summary of the terms of the Stock Option Plan.
ADMINISTRATION
The Stock Option Plan will be administered by Golden Arrow's board of directors
(the "Golden Arrow Board") or a committee thereof.
DESCRIPTION OF STOCK OPTION PLAN
The effective date (the "Effective Date") of the Stock Option Plan is May 14,
2004. The Stock Option Plan will terminate ten years from the Effective Date.
The Stock Option Plan provides that options may be granted to any employee,
officer, director or consultant of Golden Arrow or a subsidiary of Golden Arrow.
The options issued pursuant to the Stock Option Plan will be exercisable at a
price not less than the market value of Golden Arrow's common shares at the time
the option is granted. "Market Value" means:
(a) for each organized trading facility on which the common shares
are listed, Market Value will be the closing trading price of
the Golden Arrow Common Shares on the day immediately preceding
the grant date less any discounts permitted by the applicable
regulatory authorities;
(b) if Golden Arrow's Common Shares are listed on more than one
organized trading facility, the Market Value shall be the Market
Value as determined in accordance with subparagraph (a) above
for the primary organized trading facility on which the common
shares are listed, as determined by the Golden Arrow Board,
subject to any adjustments as may be required to secure all
necessary regulatory approvals;
(c) if Golden Arrow's Common Shares are listed on one or more
organized trading facilities but have not traded during the ten
trading days immediately preceding the grant date, then the
Market Value will be determined by the Golden Arrow Board,
subject to any adjustments as may be required to secure all
necessary Regulatory Approvals; and
(d) if Golden Arrow's Common Shares are not listed for trading on a
stock exchange or over the counter market, the value which is
determined by the Golden Arrow Board to be the fair value of
IMA's common shares, taking into consideration all factors that
the Golden Arrow Board deems appropriate, including, without
limitation, recent sale and offer prices of Golden Arrow shares
in private transactions negotiated at arms' length.
Options under the Stock Option Plan will be granted for a term not to exceed
five years from the date of their grant, provided that if Golden Arrow is then a
"Tier 1" company listed on the Exchange, the term of the option will be not more
than ten years.
Options granted under the Stock Option Plan will be subject to such vesting
schedule, if any, as the Committee may determine. In the event that an option is
to be terminated prior to expiry of its term due to certain corporate events,
all options then outstanding shall become immediately exercisable for 10 days
after notice thereof, notwithstanding the original vesting schedule.
Options will also be non-assignable and non-transferable, provided that they
will be exercisable by an optionee's legal heirs, personal representatives or
guardians for up to 12 months following the death or termination of an optionee
due to disability, or up to 12 months following the death of an employee if the
employee dies within 12 months of termination due to disability. All such
options will continue to vest in accordance with their original vesting
schedule.
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If a material alteration in the capital structure of Golden Arrow occurs as a
result of a recapitalization, stock split, reverse stock split, stock dividend,
or otherwise, the Golden Arrow Board shall make adjustments to the Stock Option
Plan and to the options then outstanding under it as the Golden Arrow Board
determines to be appropriate and equitable under the circumstances, unless the
Golden Arrow Board determines that it is not practical or feasible to do so, in
which event the options granted under the Stock Option Plan will terminate as
set forth above.
WARRANTS
As of the date of this Management Proxy Circular, there are no share purchase
warrants of Golden Arrow outstanding. However, holders of IMA Warrants are
entitled to receive Golden Arrow Common Shares upon exercise of the IMA
Warrants.
As of the date of this Management Proxy Circular, there are 5,352,727 IMA
Warrants outstanding. Holders of IMA Warrants are entitled to receive one Golden
Arrow Common Share for the exercise of every ten IMA Warrants. The following is
a list of the Golden Arrow Common Shares issuable upon exercise of the IMA
Warrants.
NO. OF GOLDEN ARROW COMMON
NUMBER OF SHARES ISSUABLE UPON
IMAWARRANTS EXERCISE OF IMA WARRANTS EXPIRY DATE
Warrants 1,012,778 101,278(1) May 23, 2004
Warrants 1,059,322 105,932 Sept. 15, 2004
Warrants 1,051,960 105,196 Sept. 27, 2004
Warrants 750,000 75,000 Feb. 23, 2005
Warrants 200,000 20,000 Feb. 23, 2005
Warrants 100,000 10,000 April 19, 2005
Warrants 1,178,667 117,867 March 16, 2005
--------- -------
Total 5,352,727 535,273
========= =======
(1) An aggregate of 1,012,778 IMA Warrants will expire, if not exercised,
on May 23, 2004. Accordingly, assuming that no IMA Warrants are
exercised prior to the Effective Date and that all IMA Warrants that
are due to expire on May 23, 2004 expire on that date, Golden Arrow
will on the Effective Date have common share purchase warrants that
entitle the holders to purchase an aggregate of 433,995 Golden Arrow
Common Shares.
See "The Arrangement - Effect of the Arrangement on Certain Outstanding
Securities of IMA - Share Purchase Warrants". See also "Information Concerning
IMA - Before the Arrangement - Rights to Purchase Securities - Warrants" for
further details.
ESCROWED SHARES
As of the Effective Date, Golden Arrow will have no performance shares or escrow
shares outstanding.
PRIOR SALES
Except for the one Golden Arrow Common Share issued to the incorporator of
Golden Arrow, which will be cancelled on the Effective Date, during the 12
months preceding the date of this Management Proxy Circular, Golden Arrow has
not issued any Golden Arrow Common Shares.
DIVIDEND RECORD
Golden Arrow has not paid any dividends on the Golden Arrow Common Shares since
its incorporation, nor has it any present intention of paying dividends, as it
anticipates that all available funds will be used to undertake exploration and
development programs on its mineral properties as well as for the acquisition of
additional mineral properties.
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DIRECTORS AND OFFICERS
As of the Effective Date, the Directors and Officers of Golden Arrow will be as
set forth under "Information Concerning IMA - Annual Meeting Matters - Directors
and Officers".
MANAGEMENT FEES
As at the date of this Management Proxy Circular, agreements pertaining to the
management of the business affairs of Golden Arrow have not yet been formalised.
Management of IMA anticipates that members of its management will provide the
initial management services to Golden Arrow. Such members of management of IMA
will be compensated by Golden Arrow for their time spent on the business and
affairs of Golden Arrow at commercial rates.
LEGAL PROCEEDINGS
As at the date of this Management Proxy Circular, Golden Arrow is not a party to
any outstanding legal proceedings. However, there can be no assurance that
Golden Arrow will not in the future become a party to the litigation commenced
by a subsidiary of Aquiline Resources Inc. See "Information Concerning IMA -
Before the Arrangement - Legal Proceedings".
AUDITORS, TRANSFER AGENT AND REGISTRAR
As of the Effective Date, the auditors of Golden Arrow will be
PricewaterhouseCoopers LLP, 7th Floor, 250 Howe Street, Vancouver, British
Columbia V6C 3S7, or such other auditors as may appointed by the board of
directors of Golden Arrow.
As of the Effective Date, the registrar and transfer agent of Golden Arrow will
be Computershare Trust Company of Canada, 510 Burrard Street, Vancouver, British
Columbia V6C 3B9.
MATERIAL CONTRACTS
As of the Effective Date, Golden Arrow or its subsidiaries will be a party to or
will assume the following material contracts of IMA:
1. Option Agreement dated January 24, 1997 as amended January 31, 2000,
August 22, 2000 and April 22, 2001 among IMA, Inversiones Mineras
Argentinas S.A. and Sociedad Minera de Responsabilidad Limitado Nova JJ
de Piura and Sociedad Minera de Responsabilidad Limitada (SMR Ltda) Don
Alberto JJ de Piura. See "Information Concerning IMA - Before the
Arrangement - Principal Properties - Peruvian Properties - Rio
Tabaconas Property".
2. Letter of Intent dated March 6, 2003, as subsequently amended, between
IMA and Amera Resources Corporation. See "Information Concerning IMA -
Before the Arrangement - Principal Properties - Arturo's Property
(Mogote)".
3. Arrangement Agreement. See "The Arrangement - The Arrangement
Agreement.'
4. Indemnity Agreement to be entered into between IMA and Golden Arrow in
connection with the Arrangement. See "The Arrangement - Conditions to
the Arrangement Becoming Effective" and "Information Concerning IMA -
Before the Arrangement - Legal Proceedings".
5. Option Agreement dated June 11, 2003 among IMA, Inversiones Mineras
Argentinas S.A. and Ballad Venture Ltd. See "Information Concerning IMA
- Before the Arrangement - Principal Properties - Penascudo".
6. Option Agreement dated September 22, 2003 as amended, between IMA and
Cloudbreak. See "Information Concerning IMA - Before the Arrangement -
Principal Properties - Gollete".
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SELECTED PRO FORMA FINANCIAL INFORMATION
The following table sets forth selected pro forma financial information for
Golden Arrow after giving effect to the Arrangement and should be read in
conjunction with the Pro Forma Consolidated Financial Statements of IMA and
Golden Arrow attached as Schedule "E" to this Management Information Circular.
AS AT
DECEMBER 31, 2003
Current Assets $1,326,459
Mineral Properties and deferred exploration
and development costs $5,592,415
Capital Assets $4,286
Liabilities $8,260
Shareholders' Equity $6,914,900
RISK FACTORS
The following risk factors currently apply to IMA and will apply to IMA and
Golden Arrow as appropriate after the Effective Date.
LIQUIDITY AND CASH FLOW
As at the date of this Management Proxy Circular, IMA has not generated any
revenues from operations to fund ongoing operational requirements and cash
commitments. IMA has financed its operations principally through the sale of its
equity securities. As at April 30, 2004, IMA had working capital of
approximately $7,500,000. IMA believes it has adequate resources to maintain its
ongoing operations and will require additional financing for planned exploration
and property acquisitions for the remainder of fiscal 2004. See "Management's
Discussion & Analysis".
ADDITIONAL FINANCING
IMA presently has sufficient financial resources to meet property commitments on
its existing property holdings. IMA at present does not, however, have
sufficient funds to conduct exploration programs on all these properties and
will need to obtain additional financing or find joint venture partners in order
to initiate any such programs.
On February 11, 2004, IMA announced that it had entered into an agreement with
two underwriters who had agreed to purchase, on a bought-deal basis, 1,500,000
units of IMA at a purchase price of $3.10 per unit, for total proceeds of $4.65
million, which closed on February 23, 2004. IMA considers that it has adequate
resources to maintain its ongoing operations and property commitments for the
year. IMA may require additional financing if it proceeds with further planned
exploration and property acquisitions for the remainder of fiscal 2004.
There is no assurance that IMA will be successful in obtaining additional
financing or negotiating agreements with potential joint venture partners. The
failure to obtain such financing or complete joint venture arrangements could
result in the loss or substantial dilution of IMA's interests (as existing or as
proposed to be acquired) in its properties as disclosed herein. IMA's business
strategy contemplates investments in joint ventures to fund exploration
activities on IMA's properties. Joint ventures may involve significant risks and
IMA may lose any investment it makes in a joint venture, including IMA's
interest in any properties it contributes. Except for the agreement between IMA
and Amera, IMA does not have any definitive commitment or agreement concerning
any material investment, strategic alliance or related effort, on any of IMA's
properties. Any investments, strategic alliances or related efforts are
accompanied by risks such as:
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(i) the difficulty of identifying appropriate joint
venture partners or opportunities;
(ii) the time IMA's senior management must spend
negotiating agreements and monitoring joint venture
activities;
(iii) the possibility that IMA may not be able to reach
agreement on definitive agreements, with potential
joint venture partners;
(iv) potential regulatory issues applicable to the mineral
exploration business;
(v) the investment of IMA's capital or properties and the
loss of control over the return of IMA's capital or
assets;
(vi) the inability of management to capitalize on the
growth opportunities presented by joint ventures; and
(vii) the insolvency of any joint venture partner.
There are no assurances that IMA would be successful in overcoming these risks
or any other problems encountered with joint ventures, strategic alliances or
related efforts.
EXPLORATION RISKS
Mineral exploration is highly speculative in nature, involves many risks and
frequently is nonproductive. There can be no assurance that IMA's efforts to
identify resources will be successful. Moreover, substantial expenditures are
required to establish resources through drilling, to determine metallurgical
processes to extract the metal from the ore and to construct mining and
processing facilities. During the time required to establish resources,
determine suitable metallurgical processes and construct such mining and
processing facilities, the economic feasibility of production may change because
of fluctuating prices. IMA would like to establish resources but does not intend
to construct or operate a mine.
PROJECT DELAY
IMA's minerals business is subject to the risk of unanticipated delays in
permitting its projects. Such delays may be caused by fluctuations in commodity
prices, mining risks, difficulty in arranging needed financing, unanticipated
permitting requirements or legal obstruction in the permitting process by
project opponents. In addition to adding to project capital costs (and possibly
operating costs), such delays, if protracted, could result in a write-off of all
or a portion of the carrying value of the delayed project.
TITLE TO PROPERTIES
The validity of mining claims, which constitute a significant portion of IMA's
undeveloped property holdings, is often uncertain and may be contested. Although
IMA has attempted to acquire satisfactory title to its undeveloped properties,
IMA, in accordance with mining industry practice, does not intend to obtain
title opinions until a decision is made to develop a property, with the
attendant risk that some titles, particularly titles to undeveloped properties,
may be subject to contest by other parties. Title to properties may be subject
to litigation claims by others. On March 5, 2004 Minera Aquiline Argentina SA, a
subsidiary of Aquiline, commenced an action against IMA seeking a constructive
trust over the Navidad Area Properties and damages. IMA believes the Aquiline
legal action is without merit and will vigorously defend itself. A Statement of
Defence has been filed. The trial has been set for October 11, 2005 in
Vancouver, British Columbia. At this date the outcome is not determinable. There
can be no assurance that Golden Arrow will not be joined as a defendant in this
action at some point in the future. See " Information Concerning IMA - Before
the Arrangement - Legal Proceedings".
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PRICE FLUCTUATIONS AND SHARE PRICE VOLATILITY
In recent years the securities markets in Canada have experienced a high level
of price and volume volatility and the market price of securities of many
companies, particularly junior mineral exploration companies, like IMA, have
experienced wide fluctuations which have not necessarily been related to the
operating performance, underlying asset values or prospects of such companies.
In particular, the per share price of IMA's common shares fluctuated from a high
of $2.54 to a low of $0.49 during the 12-month period ending December 31, 2003.
There can be no assurance that continual fluctuations in price will not occur.
OPERATING HAZARDS AND RISKS
Mining operations involve many risks, which even a combination of experience,
knowledge and careful evaluation may not be able to overcome. Operations in
which IMA has a direct or indirect interest will be subject to all the hazards
and risks normally incidental to exploration for metals, any of which could
result in damage to or destruction of mines and other producing facilities,
damage to life and property, environmental damage and possible legal liability
for any or all damage. Although IMA maintains liability insurance in an amount
which it considers adequate, the nature of these risks is such that liabilities
could exceed policy limits, in which event IMA could incur significant costs
that could have a materially adverse effect upon its financial condition.
INSURABLE RISKS AND LIMITATIONS OF INSURANCE
IMA maintains certain insurance however, such insurance is subject to numerous
exclusions and limitations. IMA maintains a Total Office Policy in Canadian
dollars on its principal offices. Generally, the Total Office Policy provides a
90% coverage on office contents, up to $160,000, with a $500 deductible. In
addition, the policy provides general liability coverage of up to $5,000,000 for
personal injury, per occurrence and $2,000,000 for legal liability for any one
premises, with a $500 deductible. IMA also has insurance coverage of up to
$5,000,000 for non-owned automobile liability.
IMA maintains a Foreign Commercial General Liability policy in U.S. dollars
which provides US$5,000,000 coverage for bodily injury or property damage per
occurrence and coverage up to US$5,000,000 per offence for personal injury or
advertising injury (libel, slander, etc.). The policy has a general aggregate
limit for all claims during each consecutive policy period, except for those
resulting from product hazards or completed operations hazards, of US$5,000,000.
The policy has a US$5,000,000 aggregate limit for each consecutive policy
period, for bodily injury or property damage liability arising out of completed
operations and products. In addition, the Foreign Commercial General Liability
policy provides for coverage of up to US$10,000 in medical expenses, per person,
with a US$10,000 limit per accident, and up to US$100,000 for each occurrence of
tenants' fire legal liability. The policy does not apply to injury or damages
occurring within Canada, the United States (including its territories and
possessions), Puerto Rico, any countries or territories against which the United
States has an embargo, sanction or ban in effect, territorial waters of any of
the foregoing, the Gulf of Mexico, or international waters or airspace when an
injury or damage occurs in the course of travel or transportation to any country
or place included in the foregoing. The policy also does not cover asbestos
related claims or liability for bodily injury or property damages arising out of
the discharge, dispersal, release or escape of smoke, vapors, soot, fumes,
acids, alkalis, toxic chemicals, liquids or gases, waste materials or other
irritants, contaminants or pollutants into or upon land, the atmosphere, or any
water-course or body of water. The policy also contains a professional liability
exclusion which applies to bodily injury or property damage arising out of
defects in maps, plans, designs or specifications prepared, acquired or used by
IMA or arising out of any act of negligence, error, mistake or omission in
rendering or failing to render professional consulting or engineering services,
whether performed by IMA or other for whom IMA is responsible.
IMA maintains a Foreign Commercial Automobile Liability Insurance policy on
owned, leased, hired and non-owned automobiles with the following liability
limitations: o $5,000,000 bodily injury liability for each person.
o $5,000,000 bodily injury liability for each occurrence.
o $5,000,000 property damage liability for each occurrence.
o $10,000 medical expense coverage, per person.
o $10,000 medical expense coverage, per accident.
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The foregoing descriptions of IMA's insurance policies do not purport to be
complete and does not cover all of the exclusions to such policies.
MANAGEMENT
IMA is dependent on the services of Joseph Grosso, the President and a director
of IMA, Gerald G. Carlson, the Chairman of IMA's Board of Directors, and Arthur
Lang, IMA's Chief Financial Officer. The loss of any of these people could have
an adverse affect on IMA. Joseph Grosso provides his services to IMA through
Oxbow International Marketing Corp. ("Oxbow"). Gerald G. Carlson provides his
services to IMA through KGE Management Ltd. All of IMA's other officers and
directors are employed directly by IMA. IMA has entered into consulting
agreements with Oxbow and KGE Management Ltd. IMA has entered into an employment
agreement with Arthur Lang. IMA does not maintain "key-man" insurance in respect
of any of its principals.
DEPENDENCE UPON OTHERS
The success of IMA's operations will depend upon numerous factors, many of which
are beyond IMA's control, including (i) the ability of IMA to enter into
strategic alliances through a combination of one or more joint ventures, mergers
or acquisition transactions, (ii) the ability to discover and produce minerals;
(iii) the ability to attract and retain additional key personnel in investor
relations, marketing, technical support, and finance; and (iv) the ability and
the operating resources to develop and maintain the properties held by IMA.
These and other factors will require the use of outside suppliers as well as the
talents and efforts of IMA. There can be no assurance of success with any or all
of these factors on which IMA's operations will depend.
CONFLICTS OF INTEREST
All of IMA's directors are also directors, officers or shareholders of other
companies. Such associations may give rise to conflicts of interest from time to
time. Such a conflict poses the risk that IMA may enter into a transaction on
terms which could place IMA in a worse position than if no conflict existed. The
directors of IMA are required by law to act honestly and in good faith with a
view to the best interest of IMA and to disclose any interest which they many
have in any project or opportunity of IMA. However, each director has a similar
obligation to other companies for which such director serves as an officer or
director. IMA has no specific internal policy governing conflicts of interest.
FOREIGN COUNTRIES AND REGULATORY REQUIREMENTS
The projects in which IMA has an interest are located in Argentina and Peru.
Mineral exploration and mining activities in Argentina and Peru may be affected
in varying degrees by political instability and government regulations relating
to the mining industry. Any changes in regulations or shifts in political
conditions are beyond the control of IMA and may adversely affect its business.
IMA does not maintain and does not intend to purchase political risk insurance.
Operations may be affected in varying degrees by government regulations with
respect to restrictions on production, price controls, export controls, income
taxes, expropriations of property, environmental legislation and mine safety.
The status of Argentina and Peru as developing countries may make it more
difficult for IMA to obtain any required exploration financing for its projects.
The effect of all of these factors cannot be accurately predicted. Both the
Argentine and Peruvian economies have experienced recessions in recent years and
there can be no assurance that their economies will recover from such
recessions.
As a result of the Provincial and Municipal elections in Peru held in November
2002 and the substantial investment required to advance the Rio Tabaconas
project through the next exploration stage, in June 2002 IMA announced its
intention to take a more measured approach to exploration on the Rio Tabaconas
project to ensure that all local cultural, developmental and environmental
concerns in the region have been addressed which may pertain to mining
activities. IMA intends to conduct further exploration only after an agreement
with the local community of Tamborapa has been finalized and a Social License to
continue has been obtained. Aided by several local, national and international
Peruvian Social-Economic consultants, a Company-Community plan has been prepared
and IMA has made its social-economic policies and procedures available to the
public.
-75-
Argentina has recently experienced some economic and political instability.
Management believes the new democratic elected government is making progress in
the domestic economy and it is improving the image of the country
internationally. Additionally, management believes the economic crisis of
December 2001 has been overcome, and although the country defaulted on its loans
and it has worked out with the International Monetary Fund a bail-out loan
agreement. IMA maintains the majority of its funds in Canada and only forwards
sufficient funds to meet current obligations and overhead in Argentina. IMA does
not believe that any current currency restrictions which may be imposed in
Argentina will have any immediate impact on IMA's exploration activities.
IMPACT OF GOVERNMENT REGULATIONS ON IMA'S BUSINESS
The projects in which IMA has an interest are located in Argentina and Peru.
Mineral exploration and mining activities in Argentina and Peru may be affected
in varying degrees by political instability and government regulations relating
to the mining industry. Any changes in regulations or shifts in political
conditions are beyond the control of IMA and may adversely affect its business.
IMA does not maintain and does not intend to purchase political risk insurance.
Operations may be affected in varying degrees by government regulations with
respect to restrictions on production, price controls, export controls, income
taxes, expropriations of property, environmental legislation and mine safety.
The status of Argentina and Peru as developing countries may make it more
difficult to obtain any required exploration financing for projects. The effect
of all of these factors cannot be accurately predicted. Both the Argentine and
Peruvian economies have experienced recessions in recent years and there can be
no assurance that their economies will recover from such recessions.
ARGENTINA
MINING INDUSTRY
Mineral companies are subject to both the Argentinean Mineral Code and the
Environmental Protection Mining Code. IMA believes it is in material compliance
with both the Argentinean Mineral Code and the Environmental Protection Mining
Code.
MINING LAW IN ARGENTINA
In IM-11/19 Argentina; Economic Trends-Nov. 1999, the author stated:
Although some ambiguities in its interpretation have emerged,
the 1993 Argentine Mining Code has created a favorable
investment climate in the sector. An influx of foreign
capital is bringing major copper and gold mines on line in
Catamarca and Santa Cruz provinces, as well as smaller
projects elsewhere.
(Source: U.S. Department of Commerce - National Trade Data Bank, IM-11/19
ARGENTINA; ECONOMIC TRENDS-NOV. 1999).
The right to explore a property (a "cateo") and the right to exploit (a "mina")
are granted by administrative or judicial authorities via concessions. Foreign
individuals and corporations may apply for and hold cateos and minas, at the
same level as local investors without differences of any nature. Cateos and
minas are freely transferable upon registration with the Provincial Mining
Registry where title to the cateo or mina was first registered. Upon the grant
of a legal concession of a cateo or a mine, parties have the right to explore
the land or to own the mine and the resources extracted therefrom.
REGULATORY ENVIRONMENT
Management believes the present government is deeply committed to opening up the
economy, and there has been significant progress in reducing import duties and
export taxes. For decades local industry has been protected, and the transition
to greater international competitiveness will take some time.
Importers and exporters must be registered with Customs. Except for a very
limited list of items requiring the previous approval of the authorities, there
are no import restrictions. Import of pharmaceuticals, drugs, foodstuffs,
defense material, and some other items require the approval of the applicable
government authority. Import duties
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are being progressively reduced in accordance with the free enterprise and
free-trade policy being implemented by the government in order to achieve
greater international competitiveness. To illustrate, duties currently range
between zero and 20 percent. Restrictions on exports are not generally imposed.
POLITICAL ENVIRONMENT AND ECONOMY
In recent years Argentina has experienced a number of changes to its government.
The current president, Nestor Kirchner, came to power in May 2003. The country
continues to struggle with its external debt. Negotiations continue with the IMF
and several of its other major creditors. The economic performance of the
country has been troubled and uncertain since the late 1990's. Management
believes there are currently some positive indications that the economic
situation is improving.
PERU
MINING INDUSTRY
Peru has a lengthy history of mining activities that predates the Spanish
conquistadors. Although political unrest and instability have slowed the
development of some of Peru's ore bodies in recent years, mining continues to be
an important contributor to the national economy and exploration by foreign
companies is accelerating due to the abundance of mineral sources. Peru is
already a substantial producer of at least six metals and may have unexplored
and unexploited reserves in these and other metals. Peru ranks among the top 20
gold producing nations, and the newly expanded Yanacocha mine is Latin America's
largest single gold producer and Antamina is the world's largest zinc and copper
mine.
MINERAL CONCESSIONS IN PERU
Under Peruvian law the right to explore for and exploit minerals is granted by
way of concessions. A Peruvian mining concession is a property-related right,
distinct and independent from the ownership of land on which it is located, even
when both belong to the same person. The rights granted by a mining concession
are defensible against third parties, transferable, chargeable and in general,
may be the subject of any transaction or contract. The basic unit for newly
claimed mining concessions is 1,000 hectares and existing concessions of greater
than 1,000 hectares will be reduced to that amount. Otherwise, concessions can
only be divided by percentage parts or shares. Buildings and other permanent
structures used in a mining operation are considered real property and as an
accessory to the concession on which they are situated.
The concession holder must pay an annual rental of US$3.00 per hectare (except
for the year of acquisition, as this rental is paid as part of the concession
application fee). The concession holder must sustain a minimum level of annual
commercial production of greater than US$100 per hectare in gross sales within
six years of the grant of the concession or, if the concession has not been put
into production within that period, from the seventh year, a penalty is due of
US$6.00 per hectare per year in addition to the annual rental. The concession
will terminate if the annual rental is not paid for two consecutive or
alternative years. The term of a concession is indefinite provided it is
properly maintained by payment of rental duties.
The Constitution of Peru provides that foreign people or countries cannot
acquire or own a land title or mining right, directly or indirectly, if such
land title or mining right is located within 50 kilometers of Peru's borders.
The government of Peru is permitted to grant an exemption by publishing an
official statement declaring a public necessity, called a Decreto Supremo. The
Decreto Supremo must be signed by the President of Peru and the Presidential
Cabinet, called the Consejo de Ministros.
IMA's Rio Tabaconas project was declared of public interest on June 1, 1998, by
Decreto Supremo No. 020-98-EM, in benefit of Minera IMP Peru S.A. Pursuant to
Decreto Supremo No. 020-98-EM, Minera IMP Peru S.A. was authorized to own the
mining rights inside of the project. Decreto Supremo No. 020-98-EM was signed by
the then President of Peru, Mr. Alberto Fujimori and his Presidential Cabinet.
Many commercial activities performed by private companies are subject to some
government inspection or control, including mining, which requires prior
government permission, licensing or concession, and compliance with special
registration procedures of the Department of Energy and Mines.
-77-
TERRORISM
Peru has been the subject of terrorism by the Sendero Luminoso, a Maoist group
intent on creating a socialist government, and the Tupac Amaru Revolutionary
Movement (the "MRTA"). In recent years both groups have been active. In 1997,
the Sendero Luminoso was implicated in a car-bombing. In 1996-1997, more than
400 people were killed when the MRTA attacked the Japanese embassy in Peru. IMA
may not be able to continue its operations in Peru if the terrorism continues.
IMA cannot predict if, or when, the terrorist activities will cease. IMA may not
be able to find suitable labor for its Peruvian projects, may have difficulty in
obtaining financing for its Peruvian projects, and may not be able to continue
its activities if the terrorism continues.
ENVIRONMENTAL REGULATIONS
IMA's operations are subject to environmental regulations promulgated by
government agencies from time to time. Environmental legislation provides for
restrictions and prohibitions on spills, releases or emissions of various
substances produced in association with certain mining industry operations, such
as seepage from tailings disposal areas, which would result in environmental
pollution. A breach of such legislation may result in the imposition of fines
and penalties. At present, IMA does not believe that compliance with
environmental legislation and regulations will have a material affect on IMA's
operations; however, any changes in environmental legislation or regulations, or
in IMA's business, may cause compliance with such legislation and/or regulation
to have a material impact on IMA's operations. In addition, certain types of
operations require the submission and approval of environmental impact
assessments. Environmental legislation is evolving in a manner which means
stricter standards, and enforcement, fines and penalties for non-compliance are
more stringent. Environmental assessments of proposed projects carry a
heightened degree of responsibility for companies and directors, officers and
employees. The cost of compliance with changes in governmental regulations has a
potential to reduce the profitability of operations. IMA intends to ensure that
it complies fully with all environmental regulations relating to its operations
in Argentina and Peru.
The provincial government of Chubut Province, Argentina has enacted certain
anti-mining laws banning the use of cyanide and open-pit mining in metallic
extraction in the Province of Chubut. The provincial legislation is more
restrictive than current federal Argentinean mining laws. IMA has hired a mining
engineering consultant to oversee all environmental and socio-economic studies
and programs to ensure international best practices for the mining industry are
applied in the development of IMA's properties. Certain authorities believe that
the provincial legislation may be unconstitutional. However, there can be no
assurance that the provincial legislation will be repealed.
CURRENCY FLUCTUATIONS
IMA's operations in Argentina, Peru and Canada make it subject to foreign
currency fluctuations and such fluctuation may adversely affect IMA's financial
position and results. IMA's property, option and mining expenses are generally
denominated in U.S. dollars. As such, IMA's principal foreign exchange exposure
is related to the conversion of the Canadian dollar into U.S. dollars. The
Canadian dollar varies under market conditions. Until the beginning of 2004, the
Canadian dollar has experienced an appreciation against the U.S. dollar, which
requires IMA to spend less Canadian dollars on its projects. Continued
fluctuation of the Canadian dollar against the U.S. dollar will continue to
affect IMA's operations and financial position. IMA's foreign subsidiaries
comprise a direct and integral extension of IMA's operations. These subsidiaries
are also entirely reliant upon IMA to provide financing in order for them to
continue their activities. Consequently, the functional currency of these
subsidiaries is considered by management to be the Canadian dollar and
accordingly exchange gains and losses are included in net income. Management
does not believe IMA is subject to material exchange rate exposure from any
fluctuation of the Argentine or Peruvian currencies. IMA does not engage in
hedging activities.
NO DIVIDENDS
IMA has not paid out any cash dividends to date and has no plans to do so in the
immediate future.
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PENNY STOCK REGULATION
The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in "penny stocks". Generally, penny stocks are equity
securities with a price of less than US$5.00 (other than securities registered
on certain national securities exchanges or quoted on the NASDAQ system). Since
IMA's shares are traded for less than US$5.00 per share, the shares are subject
to the SEC's penny stock rules. In addition, it is anticipated that Golden
Arrow's shares, if traded in the United States, will trade at less than US$5.00
per share and will be subject to the penny stock rules. IMA's shares and Golden
Arrow's shares will be subject to the penny stock rules until such time as (1)
the issuer's net tangible assets exceed US$5,000,000 during the issuer's first
three years of continuous operations or US$2,000,000 after the issuer's first
three years of continuous operations; or (2) the issuer has had average revenue
of at least US$6,000,000 for three years. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document prescribed by the
SEC that provides information about penny stocks and the nature and level of
risks in the penny stock market. The broker-dealer must obtain a written
acknowledgement from the purchaser that the purchaser has received the
disclosure document. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules, the broker-dealer must
make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to
the transaction. These requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. Such rules and regulations may make it difficult for holders
to sell the common stock of IMA and/or Golden Arrow, and they may be forced to
hold it indefinitely.
ENFORCEMENT OF LEGAL PROCESS
It may be difficult to bring and enforce suits against the IMA and Golden Arrow.
IMA and Golden Arrow are corporations incorporated in British Columbia. None of
IMA's nor Golden Arrow's directors are residents of the United States, and all
or a substantial portion of their assets are located outside of the United
States. As a result, it may be difficult for U.S. holders of IMA's and Golden
Arrow's common shares to effect service of process on these persons within the
United States or to enforce judgements obtained in the U.S. based on the civil
liability provisions of the U.S. federal securities laws against IMA, Golden
Arrow or their officers and directors. In addition, a shareholder should not
assume that the courts of Canada (i) would enforce judgments of U.S. courts
obtained in actions against IMA, Golden Arrow or their officers or directors
predicated upon the civil liability provisions of the U.S. federal securities
laws or other laws of the United States, or (ii) would enforce, in original
actions, liabilities against IMA, Golden Arrow or their officers or directors
predicated upon the U.S. federal securities laws or other laws of the United
States.
However, U.S. laws would generally be enforced by a Canadian court provided that
those laws are not contrary to Canadian public policy, are not foreign penal
laws or laws that deal with taxation or the taking of property by a foreign
government and provided that they are in compliance with applicable Canadian
legislation regarding the limitation of actions. Also, a judgment obtained in a
U.S. court would generally be recognized by a Canadian court except, for
example:
(a) where the U.S. court where the judgment was rendered had no
jurisdiction according to applicable Canadian law;
(b) the judgment was subject to ordinary remedy (appeal, judicial
review and any other judicial proceeding which renders the
judgment not final, conclusive or enforceable under the laws of
the applicable state) or not final, conclusive or enforceable
under the laws of the applicable state;
(c) the judgment was obtained by fraud or in any manner contrary to
natural justice or rendered in contravention of fundamental
principles of procedure;
(d) a dispute between the same parties, based on the same subject
matter has given rise to a judgment rendered in a Canadian court
or has been decided in a third country and the judgment meets
the necessary conditions for recognition in a Canadian court;
-79-
(e) the outcome of the judgment of the U.S. court was inconsistent
with Canadian public policy;
(f) the judgment enforces obligations arising from foreign penal
laws or laws that deal with taxation or the taking of property
by a foreign government; or
(g) there has not been compliance with applicable Canadian law
dealing with the limitation of actions.
LACK OF PUBLIC MARKET IN THE UNITED STATES
After consummation of the Arrangement, management does not believe there will be
a public market for the Golden Arrow Common Shares in the United States.
Management anticipates that Golden Arrow will seek to have its common shares
quoted on the Over-The-Counter Bulletin Board following completion of the
Arrangement; however, there are no assurances as to if, or when, the Golden
Arrow Common Shares will be quoted on the Over-The-Counter Bulletin Board.
Consequently, Golden Arrow Shareholders may not be to use their shares for
collateral or loans and may not be able to liquidate at a suitable price in the
event of an emergency. In addition, Golden Arrow Shareholders may not be able to
resell their shares in the United States and may have to hold them indefinitely.
ANNUAL MEETING BUSINESS
ELECTION OF DIRECTORS
The Board of Directors presently consists of seven directors and it is intended
to determine the number of directors at nine and to elect nine directors for the
ensuing year.
The term of office of each of the present directors expires at the Meeting. The
persons named below will be presented for election at the Meeting as
management's nominees and the persons named in the accompanying form of proxy
intend to vote for the election of these nominees. Management does not
contemplate that any of these nominees will be unable to serve as a director.
Each director elected will hold office until his successor is elected or
appointed, unless his office is earlier vacated in accordance with the Articles
of IMA, or with the provisions of the BCBCA.
In the following table and notes thereto is stated the name of each person
proposed to be nominated by management for election as a director, the country
in which he is ordinarily resident, all offices of IMA now held by him, his
principal occupation, the period of time for which he has been a director of
IMA, and the number of shares of IMA beneficially owned by him, directly or
indirectly, or over which he exercises control or direction, as at the date
hereof.
NAME, POSITION AND PRINCIPAL OCCUPATION AND IF NOT AT PRESENT AN ELECTED DIRECTOR NUMBER OF SHARES
COUNTRY OF RESIDENCE(1) DIRECTOR, OCCUPATION DURING THE PAST FIVE YEARS SINCE BENEFICIALLY HELD(3)
GERALD D. CARLSON President and director of Copper Ridge Exploration 1999 45,000(4)
Chairman and Director Inc., a public British Columbia mineral exploration
CANADA company from March 1999 to present.
JOSEPH GROSSO Director and officer of IMA since February 1990; 1990 641,902
President, Chief Executive President of Oxbow International Marketing Corp., a
Officer and Director private BC company.
CANADA
ART LANG Chief Financial Officer of IMA since April 2, 2004; 2004 Nil
Chief Financial Officer, Consultant providing financial management services
Vice-President and Director to various clients from 1999 to present.
CANADA
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NAME, POSITION AND PRINCIPAL OCCUPATION AND IF NOT AT PRESENT AN ELECTED DIRECTOR NUMBER OF SHARES
COUNTRY OF RESIDENCE(1) DIRECTOR, OCCUPATION DURING THE PAST FIVE YEARS SINCE BENEFICIALLY HELD(3)
NIKOLAOS CACOS Corporate Secretary and Vice-President Investor 2002 48,551
Director and Secretary Relations of IMA since 1993.
CANADA
SEAN HURD Investor relations manager for IMA from June 2001 2000 21,100
Director to present and director since September 2000.
CANADA
ROBERT STUART (TOOKIE) ANGUS Managing Director, Mergers and Acquisitions, 2003 150,000
Director Endeavour Financial Ltd., November 2003 to present;
CANADA Partner in law firm, Fasken Martineau DuMoulin LLP
from February 2001 to October 2003; Partner in
law firm, Stikeman Elliott from 1998 to 2001.
CHET IDZISZEK President, CEO and director of Madison Enterprises 2003 308,000
Director Corp. from 1993 to present; President, CEO and
CANADA director of Adrian Resources Ltd. from June 1990 to
present.
DAVID TERRY Vice President, Exploration for Amera Resources 2004 2,000
Director Corporation from March 2004 to present; Regional
CANADA geologist with the BC Ministry of Energy and Mines
in Cranbrook, BC from May 2001 to March 2004;
Project Geologist with Boldien Limited prior to
May 2001.
DAVID HORTON Senior Vice-President of Canaccord Capital Nominee 10,000
Nominee Corporation from 1996 to present.
CANADA
(1) The information as to country of residence and principal occupation,
not being within the knowledge of IMA, has been furnished by the
respective directors individually.
(2) Denotes member of Audit Committee.
(3) The information as to shares beneficially owned or over which a
director exercises control or direction, not being within the knowledge
of IMA, has been furnished by the respective directors individually.
(4) These shares are held by KGE Management Ltd., a private company owned
by Mr. Carlson.
APPOINTMENT OF AUDITORS
Unless such authority is withheld, the persons named in the accompanying proxy
intend to vote for the appointment of PricewaterhouseCoopers LLP as auditors of
IMA and to authorize the Directors to fix their remuneration.
EXECUTIVE COMPENSATION
"Named Executive Officers" means the Chief Executive Officer of IMA, regardless
of the amount of compensation of that individual, and each of IMA's four most
highly compensated executive officers, other than the Chief Executive Officer,
who were serving as executive officers at the end of the most recent fiscal year
and whose total salary and bonus amounted to $100,000 or more. In addition,
disclosure is also required for any individual whose total salary and bonus
during the most recent fiscal year was at least $100,000, whether or not they
were an executive officer at the end of the most recent fiscal year.
-81-
During the year ended December 31, 2003, IMA had one Named Executive Officer:
Joseph Grosso, President and Chief Executive Officer (the "Named Executive
Officer"). The following table sets forth all annual and long-term compensation
awarded, paid to or earned by IMA's Named Executive Officers during the
financial years ended December 31, 2001, 2002 and 2003.
SUMMARY COMPENSATION TABLE
---------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------- -----------------------------------
AWARDS PAYOUTS
------------------------ ----------
NAME AND OTHER SECURITIES RESTRICTED LTIP
PRINCIPAL SALARY BONUS ANNUAL UNDER SHARES OR PAYOUTS ALL
POSITION YEAR ($) ($) COMPENSA OPTIONS/ RESTRICTED ($) OTHER
(A) (B)(1)(C) (D) TION SARS SHARE (H) COMPEN-
($) GRANTED UNITS SATION
(E) (#)(2) ($) ($)
(F) (G) (i)
---------------------------------------------------------------------------------------------------------------------
Joseph Grosso 2003 $102,000 - - 200,000 - - -
President and Chief 2002 $102,000 - - 500,000 - - -
Executive Officer 2001 $102,000 - - 300,000 - - -
---------------------------------------------------------------------------------------------------------------------
(1) Fiscal years ended December 31, 2003, 2002 and 2001.
(2) See "Options and Stock Appreciation Rights (SAR's)".
LONG TERM INCENTIVE PLAN AWARDS
Long Term Incentive Plan Awards ("LTIP") means any plan providing compensation
intended to serve as an incentive for performance to occur over a period longer
than one fiscal year whether performance is measured by reference to financial
performance of IMA or an affiliate of IMA, or the price of shares of IMA but
does not include option or stock appreciation rights plans or plans for
compensation through restricted shares or units. IMA has not granted any LTIP's
to the Named Executive Officer during the most recently completed fiscal year.
OPTIONS AND STOCK APPRECIATION RIGHTS
Stock Appreciation Rights ("SAR's") means a right, granted by an issuer or any
of its subsidiaries as compensation for services rendered or in connection with
office or employment, to receive a payment of cash or an issue or transfer of
securities based wholly or in part on changes in the trading price of the shares
of IMA. No SAR's were granted to or exercised by the Named Executive Officers or
directors during the most recently completed fiscal year.
OPTION GRANTS
The following table sets forth stock options granted by IMA during the financial
year ended December 31, 2003 to the Named Executive Officers of IMA:
MARKET VALUE
% OF TOTAL OPTIONS OF SECURITIES
SECURITIES UNDER GRANTED IN EXERCISE OR UNDERLYING OPTIONS
NAME OPTIONS GRANTED FINANCIAL YEAR(1) BASE PRICE ON DATE OF GRANT EXPIRATION DATE
---- ---------------- ------------------ ------------ ------------------ ---------------
(#) ($/Security) ($/Security)
Joseph Grosso 200,000 10.42% $1.87 $1.87 August 27, 2008
(1) Percentage of all options granted during the financial year.
(2) The exercise price of stock options was set according to the rules of
the TSX-V. The exercise price of stock options may only be adjusted in
the event that specified events cause dilution of IMA's share capital.
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AGGREGATED OPTION EXERCISES AND OPTION VALUES
The following table sets forth details of all exercises of stock options by the
Named Executive Officers during the most recently completed fiscal year and the
fiscal year-end value of unexercised options on an aggregated basis:
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SECURITIES ACQUIRED AGGREGATE VALUE AT FISCAL YEAR-END FISCAL YEAR-END(2)
NAME ON EXERCISE(1) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
(#) ($) (#) ($)
Joseph Grosso 375,000 $454,500 325,000/Nil $156,250 / N/A
(1) All options are exercisable to acquire IMA Common Shares.
(2) Value of unexercised in-the-money options calculated using the closing
price of the IMA Common Shares on the TSX-V on December 31, 2002,
$1.75, less the exercise price per share of in-the-money stock options.
PENSION PLAN
IMA does not provide retirement benefits for directors or executive officers.
TERMINATION OF EMPLOYMENT, CHANGES IN RESPONSIBILITY AND EMPLOYMENT CONTRACTS
IMA has no plans or arrangements in respect of remuneration received or that may
be received by the Named Executive Officers in IMA's most recently completed
fiscal year or current fiscal year in respect of compensating such officers in
the event of termination of employment (as a result of resignation, retirement,
change of control, etc.) or a change in responsibilities following a change of
control, where the value of such compensation exceeds $100,000, except as
disclosed in "Annual Meeting Business - Management Contracts".
COMPENSATION OF DIRECTORS
There are no arrangements under which directors were compensated by IMA during
the most recently completed financial year ended December 31, 2003 for their
services in their capacity as directors.
During the last completed financial year ending December 31, 2003, IMA paid a
total of $156,600 to its directors who are not Named Executive Officers, as a
group, for salaries and professional services rendered. See also "Annual Meeting
Business - Management Contracts".
OPTION GRANTS
The following table sets forth information concerning stock options granted to
directors, as a group, who are not Named Executive Officers during the most
recently completed fiscal year:
MARKET VALUE
% OF TOTAL OPTIONS OF SECURITIES
SECURITIES UNDER GRANTED IN EXERCISE OR UNDERLYING OPTIONS
NAME OPTIONS GRANTED FINANCIAL YEAR(1) BASE PRICE ON DATE OF GRANT EXPIRATION DATE
---- ---------------- ----------------- ----------- ------------------ ---------------
(#) ($/Security) ($/Security)
Directors as a group 300,000 15.64% $0.90 $1.07 May 30, 2008
who are not Named 225,000 11.73% $1.87 $1.87 August 27, 2008
Executive Officers
(1) All options are for IMA Common Shares.
(2) Percentage of all options granted in the period.
(3) The exercise price of the option is set at not less than the market
value of the IMA Common Shares on the date of grant, less a discount
allowed by the TSX-V. The exercise price may be adjusted under certain
circumstances, subject to regulatory acceptance.
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AGGREGATED OPTION EXERCISES AND OPTION VALUES
The following table sets forth details of all securities acquired, the aggregate
value realized and the fiscal year end number and value of unexercised
options/SARs held by directors, as a group, who are not Named Executive
Officers:
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SECURITIES ACQUIRED AGGREGATE VALUE AT FISCAL YEAR-END FISCAL YEAR-END(2)
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
(#) ($) (#) ($)
Directors, as a 379,600 $235,228 547,900/Nil $515,915 / N/A
group, who are not
Named Executive
Officers
(1) All options are exercisable to acquire IMA Common Shares.
(2) Value of unexercised in-the-money options calculated using the closing
price of the IMA Common Shares on the TSX-V on December 31, 2002,
$0.55, less the exercise price per share of in-the-money stock options.
PROPOSED COMPENSATION
IMA has no bonus, profit sharing or similar plans in place pursuant to which
cash or non-cash compensation is proposed to be paid or distributed to the Named
Executive Officers in the current or subsequent fiscal years.
MANAGEMENT CONTRACTS
By agreement, made effective as of July 1, 1999, Oxbow International Marketing
Corp., a private company owned by Joseph Grosso, is paid a consulting fee of
$8,500 per month for making available the services of Joseph Grosso as President
and Chief Executive Officer of IMA. Under the terms of the contract, a payment
is due in the event that Oxbow's services are terminated without cause or upon a
change of control. The termination payment would include a bonus of $6,500 per
month, retroactive to July 1, 1999, plus an additional three years of
compensation at $15,000 per month. During the fiscal year ended December 31,
2003, Oxbow was paid $102,000.
By agreement dated January 1, 1996, as amended December 10, 1996 and August 22,
2001, Nikolaos Cacos, an officer and director of IMA, is paid $5,500 per month
for professional services rendered. During the fiscal year ended December 31,
2003, Mr. Cacos was paid $66,000.
By agreement dated June 11, 2001, as extended, Sean Hurd, a director of IMA, is
paid $4,000 per month for professional services rendered. During the fiscal year
ended December 31, 2003, Mr. Hurd was paid $48,000.
By agreement dated February 15, 2001, between IMA and KGE Management Ltd., a
private company owned by Gerald Carlson, Chairman of IMA, was paid a consulting
fee of $36,000 per year, plus $550 per day if services are rendered for more
than five days per month, through KGE Management Ltd. The agreement expired
January 14, 2001 and has been renewed until June 18, 2003. By mutual agreement
on October 3, 2002, the fee was changed to $2,000 per month plus $550 per day if
services are rendered for more than four days per month. During the fiscal year
ended December 31, 2003, IMA paid $41,400 to KGE Management Ltd.
CORPORATE CEASE TRADE ORDERS OR BANKRUPTCIES
Other than as disclosed herein, no director or officer of IMA is or has been,
within the preceding 10 years, a director or officer of any other issuer that,
while that person was acting in that capacity:
(a) was the subject of a cease trade order or similar order or an
order that denied the other issuer access to any exemptions for
a period of more than 30 consecutive days, or
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(b) became bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency or was subject to or instituted any
proceedings, arrangement, or compromise with creditors or had a
receiver, receiver manager or trustee appointed to hold its
assets.
PENALTIES OR SANCTIONS
No director or officer of IMA is or has, within the past 10 years:
(a) been subject to any penalties or sanctions imposed by a court
relating to Canadian securities legislation or Canadian
securities regulatory authority or has entered into a settlement
agreement with a Canadian securities regulatory authority, or
(b) been subject to any other penalties or sanctions imposed by a
court or regulatory body that would be likely to be considered
important to a reasonable investor making an investment
decision.
INDIVIDUAL BANKRUPTCIES
No director or officer of IMA is or has, within the preceding 10 years, become
bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency or been subject to or instituted any proceedings, arrangement, or
compromise with creditors or had a receiver, receiver manager or trustee
appointed to hold the assets of that individual.
CONFLICTS OF INTEREST
Certain of the existing and proposed directors, officers and shareholders of IMA
are also directors, officers and shareholders of other companies and conflicts
of interest may arise between their duties as directors of IMA and as directors
of other companies. All such possible conflicts are required to be disclosed in
accordance with the requirements of the BCBCA, and the directors concerned are
required to govern themselves in accordance with the obligations imposed on them
by law.
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
RATIFICATION OF APPROVED STOCK OPTION PLAN
At the Annual and Extraordinary General Meeting of Shareholders held on June 26,
2003, the Shareholders approved IMA's Stock Option Plan (the "Stock Option
Plan") which makes a total of 10% of the issued and outstanding shares of IMA
available for issuance thereunder.
The TSX-V requires all TSX-V listed companies who have adopted a stock options
plan which reserves a maximum of 10% of the number of common shares of IMA
issued and outstanding on the applicable date of grant, to obtain shareholder
approval to the Stock Option Plan on an annual basis. Accordingly, IMA requests
that the Shareholders ratify and approve IMA's Stock Option Plan.
The rules of the Exchange require that the Stock Option Plan be approved by the
affirmative vote of a majority of the votes cast at the Meeting. Accordingly,
the Shareholders will be asked at the Meeting to pass the ordinary resolution
substantially in the form set out in paragraph 1 of Schedule "A" attached
hereto.
An ordinary resolution is a resolution passed by a majority of at least 50% of
the votes cast by those Shareholders, who being entitled to do so, vote in
person or by proxy in respect to that resolution at the Meeting.
A full copy of the Stock Option Plan will be available at the Meeting.
Shareholders may obtain a copy of the Stock Option Plan in advance of the
Meeting upon request to IMA, 709, 837 West Hastings Street, Vancouver, British
Columbia, V6C 3N6, to the attention President. IMA's fax number is (604)
687-1858.
MANAGEMENT OF IMA RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOUR OF THE FOREGOING
RESOLUTION, AND THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY INTEND TO VOTE
FOR THE APPROVAL OF THE FOREGOING RESOLUTION AT THE MEETING UNLESS OTHERWISE
DIRECTED BY THE SHAREHOLDERS APPOINTING THEM.
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TRANSITION UNDER BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)
AMENDMENT OF NOTICE OF ARTICLES
On March 29, 2004, the new British Columbia Business Corporations Act (the
"BCBCA") came into force in British Columbia and replaced the former Company
Act, which is the statute that previously governed IMA. Under the BCBCA, IMA has
two years within which to transition ("Transition") itself under the new
statute. In accordance with the BCBCA, IMA cannot complete the Arrangement or
amend its Articles or Notice of Articles until the Transition to the BCBCA is
completed. The Board of Directors (the "Board") of IMA approved the Transition
of IMA under the BCBCA on April 29, 2004. IMA filed a transition application
with the Registrar of Companies British Columbia and completed the Transition on
May 4, 2004.
Concurrent with the completion of the Transition, IMA was required in accordance
with the BCBCA to incorporate certain provisions known as the "Pre-Existing
Company Provisions" (the "Pre-Existing Company Provisions") into its Notice of
Articles, which replaced the existing Memorandum of IMA. The Pre-Existing
Company Provisions provide IMA with certain default provisions in case certain
provisions which are required to be included in the Articles under the BCBCA are
not included in IMA's Articles.
In order to address this issue, IMA intends to delete and replace its Articles
in their entirety, as set out in this Management Proxy Circular under
"Particulars of Other Matters to be Acted Upon - Adoption of New Articles". The
New Articles, will among other things, incorporate and amend certain of the
information required by the Pre-Existing Company Provisions. In accordance with
the BCBCA, IMA cannot alter its Articles in relation to any matter that is
included in the Pre-Existing Company Provisions until IMA has removed the
application of the Pre-Existing Company Provisions by special resolution of the
shareholders of IMA.
Accordingly, the shareholders of IMA will be asked at the Meeting to pass a
special resolution in the form set out in paragraph 2 of Schedule "A" attached
hereto.
A special resolution is a resolution passed by a majority of not less than 75%
of the votes cast by those shareholders of IMA, who being entitled to do so,
vote in person or by proxy in respect to that resolution at the Meeting.
A copy of the current Notice of Articles of IMA and the proposed Notice of
Articles of IMA will be available at the Meeting. Shareholders may obtain a copy
of these documents in advance of the Meeting upon request to IMA, 709, 837 West
Hastings Street, Vancouver, British Columbia, V6C 3N6, to the attention
President. IMA's fax number is (604) 687-1858.
MANAGEMENT OF IMA RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOUR OF THE FOREGOING
RESOLUTION, AND THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY INTEND TO VOTE
FOR THE APPROVAL OF THE FOREGOING RESOLUTION AT THE MEETING UNLESS OTHERWISE
DIRECTED BY THE SHAREHOLDERS APPOINTING THEM.
ADOPTION OF NEW ARTICLES
The Board has determined that it is in the best interests of IMA to adopt new
articles (the "New Articles") to replace its existing Articles (the "Existing
Articles"). The language used in the Existing Articles of IMA is no longer
appropriate and there are a number of references to provisions in the former
Company Act (the "Former Act") which no longer exists. The New Articles also
incorporate many key provisions of the BCBCA that should reinforce the
importance of certain sections of the BCBCA including disclosing conflicts of
interest, indemnification, fiduciary duties and other obligations that are
imposed on the Board.
Set out below is a discussion of the changes proposed under the New Articles.
These proposed changes to the New Articles include a discussion of substantive
changes included in the New Articles and changes included that are as a result
of changes under the BCBCA. The New Articles incorporate a number of
non-substantive changes, including the use of the new terminology adopted under
the BCBCA. For example, "members" are now "shareholders" and "register of
members" is now "central securities register" under the BCBCA. Many of these
terminology and wording changes are not discussed in detail here, as they
reflect statutory requirements that IMA cannot alter or amend.
The following is a discussion of the substantive changes proposed in the New
Articles.
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BORROWING POWERS
Under the Existing Articles, IMA may borrow money, issue debt and mortgage,
pledge, or give security on the undertaking, or on the whole or any part of the
property and assets, of IMA (both present and future). However, under the BCBCA,
companies are now also permitted, without restriction, to guarantee repayment of
money by any other person or the performance of any obligation of any other
person. This change reflects the modernization of corporate legislation to
effectively respond to increasingly complex financial transactions that
companies may enter into in the course of their business. As a result, the New
Articles propose that IMA also be able to guarantee the repayment of money by
any other person or the performance of any obligation of any other person.
Management believes that it is in the best interests of IMA to allow for such a
guarantee to permit IMA the maximum flexibility in possible future financial
transactions, recognizing the duties directors have to ensure that the guarantee
must always be in the best interest of IMA and its shareholders.
DIRECTORS AUTHORITY TO SET AUDITOR'S REMUNERATION
Under the BCBCA, IMA is, subject to shareholder approval, permitted to include
in the New Articles authorization for the directors to set the remuneration paid
to the auditors of IMA. The Former Act required the shareholders to set the
remuneration or the shareholders to authorize, on an annual basis, the directors
to set the remuneration. Historically, shareholders of IMA have always
authorized the directors to appoint the auditors and to set the auditor's
remuneration. As a result, the inclusion of the authority for directors to set
the auditor's remuneration in the New Articles merely codifies existing
practice. More importantly, however, this change also codifies new corporate
governance rules and regulations relating to audit committees and the
appointment and remuneration of auditors.
SPECIAL MAJORITY FOR RESOLUTIONS
Under the Former Act, the majority of votes required to pass a special
resolution at a general meeting was three-quarters of the votes cast on a
resolution. Under the BCBCA, IMA is authorized to determine whether a special
resolution requires two-thirds or three-quarters of the votes cast on a
resolution. The Existing Articles did not state what the majority was for a
special resolution, as this matter was dealt with under the Former Act. The New
Articles propose that a special resolution require a majority of two-thirds of
the votes cast on a resolution. This threshold is consistent with the threshold
in most other Canadian corporate law statutes such as the Canada Business
Corporations Act.
SHARE ISSUANCES
Under the Former Act, the maximum discount or commission payable on the issuance
of a share of IMA was 25%. Under the BCBCA IMA is, subject to shareholder
approval, now permitted to avoid setting a numerical maximum for a discount or
commission payable on the issuance of a share but rather limit any discount or
commission by a test of reasonableness. The New Articles provide that IMA be
permitted to pay or offer the commission or discount as permitted in the BCBCA.
Management of IMA believes that the 25% maximum limit should not be set out in
the New Articles as such a limit does not consider factual circumstances nor
apply a test of reasonableness. By limiting the discount or commission amounts
payable by the test of reasonableness, exercised by directors with a duty to act
in the best interest of IMA, IMA is provided greater flexibility in possible
future transactions. In addition, since IMA is a public company, it is subject
to the requirements of the TSX on share issuances and discounts and commissions,
which requirements are generally far more stringent than the Former Act
provisions.
The following are changes to the provisions contained in the BCBCA which have an
effect on provisions contained in the Existing Articles:
OFFICERS
Under the Existing Articles, IMA was required to have a least a President and
Secretary as officers, and there had to be separate individuals holding those
positions. In addition, the President was required to be director of IMA. These
were requirements under the Former Act. However, under the BCBCA, those
requirements no longer exist, and as a result, it is proposed that the New
Articles remove these requirements. Management and the board of directors
believe that by removing these restrictions IMA is better able to meet its
corporate governance obligations as to membership of the board of directors.
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PUBLICATION OF ADVANCE NOTICE OF MEETING
Under the Existing Articles, IMA was required to publish an advance notice of a
general meeting of shareholders at which directors are to be elected in the
manner required under the Former Act. Under the BCBCA, IMA is no longer required
to publish notice of general meetings, and recent changes to securities
legislation in Canada requires that all public companies, including IMA, post
advance notice of a general meeting on WWW.SEDAR.COM in advance of the record
date for the meeting. As a result, it is proposed that the New Articles remove
the requirement to publish advance notice of the meeting.
SHARE CERTIFICATES
Under the Existing Articles, a shareholder is entitled to a share certificate
representing the number of shares of IMA he or she holds. Under the BCBCA, a
shareholder is now entitled to a share certificate representing the number of
shares of IMA he or she holds or a written acknowledgement of the shareholder's
right to obtain such a share certificate. As a result, the New Articles have
been amended to provide for this additional right. The addition of the ability
to issue a written acknowledgement is very useful for public companies such as
IMA, since it permits flexibility in corporate and securities transmissions.
DISCLOSURE OF INTEREST OF DIRECTORS
Under the BCBCA, the provisions relating to the disclosure of interests by
directors have been revised and updated. As directors of IMA are bound by these
provisions, the New Articles have deleted reference to the old disclosure of
interest provisions and refer to the provisions contained in the BCBCA.
INDEMNITY PROVISION
Under the Former Act, IMA could only indemnify directors where it obtained prior
court approval, except in certain limited circumstances. The Existing Articles
provided for IMA to indemnify directors, subject to the requirements of the
Former Act. Under the BCBCA, IMA is now permitted to indemnify a past or present
director or officer of IMA without obtaining prior court approval in respect of
an "eligible proceeding". An "eligible proceeding" includes any legal proceeding
relating to the activities of the individual as a director or officer of IMA.
However, under the BCBCA, IMA will be prohibited from paying an indemnity if:
(a) the party did not act honestly and in good faith with a view to
the best interests of IMA;
(b) the proceeding was not a civil proceeding and the party did not
have reasonable grounds for believing that his or her conduct
was lawful; and
(c) the proceeding is brought against the party by IMA or an
associated corporation.
As a result, the New Articles propose to allow IMA to indemnify directors,
officers, employees and agents, subject to the limits imposed under the BCBCA.
Management believes that it is in the best interests of IMA to allow the
indemnification of directors, officers, employees and agents, subject to the
limits and conditions of the BCBCA.
AUTHORIZED SHARE CAPITAL
Under the Former Act, IMA was required to set a maximum number for its
authorized share capital and such number was required to be contained in IMA's
memorandum. Under the BCBCA there are no maximum number restrictions and, due to
the elimination of the memorandum under the BCBCA, such authorized share capital
must be contained in a company's Notice of Articles. In order to provide IMA
with greater flexibility to proceed with equity financings, management has
determined that it will alter its authorized share capital from 200,000,000
shares divided into 100,000,000 common shares and 100,000,000 preferred shares
to an unlimited number of common shares and 100,000,000 preferred shares and
that such altered authorized share capital will be reflected in its New Notice
of Articles. This change forms part of the Plan of Arrangement.
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HOLDING OF ANNUAL MEETINGS
Under the Former Act, annual meetings were required to be held within 13 months
of the last annual meeting. The BCBCA allows for annual meetings to be held once
in each calendar year and not more than 15 months after the last annual meeting
and accordingly, IMA's New Articles reflect this provision.
QUORUM FOR SHAREHOLDER MEETING
Under the Existing Articles, quorum for a shareholder meeting was two persons
present and being, or representing by proxy, members holding not less than
one-tenth of the shares that may be voted at the meeting. The New Articles allow
for quorum to be two persons who are, or who represent by proxy, shareholders
who, in the aggregate, hold at least 5% of the issued shares entitled to be
voted at the meeting.
ALTERATIONS TO CONSTATING DOCUMENT
In accordance with the BCBCA, the New Articles update the type of alterations
that can be made to IMA's constating documents, and disclose the type of
resolution that is required to make such amendments.
Accordingly, the shareholders of IMA will be asked at the Meeting to pass the
following special resolution substantially in the form set out in paragraph 3 of
Schedule "A" attached hereto.
A special resolution is a resolution passed by a majority of not less than 75%
of the votes cast by those shareholders of IMA, who being entitled to do so,
vote in person or by proxy in respect to that resolution at the Meeting.
A full copy of the New Articles will be available at the Meeting. Shareholders
may obtain a copy of the New Articles in advance of the Meeting upon request to
IMA at 709-837 West Hastings Street, Vancouver, British Columbia, V6C 3N6, to
the attention President. IMA's fax number is (604) 687-1858.
MANAGEMENT OF IMA RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOUR OF THE FOREGOING
RESOLUTION, AND THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY INTEND TO VOTE
FOR THE APPROVAL OF THE FOREGOING RESOLUTION AT THE MEETING UNLESS OTHERWISE
DIRECTED BY THE SHAREHOLDERS APPOINTING THEM.
INDEBTEDNESS OF DIRECTORS AND OFFICERS
No director or senior officer of IMA, proposed management nominee for election
as a director of IMA or each associate or affiliate of any such director, senior
officer or proposed nominee is or has been indebted to IMA or any of its
subsidiaries at any time during IMA's last completed financial year, other than
routine indebtedness.
INTERESTS OF INSIDERS IN MATERIAL TRANSACTIONS
Other than as set forth below and elsewhere in this Management Proxy Circular
and other than transactions carried out in the normal course of business of IMA
or any of its affiliates, none of the directors or senior officers of IMA, a
proposed management nominee for election as a director of IMA, any shareholder
beneficially owning shares carrying more than 10% of the voting rights attached
to the shares of IMA nor an associate or affiliate of any of the foregoing
persons had since January 1, 2003 (the commencement of IMA's last completed
financial year) any material interest, direct or indirect, in any transactions
which materially affected IMA or any of its subsidiaries or in any proposed
transaction which has or would materially affect IMA or any of its subsidiaries.
On March 6, 2003 IMA entered into a letter of intent with Amera, pursuant to
which Amera could earn an undivided 51 % interest in the Mogote (Arturo's)
Property. To earn a 51 % interest in the property, Amera must issue 1,650,000
common shares to IMA and incur US$1,250,000 of expenditures, including work
programs and underlying option payments, all over five years.
In an agreement announced on April 13, 2004 Amera negotiated an option to earn
an additional 24% interest (for a total of 75% interest) in the Mogote property.
Under the terms of this new agreement, Amera may exercise its option by issuing
IMA an additional 300,000 shares and completing work expenditures totaling
US$3,000,000 over
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a three-year period. Amera has committed to spend the initial US$1,000,000 by
May 30, 2007. Amera received approval from the TSX-V for this transaction on
April 22, 2004. Joseph Grosso and Nikolaos Cacos, both directors and officers of
IMA, are also directors of Amera. Both Mr. Grosso and Mr. Cacos disclosed to the
Board of Directors the nature of their interest in the transaction and abstained
from voting on the resolutions to approve the agreement with Amera, as amended.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Other than as set forth in this Management Proxy Circular, no director or senior
officer of IMA nor any proposed nominee for election as a director of IMA, nor
any associate or affiliate of any of the foregoing, has any material interest,
directly or indirectly, by way of beneficial ownership of securities or
otherwise, in any matter to be acted upon other than the election of directors
or the appointment of auditors.
PARTICULARS OF OTHER MATTERS
Management of IMA knows of no other matters to come before the Meeting other
than those referred to in the Notice of Meeting accompanying this Management
Proxy Circular. However, if any other matters properly come before the Meeting,
it is the intention of the persons named in the form of proxy accompanying this
Management Proxy Circular to vote the same in accordance with their best
judgment of such matters.
CONSENTS
IMA has obtained consents from the following parties to the inclusion of certain
information in this Management Proxy Circular and such consents have not been
withdrawn prior to the filing of this Management Proxy Circular with the
required regulatory authorities:
(a) Paul Gordon Lhotka, P. Geo (B.C.), PhD., the author of the
report titled Diamond Drilling of the Navidad Silver-Copper-Lead
Project, November 2003 to March 2004, Chubut Province, Argentina
on behalf of IMA, effective date May 12, 2004.
(b) Paul Gordon Lhotka, P. Geo (B.C.), PhD., as responsible
independent qualified person, and Keith Patterson, P. Geo
(B.C.), M.Sc., the authors of the report titled Exploration of
the Los Toros Gold-Silver Property, February 12 to September 11,
2002, Chubut Province, Argentina on behalf of IMA, effective
date May 12, 2004.
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AUDITORS' CONSENT
IMA EXPLORATION INC.
We have read the Management Proxy Circular of IMA Exploration Inc. ("IMA") dated
May 14, 2004 relating to the reorganisation of the company. We have complied
with Canadian generally accepted standards for an auditor's involvement with
offering documents.
We consent to the use in the above-mentioned circular of our audit report to the
shareholders of IMA on the balance sheets of IMA as at December 31, 2003 and
December 31, 2002 and the statements of loss and deficit and cash flows for the
years ended December 31, 2003, 2002 and 2001. Our report is dated April 27, 2004
(except for note 12(b) which is as of May 3, 2004).
Vancouver, B.C. /s/ PRICEWATERHOUSECOOPERS LLP
May 14, 2004 Chartered Accountants
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DATED at Vancouver, British Columbia this 14th day of May, 2004
ON BEHALF OF THE BOARD OF DIRECTORS
/s/ JOSEPH GROSSO
Joseph Grosso
President and Chief Executive Officer
INDEX TO SCHEDULES
PAGE
Schedule A - Text of Resolutions....................................... A-1
Schedule B - Arrangement Agreement and Plan of Arrangement............. B-1
Schedule C - Interim Order............................................. C-1
Schedule D - Notice of Hearing of Petition for Final Order............. D-1
Schedule E - Financial Statements...................................... E-1
- Audited Consolidated Financial Statements of IMA for the
financial years ended December 31, 2003, 2002 and 2001 and the
auditor's report thereon
- Pro-forma Consolidated Balance Sheets of IMA and Golden Arrow
as at December 31, 2003
A-1
SCHEDULE "A"
(to the Management Proxy Circular of IMA Exploration Inc. dated May 14, 2004)
TEXT OF RESOLUTIONS
1. RATIFICATION OF APPROVED STOCK OPTION PLAN
"BE IT RESOLVED, AS AN ORDINARY RESOLUTION, THAT:
1. the Stock Option Plan, in the form approved by the Shareholders
of IMA Exploration Inc. ("IMA") at the Annual and Extraordinary
General Meeting held on June 26, 2003, is hereby ratified,
confirmed and approved;
2. IMA is authorized to grant stock options pursuant and subject to
the terms and conditions of the Stock Option Plan entitling all
of the optionholders in aggregate to purchase up to such number
of common shares of IMA as is equal to 10% of the number of
common shares of IMA issued and outstanding on the applicable
grant date; and
3. the Board or any committee created pursuant to the Stock Option
Plan is authorized to make such amendments to the Stock Option
Plan from time to time as the Board may, in its discretion,
consider to be appropriate, provided that such amendments will
be subject to the approval of all applicable regulatory
authorities and in certain cases, in accordance with the terms
of the Stock Option Plan, the members."
2. AMENDMENT OF NOTICE OF ARTICLES
"BE IT RESOLVED, AS A SPECIAL RESOLUTION THAT:
1. the Pre-existing Company Provisions set forth in Part 16 of the
Regulations to the BUSINESS CORPORATIONS ACT (British Columbia)
be removed and no longer apply to IMA Exploration Inc. ("IMA");
2. the directors of IMA be authorized to instruct its agents to
file a Notice of Alteration to the Notice of Articles in the
form presented to the Meeting reflecting the changes in
paragraph 1 above effective as of the time the Notice of
Alteration to a Notice of Articles is filed with the Registrar
of Companies;
3. Axium Law Group be appointed as IMA's agent to electronically
file the Notice of Alteration to a Notice of Articles with the
Registrar of Companies;
4. any director or officer of IMA, signing alone, be authorized to
execute and deliver all such documents and instruments,
including the amendment to the Notice of Articles, and to do
such further acts, as may be necessary to give full effect to
these resolutions or as may be required to carry out the full
intent and meaning thereof; and
5. the board of directors of IMA are hereby authorized to abandon
the above described amendments without further approval,
ratification or confirmation by the shareholders of IMA, and in
such case, this special resolution shall be deemed to have been
rescinded."
A-2
3. ADOPTION OF NEW ARTICLES
"BE IT RESOLVED, AS A SPECIAL RESOLUTION THAT:
1. the existing Articles of IMA Exploration Inc. ("IMA") be deleted
in their entirety, and the form of Articles presented to the
meeting of shareholders held on June 24, 2004 or any adjournment
thereof. be adopted as the Articles of IMA in substitution for,
and to the exclusion of the existing Articles of IMA;
2. any director or officer of IMA, signing alone, be authorized to
execute and deliver all such documents and instruments, and to
do such further acts, as may be necessary to give full effect to
these resolutions or as may be required to carry out the full
intent and meaning thereof; and
3. the board of directors of IMA are hereby authorized to abandon
the above described amendments without further approval,
ratification or confirmation by the shareholders of IMA, and in
such case, this special resolution shall be deemed to have been
rescinded."
4. ARRANGEMENT UNDER SECTIONS 288-299 OF THE BUSINESS CORPORATIONS ACT
(BRITISH COLUMBIA)
"BE IT RESOLVED, AS A SPECIAL RESOLUTION, THAT:
1. the arrangement (the "Arrangement") under sections 288-299 of
the BUSINESS CORPORATIONS ACT (British Columbia) substantially
as set forth in the Plan of Arrangement attached as Appendix I
to Schedule "B" to the Management Proxy Circular (the
"Management Proxy Circular") of IMA Exploration Inc. dated
effective May 14, 2004 is hereby approved and authorized;
2. the Arrangement Agreement made as of the 14th day of May 2004
among IMA Exploration Inc., IMA Holdings Ltd. and Golden Arrow
Resources Corporation, attached as Schedule "B" to the
Management Proxy Circular is hereby confirmed, ratified and
approved;
3. the board of directors of IMA Exploration Inc. be and is hereby
granted the authority to use its best judgment to proceed with
and cause IMA Exploration Inc. to complete the Arrangement in
the event of any variation of, or amendments to the Arrangement
Agreement, without further approval by the shareholders of IMA
Exploration Inc., provided that any variation or amendments are
accepted by the TSX Venture Exchange in conjunction with the
listing of the shares of Golden Arrow Resources Corporation on
the TSX Venture Exchange;
4. notwithstanding that this special resolution has been passed by
the shareholders of IMA Exploration Inc. or has received the
approval of the Supreme Court of British Columbia, the board of
directors of IMA Exploration Inc. may amend or decide not to
proceed with the Arrangement or revoke this special resolution
at any time prior to the filing of the certified copy of the
court order approving the Arrangement with the Registrar of
Companies for British Columbia without further approval of the
shareholders of IMA Exploration Inc.; and
5. any one director or officer of IMA Exploration Inc. is hereby
authorized, for and on behalf of IMA Exploration Inc. to execute
and deliver all documents and instruments and take all such
other actions as may be necessary or desirable to implement this
special resolution and the matters authorized hereby, such
determination to be conclusively evidenced by the execution and
delivery of any such documents or instruments and the taking of
any such actions.
B-1
SCHEDULE "B"
(to the Management Proxy Circular of IMA Exploration Inc. dated May 14, 2004)
ARRANGEMENT AGREEMENT AND PLAN OF ARRANGEMENT
ARRANGEMENT AGREEMENT
AMONG
IMA EXPLORATION INC.
AND
IMA HOLDINGS CORP.
AND
GOLDEN ARROW RESOURCES CORPORATION
MAY 14, 2004
ARRANGEMENT AGREEMENT
THIS ARRANGEMENT AGREEMENT made as of the 14th day of May, 2004.
AMONG:
IMA EXPLORATION INC., a company incorporated under the laws
of the Province of British Columbia and having a
head office at 709, 837 W. Hastings St., Terminal City Club
Tower Vancouver, BC V6C 3N6
(hereinafter referred to as "IMA")
AND:
IMA HOLDINGS CORP., a company incorporated under the laws
of the Province of British Columbia and having a head office
at 709, 837 W. Hastings St., Terminal City Club Tower
Vancouver, BC V6C 3N6
(hereinafter referred to as "IMA HOLDCO")
AND:
GOLDEN ARROW RESOURCES CORPORATION, a company incorporated
under the laws of the Province of British Columbia and
having a ohead office at 709, 837 W. Hastings St., Terminal
City Club Tower, Vancouver, BC V6C 3N6
(hereinafter referred to as "GOLDEN ARROW")
WHEREAS:
A. IMA, IMA Holdco, a wholly owned subsidiary of IMA, and Golden Arrow
have agreed to proceed with a proposed transaction by way of a plan of
arrangement whereby IMA will reorganize its share capital, certain
assets of IMA will be transferred to Golden Arrow, and a series of
share exchanges will take place with the result that the current
shareholders of IMA will have equivalent percentage shareholdings in
IMA and Golden Arrow;
B. IMA proposes to convene a meeting of its securityholders to consider
the Arrangement under sections 289 - 299 of the Business Corporations
Act (British Columbia), on the terms and conditions set forth in the
Plan of Arrangement attached as Appendix I hereto; and
C. Each of the parties to this Agreement has agreed to participate in and
support the Arrangement.
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the premises
and the respective covenants and agreements herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each of the parties hereto, the parties hereto covenant and
agree as follows:
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ARTICLE 1.
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, including the recitals hereto, unless there is something in
the subject matter or context inconsistent therewith, the following capitalized
words and terms shall have the following meanings:
(a) "ARRANGEMENT AGREEMENT" means this arrangement agreement,
including the Appendix I hereto, as the same may be supplemented
or amended from time to time;
(b) "INTERIM ORDER" means the interim order of the Court made
pursuant to the application therefor contemplated by section 4.4
hereof;
(c) "PERSON" means and includes an individual, sole proprietorship,
partnership, unincorporated association, unincorporated
syndicate, unincorporated organization, trust, body corporate, a
trustee, executor, administrator or other legal representative
and the Crown or any agency or instrumentality thereof;
(d) "PLAN OF ARRANGEMENT" means the plan of arrangement which is
annexed as Appendix I hereto and any amendment or variation
thereto made in accordance with section 6.1 hereof;
(e) "SPECIAL RESOLUTION" means a resolution passed by a majority of
not less than three quarters of the votes cast by the
Securityholders who vote in respect of such resolution at the
Meeting; and
(f) "SUBSIDIARY" means, with respect to a specified body corporate,
a body corporate of which more than 50% of the outstanding
shares ordinarily entitled to elect a majority of directors
thereof, whether or not shares of any other class or classes
shall or might be entitled to vote upon the happening of any
event or contingency, are at the time owned, directly or
indirectly, by such specified body corporate, and includes a
body corporate in like relation to a subsidiary;
All capitalized words used in this Agreement and not otherwise defined herein
shall have the meanings set forth in the Plan of
Arrangement.
1.2 HEADINGS
The division of this Agreement into articles, sections and other
portions and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Agreement. The terms
"this Agreement", "hereof' and "hereunder" and similar expressions refer to this
Agreement (including the appendices hereto) as a whole and not to any particular
article, section or other portion hereof and includes any agreement, document or
instrument supplementary or ancillary hereto.
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1.3 CONSTRUCTION
In this Agreement, unless something in the context is inconsistent
therewith:
(a) the words "include" or "including" when following any general
term or statement are not to be construed as limiting the
general term or statement to the specific items or matters set
forth or to similar items or matters, but rather as permitting
it to refer to all other items or matters that could reasonably
fall within its broadest possible scope;
(b) a reference to a statute shall be deemed to include every
regulation made pursuant thereto, all amendments to the statute
or to any such regulation enforced from time to time, and any
statute or regulation that supplements or supersedes such
statute or any such regulation;
(c) a reference to time or date is to the local time or date in
Vancouver, British Columbia, unless specifically indicated
otherwise;
(d) a reference to a particular corporation includes the corporation
derived from the amalgamation of the particular corporate, or of
a corporation to which such reference is extended by this
paragraph (d), with one or more other corporations;
(e) a word importing the masculine gender includes the feminine or
neuter and a word importing the singular includes the plural and
vice versa; and
(f) a reference to "approval", "authorization", "consent",
"designation" or "notice" means written approval, authorization,
consent, designation or notice unless specifically indicated
otherwise.
1.4 DATE FOR ANY ACTION
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day in the place where
the action is required to be taken, such action shall be required to be taken on
the next succeeding day which is a Business Day at such place, unless otherwise
agreed to.
1.5 CURRENCY
All sums of money which are referred to in this Agreement are expressed
in lawful money of Canada unless otherwise
specified.
1.6 ACCOUNTING PRINCIPLES
Whenever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be to the Canadian
generally accepted accounting principles from time to time approved by the
Canadian Institute of Chartered Accountants, or any successor thereto,
applicable as at the date on which a calculation is made or required to be made
in accordance with generally accepted accounting principles.
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1.7 APPENDIX
The attached Appendix I, entitled "Plan of Arrangement", shall be
deemed to be incorporated into and form part of this
Agreement.
1.8 ENTIRE AGREEMENT
This Agreement, together with the appendices, agreements and other
documents herein or therein referred to, constitute the entire agreement among
the parties pertaining to the subject manner hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, among the parties with respect to the subject matter hereof.
ARTICLE 2.
EFFECTIVE DATE OF ARRANGEMENT
2.1 ARRANGEMENT
IMA, IMA Holdco, and Golden Arrow agree to effect the Arrangement
pursuant to the provisions of sections 288 to 299 of the BCBCA on the terms and
subject to the conditions contained in this Agreement and the Plan of
Arrangement.
2.2 EFFECTIVE TIME OF ARRANGEMENT
The Arrangement shall become effective at 12:01 a.m. on the Effective
Date.
2.3 COMMITMENT TO EFFECT ARRANGEMENT
Subject to satisfaction of the terms and conditions of this Agreement
and termination pursuant to Article 6, the parties shall each use all reasonable
efforts and do all things reasonably required to cause the Arrangement to become
effective on the Effective Date and, in conjunction therewith, to cause the
transactions contemplated by the Plan of Arrangement to be completed on or prior
to the Effective Date. Without limiting the generality of the foregoing, the
parties shall proceed forthwith to apply for the Interim Order and, upon
obtainment thereof, IMA shall call the Meeting and mail the Circular to the
Securityholders.
2.4 FILING OF FINAL ORDER
Subject to the rights of termination contained in Article 6 hereof,
upon the Securityholders approving the Arrangement by Special Resolution in
accordance with the provisions of the Interim Order and the BCBCA, IMA obtaining
the Final Order and the other conditions contained in Article 5 hereof being
satisfied or waived, IMA, IMA Holdco and Golden Arrow shall send a copy of the
Final Order together with such other documents as may be required by the
Registrar to be filed pursuant to sections 288 to 299 of the BCBCA in order to
make the Arrangement effective on the Effective Date. Upon the Arrangement
becoming effective, IMA, IMA Holdco and Golden Arrow shall exchange such other
documents as may be necessary or desirable in connection with the completion of
the transactions contemplated by this Agreement and the Plan of Arrangement.
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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF IMA, IMA HOLDCO AND GOLDEN ARROW
Each of the parties represents and warrants to each other as follows:
(a) it is a corporation duly incorporated or continued and validly
subsisting under the laws of the Province of British Columbia
and has full capacity and authority to enter into this
Agreement and, subject to obtaining the requisite approvals
contemplated hereby, to perform its obligations hereunder,
(b) it has taken all corporate actions necessary to authorize the
execution and delivery of this Agreement, and this Agreement
has been duly authorized by it;
(c) neither the execution and delivery of this Agreement nor the
performance of any of its covenants and obligations hereunder
will constitute a material default under, or be in any
material contravention or breach of:
(i) any provision of its constating documents or governing
documents;
(ii) any judgment, decree, order, law, statute, rule or
regulation applicable to it; or
(iii) any agreement or instrument to which it is a party or
by which it is bound; and
(d) no dissolution, winding-up, bankruptcy, liquidation or similar
proceedings have been commenced or are pending or proposed in
respect of it.
ARTICLE 4.
COVENANTS
4.1 COVENANTS OF IMA
IMA hereby covenants and agrees with IMA Holdco and Golden Arrow as
follows:
(a) until the Effective Date, IMA and each of its Subsidiaries
shall carry on its business in the ordinary course and shall
not enter into any transaction or incur any obligation or
liability out of the ordinary course of its business, except
as otherwise contemplated in this Agreement;
(b) except as otherwise contemplated in this Agreement, until the
Effective Date, IMA shall not, and shall not suffer or permit
any of its Subsidiaries to, merge into or with, or amalgamate,
consolidate or enter into any other corporate reorganization
with, any other corporation or Person or perform any act or
enter into any transaction or negotiation which reasonably
could be expected to, directly or indirectly, interfere or be
inconsistent with the completion of the Arrangement or other
transactions contemplated by this Agreement;
(c) IMA shall, in a timely and expeditious manner, file the
Circular in all jurisdictions where the Circular is required
to be filed by IMA and mail or cause to be mailed the Circular
to the Securityholders, the directors of IMA and the auditors
of IMA and any other person
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who is entitled to receive the Circular, all in accordance
with the terms of the Interim Order and applicable law;
(d) IMA shall perform the obligations required to be performed by
it, and shall enter into all agreements required to be entered
into by it under this Agreement and the Plan of Arrangement
and shall do all such other acts and things as may be
necessary or desirable in order to carry out and give effect
to the Arrangement and related transactions as described in
the Circular and, without limiting the generality of the
foregoing, IMA shall seek:
(i) the approval of the Securityholders required for the
implementation of the Arrangement;
(ii) the Interim Order and Final Order as provided for in
section 4.4, and
(iii) such other consents, orders, rulings, approvals and
assurances as counsel may advise are necessary or
desirable for the implementation of the Arrangement,
including those referred to in section 5.1;
(e) IMA will convene the Meeting as soon as practicable and will
solicit proxies to be voted at the Meeting in favour of the
Arrangement and all other resolutions referred to in the
Circular; and
(f) IMA will use all reasonable efforts to cause each of the
conditions precedent set out in sections 5.1 and 5.2 to be
complied with on or before the Effective Date.
4.2 COVENANTS OF IMA HOLDCO
IMA Holdco hereby covenants and agrees with IMA and Golden Arrow as
follows:
(a) except as otherwise contemplated in this Agreement, until the
Effective Date, IMA Holdco shall not merge, and shall not
suffer or permit any of its Subsidiaries to, merge into or
with, or amalgamate or consolidate, or enter into any other
corporate reorganization with, any other corporation or
Person, perform any act or enter into any transaction or
negotiation which reasonably could be expected to, directly or
indirectly, interfere or be inconsistent with the completion
of the Arrangement or other transactions contemplated by this
Agreement;
(b) IMA Holdco shall perform the obligations required to be
performed by it, and shall enter into all agreements required
to be entered into by it under this Agreement and the Plan of
Arrangement and shall do all such other acts and things as may
be necessary or desirable in order to carry out and give
effect to the Arrangement and related transactions as
described in the Circular and, without limiting the generality
of the foregoing, IMA Holdco shall seek and cooperate with IMA
and Golden Arrow in seeking:
(i) the Interim Order and Final Order as provided for in
section 4.4, and
(ii) such other consents, orders, rulings, approvals and
assurances as counsel may advise are necessary or
desirable for the implementation of the Arrangement,
including those referred to in section 5.1; and
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(c) IMA Holdco will use all reasonable efforts to cause each of
the conditions precedent set out in sections 5.1 and 5.2 to be
complied with on or before the Effective Date.
4.3 COVENANTS OF GOLDEN ARROW
Golden Arrow hereby covenants and agrees with IMA as follows:
(a) except as otherwise contemplated in this Agreement, until the
Effective Date, Golden Arrow shall not merge, and shall not
suffer or permit any of its Subsidiaries to, merge into or
with, or amalgamate or consolidate, or enter into any other
corporate reorganization with, any other corporation or
Person, perform any act or enter into any transaction or
negotiation which reasonably could be expected to, directly or
indirectly, interfere or be inconsistent with the completion
of the Arrangement or other transactions contemplated by this
Agreement;
(b) Golden Arrow shall perform the obligations required to be
performed by it, and shall enter into all agreements required
to be entered into by it under this Agreement and the Plan of
Arrangement and shall do all such other acts and things as may
be necessary or desirable in order to carry out and give
effect to the Arrangement and related transactions as
described in the Circular and, without limiting the generality
of the foregoing, Golden Arrow shall seek and cooperate with
IMA and IMA Holdco in seeking:
(i) the Interim Order and Final Order as provided for in
section 4.4, and
(ii) such other consents, orders, rulings, approvals and
assurances as counsel may advise are necessary or
desirable for the implementation of the Arrangement,
including those referred to in section 5.1; and
(c) Golden Arrow will use all reasonable efforts to cause each of
the conditions precedent set out in sections 5.1 and 5.2 to be
complied with on or before the Effective Date.
4.4 INTERIM ORDER AND FINAL ORDER
Each party covenants and agrees that it will, as soon as reasonably
practicable, apply to the Court pursuant to section 291 of the BCBCA for the
Interim Order providing for, among other things, the calling and holding of the
Meeting for the purpose of, among other matters, considering and, if deemed
advisable, approving the Arrangement and that, if the approval of the
Securityholders of the Arrangement as set forth in the Interim Order is obtained
by IMA, as soon as practicable thereafter each party will take the necessary
steps to submit the Arrangement to the Court and apply for the Final Order in
such fashion as the Court may direct.
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ARTICLE 5.
CONDITIONS
5.1 MUTUAL CONDITIONS PRECEDENT
The respective obligations of each party hereto to complete the
transactions contemplated by this Agreement, and the obligation of IMA to file a
copy of the Final Order and other documents (if any) required to give effect to
the Arrangement with the Registrar, shall be subject to the satisfaction, on or
before the Effective Date, of the following conditions:
(a) the Interim Order shall have been granted in form and
substance satisfactory to IMA;
(b) the Arrangement, with or without amendment, shall have been
approved at the Meeting by the Securityholders in accordance
with the Interim Order,
(c) the Arrangement with or without amendment, shall have been
approved by the shareholders of each of IMA Holdco and Golden
Arrow;
(d) the Final Order shall have been granted in form and substance
satisfactory to IMA;
(e) the TSX-V shall have conditionally accepted the Arrangement
and confirmed that immediately prior to the Effective Date,
the IMA Special Shares and the Golden Arrow Preferred Shares
issuable under the Arrangement will be listed on the TSX-V;
(f) all other consents, orders, rulings, approvals and assurances,
including regulatory and judicial approvals and orders
required, necessary or desirable for the Arrangement to become
effective shall have been obtained or received from the
Persons, authorities or bodies having jurisdiction in the
circumstances, in a form acceptable to IMA;
(g) there shall not be in force any order or decree restraining or
enjoining the consummation of the transaction contemplated by
the Arrangement Agreement;
(h) IMA shall provide to Golden Arrow, on or before the Effective
Date, an indemnity in form and substance acceptable to Golden
Arrow for any costs or losses incurred by Golden Arrow in
respect of the legal action commenced by a subsidiary of
Aquiline Resources Inc. against IMA;
(i) notices of dissent have not been delivered by Shareholders
holding greater than 1% of the outstanding IMA Common Shares;
(j) this Agreement shall not have been terminated under Article 6;
(k) IMA and IMA Holdco shall have completed a transition pursuant
to section 436 of the BCBCA; and
(l) prior to the Effective Date, all of the Golden Arrow
Properties located in Argentina, shall be indirectly held by
IMA Holdings (BVI).
Except for the conditions set forth in subsections 5.1 (a), (b), (c), (d), (j)
and (k), any of the foregoing conditions may be waived.
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5.2 CONDITIONS AND OBLIGATIONS OF EACH PARTY
The obligation of each of IMA, IMA Holdco and Golden Arrow to complete
the transactions contemplated by this Agreement is further subject to the
condition, which may be waived by any such party without prejudice to its right
to rely on any other condition in favour of such party, that each and every one
of the covenants of the other party hereto to be performed on or before the
Effective Date pursuant to the terms of this Agreement shall have been duly
performed by such party and that, except as affected by the transactions
contemplated by this Agreement, the representations and warranties of the other
party hereto shall be true and correct in all material respects as at the
Effective Date, with the same effect as if such representations and warranties
had been made at and as of such time.
ARTICLE 6.
AMENDMENT AND TERMINATION
6.1 AMENDMENT
Subject to any mandatorily applicable restrictions under the BCBCA or
the Final Order, this Agreement may, at any time and from time to time before or
after the holding of the Meeting, but not later than the Effective Date, be
amended by written agreement of the parties hereto without, subject to
applicable law, further notice to or authorization on the part of the
Securityholders.
6.2 TERMINATION
This Agreement may, at any time before or after the holding of the
Meeting but prior to the Effective Date, be unilaterally terminated by the board
of directors of IMA without further notice to, or action on the part of, its
Securityholders for whatever reasons it may consider appropriate.
6.3 EFFECT OF TERMINATION
Upon the termination of this Agreement pursuant to section 6.2 hereof,
no party shall have any liability or further obligation to any other party
hereunder.
ARTICLE 7.
MERGER
7.1 MERGER OF CONDITIONS
The conditions set out in sections 5.1 and 5.2 shall be conclusively
deemed to have been satisfied, waived or released on
the Effective Date.
7.2 MERGER OF REPRESENTATIONS, WARRANTIES AND COVENANTS
The provisions of sections 3.1, 4.1, 4.2 and 4.3 shall be conclusively
deemed to have been satisfied in all respects on the Effective Date and shall
accordingly merge in and not survive the effectuation of the Arrangement.
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ARTICLE 8.
GENERAL
8.1 NOTICES
All notices which may be or are required to be given pursuant to any
provision of this Agreement shall be given or made in writing and shall be
deemed to be validly given if served personally or by facsimile, in each case to
the attention of the senior officer at the following addresses or at such other
addresses as shall be specified by the parties by like notice:
IF TO IMA EXPLORATION INC:
IMA Exploration Inc.
709, 837 W. Hastings St.
Terminal City Club Tower
Vancouver, BC V6C 3N6
Attention: Joseph Grosso, President and Chief Operating Officer
Facsimile: (604) 687-1858
WITH A COPY TO:
Axium Law Group
Suite 3350, Four Bentall Centre
1055 Dunsmuir Street
PO Box 49222
Vancouver, BC V7X 1L2
Attention: Michael Varabioff
Facsimile: (604) 692-4918
IF TO IMA HOLDCO OR GOLDEN ARROW:
IMA Holdings Corp. or Golden Arrow Resources Corporation (as
applicable)
709, 837 W. Hastings St.
Terminal City Club Tower
Vancouver, BC V6C 3N6
Attention: Joseph Grosso, President
Facsimile: (604) 687-1858
Any notice that is delivered shall be deemed to be delivered on the
date of delivery to such address if delivered on a Business Day prior to 5:00
p.m. (local time at the place of receipt) or on the next Business Day if
delivered after 5:00 p.m. or on a non-Business Day. Any notice delivered by
facsimile transmission shall be deemed to be delivered on the date of
transmission if delivered on a Business Day prior to 5:00 p.m. (local time at
the place of receipt) or the next Business Day if delivered after 5:00 p.m. or
on a non-Business Day.
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8.2 ASSIGNMENT
No party may assign its rights or obligations under this Agreement or
the Arrangement without the prior written consent of
the other party hereto.
8.3 BINDING EFFECT
This Agreement and the Plan of Arrangement shall be binding upon and
shall enure to the benefit of the parties hereto and their respective successors
and permitted assigns.
8.4 WAIVER
Any waiver or release of any of the provisions of this Agreement, to be
effective, must be in writing executed by the party granting the same.
8.5 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Province of British Columbia and the laws of Canada applicable
therein and shall be treated in all respects as a British Columbia contract.
8.6 EXPENSES
All expenses incurred in connection with contemplated hereby and
thereby shall be borne entirely by IMA.
8.7 COUNTERPARTS
This Agreement may be executed in one or more counterparts each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first written.
IMA EXPLORATION INC.
Per: /s/ JOSEPH GROSSO
-------------------------------
Name: Joseph Grosso
Title: President and Chief Operation Officer
IMA HOLDINGS CORP.
Per: /s/ JOSEPH GROSSO
------------------------------
Name: Joseph Grosso
Title: President
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GOLDEN ARROW RESOURCES CORPORATION
Per: /s/ JOSEPH GROSSO
----------------------------
Name: Joseph Grosso
Title: President
APPENDIX I TO ARRANGEMENT AGREEMENT MADE AS OF THE 14 DAY OF MAY, 2004,
AMONG IMA EXPLORATION INC., IMA HOLDINGS CORP. AND GOLDEN
ARROW RESOURCES CORPORATION
PLAN OF ARRANGEMENT UNDER SECTIONS 288 - 299
OF THE BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)
ARTICLE 1.
INTERPRETATION
1.1 DEFINITIONS
In this Plan of Arrangement, unless there is something in the subject matter or
context inconsistent therewith, the following capitalized words and terms shall
have the following meanings:
(a) "ARRANGEMENT" means the statutory arrangement involving IMA,
its Securityholders, IMA Holdco and Golden Arrow proposed
under the provisions of sections 288 to 299 of the BCBCA, on
the terms and conditions set out in this Plan of Arrangement
or any amendment or variation thereto made in accordance with
the terms of the Arrangement Agreement;
(b) "ARRANGEMENT AGREEMENT" means the arrangement agreement made
as of the 14 day of May, 2004 between IMA, IMA Holdco and
Golden Arrow to which this Plan of Arrangement is attached as
Appendix I, as the same may be supplemented or amended from
time to time;
(c) "BCBCA" means the BUSINESS CORPORATIONS ACT (British
Columbia), as amended;
(d) "BUSINESS DAY" means any day, which is not a Saturday or a
Sunday, or a statutory holiday in British Columbia;
(e) "CASH" means $750,000 which will be transferred from IMA to
Golden Arrow pursuant to the Plan of Arrangement;
(f) "CIRCULAR" means the definitive form, together with any
amendments thereto, of the management proxy circular of IMA to
be prepared and sent to the Securityholders in connection with
the Meeting;
(g) "CONTRACTS" means all agreements to which IMA is a party,
which pertain to the Golden Arrow Properties and which will be
assigned from IMA to Golden Arrow pursuant to the Plan of
Arrangement;
(h) "COURT" means the Supreme Court of the Province of British
Columbia;
(i) "EFFECTIVE DATE" means July 7, 2004 or such other date as may
be determined by the board of directors of IMA in accordance
with the provisions of the BCBCA;
(j) "EFFECTIVE TIME" means 12:01 a.m., Vancouver time, on the
Effective Date;
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(k) "FINAL ORDER" means the final order of the Court approving the
Arrangement pursuant to the BCBCA;
(l) "GOLDEN ARROW" means "Golden Arrow Resources Corporation" a
corporation incorporated under the BCBCA in order to
facilitate the Arrangement;
(m) "GOLDEN ARROW COMMON SHARES" means the common shares without
par value in the capital of Golden Arrow which are to be
issued under the Arrangement to holders of IMA Special Shares
in exchange for such IMA Special Shares, and having the terms
and conditions set out in Schedule D to this Plan of
Arrangement;
(n) "GOLDEN ARROW NOTE" means the demand, non-interest bearing
promissory note to be issued by Golden Arrow to IMA having a
principal amount and aggregate fair market value equal to the
aggregate fair market value of the Golden Arrow Preferred
Shares;
(o) "GOLDEN ARROW PREFERRED SHARES" means the preferred shares of
Golden Arrow which are to be issued under the Arrangement to
IMA in exchange for the Transferred Assets, which will have a
value equal to the Net Fair Market Value, and having the terms
and conditions set out in Schedule D to this Plan of
Arrangement;
(p) "GOLDEN ARROW PROPERTIES" means all of IMA's mineral property
interests in Argentina and Peru, other than the Navidad Area
Properties;
(q) "HOLDER" means, when not qualified by the adjective
"registered", the person entitled to a share hereunder whether
or not registered or entitled to be registered in respect
thereof in the central securities register of IMA, Holdco or
Golden Arrow, as the case may be;
(r) "IMA" means IMA Exploration Inc., a company incorporated under
the laws of the Province of British Columbia;
(s) "IMA COMMON SHARES" means the common shares without par value
in the capital of IMA;
(t) "IMA HOLDCO" means IMA Holdings Corp., a wholly owned
subsidiary of IMA incorporated under the laws of the Province
of British Columbia;
(u) "IMA HOLDINGS (BVI)" means Inversiones Mineras Argentinas
Holdings (BVI) Inc., a wholly-owned subsidiary of IMA Holdco
which indirectly owns or will own the Golden Arrow Properties
located in Argentina;
(v) "IMA NAVIDAD (BVI)" means IMA Navidad (BVI) Inc., a
wholly-owned subsidiary of IMA which indirectly owns and will,
upon completion of the Arrangement, continue to own the
Navidad Area Properties;
(w) "IMA NOTE" means the demand, non-interest bearing promissory
note to be issued by IMA to Golden Arrow having a principal
amount and fair market value equal to the aggregate fair
market value of the IMA Special Shares;
(x) "IMA OPTIONS" means the outstanding incentive stock options of
IMA entitling the holders to purchase IMA Common Shares in
accordance with the terms and conditions thereof;
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(y) "IMA SPECIAL SHARES" means the special shares of IMA which IMA
will be authorized to issue upon the Arrangement becoming
effective and which are to be issued under the Arrangement to
holders of IMA Common Shares in exchange for such IMA Common
Shares, and having the terms and conditions set out in
Schedule B to this Plan of Arrangement;
(z) "IMA WARRANTS" means the outstanding common share purchase
warrants of IMA entitling the holders to purchase IMA Common
Shares in accordance with the terms and conditions thereof;
(aa) "IMPSA" means IMPSA Resources Corporation, an 80.69% owned
subsidiary of IMA Holdco;
(bb) "IMPSA BVI" means IMPSA BVI Inc., a wholly-owned subsidiary of
IMA and IMA Holdco which indirectly owns mineral property
interests in Peru;
(cc) "ITA" means the INCOME TAX ACT (Canada), as amended;
(dd) "MARKETABLE SECURITIES" means the common shares of Amera
Resources Corporation, Ballad Gold & Silver Ltd. and
Cloudbreak Resources Ltd. held by IMA which pertain to the
Golden Arrow Properties and which will be transferred from IMA
to Golden Arrow pursuant to the Plan of Arrangement;
(ee) "MEETING" means the annual and special meeting of the
Securityholders to be held to consider, among other matters,
the Arrangement, and any or postponement adjournment thereof;
(ff) "NAVIDAD AREA PROPERTIES" means the Navidad Project and
certain other mineral properties held indirectly by IMA in
central Chubut Province, Argentina;
(gg) "NAVIDAD PROJECT" means IMA's silver-lead-copper project
located in Chubut Province, Argentina;
(hh) "NET FAIR MARKET VALUE" means an amount determined by the
board of directors of IMA as of the Effective Date, as being
an amount equal to the fair market value of the Transferred
Assets;
(ii) "NEW IMA COMMON SHARES" means common shares of IMA which IMA
will be authorized to issue upon the Arrangement becoming
effective and which are to be issued under the Arrangement to
holders of IMA Common Shares in exchange for such IMA Common
Shares;
(jj) "PLAN OF ARRANGEMENT" means this plan of arrangement, as it
may be amended from time to time in accordance with section
6.1 of the Arrangement Agreement;
(kk) "PUC" means paid-up capital as defined in subsection 89 (1) of
the ITA;
(ll) "RECEIVABLES" means certain amounts owing to IMA by its
subsidiaries in respect of the Golden Arrow Properties;
(mm) "REGISTRAR" means the Registrar of Companies appointed under
the BCBCA;
-4-
(nn) "RIGHTSHOLDERS" means the holders of IMA Options;
(oo) "SECURITYHOLDERS" means the Shareholders and Rightsholders
collectively;
(pp) "SHAREHOLDER" means a holder of IMA Common Shares and
"SHAREHOLDERS" means more than one Shareholder;
(qq) "TSX-V" means the TSX Venture Exchange;
(rr) "TRANSFER AGENT" means Computershare Trust Company of Canada;
and
(ss) "TRANSFERRED ASSETS" means the Cash, the Marketable
Securities, the Contracts, the common shares of IMA Holdings
(BVI), the common shares of IMPSA BVI, the common shares of
IMPSA and the Receivables, all of which will be transferred by
IMA to Golden Arrow pursuant to the Plan of Arrangement.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS
The division of this Plan of Arrangement into articles, sections, and other
portions, and the insertion of headings are for the convenience of reference
only and shall not affect the construction or interpretation of this Plan of
Arrangement. The terms "this Plan of Arrangement", "hereof', "herein",
"hereunder" and similar expressions refer to this Plan of Arrangement as a whole
and not to any particular article, section, subsection, paragraph or part
hereof. Unless something in the subject matter or context is inconsistent
therewith, all references herein to articles, sections and other portions are to
articles, sections and other portions to this Plan of Arrangement.
1.3 NUMBER AND GENDER
In this Plan of Arrangement, words importing the singular number only shall
include the plural and vice versa, and words importing the masculine gender
shall include the feminine and neuter genders, and words importing persons shall
include individuals, partnerships, associations, trusts, unincorporated
organizations and corporations.
1.4 STATUTES
A reference to a statute shall be deemed to include every regulation made
pursuant thereto, all amendments to the statute or to any such regulation
enforced from time to time, and any statute or regulation that supplements or
supersedes such statute or any such regulation.
1.5 CURRENCY
All references to currency herein are to lawful money of Canada unless otherwise
specified herein.
ARTICLE 2.
ARRANGEMENT AGREEMENT
2.1 ARRANGEMENT AGREEMENT
This Plan of Arrangement is made pursuant and subject to the provisions of the
Arrangement Agreement.
-5-
ARTICLE 3.
THE ARRANGEMENT
3.1 THE ARRANGEMENT
On the Effective Date, the following shall occur and be deemed to occur in the
following order without further act or formality and with each transaction or
event being deemed to occur immediately after the occurrence of the transaction
or event immediately preceding it:
(a) IMA's authorized share structure shall be amended by:
(i) altering the name of the 100,000,000 common shares
without par value to be 100,000,000 Class A Common
shares without par value; and
(ii) creating the following two new classes of shares:
(a) an unlimited number of common shares without
par value; and
(b) an unlimited number of special shares without
par value
IMA's shares shall have the rights and restrictions set out
in IMA's Articles. IMA's authorized share structure shall be
amended so that it is as set out in paragraph H of the Notice
of Alteration attached hereto as Schedule A. IMA's Articles
shall be amended by adding, as Article 27 of the Articles,
the rights and restrictions set out in Schedule B hereto;
(b) IMA's central securities register for common shares shall be
redesignated as the central securities register for the Class
A Common shares;
(c) Golden Arrow's authorized share structure shall be amended by
creating a new class of shares consisting of an unlimited
number of preferred shares without par value having the rights
and restrictions set out in Golden Arrow's Articles. Golden
Arrow's authorized share structure shall be amended so that it
is as set out in paragraph H of the Notice of Alteration
attached hereto as Schedule C. Golden Arrow's Articles shall
be amended by adding, as Article 27 of the Articles, the
rights and restrictions set out in Schedule D hereto;
(d) Each IMA Common Share issued and outstanding on the Effective
Date (other than shares held by dissenting shareholders) will
be exchanged for one New IMA Common Share and one-tenth of one
IMA Special Share. The stated capital of the New IMA Common
Shares and the IMA Special Shares will be determined as
follows:
(i) the amount of the stated capital account of the IMA
Special Shares will be equal to Net Fair Market Value;
and
(ii) the amount of the stated capital account of the New
IMA Common Shares will be equal to stated capital
account of the IMA Common Shares minus the Net Fair
Market Value.
-6-
Each Shareholder shall cease to the the holder of the IMA
Common Shares so exchanged and shall become the holder of the
number of New IMA Common Shares and IMA Special Shares issued
to such Shareholder. The name of such Shareholder shall be
removed from the central securities register for IMA Common
Shares in respect of the IMA Common Shares so exchanged and
shall be added to the central securities register of New IMA
Common Shares and IMA Special Shares, respectively, so issued
to such Shareholder;
(e) The IMA Common Shares exchanged for the New IMA Common Shares
and the IMA Special Shares shall be cancelled and the
appropriate entry shall be made in IMA's central securities
registry;
(f) IMA Holdco will transfer to IMA, with good and marketable
title free and clear of all encumbrances, all of the shares of
IMA Holdings (BVI), IMPSA BVI and IMPSA held by it. As
consideration for such shares transferred to IMA, IMA will
reduce the debt owed to it by IMA Holdco by an amount equal to
the fair market value of such shares;
(g) Each holder of IMA Special Shares will transfer, with good and
marketable title free and clear of all encumbrances, all such
shares to Golden Arrow. As consideration for the IMA Special
Shares transferred to it, Golden Arrow will issue to such
holders, Golden Arrow Common Shares on the basis of one Golden
Arrow Common Share for every one whole IMA Special Share held
by a respective holder. The stated capital account maintained
in respect of Golden Arrow Common Shares shall be increased by
an amount equal to the PUC of the transferred IMA Special
Shares. In connection with such sale and transfer, each holder
of IMA Special Shares so sold and transferred shall cease to
be the holder of the IMA Special Shares so sold and
transferred and shall become the holder of the number of
Golden Arrow Common Shares issued to such holder. The name of
such holder shall be removed from the central securities
register of IMA Special Shares in respect of the IMA Special
Shares so sold and transferred and shall be added to the
central securities register of Golden Arrow as the holder of
the number of Golden Arrow Common Shares so issued to such
holder, and Golden Arrow shall be and shall be deemed to be
the transferee of the IMA Special Shares so transferred and
the name of Golden Arrow shall be entered in the central
securities register of IMA Special Shares so sold and
transferred to Golden Arrow;
(h) IMA will sell and transfer the Transferred Assets to Golden
Arrow in consideration for the issuance by Golden Arrow of
1,000,000 Golden Arrow Preferred Shares having a collective
fair market value equal to the Net Fair Market Value. IMA
shall be added to the central securities registry of Golden
Arrow as the holder of the number of the 1,000,000 Golden
Arrow Preferred Shares so issued. IMA shall take all such
actions and deliver all such documents as may be required to
convey title to the Transferred Assets to Golden Arrow;
(i) IMA will purchase for cancellation the IMA Special Shares held
by Golden Arrow in consideration for the issuance by IMA to
Golden Arrow of the IMA Note having a principal amount and
fair market value equal to the aggregate fair market value of
the IMA Special Shares purchased for cancellation. The
repurchased IMA Special Shares shall be cancelled and the
appropriate entry made on the central securities registry for
the IMA Special Shares;
-7-
(j) The authorized share structure of IMA shall be amended by
eliminating the 100,000,000 Class A Common Shares without par
value and the unlimited Special Shares without par value, none
of which are issued. IMA's authorized share structure shall be
amended so that it is as set out in paragraph H of the Notice
of Alteration attached hereto as Schedule E. IMA's Articles
shall be amended by deleting Article 27 of the Articles and
replacing it with Article 27 in the form set out in Schedule F
hereto;
(k) Golden Arrow will purchase for cancellation the Golden Arrow
Preferred Shares held by IMA in consideration for the issuance
by Golden Arrow to IMA of the Golden Arrow Note having a
principal amount and fair market value equal to the aggregate
fair market value of the Golden Arrow Preferred Shares
purchased for cancellation. The repurchased Golden Arrow
Preferred Shares shall be cancelled and the appropriate entry
made on the central securities registry for the Golden Arrow
Preferred Shares;
(l) The authorized share structure of Golden Arrow shall be
amended by eliminating the unlimited preferred shares without
par value, none of which are issued. Golden Arrow's authorized
share structure shall be amended so that it is as set out in
paragraph H of the Notice of Alteration attached hereto as
Schedule G. Golden Arrow's Articles shall be amended by
deleting Article 27 of the Articles which contain the rights
and restrictions attached to the Golden Arrow Common Shares
and Golden Arrow Preferred Shares; and
(m) IMA will pay the principal amount of the IMA Note by
transferring to Golden Arrow the Golden Arrow Note which will
be accepted by Golden Arrow as full payment, satisfaction and
discharge of IMA's obligation under the IMA Note and
simultaneously, Golden Arrow will pay the principal amount of
the Golden Arrow Note by transferring to IMA the IMA Note
which will be accepted by IMA as full payment, satisfaction
and discharge of Golden Arrow's obligation under the Golden
Arrow Note. The IMA Note and the Golden Arrow Note will both
thereupon be cancelled.
3.2 TREATMENT OF IMA WARRANTS
After the Effective Date, each whole IMA Warrant outstanding on the Effective
Date will entitle the holder thereof to receive, upon exercise on or after the
Effective Date, one New IMA Common Share and one tenth of one Golden Arrow
Common Share at an aggregate exercise price equal to the exercise price provided
for in the certificate representing such IMA Warrant, subject to the terms and
conditions contained in such certificate. Holders of IMA Warrants will not be
permitted to exercise IMA Warrants to purchase either New IMA Common Shares or
Golden Arrow Common Shares separately from each other. A holder of IMA Warrants
who partially exercises such IMA Warrants after the Effective Date will be
requested to exercise such IMA Warrants in multiples of ten to avoid
subscriptions for fractions of Golden Arrow Common Shares.
The net proceeds from the exercise of any IMA Warrants after the Effective Date
will be split between IMA and Golden Arrow in proportion to the relative market
capitalizations of IMA and Golden Arrow calculated using the weighted average
market price of New IMA Common Shares and Golden Arrow Common Shares for the
first five trading days commencing when the Golden Arrow Common Shares commence
trading on the TSX-V, provided that in no event will Golden Arrow receive less
than $0.50 per Golden Arrow Common Share issued. IMA will, forthwith upon
exercise of an IMA Warrant, pay to Golden Arrow on behalf of the holder of IMA
Warrants, the amount to which Golden Arrow is entitled. Upon receipt of such
funds, Golden Arrow will issue and deliver to the IMA Warrant holder the
certificate representing Golden Arrow Common Shares to which such IMA Warrant
holder is entitled. The price at which the Golden Arrow Common Shares will be
issued will be calculated by dividing the
-8-
amount of cash received by Golden Arrow from IMA, by the number of Golden Arrow
Common Shares issued.
From the Effective Time, certificates representing IMA Warrants which were
outstanding on the Effective Date will represent rights to purchase the same
number of New IMA Common Shares as represented by the certificate and one-tenth
that number of Golden Arrow Common Shares. Neither IMA nor Golden Arrow will
issue new warrant certificates representing such rights.
3.3 TREATMENT OF IMA OPTIONS
After the Effective Time, all outstanding IMA Options will remain as constituted
immediately prior to the Effective Time, and upon exercise, will entitle the
holders to acquire the number of New IMA Common Shares equal to the number of
IMA Common Shares they would have acquired had they exercised the options prior
to the Effective Date.
The board of directors of Golden Arrow may grant incentive stock options to
purchase Golden Arrow Common Shares to its directors, officers, employees and
consultants in amounts to be determined by the board of directors of Golden
Arrow at exercise prices in compliance with the requirements of the TSX-V.
3.4 DEEMED FULLY PAID AND NON-ASSESSABLE SHARES
All New IMA Common Shares, IMA Special Shares, Golden Arrow Common Shares and
Golden Arrow Class A Shares issued pursuant hereto shall be deemed to be validly
issued and outstanding as fully paid and non-assessable shares for all purposes
of the BCBCA.
3.5 ARRANGEMENT EFFECTIVENESS
On the Effective Date, the Arrangement shall become finally and conclusively
binding on the Securityholders and each of IMA, IMA
Holdco and Golden Arrow.
3.6 SUPPLEMENTARY ACTIONS
Notwithstanding that the transaction and events set out in section 3.1 shall
occur and shall be deemed to occur in the order therein set out without any act
or formality, each of IMA, IMA Holdco and Golden Arrow shall be required to
make, do and execute or cause and procure to be made, done and executed all such
further acts, deeds, agreements, transfers, assurances, instruments or documents
as may be required to further document or evidence any of the transactions or
events set out in section 3.1, including without limitation, any resolutions of
directors authorizing the issue, transfer or purchase for cancellation of
shares, any share transfer powers evidencing the transfer of shares and any
receipt therefore, any promissory notes and receipts therefor and any necessary
addition to or deletions from share registers.
ARTICLE 4.
CERTIFICATES AND DOCUMENTATION
4.1 IMA COMMON SHARE CERTIFICATES
From and after the Effective Time, share certificates representing IMA Common
Shares shall for all purposes be deemed to be share certificates representing
New IMA Common Shares, and no new share certificates shall be issued with
respect to the New IMA Common Shares issued in connection with the Arrangement.
-9-
4.2 IMA SPECIAL SHARE CERTIFICATES
Recognizing that all of the IMA Special Shares issued to the Shareholders will
immediately be transferred to Golden Arrow in exchange for Golden Arrow Common
Shares, IMA will not issue certificates representing the IMA Special Shares.
4.3 GOLDEN ARROW PREFERRED SHARE CERTIFICATES
Recognizing that all of the Golden Arrow Preferred Shares issued to IMA will
immediately be purchased for cancellation by Golden Arrow in exchange for the
Golden Arrow Note, Golden Arrow will not issue certificates representing the
Golden Arrow Preferred Shares.
4.4 GOLDEN ARROW COMMON SHARE CERTIFICATES
As soon as practicable after the Effective Time, Golden Arrow shall cause to be
issued to the registered holders of Golden Arrow Common Shares at the close of
business on the Effective Date, share certificates representing in the aggregate
number of the Golden Arrow Common Shares to which such holders are entitled
following the Effective Date and shall cause such certificates to be delivered
or mailed to such holder in accordance with the terms hereof.
4.5 FRACTIONAL SHARES
No fractional IMA Special Shares will be issued and the number of IMA Special
Shares to which each Shareholder will be entitled shall be rounded down to the
next whole number. No fractional shares, including shares issuable upon the
exercise of any IMA Warrants after the Effective Date, will be issued, and no
cash will be paid in lieu thereof, by either IMA or Golden Arrow. Any fractions
resulting will be rounded down to the nearest whole number. No subscription for
a fraction of a Golden Arrow Common Share will be accepted with respect to the
exercise of IMA Warrants as set out in paragraph 3.2 above.
ARTICLE 5.
AMENDMENT AND TERMINATION
5.1 AMENDMENT
This Plan of Arrangement may, at any time and from time to time before or after
the holding of the Meeting but not later than the Effective Date, be amended in
a manner not materially prejudicial to the Securityholders provided that such
amendment be contained in a written document which is filed with the Court.
5.2 TERMINATION
This Plan of Arrangement may, at any time before or after the holding of the
Meeting but no later than the Effective Date, be terminated by the Board of
Directors of IMA without further notice to, or action on the part of, its
Securityholders.
Without limiting the generality of the foregoing, IMA may terminate this Plan of
Arrangement, if prior to the Effective Date, there is a material change in the
business, operations, properties, assets, liabilities or condition, financial or
otherwise, of IMA and its subsidiaries, taken as a whole, or in Golden Arrow, or
any change in general economic conditions, interest rates or any outbreak or
material escalation in, or the cessation of, hostilities or any other calamity
or crisis, or there should develop, occur or come into effect
-10-
any occurrence which has a material effect on the financial markets of Canada
and the board of directors of IMA determines in its sole judgment that it would
be inadvisable in such circumstances for IMA to proceed with the Arrangement.
5.3 EFFECT OF TERMINATION
Upon the termination of this Plan of Arrangement pursuant to Section 5.2 hereof,
no party shall have any liability or further obligation to any other party
hereunder.
ARTICLE 6.
RIGHTS OF DISSENT AND APPRAISAL
6.1 DISSENT RIGHT
Notwithstanding section 3.1 hereof, Shareholders may exercise rights of dissent
(the "Dissent Right") in connection with the Arrangement pursuant to the Interim
Order and this Article 6.
6.2 NOTICE OF DISSENT
A Shareholder who wishes to exercise a Dissent Right must give written notice of
dissent ("Notice of Dissent") to IMA by depositing such Notice of Dissent with
IMA, or mailing it to IMA by registered mail, at its head office at Suite
709-837 West Hastings Street, Vancouver, British Columbia, V6C 3N6, marked to
the attention of the President, not later than two days before the IMA Meeting.
A Shareholder who has given a Notice of Dissent in accordance with this section
6.2 is herein referred to as a "Dissenting Shareholder". A Shareholder who
wishes to dissent must prepare a separate notice of dissent for (i) the
Shareholder, if the Shareholder is dissenting on its own behalf and (ii) each
person who beneficially owns shares in the Shareholder's name and on whose
behalf the Shareholder is dissenting. To be valid, a Notice of Dissent must:
(a) identify in each Notice of Dissent the person on whose behalf
dissent is being exercised;
(b) set out the number of IMA Common Shares in respect of which
the Shareholder is exercising the Dissent Right (the "Notice
Shares"), which number cannot be less than all of the IMA
Common Shares held by the beneficial holder on whose behalf
the Dissent Right is being exercised;
(c) if the Notice Shares constitute all of the shares of which the
Dissenting Shareholder is both the registered owner and
beneficial owner and the Dissenting Shareholder owns no other
shares of IMA as beneficial owner, a statement to that effect;
(d) if the Notice Shares constitute all of the shares of which the
Dissenting Shareholder is both the registered and beneficial
owner but the Dissenting Shareholder owns other shares of IMA
as beneficial owner, a statement to that effect, and
(i) the names of the registered owners of those other
shares,
(ii) the number of those other shares that are held by each
of those registered owners, and
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(iii) a statement that Notices of Dissent are being or have
been sent in respect of all those other shares;
(e) if dissent is being exercised by the Dissenting Shareholder on
behalf of a beneficial owner who is not the Dissenting
Shareholder, a statement to that effect, and
(i) the name and address of the beneficial owner, and
(ii) a statement that the Dissenting Shareholder is
dissenting in relation to all of the shares
beneficially owned by the beneficial owner that are
registered in the Dissenting Shareholder's name.
6.3 RIGHT OF DISSENTING SHAREHOLDER
The giving of a Notice of Dissent does not deprive a Shareholder of his or her
right to vote at the Meeting on the special resolution approving the
Arrangement. A vote against the special resolution or the execution or exercise
of a proxy with instructions to vote against the special resolution does not
constituted a Notice of Dissent.
6.4 WHEN DISSENT RIGHT NOT AVAILABLE:
A Shareholder is not entitled to exercise a Dissent Right with respect to any
IMA Common Shares if the a Shareholder votes ( or instructs or is deemed, by
submission of any incomplete proxy, to have instructed his or her proxyholder to
vote) in favour of the special resolution approving the Arrangement. However, a
Shareholder may vote as a proxy for a Shareholder whose proxy required an
affirmative vote, without affecting his or her right to exercise the Dissent
Right in respect of the IMA Common Shares of which he or she is the registered
holder.
6.5 NOTICE TO PROCEED
If IMA intends to act on the authority of the special resolution approving the
Arrangement, it must send a notice (the "Notice to Proceed") to the Dissenting
Shareholder promptly after the later of:
(a) the date on which IMA forms the intention to proceed, and
(b) the date on which the Notice of Dissent was received.
If IMA has acted on the authority of that special resolution it must promptly
send a Notice to Proceed to the Dissenting Shareholder. The Notice to Proceed
must be dated not earlier than the date on which it is sent and state that IMA
intends to act or has acted on the authority of the special resolution and
advise the Dissenting Shareholder of the manner in which dissent is to be
completed under section 6.7 hereof.
6.6 ENTITLEMENT TO PAYMENT OF FAIR VALUE
On receiving a Notice to Proceed in accordance with section 6.5 hereof, the
Dissenting Shareholder is entitled to require IMA to purchase all of the IMA
Common Shares in respect of which the Notice of Dissent was given.
-12-
6.7 DEMAND FOR PAYMENT OF FAIR VALUE
A Dissenting Shareholder who receives a Notice to Proceed is bound to sell its
IMA Common Shares to IMA and must send to IMA within one month after the date of
the Notice to Proceed:
(a) a written statement that the Dissenting Shareholder requires
IMA to purchases all of the Notice Shares;
(b) the certificates representing the Notice Shares, and
(c) if dissent is being exercised by the Shareholder on behalf of
a beneficial owner who is not the Dissenting Shareholder, a
written statement signed by the beneficial owner setting out
whether the beneficial owner is the beneficial owner of other
shares of IMA and if so, setting out:
(i) the names of the registered owners of those other
shares,
(ii) the number of those other shares that are held by each
of those registered owners, and
(iii) that dissent is being exercised in respect of all of
those other shares,
whereupon IMA is bound to purchase them in accordance with the Notice of
Dissent.
6.8 PAYMENT FOR NOTICE SHARES
IMA and the Dissenting Shareholder may agree on the amount of the payout value
of the Notice Shares and in that event, IMA must either promptly pay that amount
to the Dissenting Shareholder or send a notice to the Dissenting Shareholder
that IMA is unable lawfully to pay Dissenting Shareholders for their share as
IMA is insolvent or if the payment would render IMA insolvent.
6.9 APPLICATION TO COURT TO FIX PAYOUT VALUE
If IMA and the Dissenting Shareholder do not agree on the amount of the payout
value of the Notice Shares the Dissenting Shareholder or IMA may apply to the
court and the court may:
(a) determine the payout value of the Notice Shares or order that
the payout value of the notice shares be established by
arbitration or by reference to the registrar or a referee of
the court;
(b) join in the application each Dissenting Shareholder who has
not agreed with IMA on the amount of the payout value of the
Notice Shares; and
(c) make consequential orders and give directions it considers
appropriate.
Promptly after a determination of the payout value of the Notice Shares has been
made, IMA must either pay that amount to the Dissenting Shareholder or send a
notice to the Dissenting Shareholder that IMA is unable lawfully to pay
Dissenting Shareholders for their shares as IMA is insolvent or if the payment
would render IMA insolvent. If the Dissenting Shareholder receives a notice that
IMA is unable to lawfully pay Dissenting Shareholders for their share the
Dissenting Shareholder may with in 30 days after receipt of the notice, withdraw
his or her Notice of Dissent. If the Notice of Dissent is not withdrawn the
Dissenting Shareholder remains a claimant against IMA to be paid as soon as IMA
is lawfully able to do
-13-
so or, in a liquidation, to be ranked subordinate to the rights of creditors of
IMA but in priority to its shareholders.
6.10 DEEMED NOTICE
Any notice required to be given by IMA or a Dissenting Shareholder to the other
in connection with the exercise of the Dissent Right, will be deemed to have
been given and received, if delivered, on the day of delivery, if mailed, on the
earlier of the date of receipt or the second business day after the day of
mailing, or, if sent by telecopier or other similar form of transmission, the
first business day after the date of transmittal.
6.11 CONSEQUENCES OF EXERCISING DISSENT RIGHTS
A Shareholder who:
(a) properly exercises the Dissent Right by complying with all of
the procedures (the "Dissent Procedures") required to be
complied with by a Dissenting Shareholder, will:
(i) be bound by the provisions of this Article 6;
(ii) be deemed not to have participated in the Arrangement;
and
(iii) cease to have any rights as a Shareholder other than
the right to be paid the payout value of the Notice
Shares by IMA in accordance with the Dissent
Procedures; or
(b) seeks to exercise the Dissent Right, but:
(i) who for any reason does not properly comply with each
of the Dissent Procedures required to be complied with
by a Dissenting Shareholder, or
(ii) subsequent to giving his or her Notice of Dissent,
acts inconsistently with such dissent;
will be deemed to have participated in the Arrangement on the same basis as each
non-dissenting Shareholder and will receive his or her pro rata portion of the
Golden Arrow Common Shares based upon the number of IMA Common Shares of which
such Dissenting Shareholder is the registered holder. IMA may in its sole
discretion waive any non-compliance by a shareholder with any of the provisions
of this Article 6 in order to give effect to a shareholder's Dissent Rights.
6.12 ABANDONMENT OF DISSENT
A Dissenting Shareholder may not withdraw a Notice of Dissent without the
consent of IMA. A dissenting Shareholder may, with the written consent of IMA,
at any time prior to the payment to the Dissenting Shareholder of the full
amount of money to which the Dissenting shareholder is entitled under this
Article 6, abandon such Dissenting Shareholder's dissent to the Arrangement by
giving written notice to IMA withdrawing the Notice of Dissent by depositing
such notice with IMA or mailing it to IMA by registered mail, at its head at
office at #709-837 West Hastings Street, Vancouver, British Columbia, V6C 3N6,
marked to the attention of the President, and will then be deemed to have
participated in the Arrangement on the same basis as each non-dissenting
Shareholder and will receive such number of Golden Arrow Common Shares to which
he or she is entitled.
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6.13 RESERVATION OF GOLDEN ARROW COMMON SHARES
If a Shareholder exercises the Dissent Right, IMA shall on the Effective Date
set aside and not distribute that portion of the Golden Arrow Common Shares
which is attributable to the IMA Common Shares for which Dissent Rights have
been exercised. If an IMA Shareholder exercises the Dissent Right, but, as set
out in subsection 6.11(b) does not properly comply with the Dissent Procedures
or, subsequent to giving his or her Notice of Dissent, acts inconsistently with
such dissent, then IMA shall distribute to such Shareholder his or her pro rata
portion of the Golden Arrow Common Shares. If a Shareholder duly complies with
the Dissent Procedures as set out in subsection 6.11(a), then IMA shall retain
the portion of the Golden Arrow Common Shares attributable to such Shareholder
(the "Non-Distributed Golden Arrow Shares"), and the Non-Distributed Golden
Arrow Shares will be dealt with as determined by the Board of Directors of IMA
in its discretion.
SCHEDULE A TO PLAN OF ARRANGEMENT BEING APPENDIX I
TO THE ARRANGEMENT AGREEMENT
MADE AS OF THE 14TH DAY OF MAY, 2004
AMONG IMA EXPLORATION INC., IMA HOLDINGS CORP. AND
GOLDEN ARROW RESOURCES CORPORATION
(PARAGRAPH 3.1 (A) OF PLAN OF ARRANGEMENT)
NOTICE OF ALTERATION
SCHEDULE B TO PLAN OF ARRANGEMENT BEING APPENDIX I
TO THE ARRANGEMENT AGREEMENT
MADE AS OF THE 14TH DAY OF MAY, 2004
AMONG IMA EXPLORATION INC., IMA HOLDINGS CORP. AND
GOLDEN ARROW RESOURCES CORPORATION
(PARAGRAPH 3.1 (A) PLAN OF ARRANGEMENT)
27. SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE COMMON SHARES,
CLASS A COMMON SHARES, SPECIAL SHARES AND PREFERRED SHARES
SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE COMMON SHARES
The common shares (the "Common Shares") shall have attached thereto the
following special rights and restrictions:
1. VOTING
The holders of the Common Shares shall be entitled to receive notice of and to
attend all meetings of the shareholders of the Company and shall have one vote
for each Common Share held at all meetings of the shareholders of the Company,
except meetings at which only holders of another specified class or series of
shares of the Company are entitled to vote separately as a class or series.
2. DIVIDENDS
Subject to the prior rights of the holders of the Preferred Shares and any other
shares ranking senior to the Common Shares with respect to priority in the
payment of dividends, the holders of Common Shares shall be entitled to receive
dividends and the Company shall pay dividends thereon, as and when declared by
the board of directors of the Company out of moneys property applicable to the
payment of dividends, in such amount and in such form as the board of directors
of the Company may from time to time determine and all dividends which the board
of directors of the Company may declare on the Common Shares shall be declared
and paid in equal amounts per share on all Common Shares at the time
outstanding.
3. LIQUIDATION, DISSOLUTION OR WINDING-UP
In the event of the dissolution, liquidation or winding-up of the Company,
whether voluntary or involuntary, or any other distribution of assets of the
Company among its shareholders for the purpose of winding-up its affairs,
subject to the prior rights of the holders of the Preferred Shares and any other
shares ranking senior to the Common Shares with respect to priority in the
distribution of assets upon dissolution, liquidation, winding-up or distribution
for the purpose of winding-up, the holders of the Common Shares shall be
entitled to receive the remaining property and assets of the Company.
SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE CLASS A COMMON SHARES
The class A common shares (the "Class A Shares") shall have attached
thereto the following special rights and restrictions:
-2-
1. VOTING
The holders of the Class A Shares shall be entitled to receive notice of and to
attend all meetings of the shareholders of the Company and shall have one vote
for each Class A Shares held at all meetings of the shareholders of the Company,
except meetings at which only holders of another specified class or series of
shares of the Company are entitled to vote separately as a class or series.
2. DIVIDENDS
Subject to the prior rights of the holders of the Preferred Shares and any other
shares ranking senior to the Class A Shares with respect to priority in the
payment of dividends, the holders of Class A Shares shall be entitled to receive
dividends and the Company shall pay dividends thereon, as and when declared by
the board of directors of the Company out of moneys property applicable to the
payment of dividends, in such amount and in such form as the board of directors
of the Company may from time to time determine and all dividends which the board
of directors of the Company may declare on the Class A Shares shall be declared
and paid in equal amounts per share on all Class A Shares at the time
outstanding.
3. LIQUIDATION, DISSOLUTION OR WINDING-UP
In the event of the dissolution, liquidation or winding-up of the Company,
whether voluntary or involuntary, or any other distribution of assets of the
Company among its shareholders for the purpose of winding-up its affairs,
subject to the prior rights of the holders of the Preferred Shares and any other
shares ranking senior to the Class A Shares with respect to priority in the
distribution of assets upon dissolution, liquidation, winding-up or distribution
for the purpose of winding-up, the holders of the Class A Shares shall be
entitled to receive the remaining property and assets of the Company.
SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE SPECIAL SHARES
The special shares (the "Special Shares") shall have attached thereto
the following special rights and restrictions:
1. VOTING
The holders of Special Shares are not entitled to notice of or to attend or vote
at any meeting of shareholders of the Company except
as may be required by the BUSINESS CORPORATIONS ACT (British Columbia).
2. DIVIDENDS
Subject to the rights, privileges, restrictions and conditions attaching to
shares of any class of the Company ranking prior to the Special Shares, the
holders thereof are entitled to receive such dividends payable in money,
property, or by the issue of fully paid shares of the Company, as may be
declared by the Board of Directors and to receive on an equal basis share for
share with the holders of the Common Shares the remaining property of the
Company upon the liquidation or winding up thereof.
The Directors of the Company may determine at any time and from time to time,
with respect to all or portion of any dividend on the Special Shares of the
Company that such dividend shall be payable in money or, in the case of electing
holders whose addresses on the books of the Company are in Canada, and in
jurisdictions specified by the Directors outside Canada, by the issue of fully
paid Special Shares of the Company having a value, as determined by the
Directors, that is substantially equivalent, as of the date or period of days
determined by the Directors, to the cash amount of such dividend, provided that
the
-3-
Directors may (but need not) value the Special Shares to be issued in payment of
the dividend at a discount from or premium to the relevant market value thereof
of up to 5%, in either case.
With respect to fractional shares that may result from any such stock dividend
the Company shall issue to an agent for shareholders appointed by the Company a
number of whole shares representing in the aggregate the fractional shares of
all electing shareholders, unless the Directors of the Company otherwise
determine, for instance by the payment of cash in lieu of fractional share
interests that may result from any such stock dividend. In any event, no
certificates representing fraction of share interests will be issued by the
Company.
3. CONVERSION
A holder of Special Shares shall have the right, at his option, to convert at
any time and from time to time, subject to the terms and provisions hereof, all
or part of his Special Shares into Common Shares, on the basis of one Common
Share for each Special Share. The conversion of Special Shares may be effected
by surrender of the certificate or certificates representing the same at any
time during usual business hours at the option of the holder at the Registered
Office of the Company or at any office of any transfer agent of the Company at
which the Special Shares are transferable accompanied: (1) by payment or
evidence of payment of the tax (if any) payable as provided in this section 3;
and (2) by written instrument of surrender in form satisfactory to the Company
duly executed by the registered holder, or his attorney duly authorized in
writing, in which instrument such holder shall elect to convert all or part only
of the Special Shares represented by such certificate or certificates in which
event the Company shall issue and deliver or cause to be delivered to such
holder, at the expense of the Company, a new certificate representing the
Special Shares represented by such certificate or certificates which have not
been converted. The date of such surrender of certificates representing Special
Shares to be converted is referred to hereinafter as the "Conversion Date". A
holder of Special Shares to be converted shall not be entitled to fractional
shares upon conversion but shall be entitled to receive a new certificate
representing the number of remaining Special Shares which cannot be converted.
As promptly as practicable on or after the Conversion Date the Company shall
issue and deliver, or cause to be delivered to or upon the written order of the
holder of the Special Shares so surrendered, a certificate or certificates
issued in the name of, or in such name or names as may be directed by, such
holder representing the number of fully paid and non-assessable Common Shares
and the number of remaining Special Shares, if any, to which such holder is
entitled. Such conversion shall be deemed to have been made at the close of
business on the Conversion Date, so that the rights of the holder of such
Special Shares as the holder thereof shall cease at such time and the person or
persons entitled to receive Common Shares upon such conversion shall be treated
for all purposes as having become the holder or holders of record of such
Special Shares at such time.
The registered holder of any Special Shares on the record date for any dividend
declared payable on such share shall be entitled to such dividend
notwithstanding that such share is converted after such record date and before
the payment date of such dividend.
The issuance of certificates for Common Shares upon the conversion of Special
Shares shall be made without charge to the converting holders of Special Shares
for any fee or tax in respect of the issuance of such certificates or the Common
Shares represented thereby; provided, however, that the Company shall not be
required to pay any tax which may be imposed upon the person or person to whom
such Common Shares are issued in respect of the issuance of such Common Shares
or the certificates therefore or which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate in a name or names
other than that of the holder of the Special Shares converted, and the Company
shall not be required to issue or deliver such certificate unless the person or
persons requesting the issuance thereof
-4-
shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid.
4. LIQUIDATION, DISSOLUTION OR WINDING-UP
In respect of the declaration and payment of dividends and upon the liquidation,
dissolution or winding up of the Company the Special Shares shall rank PARI
PASSU with the Common Shares of the Company.
SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE PREFERRED SHARES
The preferred shares (the "Preferred Shares") shall have attached
thereto the following special rights and restrictions:
1. ISSUANCE OF SHARES
The board of directors of the Company may issue the Preferred Shares at any time
and from time to time in one or more series. Before the first shares of a
particular series are issued, the board of directors of the Company shall fix
the number of shares in such series and shall determine, subject to the
limitations set out in the Articles, the designation, rights, privileges,
restrictions and conditions to be attached to the shares of such series
including, without limitation, the rate or rates, amount or method or methods of
calculation of dividends thereon, the time and place of payment of dividends,
whether cumulative or non-cumulative or partially cumulative and whether such
rate, amount or method of calculation shall be subject to change or adjustment
in the future, the currency or currencies of payment of dividends, the
consideration and the terms and conditions of any purchase for cancellation,
retraction or redemption (if any), the conversion, exchange or reclassification
rights attached thereto (if any), the voting right attached thereto ( if any),
the terms and conditions of any share purchase plan or sinking fund with respect
thereto, and any other terms not inconsistent with these provisions. Before the
issue of the first shares of a series, the board of directors of the Company
shall send to the Registrar (as defined in the, BUSINESS CORPORATIONS ACT
(BRITISH COLUMBIA)) a certified copy of the directors' resolution containing a
description of such series including the designation, rights, privileges,
restrictions and conditions determined by the board of directors of the Company.
2. VOTING
Except as hereinafter referred to or as otherwise required by law or in
accordance with any voting rights which may from time to time be attached to any
series of Preferred Shares, the holders of the Preferred Shares as a class shall
not be entitled as such to receive notice of, to attend or to vote at any
meeting of the shareholders of the Company.
3. DIVIDENDS
No rights, privileges, restrictions or conditions attached to a series of
Preferred Shares shall confer upon a series a priority in respect of dividends
or return of capital over any other series of Preferred shares then outstanding.
The Preferred Shares shall be entitled to priority over the Common Shares of the
Company and over any other shares of the Company ranking junior to the Preferred
shares with respect to priority in the payment of dividends and the distribution
of assets in the event of liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, or any other distribution of the assets of the
Company among its shareholders for the purpose of winding-up its affairs. If any
cumulative dividends or amounts payable on a return of capital in respect of a
series of Preferred Shares are not paid in full, the Preferred Shares of all
series shall participate rateably in respect of such dividends, including
accumulations, if any, in accordance with the sums that would be payable on such
shares if all such
-5-
dividends were declared and paid in full, and in respect of any repayment of
capital in accordance with the sums that would be payable on such repayment of
capital if all sums so payable were paid in full; provided however, that in the
event of there being insufficient assets to satisfy in full all such claims to
dividends and return of capital, the claims of the holders of the Preferred
Shares with respect to repayment of capital shall first be paid and satisfied
and any assets remaining thereafter shall be applied towards the payment and
satisfaction of claims in respect of dividends. The Preferred Shares of any
series may also be given such other preferences, not inconsistent with
paragraphs 1 to 4 hereof, over the Common shares and over any other shares
ranking junior to the Preferred shares as may be determined in the case of such
series of Preferred Shares.
4. AMENDMENT TO RIGHTS AND RESTRICTIONS
The rights privileges, restrictions and conditions attaching to the Preferred
shares as a class may be added to, changed or removed but only with the approval
of the holders of the Preferred shares given as hereinafter specified. The
approval of the holders of the Preferred shares to add to, change or remove any
right, privilege, restriction or condition attaching to the Preferred shares as
a class or to any other matter requiring the consent of the holders of the
Preferred shares as a class shall be given in such manner as may then be
required by law, subject to a minimum requirement that such approval shall be
given by resolution passed by the affirmative vote of at least two-thirds of the
votes cast at a meeting of the holders of Preferred shares duly called for that
purpose. The formalities to be observed in respect of the giving notice of any
such meeting or any adjourned meeting and the conduct thereof shall be those
from time to time required by the BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)
(as from time to time amended, varied or replaced) and prescribed in the
Articles of the Company with respect to meetings of shareholders. On every poll
taken at a meeting of holders of Preferred shares as a class, each holder
entitled to vote thereat shall have one vote in respect of each Cdn.$1.00 of
stated capital added to the appropriate stated capital account of the Company in
respect of the issue of each such share held by the holder.
SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE PREFERRED SHARES, SERIES 1
The preferred shares, series I (the "Series I Shares") shall have attached
thereto the following special rights and restrictions:
1. DIVIDENDS
Subject to the prior rights of any shares of the Company ranking in priority to
the Series I Shares, the holders of Series I Shares shall be entitled to
receive, if, as and when declared by the board of directors of the Company,
non-cumulative dividends in an amount or amounts to be determined by the board
of directors from time to time.
2. REDEMPTION
Subject to the rights, privileges, restrictions and conditions attaching to any
shares of the Company ranking in priority to the Series I Shares, the Company
may redeem at any time any of the then outstanding Series I Shares on payment in
cash or property for each share of an amount equal to the Redemption Amount (as
defined below), together with all declared and unpaid dividends thereon. The
redemption amount (the "Redemption Amount") will be determined by dividing Cdn.
$3,495,800 by the number of Series I Shares issued.
Every registered holder of Series I Shares may (at his, her or its option upon
giving notice) require the Company at any time to redeem any of the Series I
Shares held by such holder, and the Company shall pay to such holder for each
share which the holder requires to be redeemed, the Redemption Amount,
-6-
together with all declared and unpaid dividends thereon. If only a part of the
shares represented by any certificate are to be redeemed, a new certificate for
the balance shall be issued at the expense of the Company. From and after the
redemption, the holders of the Series I Shares to be redeemed as aforesaid,
shall cease to be entitled to dividends and shall not be entitled to exercise
any of the rights as a member in respect thereof unless payment of the
redemption value of his, her or its shares shall not be made upon presentation
of the certificate in which case the rights of the holder shall remain
unaffected.
3. LIQUIDATION, DISSOLUTION OR WINDING-UP
In the event of any dissolution, liquidation or winding-up of the Company or
other distribution of the property or assets of the Company, the holders of
Series I Shares shall be entitled to receive from the property or assets of the
Company an amount equal to the Redemption Amount, together with all declared and
unpaid dividends thereon. Subject to the prior rights of any shares of the
Company ranking in priority to the Series I Shares, such payment or distribution
shall be made prior to the payment of any amount or any amount or distribution
of any property or assets of the Company to the holders of Common shares or any
other shares ranking junior to the Series I Shares. Upon payment of the holders
of record of the Series I Shares on the date of distribution of the amount so
payable to them, such holders shall not be entitled to share in any further
distribution of the property or assets of the Company.
4. VOTING
The holders of the Series I Shares will not be entitled to any vote in respect
of any general meeting of shareholders of the Company.
5. AMENDMENT TO RIGHTS AND RESTRICTIONS
The provisions attaching to the Series I Shares may be repealed, altered,
modified or amended but only with the prior approval of the holders of the
Series I Shares, given by an instrument (s) in writing by the holders of all
Series I Shares, or by a resolution passed by at least two-thirds of the votes
cast at a meeting of the holders of the Series I Shares called for such purpose.
Such requirement for the approval of the holders of the Series I Shares shall be
in addition to any vote, authorization, confirmation or approval as may then be
required by applicable law.
SCHEDULE C TO PLAN OF ARRANGEMENT BEING APPENDIX I
TO THE ARRANGEMENT AGREEMENT
MADE AS OF THE 14TH DAY OF MAY, 2004
AMONG IMA EXPLORATION INC., IMA HOLDINGS CORP. AND
GOLDEN ARROW RESOURCES CORPORATION
(PARAGRAPH 3.1 (C) OF PLAN OF ARRANGEMENT)
NOTICE OF ALTERATION
SCHEDULE D TO PLAN OF ARRANGEMENT BEING APPENDIX I
TO THE ARRANGEMENT AGREEMENT
MADE AS OF THE 14TH DAY OF MAY, 2004
AMONG IMA EXPLORATION INC., IMA HOLDINGS CORP. AND
GOLDEN ARROW RESOURCES CORPORATION
(PARAGRAPH 3.1 (C) OF PLAN OF ARRANGEMENT)
27. SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE
COMMON SHARES AND PREFERRED SHARES
SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE COMMON SHARES
The common shares (the "Common Shares") shall have attached thereto the
following special rights and restrictions:
1. VOTING
The holders of the Common Shares shall be entitled to receive notice of and to
attend all meetings of the shareholders of the Company and shall have one vote
for each Common Share held at all meetings of the shareholders of the Company,
except meetings at which only holders of another specified class or series of
shares of the Company are entitled to vote separately as a class or series.
2. DIVIDENDS
Subject to the prior rights of the holders of any other shares ranking senior to
the Common Shares with respect to priority in the payment of dividends, the
holders of Common Shares shall be entitled to receive dividends and the Company
shall pay dividends thereon, as and when declared by the board of directors of
the Company out of moneys property applicable to the payment of dividends, in
such amount and in such form as the board of directors of the Company may from
time to time determine and all dividends which the board of directors of the
Company may declare on the Common Shares shall be declared and paid in equal
amounts per share on all Common Shares at the time outstanding.
3. LIQUIDATION, DISSOLUTION OR WINDING-UP
In the event of the dissolution, liquidation or winding-up of the Company,
whether voluntary or involuntary, or any other distribution of assets of the
Company among its shareholders for the purpose of winding-up its affairs,
subject to the prior rights of any other shares ranking senior to the Common
Shares with respect to priority in the distribution of assets upon dissolution,
liquidation, winding-up or distribution for the purpose of winding-up, the
holders of the Common Shares shall be entitled to receive the remaining property
and assets of the Company.
SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE PREFERRED SHARES
The preferred shares (the "Preferred Shares") shall have attached
thereto the following special rights and restrictions:
1. VOTING
The holders of Preferred Shares shall be entitled to receive notices of and to
attend and vote at all meetings of the shareholders of the Company in the same
manner and to the same extend as are the holders of the Common Shares.
-2-
2. DIVIDENDS
The holders of the Preferred Shares shall be entitled to receive, and the
Company shall pay thereon as and when declared by the Board of Directors out of
the monies of the Company properly applicable to the payment of dividends,
dividends which shall be in the amounts and upon the conditions that shall have
been agreed upon by the Board of Directors at the time of issuance and sale of
each such share.
3. LIQUIDATION, DISSOLUTION OR WINDING-UP
In the event of the liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, the holders of the Preferred Shares shall be
entitled to receive, before any distribution of any part of the property and
assets of the Company among the holders of the Common Shares, an amount equal to
one hundred percent (100%) of the amount paid thereon and any dividends declared
thereon and unpaid, and no more.
4. PARTICIPATION IN THE PROFITS AND ASSETS
The Preferred Shares shall rank, both as regards dividends and return of
capital, in priority to the Common Shares of the company, but shall not be
entitled to any further right to participate in the profits or assets of the
Company.
SCHEDULE E TO PLAN OF ARRANGEMENT BEING APPENDIX I
TO THE ARRANGEMENT AGREEMENT
MADE AS OF THE 14TH DAY OF MAY, 2004
AMONG IMA EXPLORATION INC., IMA HOLDINGS CORP. AND
GOLDEN ARROW RESOURCES CORPORATION
(PARAGRAPH 3.1 (J) OF PLAN OF ARRANGEMENT)
NOTICE OF ALTERATION
SCHEDULE F TO PLAN OF ARRANGEMENT BEING APPENDIX I
TO THE ARRANGEMENT AGREEMENT
MADE AS OF THE 14TH DAY OF MAY, 2004
AMONG IMA EXPLORATION INC., IMA HOLDINGS CORP. AND
GOLDEN ARROW RESOURCES CORPORATION
(PARAGRAPH 3.1 (J) OF PLAN OF ARRANGEMENT)
27. RIGHTS AND RESTRICTIONS ATTACHING TO THE COMMON
SHARES AND PREFERRED SHARES.
SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE COMMON SHARES
The common shares (the "Common Shares") shall have attached thereto the
following special rights and restrictions:
1. VOTING
The holders of the Common Shares shall be entitled to receive notice of and to
attend all meetings of the shareholders of the Company and shall have one vote
for each Common Share held at all meetings of the shareholders of the Company,
except meetings at which only holders of another specified class or series of
shares of the Company are entitled to vote separately as a class or series.
2. DIVIDENDS
Subject to the prior rights of the holders of the Preferred Shares and any other
shares ranking senior to the Common Shares with respect to priority in the
payment of dividends, the holders of Common Shares shall be entitled to receive
dividends and the Company shall pay dividends thereon, as and when declared by
the board of directors of the Company out of moneys property applicable to the
payment of dividends, in such amount and in such form as the board of directors
of the Company may from time to time determine and all dividends which the board
of directors of the Company may declare on the Common Shares shall be declared
and paid in equal amounts per share on all Common Shares at the time
outstanding.
3. LIQUIDATION, DISSOLUTION OR WINDING-UP
In the event of the dissolution, liquidation or winding-up of the Company,
whether voluntary or involuntary, or any other distribution of assets of the
Company among its shareholders for the purpose of winding-up its affairs,
subject to the prior rights of the holders of the Preferred Shares and any other
shares ranking senior to the Common Shares with respect to priority in the
distribution of assets upon dissolution, liquidation, winding-up or distribution
for the purpose of winding-up, the holders of the Common Shares shall be
entitled to receive the remaining property and assets of the Company.
SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE PREFERRED SHARES
The preferred shares (the "Preferred Shares") shall have attached
thereto the following special rights and restrictions:
-2-
1. ISSUANCE OF SHARES
The board of directors of the Company may issue the Preferred Shares at any time
and from time to time in one or more series. Before the first shares of a
particular series are issued, the board of directors of the Company shall fix
the number of shares in such series and shall determine, subject to the
limitations set out in the Articles, the designation, rights, privileges,
restrictions and conditions to be attached to the shares of such series
including, without limitation, the rate or rates, amount or method or methods of
calculation of dividends thereon, the time and place of payment of dividends,
whether cumulative or non-cumulative or partially cumulative and whether such
rate, amount or method of calculation shall be subject to change or adjustment
in the future, the currency or currencies of payment of dividends, the
consideration and the terms and conditions of any purchase for cancellation,
retraction or redemption (if any), the conversion, exchange or reclassification
rights attached thereto (if any), the voting right attached thereto ( if any),
the terms and conditions of any share purchase plan or sinking fund with respect
thereto, and any other terms not inconsistent with these provisions. Before the
issue of the first shares of a series, the board of directors of the Company
shall send to the Registrar (as defined in the, BUSINESS CORPORATIONS ACT
(BRITISH COLUMBIA)) a certified copy of the directors' resolution containing a
description of such series including the designation, rights, privileges,
restrictions and conditions determined by the board of directors of the Company.
2. VOTING
Except as hereinafter referred to or as otherwise required by law or in
accordance with any voting rights which may from time to time be attached to any
series of Preferred Shares, the holders of the Preferred Shares as a class shall
not be entitled as such to receive notice of, to attend or to vote at any
meeting of the shareholders of the Company.
3. DIVIDENDS
No rights, privileges, restrictions or conditions attached to a series of
Preferred Shares shall confer upon a series a priority in respect of dividends
or return of capital over any other series of Preferred shares then outstanding.
The Preferred Shares shall be entitled to priority over the Common Shares of the
Company and over any other shares of the Company ranking junior to the Preferred
shares with respect to priority in the payment of dividends and the distribution
of assets in the event of liquidation, dissolution or winding-up of the Company,
whether voluntary or involuntary, or any other distribution of the assets of the
Company among its shareholders for the purpose of winding-up its affairs. If any
cumulative dividends or amounts payable on a return of capital in respect of a
series of Preferred Shares are not paid in full, the Preferred Shares of all
series shall participate rateably in respect of such dividends, including
accumulations, if any, in accordance with the sums that would be payable on such
shares if all such dividends were declared and paid in full, and in respect of
any repayment of capital in accordance with the sums that would be payable on
such repayment of capital if all sums so payable were paid in full; provided
however, that in the event of there being insufficient assets to satisfy in full
all such claims to dividends and return of capital, the claims of the holders of
the Preferred Shares with respect to repayment of capital shall first be paid
and satisfied and any assets remaining thereafter shall be applied towards the
payment and satisfaction of claims in respect of dividends. The Preferred Shares
of any series may also be given such other preferences, not inconsistent with
paragraphs 1 to 4 hereof, over the Common shares and over any other shares
ranking junior to the Preferred shares as may be determined in the case of such
series of Preferred Shares.
-3-
4. AMENDMENT TO RIGHTS AND RESTRICTIONS
The rights privileges, restrictions and conditions attaching to the Preferred
shares as a class may be added to, changed or removed but only with the approval
of the holders of the Preferred shares given as hereinafter specified. The
approval of the holders of the Preferred shares to add to, change or remove any
right, privilege, restriction or condition attaching to the Preferred shares as
a class or to any other matter requiring the consent of the holders of the
Preferred shares as a class shall be given in such manner as may then be
required by law, subject to a minimum requirement that such approval shall be
given by resolution passed by the affirmative vote of at least two-thirds of the
votes cast at a meeting of the holders of Preferred shares duly called for that
purpose. The formalities to be observed in respect of the giving notice of any
such meeting or any adjourned meeting and the conduct thereof shall be those
from time to time required by the BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)
(as from time to time amended, varied or replaced) and prescribed in the
Articles of the Company with respect to meetings of shareholders. On every poll
taken at a meeting of holders of Preferred shares as a class, each holder
entitled to vote thereat shall have one vote in respect of each Cdn.$1.00 of
stated capital added to the appropriate stated capital account of the Company in
respect of the issue of each such share held by the holder.
SPECIAL RIGHTS AND RESTRICTIONS ATTACHING TO THE PREFERRED SHARES, SERIES 1
The preferred shares, series I (the "Series I Shares") shall have attached
thereto the following special rights and restrictions:
1. DIVIDENDS
Subject to the prior rights of any shares of the Company ranking in priority to
the Series I Shares, the holders of Series I Shares shall be entitled to
receive, if, as and when declared by the board of directors of the Company,
non-cumulative dividends in an amount or amounts to be determined by the board
of directors from time to time.
2. REDEMPTION
Subject to the rights, privileges, restrictions and conditions attaching to any
shares of the Company ranking in priority to the Series I Shares, the Company
may redeem at any time any of the then outstanding Series I Shares on payment in
cash or property for each share of an amount equal to the Redemption Amount (as
defined below), together with all declared and unpaid dividends thereon. The
redemption amount (the "Redemption Amount") will be determined by dividing Cdn.
$3,495,800 by the number of Series I Shares issued.
Every registered holder of Series I Shares may (at his, her or its option upon
giving notice) require the Company at any time to redeem any of the Series I
Shares held by such holder, and the Company shall pay to such holder for each
share which the holder requires to be redeemed, the Redemption Amount, together
with all declared and unpaid dividends thereon. If only a part of the shares
represented by any certificate are to be redeemed, a new certificate for the
balance shall be issued at the expense of the Company. From and after the
redemption, the holders of the Series I Shares to be redeemed as aforesaid,
shall cease to be entitled to dividends and shall not be entitled to exercise
any of the rights as a member in respect thereof unless payment of the
redemption value of his, her or its shares shall not be made upon presentation
of the certificate in which case the rights of the holder shall remain
unaffected.
-4-
3. LIQUIDATION, DISSOLUTION OR WINDING-UP
In the event of any dissolution, liquidation or winding-up of the Company or
other distribution of the property or assets of the Company, the holders of
Series I Shares shall be entitled to receive from the property or assets of the
Company an amount equal to the Redemption Amount, together with all declared and
unpaid dividends thereon. Subject to the prior rights of any shares of the
Company ranking in priority to the Series I Shares, such payment or distribution
shall be made prior to the payment of any amount or any amount or distribution
of any property or assets of the Company to the holders of Common shares or any
other shares ranking junior to the Series I Shares. Upon payment of the holders
of record of the Series I Shares on the date of distribution of the amount so
payable to them, such holders shall not be entitled to share in any further
distribution of the property or assets of the Company.
4. VOTING
The holders of the Series I Shares will not be entitled to any vote in respect
of any general meeting of shareholders of the Company.
5. AMENDMENT TO RIGHTS AND RESTRICTIONS
The provisions attaching to the Series I Shares may be repealed, altered,
modified or amended but only with the prior approval of the holders of the
Series I Shares, given by an instrument (s) in writing by the holders of all
Series I Shares, or by a resolution passed by at least two-thirds of the votes
cast at a meeting of the holders of the Series I Shares called for such purpose.
Such requirement for the approval of the holders of the Series I Shares shall be
in addition to any vote, authorization, confirmation or approval as may then be
required by applicable law.
SCHEDULE G TO PLAN OF ARRANGEMENT BEING APPENDIX I
TO THE ARRANGEMENT AGREEMENT
MADE AS OF THE 14TH DAY OF MAY, 2004
AMONG IMA EXPLORATION INC., IMA HOLDINGS CORP. AND
GOLDEN ARROW RESOURCES CORPORATION
(PARAGRAPH 3.1 (L) OF PLAN OF ARRANGEMENT)
NOTICE OF ALTERATION
C-1
SCHEDULE "C"
(to the Management Proxy Circular of IMA Exploration Inc. dated May 14, 2004)
INTERIM ORDER
NO. L041204
VANCOUVER REGISTRY
IN THE SUPREME COURT OF BRITISH COLUMBIA
IN THE MATTER OF SECTION 291 OF THE
BUSINESS CORPORATIONS ACT,
S.B.C. 2002, c. 57, AS AMENDED
AND
IN THE MATTER OF A PROPOSED ARRANGEMENT AMONG
IMA EXPLORATION INC., IMA HOLDINGS CORP. AND GOLDEN ARROW
RESOURCES CORPORATION AND THEIR RESPECTIVE SHAREHOLDERS
IMA EXPLORATION INC., IMA HOLDINGS CORP. AND
GOLDEN ARROW RESOURCES CORPORATION
PETITIONERS
INTERIM ORDER
BEFORE MASTER SCARTH || FRIDAY, THE 14TH DAY
|| OF MAY, 2004
||
THIS EX PARTE APPLICATION coming on for hearing at Vancouver, British
Columbia, on the 14th day of May, 2004, and on hearing J. Brent MacLean, counsel
for the Petitioners, and upon reading the Petition herein dated the 14th day of
May, 2004 and filed and the affidavit of Art Lang sworn on the 14th day of May,
2004 and filed:
THIS COURT ORDERS THAT:
MEETING OF THE SHAREHOLDERS AND OPTIONHOLDERS
1. The Petitioner, IMA Exploration Inc. ("IMA"), be at liberty to convene an
annual and special meeting (together the "SPECIAL MEETING") of its shareholders
and of the holders of
-2-
options to purchase common shares of IMA (the "Optionholders") to be held on
Thursday, the 24th day of June, 2004, to be held for the purpose of considering
and, if deemed advisable, approving with or without modification a plan of
arrangement (the "ARRANGEMENT") substantially in the form attached as Exhibit I
to the arrangement agreement attached as Exhibit "E" to the affidavit of Art
Lang, which Arrangement is proposed to be made among the Petitioners and their
respective shareholders.
2. The respective shareholders of IMA Holdings Corp. ("Holdings") and Golden
Arrow Resources Limited ("Golden") and the holder of preferred shares of IMA be
at liberty to approve the Arrangement by unanimous signed written member's
resolution.
RECORD DATE
3. The record date for determination of the shareholders of IMA, entitled to
receive notice of and attend and vote at the Special Meeting in compliance with
the form and disclosure requirements of the BUSINESS CORPORATIONS ACT, S.B.C.
2002, c. 57, as amended, (the "BUSINESS CORPORATIONS ACT") and the SECURITIES
ACT, R.S.B.C. 1996, c. 418, as amended, will be at 5:00 p.m. on the 12th day of
May, 2004 (the "RECORD DATE"). The Record Date will also be the date for the
determination of the Optionholders entitled to receive notice of and attend and
vote at the Special Meeting as Optionholders.
NOTICE OF MEETING
4. Good and sufficient notice of the Special Meeting, for all purposes, will
be given by IMA by mailing, by prepaid first class mail, not less than 21 days
before the day appointed for the Special Meeting:
(a) a Notice convening the Meeting (the "NOTICE");
(b) a Management Proxy Circular (the "CIRCULAR")
(c) a Notice of Hearing of the Petition herein (the "NOTICE OF
HEARING"); and,
(d) instruments of proxy fo r the shareholders of IMA and the
Optionholders (the "PROXY");
-3-
(collectively, the "MAILED MATERIALS"),
which, are attached to or referenced in the affidavit of Art Lang, with such
amendments thereto as counsel for the Petitioners may advise are necessary or
desirable, provided such amendments are not inconsistent with the terms of this
Interim Order.
5. The Mailed Materials will be mailed by prepaid first class bulk mail
addressed to the following persons:
(a) the members of IMA at their registered addresses, as they may appear
on the register of members of IMA on the Record Date;
(b) the Optionholders at their recorded addresses as they appear on the
records maintained or on behalf of IMA on the Record Date; and,
(c) the directors and auditors of IMA.
6. Good and sufficient notice of the Special Meeting, for all purposes, will
be given by IMA by mailing, by prepaid first class bulk mail, the Mailed
Materials as provided in this Interim Order.
SERVICE OF NOTICE OF HEARING
7. Service of the Notice of Hearing as herein set out will be good and
sufficient service of the Notice of Hearing upon all those shareholders of IMA
and Optionholders who may wish to appear in these proceedings and no other form
of service need be made, and that service of the Mailed Materials on the
shareholders of IMA and Optionholders be deemed to be effected on the second day
following the day on which the Mailed Materials are mailed to the shareholders
of IMA and the Optionholders, and that the Petitioners are not required to serve
the Petition, any affidavits filed in support of the Petition, any motions filed
by the Petitioners, including affidavits filed in support of such motions, or
any orders made on application by the Petitioners, including this Interim Order,
on any shareholders of the Petitioners or Optionholders except on written
request.
-4-
8. The accidental omission to give notice of the Special Meeting to, or
the non-receipt of such notice by one or more of the persons entitled thereof,
will not invalidate any resolution passed or proceedings taken at the Special
Meeting.
PROCEEDINGS OF THE MEETINGS
9. The Chair of the Special Meeting will be an officer or director of IMA, who
will be appointed by the directors of IMA for that purpose.
10. The Chair of the Special Meeting is at liberty to call on the assistance
of legal counsel to IMA at any time and from time to time, as the Chair of the
Special Meeting may deem necessary or appropriate, during the Special Meeting,
and such legal counsel is entitled to attend the Special Meeting for this
purpose.
11. The Special Meeting shall otherwise be conducted in accordance with the
provisions of the BUSINESS CORPORATIONS ACT and the Articles of IMA, subject to
the terms of this Interim Order.
QUORUM AND VOTING
12. The quorum for the transaction of business by members of IMA at the Special
Meeting will be the quorum of members required by the Articles of IMA.
13. The quorum for the transaction of business by the Optionholders will be
two Optionholders present in person or by proxy.
14. The vote of the members of IMA required to adopt the resolution in respect
of the Arrangement (the "ARRANGEMENT RESOLUTION") at the Special Meeting will be
the affirmative vote of not less than three-quarters of the votes cast by
shareholders of IMA who vote in person or by proxy on the Arrangement
Resolution.
15. The vote of the Optionholders required to adopt the resolution in
respect of the Arrangement (the OPTIONHOLDERS RESOLUTION") at the Special
Meeting will be the affirmative vote of not less than three quarters of the
votes cast by the Optionholders who vote in person or
-5-
by proxy on the Optionholders Resolution with one vote allowed for each common
share of IMA over which an option is held.
ADJOURNMENT OF MEETINGS
16. The Special Meeting may be adjourned for any reason upon the approval of
the Chair of the Special Meeting, and if the Special Meeting is adjourned, it
will be reconvened at a place and time to be designated by the Chair of the
Special Meeting to a date which is not more than 30 days thereafter.
AMENDMENTS TO THE INTERIM ORDER
17. The Petitioners be entitled at any time to seek leave to vary this Interim
Order.
DISSENT RIGHTS
18. The members of IMA will be granted the rights of dissent with respect to
the Arrangement, as set out in Article 6 of the Plan of Arrangement attached as
Exhibit I to the arranged agreement attached as Exhibit "E" to the Affidavit of
Art Lang.
FINAL APPLICATION
19. The Chair of the Special Meeting shall, in due course, file herein an
affidavit verifying the actions taken and the decisions reached at the Special
Meeting with respect to the Arrangement.
20. The Petitioners are at liberty to serve the Notice of Hearing on persons
outside the jurisdiction of this Honourable Court in the manner specified in
this Interim Order.
21. Any shareholder of a Petitioner and any holder of options, warrants or
other securities of a Petitioner may appear and make representations at the
hearing of the Petition herein (the "HEARING"), provided that such shareholder
or other security holder shall file an Appearance, in the form prescribed by the
Rules of Court of the Supreme Court of British Columbia, with this Honourable
Court and deliver a copy of the filed Appearance, together with a copy of all
material on which such applicant intends to rely at the Hearing, including an
outline of such
-6-
applicant's proposed submissions, to the solicitors for the Petitioner at their
address for delivery set out in the Petition, on or before 4:00 p.m. on Tuesday,
June 22, 2004, subject to the direction of this Honourable Court.
22. If the Hearing is adjourned, only those persons who have filed and
delivered an Appearance, in accordance with the immediately foregoing paragraph,
need to be served with notice of the adjourned date.
23. The Petitioners may apply on Tuesday, the 29th day of June, 2004 or on
such later date as this Honourable Court may direct, for the approval, if the
Arrangement is approved and agreed to by the Special Meeting and the
shareholders of Holdings and Golden, of the Arrangement by this Honourable
Court.
BY THE COURT
/s/ signature
-------------------------------------
DISTRICT REGISTRAR
APPROVED AS TO FORM: ENTERED
May 14, 2004
Vancouver Registry
/s/ J. BRENT MACLEAN
------------------------------------
J. Brent MacLean
Counsel for the Petitioners
ENTERED
MAY 14, 2004
VANCOUVER REGISTRY
VOL S1210 FOL 23
NO.
VANCOUVER REGISTRY
IN THE SUPREME COURT OF BRITISH COLUMBIA
IN THE MATTER OF SECTION 291 OF THE BUSINESS CORPORATIONS ACT,
S.B.C. 2002, c.57, AS AMENDED
AND
IN THE MATTER OF A PROPOSED ARRANGEMENT AMONG
IMA EXPLORATION INC., IMA HOLDINGS CORP. AND GOLDEN ARROW
RESOURCES CORPORATION AND THEIR RESPECTIVE SHAREHOLDERS
IMA EXPLORATION INC., IMA HOLDINGS CORP. AND
GOLDEN ARROW RESOURCES CORPORATION
PETITIONERS
--------------------------------------------------------------------------------
INTERIM ORDER
--------------------------------------------------------------------------------
DAVIS & COMPANY
Barristers & Solicitors
2800 Park Place
666 Burrard Street
Vancouver, BC V6C 2Z7
Tel. No. (604) 687-9444
Fax No. (604) 687-1612
File No. 54532-00002 JBM/cc
VANLIT Library:237776.2
D-1
SCHEDULE "D"
(to the Management Proxy Circular of IMA Exploration Inc. dated May 14, 2004)
NOTICE OF HEARING OF PETITION FOR FINAL ORDER
NO. L041204
VANCOUVER REGISTRY
IN THE SUPREME COURT OF BRITISH COLUMBIA
IN THE MATTER OF SECTION 291 OF THE
BUSINESS CORPORATIONS ACT,
S.B.C. 2002, c.57, AS AMENDED
AND
IN THE MATTER OF A PROPOSED ARRANGEMENT AMONG
IMA EXPLORATION INC., IMA HOLDINGS CORP. AND GOLDEN ARROW
RESOURCES CORPORATION AND THEIR RESPECTIVE SHAREHOLDERS
IMA EXPLORATION INC., IMA HOLDINGS CORP. AND
GOLDEN ARROW RESOURCES CORPORATION
PETITIONERS
NOTICE OF HEARING
TAKE NOTICE that the Petition of the Petitioners filed on May 14, 2004
will be heard in Chambers at the Courthouse at 800 Smithe Street, Vancouver,
British Columbia, on Tuesday, June 29, 2004 at the hour of 9:45 a.m.
1. This matter is without notice.
2. This is an ex parte application and is estimated to require 30 minutes
to complete.
3. This matter is within the jurisdiction of a master
Dated: May 14, 2004
/s/ DAVIS & COMPANY per Robyn Jarvis
---------------------------------------
Davis & Company
Solicitors for the Petitioners
This NOTICE OF HEARING was prepared by the firm of Davis & Company, Barristers &
Solicitors, whose place of business and address for service is 2800 Park Place,
666 Burrard Street, Vancouver, BC, V6C 2Z7
NO.
VANCOUVER REGISTRY
IN THE SUPREME COURT OF BRITISH COLUMBIA
IN THE MATTER OF SECTION 291 OF THE
BUSINESS CORPORATIONS ACT,
S.B.C. 2002, c.57, AS AMENDED
AND
IN THE MATTER OF A PROPOSED ARRANGEMENT AMONG
IMA EXPLORATION INC., IMA HOLDINGS CORP. AND GOLDEN ARROW
RESOURCES CORPORATION AND THEIR RESPECTIVE SHAREHOLDERS
IMA EXPLORATION INC., IMA HOLDINGS CORP. AND
GOLDEN ARROW RESOURCES CORPORATION
PETITIONERS
--------------------------------------------------------------------------------
NOTICE OF HEARING
--------------------------------------------------------------------------------
DAVIS & COMPANY
Barristers & Solicitors
2800 Park Place
666 Burrard Street
Vancouver, BC V6C 2Z7
Tel. No. (604) 687-9444
Fax No. (604) 687-1612
File No. 54532-00002 JBM/cc
VANLIT Library:237778.2
E-1
SCHEDULE "E"
(to the Management Proxy Circular of IMA Exploration Inc. dated May 14, 2004)
FINANCIAL STATEMENTS
================================================================================
IMA EXPLORATION INC.
AND
GOLDEN ARROW RESOURCES CORPORATION
PRO FORMA
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003
(EXPRESSED IN CANADIAN DOLLARS)
================================================================================
COMPILATION REPORT
To the Directors of
IMA EXPLORATION INC.
We have read the accompanying unaudited pro forma balance sheets of IMA
Exploration Inc. ("IMA") and Golden Arrow Resources Corporation as at December
31, 2003, and have performed the following procedures.
1. Compared the figures in the column captioned "IMA Exploration Inc." to
the audited financial statements of IMA for the year ended December 31,
2003, and found them to be in agreement.
2. Made enquiries of certain officials of IMA who have responsibility for
financial and accounting matters about the basis for determination of
the pro forma adjustments. The officials described to us the basis for
determination of the pro forma adjustments.
3. Read the notes to the pro forma statements, and found them to be
consistent with the basis described to us for determination of the pro
forma adjustments.
4. Recalculated the application of the pro forma adjustments to the
aggregate of the amounts in the column captioned "Total" and found the
amounts to be arithmetically correct.
5. Recalculated the application of the pro-forma adjustments to the
aggregate of the amounts in the columns captioned "Golden Arrow
Resources Corporation Pro Forma" and "IMA Exploration Inc. Pro Forma"
as at December 31, 2003, and found the amounts to be arithmetically
correct.
A pro forma financial statement is based on management assumptions and
adjustments which are inherently subjective. The foregoing procedures are
substantially less than either an audit or a review, the objective of which is
the expression of assurance with respect to management's assumptions, the pro
forma adjustments, and the application of the adjustments to the historical
financial information. Accordingly, we express no such assurance. The foregoing
procedures would not necessarily reveal matters of significance to the pro forma
financial statements, and we therefore make no representation about the
sufficiency of the procedures for the purposes of a reader of such statements.
/s/ PRICEWATERHOUSECOOPERS LLP
Vancouver, B.C. (Signed) PRICEWATERHOUSECOOPERS LLP
May 14, 2004 Chartered Accountants
IMA EXPLORATION INC.
AND
GOLDEN ARROW RESOURCES CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31, 2003
(UNAUDITED - SEE COMPILATION REPORT)
GOLDEN ARROW
RESOURCES
PRO FORMA CORPORATION IMA
IMA ADJUSTMENTS PRO FORMA EXPLORATION
EXPLORATION (NOTES 2(C) (NOTES 2(A) INC.
INC. (D) AND (E) TOTAL AND (B)) PRO FORMA
$ $ $ $ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 4,454,241 6,415,515 10,869,756 781,908 10,087,848
Amounts receivable and prepaids 176,030 - 176,030 1,091 174,939
Marketable securities 543,460 - 543,460 543,460 -
-------------- --------------- -------------- -------------- ---------------
5,173,731 6,415,515 11,589,246 1,326,459 10,262,787
EQUIPMENT 40,472 - 40,472 4,286 36,186
MINERAL PROPERTIES
AND DEFERRED COSTS 6,883,641 6,883,641 5,592,415 1,291,226
-
-------------- --------------- -------------- -------------- ---------------
12,097,844 6,415,515 18,513,359 6,923,160 11,590,199
============== =============== ============== ============== ===============
LIABILITIES
CURRENT LIABILITIES
Accounts payable and
accrued liabilities 426,494 - 426,494 8,260 418,234
-------------- --------------- -------------- -------------- ---------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL 27,707,597 6,615,515 34,323,112 6,914,900 27,408,212
CONTRIBUTED SURPLUS 1,541,116 - 1,541,116 - 1,541,116
DEFICIT (17,577,363) (200,000) (17,777,363) - (17,777,363)
-------------- --------------- -------------- -------------- ---------------
11,671,350 6,415,515 18,086,865 6,914,900 11,171,965
-------------- --------------- -------------- -------------- ---------------
12,097,844 6,415,515 18,513,359 6,923,160 11,590,199
============== =============== ============== ============== ===============
APPROVED BY THE BOARD
/s/ Joseph Grosso , Director
---------------------------
/s/ Art Lang , Director
---------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE PRO FORMA
CONSOLIDATED BALANCE SHEETS.
IMA EXPLORATION INC.
AND
GOLDEN ARROW RESOURCES CORPORATION
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31, 2003
(UNAUDITED - SEE COMPILATION REPORT)
1. BASIS OF PRESENTATION
The unaudited pro forma consolidated balance sheets of IMA Exploration
Inc. ("IMA") and Golden Arrow Resources Corporation ("Golden Arrow")
have been prepared for inclusion in the Management Proxy Circular of
IMA dated May 14, 2004. IMA intends to proceed with a reorganization
which will have the result of dividing its present mineral resource
assets into two separate public companies. Upon implementation of a
Plan of Arrangement, IMA will continue to hold the Navidad project,
while Golden Arrow will hold the non-Navidad projects. These pro forma
consolidated balance sheets have been derived from the audited
consolidated balance sheet of IMA as at December 31, 2003 and the
assumptions contained in Note 2. Golden Arrow is a newly formed company
incorporated in the Province of British Columbia.
The pro forma consolidated balance sheets are prepared as if the
reorganization of IMA into the two separate entities, IMA and Golden
Arrow, had occurred on December 31, 2003 and the assumptions in Note 2
had occurred as at December 31, 2003. In the opinion of management, the
pro forma consolidated balance sheets include all the adjustments
necessary for fair presentation in accordance with Canadian generally
accepted accounting principles.
No attempt has been made to present pro forma consolidated income
statements of the new entities. The audited consolidated income
statements of IMA for the years ended December 31, 2003, 2002 and 2001
are presented elsewhere in this Management Proxy Circular.
These pro forma consolidated balance sheets are not intended to reflect
the financial position that would have occurred if the events reflected
therein had been in effect at the dates indicated. Further, these pro
forma consolidated balance sheets are not necessarily indicative of the
financial position that may be obtained in the future. These pro forma
consolidated balance sheets should be read in conjunction with the
consolidated financial statements of IMA included elsewhere in the
Management Proxy Circular.
2. PRO FORMA BALANCE SHEET ADJUSTMENTS AND ASSUMPTIONS
a) IMA is assumed to transfer to Golden Arrow: i) all of IMA's
investment in its mineral properties, excluding the Navidad
project; ii) the assets and liabilities of IMPSA Resources (BVI)
Inc., Inversiones Mineras Argentinas Holdings (BVI) Inc., both
wholly-owned subsidiaries of IMA, and IMPSA Resources Corporation,
an 80.69% owned subsidiary of IMA; and iii) marketable securities
at their historical book values, as follows:
$
Cash and cash equivalents 31,908
Amounts receivable and prepaids 1,091
Equipment 4,286
Marketable securities 543,460
Mineral properties and deferred cost 5,592,415
Accounts payable and accrued liabilities (8,260)
------------
6,164,900
============
b) IMA is assumed to transfer cash of $750,000 to Golden Arrow.
IMA EXPLORATION INC.
AND
GOLDEN ARROW RESOURCES CORPORATION
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31, 2003
(UNAUDITED - SEE COMPILATION REPORT)
2. PRO FORMA BALANCE SHEET ADJUSTMENTS AND ASSUMPTIONS (continued)
c) Subsequent to December 31, 2003, IMA completed a brokered private
placement of 1,500,000 units at $3.10 per unit. The proceeds of
$4,307,500 have been reflected net $279,000 of agent's cash
commission and $63,500 related issue costs.
d) During the period January 1, 2004 to April 27, 2004, IMA received
$2,308,015 on the exercise of stock options and warrants.
e) The adjustments assume that transaction costs associated with the
re-organization amount to $200,000 and that these are borne by
IMA.
--------------------------------------------------------------------------------
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
--------------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS
PricewaterhouseCoopers LLP
Chartered Accountants
PricewaterhouseCoopers Place
#700 - 250 Howe Street
Vancouver, BC Canada
V6C 3S7
Tel: 604-806-7000
Fax: 604-806-7806
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF
IMA EXPLORATION INC.
We have audited the consolidated balance sheets of IMA EXPLORATION INC. as at
December 31, 2003 and 2002 and the consolidated statements of loss and deficit
and cash flows for the years ended December 31, 2003, 2002 and 2001. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing standards
in Canada and the United States. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at December 31, 2003
and 2002 and the results of its operations and its cash flows for the years
ended December 31, 2003, 2002 and 2001 in accordance with Canadian generally
accepted accounting principles.
/s/ PricewaterhouseCoopers LLP
CHARTERED ACCOUNTANTS
Vancouver, B.C., Canada
April 27, 2004 (except for note 12(b) which is as of May 3, 2004)
COMMENTS BY AUDITORS FOR US READERS ON CANADA-US REPORTING DIFFERENCE
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when there is a
change in accounting principles that has a material effect on the comparability
of the company's financial statements such as the changes described in Note 2 to
the financial statements. Our report dated April 27, 2004 is expressed in
accordance with Canadian reporting standards, which do not require reference to
such a change in accounting principles in the auditor's report when the change
is properly accounted for and adequately disclosed in the financial statements.
/s/ PricewaterhouseCoopers LLP
CHARTERED ACCOUNTANTS
Vancouver, BC, Canada
April 27, 2004
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31, 2003 AND 2002
(EXPRESSED IN CANADIAN DOLLARS)
2003 2002
$ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 4,454,241 1,436,124
Amounts receivable and prepaids 176,030 79,661
Marketable securities (Note 4) 543,460 23,460
------------ ------------
5,173,731 1,539,245
EQUIPMENT net of accumulated depreciation
of $228,692 (2002 - $201,771) 40,472 45,517
MINERAL PROPERTIES AND DEFERRED COSTS (Note 5) 6,883,641 5,847,727
------------ ------------
12,097,844 7,432,489
============ ============
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 426,494 108,351
------------ ------------
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 6) 27,707,597 21,354,823
CONTRIBUTED SURPLUS 1,541,116 128,260
DEFICIT (17,577,363) (14,158,945)
------------ ------------
11,671,350 7,324,138
------------ ------------
12,097,844 7,432,489
============ ============
NATURE OF OPERATIONS (Note 1)
SUBSEQUENT EVENTS (Note 12)
APPROVED BY THE BOARD
/s/ Joseph Grosso , Director
-------------------------------
/s/ Art Lang , Director
-------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
2003 2002 2001
$ $ $
EXPENSES
Administrative and management services 243,515 224,109 219,891
Bank charges and interest 10,319 10,492 7,464
Corporate development and investor relations 352,706 249,373 88,198
Depreciation 26,920 22,772 24,657
General exploration 226,956 180,321 109,875
Office and sundry 57,959 34,823 37,875
Printing 46,388 22,304 12,133
Professional fees 297,763 172,828 105,052
Rent, parking and storage 72,192 72,268 68,522
Salaries and employee benefits 199,411 196,042 193,544
Stock based compensation (Note 6 (d)) 1,487,235 128,260 -
Telephone and utilities 37,934 34,368 25,138
Transfer agent and regulatory fees 34,078 35,831 15,596
Travel and accommodation 105,950 80,485 37,740
Cost recoveries (Note 7(d)) (35,110) (6,000) -
------------ ------------ ------------
3,164,216 1,458,276 945,685
------------ ------------ ------------
OTHER EXPENSE (INCOME)
Foreign exchange 25,916 8,415 (17,030)
Interest and other income (66,561) (26,585) (97,280)
Gain on options and disposition of mineral properties (481,779) - -
Write-off of mineral properties and deferred costs 776,626 - 21,483
Write-down of marketable securities - - 22,483
Loss on sale of marketable securities - - 6,534
------------ ------------ ------------
254,202 (18,170) (63,810)
------------ ------------ ------------
LOSS FOR THE YEAR (3,418,418) (1,440,106) (881,875)
DEFICIT - BEGINNING OF YEAR (14,158,945) (12,718,839) (11,836,964)
------------ ------------ ------------
DEFICIT - END OF YEAR (17,577,363) (14,158,945) (12,718,839)
============ ============ ============
BASIC AND DILUTED LOSS PER COMMON SHARE $(0.11) $(0.06) $(0.06)
============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 32,251,753 23,188,485 15,104,239
============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
2003 2002 2001
$ $ $
CASH PROVIDED FROM (USED FOR)
OPERATING ACTIVITIES
Net loss for the year (3,418,418) (1,440,106) (881,875)
Items not affecting cash
Depreciation 26,920 22,772 24,657
Stock based compensation 1,487,235 128,260 -
Gain on options and disposition of mineral properties (481,779) - -
Write-down of marketable securities - - 22,483
Loss on sale of marketable securities - - 6,534
Write-off of mineral properties and deferred costs 776,626 - 21,483
------------ ------------ ------------
(1,609,416) (1,289,074) (806,718)
Increase in amounts receivable and prepaids (96,369) (9,772) (17,984)
Increase (decrease) in accounts payable and accrued liabilities 318,143 (7,365) (73,703)
------------ ------------ ------------
(1,387,642) (1,306,211) (898,405)
------------ ------------ ------------
INVESTING ACTIVITIES
Expenditures on mineral properties and deferred costs (1,850,761) (1,266,555) (1,320,777)
Purchase of equipment (21,875) (11,201) (8,012)
Proceeds on sale of marketable securities - - 16,966
------------ ------------ ------------
(1,872,636) (1,277,756) (1,311,823)
------------ ------------ ------------
FINANCING ACTIVITIES
Issuance of common shares 6,467,245 3,453,382 1,563,940
Share issuance costs (188,850) (189,056) (100,684)
------------ ------------ ------------
6,278,395 3,264,326 1,463,256
------------ ------------ ------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 3,018,117 680,359 (746,972)
CASH AND CASH EQUIVALENTS
- BEGINNING OF YEAR 1,436,124 755,765 1,502,737
------------ ------------ ------------
CASH AND CASH EQUIVALENTS - END OF YEAR 4,454,241 1,436,124 755,765
============ ============ ============
CASH AND CASH EQUIVALENTS IS COMPRISED OF:
CASH 1,654,241 631,255 605,765
TERM DEPOSITS 2,800,000 804,869 150,000
------------ ------------ ------------
4,454,241 1,436,124 755,765
============ ============ ============
SUPPLEMENTARY CASH FLOW INFORMATION (Note 11)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED SCHEDULE OF MINERAL PROPERTY INTERESTS
FOR THE YEAR ENDED DECEMBER 31, 2003
(EXPRESSED IN CANADIAN DOLLARS)
ARGENTINA
----------------------------------------------------------------------------
LIRIO RIO DE LAGUNA DE
GROUP NAVIDAD LAS TAGUAS EVELINA LOS TOROS
$ $ $ $ $
Balance, beginning of year 1,966,934 5,090 543,889 107,209 138,203
------------ ------------ ------------ ------------ ------------
Expenditures during the year
Assays - 62,232 - 14,048 -
Contractors - access - 10,923 - 18,268 -
Contractors - surveying - 102,595 - - -
Contractors - environmental - 40,664 - 301 -
Drilling - 193,836 - 191,923 -
Field supplies - 28,423 - 3,801 -
Field workers - - - - -
Geological 2,250 297,005 - 27,990 1,207
Geological supplies - 50,317 - 4,896 -
Geochemistry - 1,659 - - -
Geophysics - 88,886 - - -
Geophysics supplies - 29,702 - - -
Legal fees 2,382 198 - 162 162
Option payments 90,810 - - - -
Staking and statutory fees 1,900 2,900 - - -
Taxes 204 669 191 417 214
Travel - 37,369 - 9,595 50
Office 746 9,924 704 1,262 53
Other 5,327 - - - -
Project management 659 10,879 279 2,002 973
Vehicles - 28,940 - 9,431 2
------------ ------------ ------------ ------------ ------------
104,278 997,121 1,174 284,096 2,661
------------ ------------ ------------ ------------ ------------
Option payments received and cost recoveries (94,803) - - - -
Write-off of mineral properties (649,094) - - - -
Proceeds on sale of mineral properties - - - - -
Foreign value added tax - - - - -
------------ ------------ ------------ ------------ ------------
(743,897) - - - -
------------ ------------ ------------ ------------ ------------
Balance, end of year 1,327,315 1,002,211 545,063 391,305 140,864
============ ============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
CONSOLIDATED SCHEDULE OF MINERAL PROPERTY INTERESTS, 2003 - CONTINUED
ARGENTINA PERU TOTAL
---------------------------- ------------ ------------
RIO
MOGOTE OTHER TABACONAS
$ $ $ $
Balance, beginning of year 107,940 312,012 2,666,450 5,847,727
------------ ------------ ------------ ------------
Expenditures during the year
Assays 8,050 13,233 1,580 99,143
Contractors - access 1,483 - - 30,674
Contractors - surveying - - - 102,595
Contractors - environmental - - 104,844 145,809
Drilling - - - 385,759
Field supplies 9,013 501 12,036 53,774
Field workers - - 18,850 18,850
Geological 52,011 4,626 146,576 531,665
Geological supplies 3,859 2,244 - 61,316
Geochemistry - - - 1,659
Geophysics - - - 88,886
Geophysics supplies - - - 29,702
Legal fees 2,375 3,760 54,336 63,375
Option payments 15,291 - 41,247 147,348
Staking and statutory fees 825 80,979 49,260 135,863
Taxes 237 21,899 14 23,845
Travel 718 285 38,176 86,193
Office 1,434 826 18,286 33,236
Other - - 1,958 7,285
Project management 2,431 7,557 - 24,780
Vehicles 498 4,970 8,849 52,690
------------ ------------ ------------ ------------
98,225 140,880 496,012 2,124,447
------------ ------------ ------------ ------------
Option payments received and cost recoveries (206,165) (45,979) - (346,947)
Write-off of mineral properties - (127,532) - (776,626)
Proceeds on sale of mineral properties - (22,981) - (22,981)
Foreign value added tax - 55,929 2,092 58,021
------------ ------------ ------------ ------------
(206,165) (140,563) 2,092 (1,088,533)
------------ ------------ ------------ ------------
Balance, end of year - 312,329 3,164,554 6,883,641
============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED SCHEDULE OF MINERAL PROPERTY INTERESTS
FOR THE YEAR ENDED DECEMBER 31, 2002
(EXPRESSED IN CANADIAN DOLLARS)
ARGENTINA
----------------------------------------------------------------------------
LIRIO RIO DE LAGUNA DE
GROUP NAVIDAD LAS TAGUAS EVELINA LOS TOROS
$ $ $ $ $
Balance, beginning of year 1,879,134 - 540,720 7,853 72,017
------------ ------------ ------------ ------------ ------------
Expenditures during the year
Assays - - 19 39,836 20,251
Contractors - access - - - - -
Contractors - surveying - - - - -
Contractors - environmental - 487 - 856 -
Drilling - - - - -
Field supplies - - 100 - -
Field workers - - - - -
Geological 1,941 785 - 43,799 37,815
Geological supplies - - - 2,451 1,092
Geochemistry - - - - -
Geophysics - - - - -
Geophysics supplies - - - - -
Legal fees 2,343 - - 34 34
Option payments 71,585 - - - -
Staking and statutory fees - 3,818 3 - 1,232
Taxes 1,653 - 1,653 121 562
Travel - - - 7,445 575
Office 10,278 - 385 729 1,014
Other - - - - -
Project management - - 1,009 36 36
Vehicles - - - 4,049 3,575
------------ ------------ ------------ ------------ ------------
87,800 5,090 3,169 99,356 66,186
------------ ------------ ------------ ------------ ------------
Foreign value added tax - - - - -
------------ ------------ ------------ ------------ ------------
Balance, end of year 1,966,934 5,090 543,889 107,209 138,203
============ ============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
CONSOLIDATED SCHEDULE OF MINERAL PROPERTY INTERESTS, 2002 - CONTINUED
ARGENTINA PERU TOTAL
---------------------------- ------------ ------------
RIO
MOGOTE OTHER TABACONAS
$ $ $ $
Balance, beginning of year 74,565 203,169 1,803,714 4,581,172
------------ ------------ ------------ ------------
Expenditures during the year
Assays - - 24,428 84,534
Contractors - access - - - -
Contractors - surveying - - 20,923 20,923
Contractors - environmental - - 112,689 114,032
Drilling - - - -
Field supplies 1,220 - 18,122 19,442
Field workers - - 49,790 49,790
Geological 14,034 57,075 236,231 391,680
Geological supplies - - - 3,543
Geochemistry - - - -
Geophysics - - - -
Geophysics supplies - - - -
Legal fees 469 - 63,266 66,146
Option payments 13,969 - 227,079 312,633
Staking and statutory fees 757 39,753 - 45,563
Taxes 424 - - 4,413
Travel 1,710 - 41,856 51,586
Office 792 - 19,266 32,464
Other - - 12,882 12,882
Project management - - - 1,081
Vehicles - - 36,204 43,828
------------ ------------ ------------ ------------
33,375 96,828 862,736 1,254,540
------------ ------------ ------------ ------------
Foreign value added tax - 12,015 - 12,015
------------ ------------ ------------ ------------
Balance, end of year 107,940 312,012 2,666,450 5,847,727
============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
1. NATURE OF OPERATIONS
The Company is in the process of exploring its mineral properties in
South America and evaluating other mineral properties. The Company
presently has no proven or probable reserves and on the basis of
information to date, it has not yet determined whether these properties
contain economically recoverable ore reserves. Consequently the Company
considers itself to be an exploration stage company. The amounts shown
as mineral properties and deferred costs represent costs incurred to
date, less amounts amortized and/or written off, and do not necessarily
represent present or future values. The underlying value of the mineral
properties and deferred costs is entirely dependent on the existence of
economically recoverable reserves, securing and maintaining title and
beneficial interest in the properties, the ability of the Company to
obtain the necessary financing to complete development, and future
profitable production. The Company considers that it has adequate
resources to maintain its core operations for the next fiscal year. See
also Note 12.
2. CHANGE IN ACCOUNTING POLICY
Effective January 1, 2003, the Company prospectively adopted the fair
value method of accounting for the stock options granted to employees
and directors, as recommended by the Canadian Institute of Chartered
Accountants' Handbook ("CICA 3870") STOCK-BASED COMPENSATION AND OTHER
STOCK BASED PAYMENTS. CICA 3870 provides alternative methods of
transition for the adoption of the fair value method and as permitted,
the Company has elected the prospective application, which allows the
fair value method to be applied to stock options granted, modified or
settled on or after January 1, 2003 to employees and directors.
Pro-forma disclosure for stock options issued prior to January 1, 2003,
as required by the standard, had the Company used the fair value method
is presented in Note 6 (d).
Stock-based compensation has been credited to contributed surplus.
The fair value of stock options is determined by using the
BLACK-SCHOLES OPTION PRICING MODEL with assumptions for risk-free
interest rates, dividend yields, volatility factors of the expected
market price of the Company's common shares and an expected life of the
options.
For stock options granted to other than employees and directors the
Company continues to apply the fair value method.
3. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These consolidated financial statements have been prepared in
accordance with Canadian generally accepted accounting principles
("Canadian GAAP"). The significant measurement differences between
those principles and those that would be applied under United States
generally accepted accounting principles ("US GAAP") as they affect the
Company are disclosed in Note 10.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
USE OF ESTIMATES
The preparation of financial statements in conformity with Canadian
GAAP requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the
period. Significant areas requiring the use of management estimates
relate to the determination of environmental obligations and impairment
of mineral properties and deferred costs. Actual results may differ
from these estimates.
PRINCIPLES OF CONSOLIDATION
These consolidated financial statements include the accounts of the
Company and all its subsidiaries. The Company's principal subsidiaries
are IMPSA Resources Corporation (80.69%), Minera Imp-Peru S.A. (100%)
and Inversiones Mineras Argentinas S.A. (100%). All intercompany
transactions and balances have been eliminated.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash and short-term investments
maturing within 90 days of the original date of acquisition.
MARKETABLE SECURITIES
Marketable securities are carried at the lower of cost or market.
MINERAL PROPERTIES AND DEFERRED COSTS
Direct costs related to the acquisition and exploration of mineral
properties held or controlled by the Company are deferred on an
individual property basis until the viability of a property is
determined. Administration costs and general exploration costs are
expensed as incurred. When a property is placed in commercial
production, deferred costs will be depleted using the
units-of-production method. Management of the Company periodically
reviews the recoverability of the capitalized mineral properties.
Management takes into consideration various information including, but
not limited to, results of exploration activities conducted to date,
estimated future metal prices, and reports and opinions of outside
geologists, mine engineers and consultants. When it is determined that
a project or property will be abandoned or its carrying value has been
impaired, a provision is made for any expected loss on the project or
property.
The Company also accounts for foreign value added taxes paid as part of
mineral properties and deferred costs. The recovery of these taxes will
commence on the beginning of foreign commercial operations. Should
these amounts be recovered they would be treated as a reduction in
carrying costs of mineral properties and deferred costs.
Although the Company has taken steps to verify title to mineral
properties in which it has an interest, these procedures do not
guarantee the Company's title. Such properties may be subject to prior
agreements or transfers and title may be affected by undetected
defects.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
From time to time, the Company acquires or disposes of properties
pursuant to the terms of option agreements. Options are exercisable
entirely at the discretion of the optionee and, accordingly, are
recorded as mineral property costs or recoveries when the payments are
made or received.
EQUIPMENT
Equipment, which comprise leasehold improvements and office furniture
and equipment, are recorded at cost less accumulated depreciation
calculated using the straight-line method over their estimated useful
lives of five years.
ASSET RETIREMENT OBLIGATIONS
The fair value of a liability for an asset retirement obligation is
recognized when a reasonable estimate of fair value can be made. The
asset retirement obligation is recorded as a liability with a
corresponding increase to the carrying amount of the related long-lived
asset. Subsequently, the asset retirement cost is allocated to expenses
using a systematic and rational method and is adjusted to reflect
period-to-period changes in the liability resulting from passage of
time and revisions to either timing or the amount of the original
estimate of the undiscounted cash flow. As at December 31, 2003, the
Company does not have any asset retirement obligations.
LONG-LIVED ASSETS IMPAIRMENT
Long-lived assets are reviewed for impairment when changes in
circumstances suggest their carrying value has become impaired.
Management considers assets to be impaired if the carrying value
exceeds the estimated undiscounted future projected cash flows to
result from the use of the asset and its eventual disposition. If
impairment is deemed to exist, the assets will be written down to fair
value. Fair value is generally determined using a discounted cash flow
analysis.
TRANSLATION OF FOREIGN CURRENCIES
The Company's foreign operations are integrated and translated using
the temporal method. Under this method, the Company translates monetary
assets and liabilities denominated in foreign currencies at period-end
rates. Non-monetary assets and liabilities are translated at historical
rates. Revenues and expenses are translated at average rates in effect
during the period except for depreciation and amortization which are
translated at historical rates. The resulting gains or losses are
reflected in the operating results in the period of translation.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to a
significant concentration of credit risk consist primarily of cash and
cash equivalents and amounts receivable. The Company limits its
exposure to credit loss by placing its cash and cash-equivalents with
major financial institutions.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair value of the Company's financial instruments consisting of
cash and cash equivalents, amounts receivable and accounts payable and
accrued liabilities approximate their carrying values. As of December
31, 2003, the market value of marketable securities was $1,032,546
(2002 - $78,200).
INCOME TAXES
The Company uses the liability method of accounting for future income
taxes. Under this method of tax allocation, future income tax
liabilities and assets are recognized for the estimated tax
consequences attributable to differences between the amounts reported
in the consolidated financial statements and their respective tax
bases, using substantively enacted tax rates and laws that are expected
to be in effect in the periods in which the future income tax assets or
liabilities are expected to be settled or realized. The effect of a
change in income tax rates on future income tax liabilities and assets
is recognized in income in the period that the change occurs. Future
income tax assets are recognized to the extent that they are considered
more likely than not to be realized.
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing income
available to common shareholders by the weighted average number of
common shares outstanding during the year. The computation of diluted
earnings per share assumes the conversion, exercise or issuance of
securities only when such conversion, exercise or issuance would have a
dilutive effect on earnings per share. The dilutive effect of
outstanding options and warrants and their equivalents is reflected in
diluted earnings per share by application of the treasury stock method.
COMPARATIVE FIGURES
Certain of the 2002 and 2001 fiscal year figures have been reclassified
to conform with the presentation used in fiscal 2003.
4. MARKETABLE SECURITIES
2003 2002
---------------------------- ----------------------------
QUOTED QUOTED
RECORDED MARKET RECORDED MARKET
VALUE VALUE VALUE VALUE
$ $ $ $
Ballad Gold & Silver Ltd.
- 500,000 common shares 250,000 325,000 - -
Amera Resources Corporation ("Amera")
- 600,000 common shares 270,000 546,000 - -
Other 23,460 161,546 23,460 78,200
------------ ------------ ------------ ------------
543,460 1,032,546 23,460 78,200
============ ============ ============ ============
The Company has entered into option and sale agreements on certain of
its non-core mineral property holdings in which the Company received
common shares of publicly-traded companies as partial consideration.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
5. MINERAL PROPERTIES AND DEFERRED COSTS
2003 2002
-------------------------------------------- ------------
DEFERRED
ACQUISITION EXPLORATION
COSTS COSTS TOTAL TOTAL
$ $ $ $
Argentina
Navidad - 1,002,211 1,002,211 5,090
Lirio Group 221,020 1,106,295 1,327,315 1,966,934
Rio de las Taguas 133,262 411,801 545,063 543,889
Evelina - 391,302 391,302 107,209
Laguna de los Toros - 140,867 140,867 138,203
Other 11,639 300,690 312,329 419,952
------------ ------------ ------------ ------------
365,921 3,353,166 3,719,087 3,181,277
Peru
Rio Tabaconas 741,293 2,423,261 3,164,554 2,666,450
------------ ------------ ------------ ------------
1,107,214 5,812,132 6,883,641 5,847,727
============ ============ ============ ============
(a) Argentinean Properties
The Company has either staked, fully paid or holds options to
acquire 100% working interests in mineral properties, located
in San Juan Province and Chubut Province in Argentina.
As of December 31, 2003, the Company must make further
payments with respect to option agreements on the Lirio Group
of properties, totalling US $240,000, as follows:
YEAR US $
2004 70,000
2005 170,000
------------
240,000
============
The Company has also agreed to pay net smelter return
royalties ("NSR") of up to US $7,000,000 once commercial
production is achieved on the Lirio Group of properties.
During fiscal 2003, the Company reviewed its non-core mineral
properties and determined to write off mineral properties and
related deferred exploration costs of $776,626.
(b) Rio Tabaconas, Peru
The Company holds an option to acquire a 100% interest in
three concessions, in the Cajamarca Department of San Ignacio
Province in northern Peru. In addition, the Company owns ten
concessions, which surround and overlie the optioned
concessions. Collectively these are known as the Rio Tabaconas
Project.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
5. MINERAL PROPERTIES AND DEFERRED COSTS (continued)
Under the terms of the option agreement, the Company has paid
US $185,000 and was required to make further payments
totalling US $1,340,000. On June 28, 2002, the Company
suspended further exploration activities at the Rio Tabacanos
project. This decision was made in response to the local
community expressing its concerns with mineral exploration
activities. The Company has deferred any further exploration
until an agreement with the local community has been
finalized. As a result the Company declared force majeure, as
allowed under its option agreement. Accordingly, the Company
and the optionor have deferred payment of the remaining US
$1,155,000 option payments until the force majeure is
discontinued. On August 1, 2003, the Company commenced paying
US $1,500 per month to the optionor as compensation during
this waiting period.
(c) During fiscal 2003, the Company entered into agreements with
Amera, a publicly-traded company with common management and
shareholders, whereby the Company:
(i) optioned its Mogote Property in the NW San Juan
Region of Argentina. Amera has the option to earn a
51% interest in the 8,009 hectare Mogote Property by
issuing a total of 1,650,000 common shares of Amera
to the Company and by incurring US $1.25 million of
expenditures, including work programs and underlying
option payments, all over a five year period ending
July 1, 2007. Amera has also agreed to reimburse the
Company for past payments made and expenditures which
had been incurred by the Company on the Mogote
Property. As at December 31, 2003, Amera has
reimbursed the Company $192,952, and $4,902 remained
outstanding and is included in amounts receivable.
The Company has also received 100,000 shares of Amera
at a recorded amount of $45,000.
On April 8, 2004, the Company and Amera entered into
a further agreement whereby Amera can earn an
additional 24% interest, for a total 75% interest,
after earning the initial 51% interest, by issuing
300,000 shares of Amera (issued) and conducting an
additional US $3 million of exploration expenditures
over a three year period ending May 20, 2007.
(ii) sold a 100% undivided interest in three mineral
properties, comprising 24,280 hectares (the "Chubut
Properties"), located in Chubut Province, Argentina,
for 500,000 common shares of Amera for a recorded
amount of $225,000. In addition, in the event that a
decision is made to place the Chubut Properties into
commercial production, Amera will pay the Company a
bonus of US$250,000 and a 3% net smelter returns
royalty.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
6. SHARE CAPITAL
Authorized - 100,000,000 common shares without par value
- 100,000,000 preferred shares without par value
NUMBER $
Issued - common shares
Balance, December 31, 2000 13,529,219 16,627,241
Private placements 5,063,000 1,563,940
Less share issue costs - (100,684)
------------ ------------
Balance, December 31, 2001 18,592,219 18,090,497
Private placements 5,703,026 2,552,870
Exercise of options 170,000 68,000
Exercise of warrants 2,085,361 837,512
Less share issue costs - (194,056)
------------ ------------
Balance, December 31, 2002 26,550,606 21,354,823
Private placement 2,900,000 2,610,000
Exercise of options 1,855,850 895,859
Exercise of warrants 4,969,066 2,940,428
Exercise of agent's options 105,930 95,337
Less share issue costs - (188,850)
------------ ------------
Balance, December 31, 2003 36,381,452 27,707,597
============ ============
(a) During fiscal 2003, the Company completed a brokered private
placement for 2,900,000 units at a price of $0.90 per unit,
for cash proceeds of $2,421,150, net of share issue costs of
$188,850. Each unit consisted of one common share of the
Company and one-half non-transferable common share purchase
warrant. One whole warrant entitles the holder to purchase one
common share for the exercise price of $1.10 per share on or
before April 28, 2004. Certain officers and directors of the
Company purchased 445,000 units of the private placement.
In connection with the financing, the Company granted the
agent an option to purchase 195,750 units on the same basis
and terms as the private placement. The agent has exercised
options to purchase 105,930 units, for $95,337 cash, and, as
of December 31, 2003, 89,820 units remained outstanding.
(b) During fiscal 2002, the Company completed the following
private placements:
i) 637,000 units at a price of $0.38 for cash proceeds of
$222,695, net of share issue costs of $19,365. Each
unit consisted of one common share of the Company and
one warrant. Two warrants entitled the holder to
purchase an additional common share for the exercise
price of $0.45 on or before March 31, 2003. The Company
also issued agents warrants to purchase 63,700 common
shares at a price of $0.45 on or before March 31, 2003;
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
6. SHARE CAPITAL (continued)
ii) 1,777,778 units at a price of $0.45 per unit for cash
proceeds of $686,132, net of share issue costs of
$118,868. Each unit consisted of one common share of
the Company and one warrant. Two warrants entitle the
holder to purchase an additional common share at a
price of $0.54 per share on or before April 9, 2003.
The Company also issued 11,111 shares to the agents, at
a price of $0.45 per share. The Company also issued
agents warrants to purchase 355,556 common shares at a
price of $0.54 per share on or before April 9, 2003;
iii) 1,722,222 units at a price of $0.45 per unit, for cash
proceeds of $751,000 net of share issue costs of
$24,000. Each unit consisted of one common share of the
Company and one warrant. Each warrant entitled the
holder to purchase an additional common share of the
Company at a price of $0.53 per share on or before May
23, 2003 and $0.60 per share on or before May 23, 2004.
Certain directors purchased 191,111 units. The Company
also issued agents warrants to purchase 66,666 common
shares at a price of $0.53 per share on or before May
23, 2003; and
iv) 1,554,915 units at a price of $0.47 for cash proceeds
of $698,987, net of share issue costs of $31,823. Each
unit consisted of one common share of the Company and
one warrant. Each warrant entitles the holder to
purchase an additional common share of the Company at a
price of $0.55 per share on or before September 27,
2003 and $0.60 on or before September 27, 2004. Certain
directors purchased 325,000 units. The Company also
issued agents warrants to purchase 37,496 common shares
at a price of $0.50 per share on or before September
27, 2003.
(c) During fiscal 2001, the Company completed the following
private placements:
i) 3,000,000 units at a price of $0.26 for cash proceeds
of $746,250, net of share issue costs of $33,750. Each
unit consisted of one common share of the Company and
one-half warrant. Each full warrant entitled the holder
to purchase one common share for the exercise price of
$0.40 on or before July 3, 2002. The President of the
Company purchased 240,000 units. The Company also
issued agents warrants to purchase 259,000 common
shares at a price of $0.35 on or before July 3, 2002;
ii) 2,063,000 units at a price of $0.38 for cash proceeds
of $717,006, net of share issue costs of $66,934. Each
unit consisted of one common share of the Company and
one-half warrant. Each full warrant entitled the holder
to purchase one common share for the exercise price of
$0.45 on or before March 31, 2003. The Company also
issued agents warrants to purchase 206,300 common
shares for the exercise price of $0.45 on or before
March 31, 2003.
(d) Stock Options
The Company grants stock options in accordance with the
policies of the TSX Venture Exchange ("TSXV"). A summary of
the Company's outstanding options at December 2003, 2002 and
2001 and the changes for the years ending on those dates is
presented below:
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
6. SHARE CAPITAL (continued)
2003 2002 2001
---------------------- ---------------------- ----------------------
OPTIONS WEIGHTED OPTIONS WEIGHTED OPTIONS WEIGHTED
OUTSTANDING AVERAGE OUTSTANDING AVERAGE OUTSTANDING AVERAGE
AND EXERCISE AND EXERCISE AND EXERCISE
EXERCISABLE PRICE EXERCISABLE PRICE EXERCISABLE PRICE
$ $ $
Balance,
beginning of year 2,465,500 0.44 1,635,500 0.40 1,224,000 0.54
Granted 1,918,500 1.60 1,050,000 0.50 1,635,500 0.40
Exercised (1,855,850) 0.44 (170,000) 0.40 - -
Cancelled - - (50,000) 0.40 (1,224,000) 0.54
------------ ------------ ------------
Balance, end of year 2,528,150 1.32 2,465,500 0.44 1,635,500 0.40
============ ============ ============
Stock options outstanding and exercisable at December 31, 2003
are as follows:
NUMBER EXERCISE PRICE EXPIRY DATE
$
254,150 0.40 July 19, 2006
159,000 0.50 May 2, 2007
225,000 0.50 September 23, 2007
195,000 0.84 March 7, 2008
300,000 0.90 May 30, 2008
1,395,000 1.87 August 27, 2008
---------
2,528,150
=========
During fiscal 2002, the Company granted 540,000 stock options
to its employees and directors and applied the intrinsic value
based method of accounting. Had the Company followed the fair
value based method of accounting in fiscal 2002, the Company
would have recorded an additional compensation expense of
$140,840 in respect of its employees and directors' stock
options. Pro- forma loss and loss per share information
determined under the fair value method in fiscal 2002 are as
follows:
$
Net loss for fiscal 2002
- as reported (1,440,106)
- compensation expense (140,840)
------------
- pro-forma (1,580,946)
============
Basic and diluted loss per share
- as reported (0.06)
- pro-forma (0.07)
During fiscal 2002, the Company recognized compensation
expense of $128,260 for stock options granted to consultants.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
6. SHARE CAPITAL (continued)
The fair value of stock options granted to employees,
directors and consultants is estimated on the dates of grants
using the Black-Scholes option pricing model with the
following assumptions used for the grants made during the
year:
2003 2002
Risk-free interest rate 3.76% - 4.16% 3.89% - 4.25%
Estimated volatility 74% - 78% 73% - 87%
Expected life 2.5 years 2.5 years
The weighted average fair value per share of stock options,
calculated using the Black-Scholes option pricing model,
granted during the period to the Company's employees,
directors and consultants was $0.63 (2002 - $0.26) per share.
Option-pricing models require the use of estimates and
assumptions including the expected volatility. Changes in the
underlying assumptions can materially affect the fair value
estimates and, therefore, existing models do not necessarily
provide reliable measure of the fair value of the Company's
stock options.
(e) Warrants
A summary of the number of common shares reserved pursuant to
the Company's outstanding warrants and agents warrants
outstanding at December 31, 2003, 2002 and 2001 and the
changes for the years ending on those dates is as follows:
2003 2002 2001
Balance, beginning of year 9,511,550 6,588,967 3,592,167
Issued 1,502,965 5,007,944 2,996,800
Exercised (4,969,066) (2,085,361) -
Expired (3,001) - -
------------ ------------ ------------
Balance, end of year 6,042,448 9,511,550 6,588,967
============ ============ ============
Common shares reserved pursuant to warrants and agent warrants
outstanding at December 31, 2003 are as follows:
NUMBER EXERCISE PRICE EXPIRY DATE
$
1,477,222 0.60 May 23, 2004
778,471 0.60 September 27, 2004
1,066,822 0.75 September 15, 2004
1,253,667 0.90 March 16, 2005
173,667 0.75 April 19, 2004
1,292,599 1.10 April 28, 2004
---------
6,042,448
=========
(f) See also Note 12.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
7. RELATED PARTY TRANSACTIONS
(a) During fiscal 2003, the Company paid $330,600 (2002 -
$136,276; 2001 - $157,825) to companies controlled by current
and former directors and officers of the Company, for
accounting, management, and consulting services provided.
(b) The Company has agreements with a company controlled by the
President of the Company for the rental of office premises.
The Company is required to make monthly rent payments of
$5,077. During fiscal 2003, the Company paid $60,924 (2002 -
$60,924; 2001 - $60,924) for rent.
(c) During fiscal 2003, the Company recorded $61,067 (2002 -
$64,641; 2001 - $45,381) for reimbursement of expenditures and
disbursements incurred on behalf of the Company by the
President of the Company. As at December 31, 2003, $7,538
(2002 - $1,496 ; 2001 - $17,683) remains unpaid and has been
included in accounts payable and accrued liabilities.
(d) The Company shares its office facilities with Amera. Amera is
currently paying a minimum of $2,500 per month to the Company
for shared rent and administration costs. During fiscal 2003,
the Company received $35,110 (2002 - $6,000; 2001 - $nil) from
Amera.
(e) The President of the Company provides his services on a
full-time basis under a contract with a private company
controlled by the President. The President is paid an annual
amount of $102,000. The contract also provides that, in the
event the services are terminated without cause or upon a
change in control of the Company, a termination payment would
include a bonus of $6,500 per month, retroactive to July 1,
1999, plus an additional three years of compensation at
$15,000 per month. If the termination had occurred on December
31, 2003, the amount under the agreement would be $891,000.
(f) Other related party transactions are disclosed elsewhere in
these consolidated financial statements.
8. INCOME TAXES
The recovery of income taxes shown in the consolidated statements of
operations and deficit differs from the amounts obtained by applying
statutory rates to the loss before provision for income taxes due to
the following:
2003 2002 2001
$ $ $
Statutory tax rate 37.62% 39.62% 44.62%
Provision for income taxes based on statutory
Canadian combined federal and provincial
income tax rates (1,286,009) (570,570) (393,493)
Differences in foreign tax rates (383,116) (4,234) 179,918
Losses for which an income tax benefit
has not been recognized 1,669,125 574,804 213,575
------------ ------------ ------------
- - -
============ ============ ============
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
8. INCOME TAXES (continued)
The significant components of the Company's future tax assets are as
follows:
2003 2002
$ $
Future income tax assets
Financing costs 116,985 98,934
Operating loss carryforward 4,051,130 4,164,745
Excess of tax values of mineral
properties and property, plant
and equipment over book value 465,045 330,957
------------ ------------
4,633,160 4,594,636
Valuation allowance for future tax assets (4,633,160) (4,594,636)
------------ ------------
- -
============ ============
The Company has Canadian non-capital loss carryforwards of $9,002,084
that may be available for tax purposes. The losses expire as follows:
EXPIRY DATE $
2004 1,554,225
2005 1,266,386
2006 1,255,915
2007 1,277,771
2008 845,836
2009 1,319,284
2010 1,482,667
------------
9,002,084
============
9. SEGMENTED INFORMATION
The Company is involved in mineral exploration and development
activities, which are conducted principally in Argentina and Peru. The
Company is in the exploration stage and, accordingly, has no reportable
segment revenues or operating results for each of fiscal 2003, 2002 and
2001.
The Company's total assets are segmented geographically as follows:
2003
------------------------------------------------------------
CORPORATE ARGENTINA PERU TOTAL
$ $ $ $
Current assets 5,075,092 65,637 32,999 5,173,728
Equipment 28,974 7,032 4,466 40,472
Mineral properties and deferred costs - 3,719,087 3,164,554 6,883,641
------------- ------------ ------------ ------------
5,104,066 3,791,756 3,202,019 12,097,844
============= ============ ============ ============
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
9. SEGMENTED INFORMATION (continued)
2002
------------------------------------------------------------
CORPORATE ARGENTINA PERU TOTAL
$ $ $ $
Current assets 4,161,455 49,117 40,914 1,539,245
Equipment 34,323 5,817 5,377 45,517
Mineral properties and deferred costs - 3,181,277 2,666,450 5,847,727
------------ ------------ ------------ ------------
4,196,278 3,236,211 2,712,741 7,432,489
============ ============ ============ ============
10. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES
The consolidated financial statements of the Company have been prepared
in accordance with Canadian GAAP, which differ in certain material
respects from US GAAP.
The significant measurement differences between Canadian GAAP and US
GAAP for certain items on the consolidated balance sheets, statements
of operations and deficit and statements of cash flows are as follows:
2003 2002 2001
$ $ $
CONSOLIDATED STATEMENTS OF OPERATIONS
Loss for the year under Canadian GAAP (3,418,418) (1,440,106) (881,875)
Mineral properties and deferred costs for the year (i) (1,812,540) (1,266,555) (1,320,777)
Mineral properties and deferred costs written off
during the year which would have been
expensed in the year incurred (i) 776,626 - 21,483
Stock-based compensation (iii) (144,000) (102,150) -
------------ ------------ ------------
Loss for the year under US GAAP (4,598,332) (2,808,811) (2,181,169)
Unrealized gains on available-for-sale securities (ii) 434,346 54,740 -
------------ ------------ ------------
Comprehensive loss (iv) (4,163,986) (2,754,071) (2,181,169)
============= ============ ============
Loss per share under US GAAP (0.14) (0.12) (0.14)
============= ============ ============
Diluted loss per share under US GAAP (0.14) (0.12) (0.14)
============= ============ ============
2003 2002
$ $
SHAREHOLDERS' EQUITY
Balance per Canadian GAAP 11,671,350 7,324,138
Mineral properties and deferred costs expensed (i) (6,883,641) (5,847,727)
Accumulated other comprehensive income (ii) 489,086 54,740
------------ ------------
Balance per US GAAP 5,276,795 1,531,151
============ ============
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
10. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)
2003 2002
$ $
MINERAL PROPERTIES AND DEFERRED COSTS
Balance per Canadian GAAP 6,883,641 5,847,727
Mineral properties and deferred costs
expensed under US GAAP (i) (6,883,641) (5,847,727)
------------ ------------
Balance per US GAAP - -
============ ============
2003 2002 2001
$ $ $
CONSOLIDATED STATEMENTS OF CASH FLOWS
OPERATING ACTIVITIES
Cash used per Canadian GAAP (1,387,642) (1,306,211) (898,405)
Mineral properties and deferred costs (i) (1,850,761) (1,266,555) (1,320,777)
------------ ------------ ------------
Cash used per US GAAP (3,238,403) (2,572,766) (2,219,182)
============ ============ ============
2003 2002 2001
$ $ $
INVESTING ACTIVITIES
Cash used per Canadian GAAP (1,872,636) (1,277,756) (1,311,823)
Mineral properties and deferred costs (i) 1,850,761 1,266,555 1,320,777
------------ ------------ ------------
Cash provided (used) per US GAAP (21,875) (11,201) 8,954
============ ============ ============
i) Mineral properties and deferred costs
Mineral properties and deferred costs are accounted for in
accordance with Canadian GAAP as disclosed in Note 3. For US
GAAP purposes, the Company expenses acquisition and
exploration costs relating to unproven mineral properties as
incurred. When proven and probable reserves are determined for
a property, subsequent exploration and development costs of
the property are capitalized. The capitalized costs of such
properties would then be assessed, on a periodic basis, to
determine whether the carrying value can be recovered on an
undiscounted cash flow basis. If the carrying value cannot be
recovered on this basis, the mineral properties would be
written down to fair value determined using discounted cash
flows.
ii) Investments
The Company's marketable securities are classified as
available-for-sale investments under US GAAP and carried at
the lower of cost and market value for Canadian GAAP purposes.
Such investments are not held principally for the purpose of
selling in the near term and, for US GAAP purposes, must have
holding gains and losses reported as a separate component of
shareholders' equity until realized or until an other than
temporary impairment in value occurs.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
10. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)
iii) Accounting for stock-based compensation
For US GAAP purposes, the Company accounted for stock-based
employee compensation arrangements using the intrinsic value
method prescribed in Accounting Principles Board ("APB")
Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES"
until 2003.
Under US GAAP, when stock options are cancelled and
immediately reissued at a revised price (the "Repricing"),
these options are accounted for as variable compensation from
the date of the Repricing. Under this method, following the
repricing date, compensation expense is recognized when the
quoted market value of the Company's common shares exceeds the
amended exercise price. Should the quoted market value
subsequently decrease, a recovery of a portion, or all of the
previously recognized compensation expense, will be
recognized.
During fiscal 2003, for US GAAP purposes, the Company has
prospectively adopted the fair based method of accounting for
stock-based compensation in accordance with FAS 148. This
application is consistent with the early application of CICA
3870 under Canadian GAAP (Note 3). Accordingly there is no
difference on accounting for stock-based compensation under
Canadian and US GAAP.
iv) Comprehensive income
US GAAP requires disclosure of comprehensive income (loss)
which is intended to reflect all other changes in equity
except those resulting from contributions by and payments to
owners.
v) New Accounting Standards
In May 2003, the FASB issued Statement No. 150, "ACCOUNTING
FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY" ("SFAS No. 150"), which addresses how
to classify and measure certain financial instruments with
characteristics of both liabilities (or assets in some
circumstances) and equity. SFAS No. 150 is effective for
financial instruments entered into or modified after May 31,
2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003. Adoption of SFAS
No. 150 on July 1, 2003 had no impact on the Company's
financial position and results of operations.
In January 2003, the FSAB issued Interpretation No. 46
"CONSOLIDATION OF VARIABLE INTEREST ENTITIES" ("FIN No. 46")
(revised December 2003). FIN No. 46 clarifies the application
of Accounting Research Bulletin No. 51 "CONSOLIDATED FINANCIAL
STATEMENTS" to only certain entities in which equity investors
do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the
equity to finance its activities without additional
subordinated financial support from other parties. FIN No. 46
applies immediately to variable interest entities created
after January 31, 2003, and the variable interest entities
obtained after that date. It applies at the end of the first
annual reporting period beginning after June 15, 2003, to
variable interests in which an enterprise holds a variable
interest which was acquired before February 1, 2003. Adoption
of FIN No. 46 on January 1, 2004 will not materially impact
the Company's financial position or results of operations.
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
10. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)
A similar guideline has been introduced in Canada, Accounting
Guideline 15 "CONSOLIDATION OF VARIABLE INTEREST ENTITIES".
This guideline applies to annual and interim periods beginning
on or after November 1, 2004. The Company is continuing to
evaluate the potential impact of Accounting Guideline 15.
In July 2003, the CICA released Section 1100 "GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES". This new section establishes
standards for financial reporting in accordance with generally
accepted accounting principles. It describes what constitutes
Canadian GAAP and its sources, replacing "FINANCIAL STATEMENT
CONCEPTS" paragraph 1000.59-61. Also, in July 2003, the CICA
released Section 1400, "GENERAL STANDARDS OF FINANCIAL
STATEMENT PRESENTATION". This section clarifies what
constitutes fair presentation in accordance with Canadian
GAAP. Both these sections are effective for fiscal years
beginning on or after October 1, 2003 and the Company is
currently evaluating their impact.
11. SUPPLEMENTARY CASH FLOW INFORMATION
Non-cash investing and financing activities were conducted by the
Company as follows:
2003 2002 2001
$ $ $
Investing activities
Proceeds on disposition of mineral properties (272,982) - -
Acquisition of marketable securities 272,982 - -
------------ ------------ ------------
- - -
============ ============ ============
Financing activities
Finder's fees payable - (5,000) -
Shares issued for payment of finder's fees - 5,000 -
Shares issued on exercise of options 74,379 - -
Contributed surplus (74,379) - -
------------ ------------ ------------
- - -
============ ============ ============
Other supplementary cash flow information:
2003 2002 2001
$ $ $
Interest paid in cash - - -
============ ============ ============
Income taxes paid in cash - - -
============ ============ ============
IMA EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
(EXPRESSED IN CANADIAN DOLLARS)
12. SUBSEQUENT EVENTS
a) In March 2004, Minera Aquiline Argentina S.A., a wholly-owned
subsidiary of Aquiline Resources Inc., commenced a legal
proceeding against the Company, asserting that the Company
unlawfully used confidential information, and is seeking a
constructive trust over the Navidad Project and other
surrounding properties in Chubut Province, Argentina. The
Company is defending this action and, as at the date of the
Auditor's Report, the outcome is not determinable.
b) On May 3, 2004, the Company announced a corporate
restructuring which would have the result of dividing its
existing portfolio of mineral properties into two separate
public companies. Following the corporate restructuring the
Company will continue to hold the Navidad project, while the
newly created company will hold all other mineral property
interests. The proposed reorganization of the Company will be
accomplished by way of a statutory plan of arrangement and is
subject to shareholder, regulatory and court approvals.
c) Subsequent to December 31, 2003, the Company:
(i) completed a brokered private placement of 1,500,000
units at $3.10 per unit, for proceeds of $4,307,500 net
of $279,000 agent's commission and $63,500 of related
issue costs. Each unit consisted of one common share
and one half non-transferable share purchase warrant.
Each whole warrant entitles the holder to purchase a
common share for $3.70 per share on or before February
23, 2005. The Company also issued 200,000 units, at a
recorded amount of $620,000 to its agent;
(ii) granted 1,462,000 stock options for $3.10 per share to
its directors, employees and consultants for a period
of five years; and
(iii) issued 2,634,291 common shares for $2,308,015 on the
exercises of stock options and warrants.
BRITISH MINISTRY OF FINANCE NOTICE OF ALTERATION
COLUMBIA Corporate and Personal FORM 11 - BC COMPANY
Property Registries Section 257(4)
www.fin.gov.bc.ca/registries BUSINESS CORPORATIONS ACT
Telephone: 250 356-8626
Hours: 8:30 - 4:30 (Monday-Friday)
DO NOT MAIL THIS FORM TO THE CORPORATE AND PERSONAL FREEDOM OF INFORMATION AND PROTECTION ACT (FIPPA)
PROPERTY REGISTRIES UNLESS YOU ARE INSTRUCTED TO DO SO The personal information requested on this form is made available
BY REGISTRY STAFF. THE REGULATION UNDER THE BUSINESS to the public under the authority of the BUSINESS CORPORATIONS ACT.
CORPORATIONS ACT REQUIRES THIS FORM TO BE FILED ON Questions about how the FIPPA applies to this personal information
THE INTERNET AT WWW.CORPORATEONLINE.GOV.BC.CA can be directed to the Administrative Assistant of the Corporate
and Personal Property Registries at 250 356-1198, PO Box 9431 Stn
Prov Govt, Victoria BC V8W 9V3.
--------------------------------------------------------------------------------
[A] INCORPORATION NUMBER OF COMPANY
694758
--------------------------------------------------------------------------------
[B] NAME OF COMPANY
Golden Arrow Resources Corporation
--------------------------------------------------------------------------------
[C] ALTERATIONS TO THE NOTICE OF ARTICLES
Please indicate what information on the Notice of Articles is to be altered
or added:
[ ] Company name [ ] Date of a Resolution or Court
Order
[ ] A translation of company name [ ] Authorized Share Structure
[ ] Pre-existing Company Provisions
--------------------------------------------------------------------------------
[D] ALTERATION EFFECTIVE DATE - CHOOSE ONE OF THE FOLLOWING:
[ ] The alteration is to take effect at the time that this notice is filed
with the registrar.
[ ] The alteration is to take effect at 12:01 a.m. Pacific Time on
yyyy / mm / dd being a date that is not more than ten days after the
date of filing of this notice.
[ ] The alteration is to take effect at ____ Pacific Time on yyyy / mm / dd
being a date and time that is not more than ten days after the date of
filing of this notice.
--------------------------------------------------------------------------------
[E] CHANGE OF COMPANY NAME
The company is to change its name from ____________________________________
to (CHOOSE ONE OF THE FOLLOWING):
[ ] __________________________________________________________. This name
has been reserved for the company under name reservation number ______
___________________________________, or
[ ] a name created by adding "B.C. Ltd." after the incorporation number
of the company.
--------------------------------------------------------------------------------
[F] TRANSLATION OF COMPANY NAME
Set out every new translation of the company name, or set out any change or
deletion of an existing translation of the company name to be used outside
of Canada.
ADDITIONS: Set out every new translation of the company name that the
company intends to use outside of Canada.
--------------------------------------------------------------------------------
FORM 11/WEB Rev. 2004 / 3 / 10 Page 1
--------------------------------------------------------------------------------
CHANGES: Change the following translation(s) of the company name:
-------------------------------------------------------------------------------------------------------------------
PREVIOUS TRANSLATION OF THE COMPANY NAME NEW TRANSLATION OF THE COMPANY NAME
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
DELETIONS: Remove the following translation(s) of the company name:
--------------------------------------------------------------------------------
[G] PRE-EXISTING COMPANY PROVISIONS (refer to Part 17 and Table 3 of the
Regulation under the BUSINESS CORPORATIONS ACT)
Complete this item only if the company has resolved that none of the
Pre-existing Company Provisions are to apply to this company.
[ ] The company has resolved that the Pre-existing Company Provisions are
no longer to apply to this company.
--------------------------------------------------------------------------------
[H] AUTHORIZED SHARE STRUCTURE
Set out the date of each resolution or court order altering special rights
or restrictions attached to a class or series of shares.
YYYY/MM/DD
____________
SET OUT THE NEW AUTHORIZED SHARE STRUCTURE
------------------------------------------------------------------------------------------------------------------------------------
Maximum number of shares of Are there special rights
this class or series of Kind of shares of this class or restrictions attached
shares that the company or series of shares. to the shares of this
Identifying name of class is authorized to issue, or class or
or series of shares indicate there is no maximum series of shares?
number.
----------------------------- -------------------------------------------- ------------------------
THERE IS MAXIMUM NUMBER WITHOUT PAR WITH A PAR Type of YES (X) NO (X)
NO MAXIMUM OF SHARES VALUE VALUE OF currency
(X) AUTHORIZED (X) ($)
------------------------------------------------------------------------------------------------------------------------------------
Common X X X
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
[I] CERTIFIED CORRECT - I have read this form and found it to be correct.
NAME OF AUTHORIZED SIGNING AUTHORITY SIGNATURE OF AUTHORIZED SIGNING AUTHORITY DATE SIGNED
FOR THE COMPANY FOR THE COMPANY YYYY/MM/DD
X
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FORM 11/WEB Rev. 2004 / 3 / 10 Page 2
BRITISH MINISTRY OF FINANCE NOTICE OF ALTERATION
COLUMBIA Corporate and Personal FORM 11 - BC COMPANY
Property Registries Section 257(4)
www.fin.gov.bc.ca/registries BUSINESS CORPORATIONS ACT
Telephone: 250 356-8626
Hours: 8:30 - 4:30 (Monday-Friday)
DO NOT MAIL THIS FORM TO THE CORPORATE AND PERSONAL FREEDOM OF INFORMATION AND PROTECTION ACT (FIPPA)
PROPERTY REGISTRIES UNLESS YOU ARE INSTRUCTED TO DO SO The personal information requested on this form is made available
BY REGISTRY STAFF. THE REGULATION UNDER THE BUSINESS to the public under the authority of the BUSINESS CORPORATIONS ACT.
CORPORATIONS ACT REQUIRES THIS FORM TO BE FILED ON Questions about how the FIPPA applies to this personal information
THE INTERNET AT WWW.CORPORATEONLINE.GOV.BC.CA can be directed to the Administrative Assistant of the Corporate
and Personal Property Registries at 250 356-1198, PO Box 9431 Stn
Prov Govt, Victoria BC V8W 9V3.
--------------------------------------------------------------------------------
[A] INCORPORATION NUMBER OF COMPANY
694758
--------------------------------------------------------------------------------
[B] NAME OF COMPANY
Golden Arrow Resources Corporation
--------------------------------------------------------------------------------
[C] ALTERATIONS TO THE NOTICE OF ARTICLES
Please indicate what information on the Notice of Articles is to be altered
or added:
[ ] Company name [ ] Date of a Resolution or Court
Order
[ ] A translation of company name [X] Authorized Share Structure
[ ] Pre-existing Company Provisions
--------------------------------------------------------------------------------
[D] ALTERATION EFFECTIVE DATE - CHOOSE ONE OF THE FOLLOWING:
[ ] The alteration is to take effect at the time that this notice is filed
with the registrar.
[ ] The alteration is to take effect at 12:01 a.m. Pacific Time on
yyyy / mm / dd being a date that is not more than ten days after the
date of filing of this notice.
[ ] The alteration is to take effect at ____ Pacific Time on yyyy / mm / dd
being a date and time that is not more than ten days after the date of
the filing of this notice.
--------------------------------------------------------------------------------
[E] CHANGE OF COMPANY NAME
The company is to change its name from ____________________________________
to (CHOOSE ONE OF THE FOLLOWING):
[ ] __________________________________________________________. This name
has been reserved for the company under name reservation number ______
___________________________________, or
[ ] a name created by adding "B.C. Ltd." after the incorporation number
of the company.
--------------------------------------------------------------------------------
[F] TRANSLATION OF COMPANY NAME
Set out every new translation of the company name, or set out any change or
deletion of an existing translation of the company name to be used outside
of Canada.
ADDITIONS: Set out every new translation of the company name that the
company intends to use outside of Canada.
--------------------------------------------------------------------------------
FORM 11/WEB Rev. 2004 / 3 / 10 Page 1
--------------------------------------------------------------------------------
CHANGES: Change the following translation(s) of the company name:
-------------------------------------------------------------------------------------------------------------------
PREVIOUS TRANSLATION OF THE COMPANY NAME NEW TRANSLATION OF THE COMPANY NAME
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
DELETIONS: Remove the following translation(s) of the company name:
--------------------------------------------------------------------------------
[G] PRE-EXISTING COMPANY PROVISIONS (refer to Part 17 and Table 3 of the
Regulation under the BUSINESS CORPORATIONS ACT)
Complete this item only if the company has resolved that none of the
Pre-existing Company Provisions are to apply to this company.
[ ] The company has resolved that the Pre-existing Company Provisions are
no longer to apply to this company.
--------------------------------------------------------------------------------
[H] AUTHORIZED SHARE STRUCTURE
Set out the date of each resolution or court order altering special rights
or restrictions attached to a class or series of shares.
YYYY/MM/DD
____________
SET OUT THE NEW AUTHORIZED SHARE STRUCTURE
------------------------------------------------------------------------------------------------------------------------------------
Maximum number of shares of Are there special rights
this class or series of Kind of shares of this class or restrictions attached
shares that the company or series of shares. to the shares of this
Identifying name of class is authorized to issue, or class or
or series of shares indicate there is no maximum series of shares?
number.
----------------------------- -------------------------------------------- ------------------------
THERE IS MAXIMUM NUMBER WITHOUT PAR WITH A PAR Type oF YES (X) NO (X)
NO MAXIMUM OF SHARES VALUE VALUE OF currencY
(X) AUTHORIZED (X) ($)
------------------------------------------------------------------------------------------------------------------------------------
Common X X X
------------------------------------------------------------------------------------------------------------------------------------
Preferred X X X
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
[I] CERTIFIED CORRECT - I have read this form and found it to be correct.
NAME OF AUTHORIZED SIGNING AUTHORITY SIGNATURE OF AUTHORIZED SIGNING AUTHORITY DATE SIGNED
FOR THE COMPANY FOR THE COMPANY YYYY/MM/DD
X
------------------------------------------------------------------------------------------------------------
FORM 11/WEB Rev. 2004 / 3 / 10 Page 2
BRITISH MINISTRY OF FINANCE NOTICE OF ALTERATION
COLUMBIA Corporate and Personal FORM 11 - BC COMPANY
Property Registries Section 257(4)
www.fin.gov.bc.ca/registries BUSINESS CORPORATIONS ACT
Telephone: 250 356-8626
Hours: 8:30 - 4:30 (Monday-Friday)
DO NOT MAIL THIS FORM TO THE CORPORATE AND PERSONAL FREEDOM OF INFORMATION AND PROTECTION ACT (FIPPA)
PROPERTY REGISTRIES UNLESS YOU ARE INSTRUCTED TO DO SO The personal information requested on this form is made available
BY REGISTRY STAFF. THE REGULATION UNDER THE BUSINESS to the public under the authority of the BUSINESS CORPORATIONS ACT.
CORPORATIONS ACT REQUIRES THIS FORM TO BE FILED ON Questions about how the FIPPA applies to this personal information
THE INTERNET AT WWW.CORPORATEONLINE.GOV.BC.CA can be directed to the Administrative Assistant of the Corporate
and Personal Property Registries at 250 356-1198, PO Box 9431 Stn
Prov Govt, Victoria BC V8W 9V3.
--------------------------------------------------------------------------------
[A] INCORPORATION NUMBER OF COMPANY
197061
--------------------------------------------------------------------------------
[B] NAME OF COMPANY
IMA Exploration Inc.
--------------------------------------------------------------------------------
[C] ALTERATIONS TO THE NOTICE OF ARTICLES
Please indicate what information on the Notice of Articles is to be altered
or added:
[ ] Company name [ ] Date of a Resolution or Court
Order
[ ] A translation of company name [X] Authorized Share Structure
[ ] Pre-existing Company Provisions
--------------------------------------------------------------------------------
[D] ALTERATION EFFECTIVE DATE - CHOOSE ONE OF THE FOLLOWING:
[ ] The alteration is to take effect at the time that this notice is filed
with the registrar.
[ ] The alteration is to take effect at 12:01 a.m. Pacific Time on
yyy / mm / dd being a date that is not more than ten days after the
date of filing of this notice.
[ ] The alteration is to take effect at _____ Pacific Time on yyyy /mm / dd
being a date and time that is not more than ten days after the date of
filing of this notice.
--------------------------------------------------------------------------------
[E] CHANGE OF COMPANY NAME
The company is to change its name from ____________________________________
to (CHOOSE ONE OF THE FOLLOWING):
[ ] __________________________________________________________. This name
has been reserved for the company under name reservation number ______
___________________________________, or
[ ] a name created by adding "B.C. Ltd." after the incorporation number
of the company.
--------------------------------------------------------------------------------
[F] TRANSLATION OF COMPANY NAME
Set out every new translation of the company name, or set out any change or
deletion of an existing translation of the company name to be used outside
of Canada.
ADDITIONS: Set out every new translation of the company name that the
company intends to use outside of Canada.
--------------------------------------------------------------------------------
FORM 11/WEB Rev. 2004 / 3 / 10 Page 1
--------------------------------------------------------------------------------
CHANGES: Change the following translation(s) of the company name:
-------------------------------------------------------------------------------------------------------------------
PREVIOUS TRANSLATION OF THE COMPANY NAME NEW TRANSLATION OF THE COMPANY NAME
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
DELETIONS: Remove the following translation(s) of the company name:
--------------------------------------------------------------------------------
[G] PRE-EXISTING COMPANY PROVISIONS (refer to Part 17 and Table 3 of the
Regulation under the BUSINESS CORPORATIONS ACT)
Complete this item only if the company has resolved that none of the
Pre-existing Company Provisions are to apply to this company.
[ ] The company has resolved that the Pre-existing Company Provisions are
no longer to apply to this company.
--------------------------------------------------------------------------------
[H] AUTHORIZED SHARE STRUCTURE
Set out the date of each resolution or court order altering special rights
or restrictions attached to a class or series of shares.
YYYY/MM/DD
____________
SET OUT THE NEW AUTHORIZED SHARE STRUCTURE
------------------------------------------------------------------------------------------------------------------------------------
Maximum number of shares of Are there special rights
this class or series of Kind of shares of this class or restrictions attached
shares that the company or series of shares. to the shares of this
Identifying name of class is authorized to issue, or class or
or series of shares indicate there is no maximum series of shares?
number.
----------------------------- -------------------------------------------- ------------------------
THERE IS MAXIMUM NUMBER WITHOUT PAR WITH A PAR Type of YES (X) NO (X)
NO MAXIMUM OF SHARES VALUE VALUE OF currency
(X) AUTHORIZED (X) ($)
------------------------------------------------------------------------------------------------------------------------------------
Common X X X
------------------------------------------------------------------------------------------------------------------------------------
Preferred, of which 18,283,053 100,000,000 X X
------------------------------------------------------------------------------------------------------------------------------------
shares have been designated
------------------------------------------------------------------------------------------------------------------------------------
as Preferred Shares, Series 1
------------------------------------------------------------------------------------------------------------------------------------
[I] CERTIFIED CORRECT - I have read this form and found it to be correct.
NAME OF AUTHORIZED SIGNING AUTHORITY SIGNATURE OF AUTHORIZED SIGNING AUTHORITY DATE SIGNED
FOR THE COMPANY FOR THE COMPANY YYYY/MM/DD
X
------------------------------------------------------------------------------------------------------------
FORM 11/WEB Rev. 2004 / 3 / 10 Page 2
BRITISH MINISTRY OF FINANCE NOTICE OF ALTERATION
COLUMBIA Corporate and Personal FORM 11 - BC COMPANY
Property Registries Section 257(4)
www.fin.gov.bc.ca/registries BUSINESS CORPORATIONS ACT
Telephone: 250 356-8626
Hours: 8:30 - 4:30 (Monday-Friday)
DO NOT MAIL THIS FORM TO THE CORPORATE AND PERSONAL FREEDOM OF INFORMATION AND PROTECTION ACT (FIPPA)
PROPERTY REGISTRIES UNLESS YOU ARE INSTRUCTED TO DO SO The personal information requested on this form is made available
BY REGISTRY STAFF. THE REGULATION UNDER THE BUSINESS to the public under the authority of the BUSINESS CORPORATIONS ACT.
CORPORATIONS ACT REQUIRES THIS FORM TO BE FILED ON Questions about how the FIPPA applies to this personal information
THE INTERNET AT WWW.CORPORATEONLINE.GOV.BC.CA can be directed to the Administrative Assistant of the Corporate
and Personal Property Registries at 250 356-1198, PO Box 9431 Stn
Prov Govt, Victoria BC V8W 9V3.
--------------------------------------------------------------------------------
[A] INCORPORATION NUMBER OF COMPANY
197061
--------------------------------------------------------------------------------
[B] NAME OF COMPANY
IMA Exploration Inc.
--------------------------------------------------------------------------------
[C] ALTERATIONS TO THE NOTICE OF ARTICLES
Please indicate what information on the Notice of Articles is to be altered
or added:
[ ] Company name [ ] Date of a Resolution or Court
Order
[ ] A translation of company name [X] Authorized Share Structure
[ ] Pre-existing Company Provisions
--------------------------------------------------------------------------------
[D] ALTERATION EFFECTIVE DATE - CHOOSE ONE OF THE FOLLOWING:
[ ] The alteration is to take effect at the time that this notice is filed
with the registrar.
[ ] The alteration is to take effect at 12:01 a.m. Pacific Time on
yyyy / mm / dd being a date that is not more than ten days after the
date of filing of this notice.
[ ] The alteration is to take effect at ____ Pacific Time on yyyy / mm / dd
being a date and time that is not more than ten days after the date of
the filing of this notice.
--------------------------------------------------------------------------------
[E] CHANGE OF COMPANY NAME
The company is to change its name from ____________________________________
to (CHOOSE ONE OF THE FOLLOWING):
[ ] __________________________________________________________. This name
has been reserved for the company under name reservation number ______
___________________________________, or
[ ] a name created by adding "B.C. Ltd." after the incorporation number
of the company.
--------------------------------------------------------------------------------
[F] TRANSLATION OF COMPANY NAME
Set out every new translation of the company name, or set out any change or
deletion of an existing translation of the company name to be used outside
of Canada.
ADDITIONS: Set out every new translation of the company name that the
company intends to use outside of Canada.
--------------------------------------------------------------------------------
FORM 11/WEB Rev. 2004 / 3 / 10 Page 1
--------------------------------------------------------------------------------
CHANGES: Change the following translation(s) of the company name:
-------------------------------------------------------------------------------------------------------------------
PREVIOUS TRANSLATION OF THE COMPANY NAME NEW TRANSLATION OF THE COMPANY NAME
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
DELETIONS: Remove the following translation(s) of the company name:
--------------------------------------------------------------------------------
[G] PRE-EXISTING COMPANY PROVISIONS (refer to Part 17 and Table 3 of the
Regulation under the BUSINESS CORPORATIONS ACT)
Complete this item only if the company has resolved that none of the
Pre-existing Company Provisions are to apply to this company.
[ ] The company has resolved that the Pre-existing Company Provisions are
no longer to apply to this company.
--------------------------------------------------------------------------------
[H] AUTHORIZED SHARE STRUCTURE
Set out the date of each resolution or court order altering special rights
or restrictions attached to a class or series of shares.
YYYY/MM/DD
____________
SET OUT THE NEW AUTHORIZED SHARE STRUCTURE
------------------------------------------------------------------------------------------------------------------------------------
Maximum number of shares of Are there special rights
this class or series of Kind of shares of this class or restrictions attached
shares that the company or series of shares. to the shares of this
Identifying name of class is authorized to issue, or class or
or series of shares indicate there is no maximum series of shares?
number.
----------------------------- -------------------------------------------- ------------------------
THERE IS MAXIMUM NUMBER WITHOUT PAR WITH A PAR Type of YES (X) NO (X)
NO MAXIMUM OF SHARES VALUE VALUE OF currency
(X) AUTHORIZED (X) ($)
------------------------------------------------------------------------------------------------------------------------------------
Class A Common 100,000,000 X X
------------------------------------------------------------------------------------------------------------------------------------
Common X X X
------------------------------------------------------------------------------------------------------------------------------------
Preferred, of which 18,283,053 100,000,000 X X
------------------------------------------------------------------------------------------------------------------------------------
shares have been designated
------------------------------------------------------------------------------------------------------------------------------------
as Preferred Shares, Series 1
------------------------------------------------------------------------------------------------------------------------------------
Special X X X
------------------------------------------------------------------------------------------------------------------------------------
[I] CERTIFIED CORRECT - I have read this form and found it to be correct.
NAME OF AUTHORIZED SIGNING AUTHORITY SIGNATURE OF AUTHORIZED SIGNING AUTHORITY DATE SIGNED
FOR THE COMPANY FOR THE COMPANY YYYY/MM/DD
X
------------------------------------------------------------------------------------------------------------
FORM 11/WEB Rev. 2004 / 3 / 10 Page 2