ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON SHARES AND RELATED SHAREHOLDER MATTERS
Market Information
The Company's common shares are traded on The Toronto Stock Exchange (TSE) under the symbol "NPF". The Company shares were traded on the National Association of Securities Dealers Automated Quotation (NASDAQ) system under the symbol "NORPF" until May 3, 1999 and thereafter on the NASDAQ OTC Bulletin Board.
Following is the quarterly range of stock prices for the Company's common shares as reported by The Toronto Stock Exchange (the TSE) for 1999 and 1998. Per share amounts are reported in Canadian dollars.
1999 (C$) High Low
1st Quarter 1.10 .75 2nd Quarter .95 .70 3rd Quarter 1.00 .72 4th Quarter 1.05 .25
1998 (C$) High Low
1st Quarter 4.35 3.00 2nd Quarter 4.25 3.30 3rd Quarter 3.08 1.10 4th Quarter 1.75 .85
The following is the quarterly range of sales prices for the Company's common shares as reported by NASDAQ for 1999 and 1998. The quotations reflect interdealer prices, without retail mark up, mark down or commission and may not necessarily represent actual transactions.
1999 (US$) High Low
1st Quarter 7/8 31/64 2nd Quarter 11/16 29/64 3rd Quarter 13/16 7/16 4th Quarter 47/64 1/4
1998 (US$) High Low
1st Quarter 3 1/8 2 2nd Quarter 3 1/8 2 1/16 3rd Quarter 2 1/4 9/16 4th Quarter 1 5/16 9/16
Dividends
There were no dividends declared or paid in 1999 or 1998 and dividends are not anticipated in the near future. The Company intends to retain earnings to support current operations, to fund exploration and development projects and to repay bank loans.
Shareholders
As of March 31, 2000, the approximate number of shareholders of record of the Company's common shares was 315.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Safe Harbor Statement under the Private Securities Litigation Act of 1995. The statements contained in this report which are not historical fact are "forward looking statements" that involve various important risks, uncertainties, and other factors which could cause the Company's actual results for 1999 and beyond to differ materially from those expressed in such forward looking statements. These important factors include, without limitation, the risks and factors set forth herein as well as other risks previously disclosed in the Company's securities filings.
Results of Operations
December 31, 1999 compared to December 31, 1998
The Company recorded a net loss of $7,722,000 for the year ended December 31, 1999 compared to net earnings of $25,000 in 1998. The loss was attributed primarily to a $4,679,000 writedown of the value of the Company's interest in the Ramu Nickel-Cobalt mine, which was sold in March 2000, and to an operating loss at the Company's Girilambone copper mine.
Copper sold during 1999 totaled 14,465,000 pounds, a 9.2% decrease from 1998, when 15,922,000 pounds were sold. For the years ended December 31, 1999 and 1998, the Company received an average price of $.72 and $.76 per pound of copper sold, respectively. The copper hedging programs established by the Company resulted in an increase in sales of $403,000 in 1999 and $1,616,000 in 1998. Including the impact of copper hedging programs, the Company realized a net average selling price of $.74 for the year ended December 31, 1999 compared to $.87 in 1998. Cost of sales per pound of copper increased to $.89 for the year ended December 31, 1999 compared to $.64 in 1998. The increase resulted primarily from the higher rate of amortization on copper production from the Girilambone North ore bodies, compounded by higher rates of copper production from those ore bodies compared to 1998, plus increased depreciation, depletion and amortization as the mine approaches the end of its production life.
The provision for abandoned and impaired properties increased to $4,750,000 for the year ended December 31, 1999 from $96,000 in 1998. The value of the Company's interest in Ramu was written down by $4,679,000 to its sale value, and the carrying value of the Company's Mexican exploration properties was reduced to nil, a writedown of $71,000. The Company wrote off exploration costs of $96,000 in Mexico in 1998.
General and administrative expenses decreased for the year ended December 31, 1999 to $2,305,000 from $2,941,000 in 1998, primarily due to decreases in salaries, public relations and consulting costs and other overhead charges.
Interest and other income and expenses decreased for the year ended December 31, 1999 compared to 1998 due to reduced funds available for investment plus expenses related to the sale of Ramu. Interest expense and amortization of debt issuance increased slightly in 1999 from 1998 due to higher debt balances outstanding. Fluctuations in gains and losses from foreign currency forward exchange contracts and from foreign currency transactions are primarily a result of changes in the relative strength of the Australian dollar compared to the United States dollar. The Australian dollar ended 1999 stronger against the U.S. dollar.
The deferred tax benefit of $1,281,000 in 1999 includes a statutory tax provision of $3,151,000 offset by a provision of $750,000 for the expiration of exploration cost carryforwards and by $718,000 attributable to a change in the valuation allowance for deferred tax assets. The 1998 deferred tax benefit of $740,000 includes an adjustment of deferred taxes provided for in prior years in Australia, offset by a provision of $510,000 attributable to income generated in Australia. Operating losses incurred in other taxing jurisdictions cannot be used to offset taxable income generated in Australia.
December 31, 1998 compared to December 31, 1997 The Company recorded net earnings of $25,000 for the year ended December 31, 1998 compared to a net loss of $14,327,000 in 1997. Copper sold during 1998 totaled 15,922,000 pounds, a 2% increase over 15,600,000 pounds of copper sold in 1997. For the years ended December 31, 1998 and 1997, the Company received an average price of $.76 and $1.05 per pound of copper sold, respectively. The copper hedging programs established by the Company resulted in an increase in sales of $1,616,000 in 1998 compared to a decrease of $54,000 in 1997. Including the impact of copper hedging programs, the Company realized a net average selling price of $.87 for the year ended December 31, 1998 compared to $1.05 realized in 1997. Cost of sales per pound of copper increased to $.65 for the year ended December 31, 1998 compared to $.56 in 1997. The increase resulted primarily from increased depreciation, depletion and amortization as the mine approaches the end of its production life.
The provision for abandoned and impaired properties decreased to $96,000 for the year ended December 31, 1998 from $14,293,000 in 1997. Due to the precipitous decline in gold prices during the fourth quarter of 1997, the Company's review of the Tabar Island Gold Project (Tabar) in PNG indicated that the full carrying value of Tabar was not recoverable at projected gold prices. The Company wrote down the value of this project by $13,381,000 to its estimated fair value of $4,275,000. The Company also wrote off the costs associated with gold projects in Canada ($609,000) and Mexico ($303,000). The Company wrote off exploration costs of $96,000 in Mexico in 1998.
General and administrative expenses decreased for the year ended December 31, 1998 to $2,941,000 from $3,827,000 primarily due to decreases in salaries, public relations costs and overhead charges.
Interest and other income decreased for the year ended December 31, 1998 compared to 1997 due to reduced funds available for investment. Interest expense and amortization of debt issuance costs decreased as a portion of debt outstanding at the beginning of the year was repaid during 1998. Fluctuations in gains and losses from foreign currency forward exchange contracts and from foreign currency transactions are primarily a result of changes in the relative strength of the Australian dollar compared to the United States dollar. During 1998 and 1997, the Australian dollar weakened compared to the United States dollar. Other income included a gain of $372,000 in 1997 resulting from an increase in the market value of copper contracts not designated as hedging instruments.
The deferred tax benefit of $740,000 in 1998 includes an adjustment of deferred taxes provided for in prior years in Australia, offset by a provision of $510,000 attributable to income generated in Australia. The deferred tax provision of $2,300,000 in 1997 is attributable to income generated in 1997 from the Girilambone mining operations in Australia. Operating losses incurred in other taxing jurisdictions cannot be used to offset taxable income generated in Australia.
Liquidity and Capital Resources
Cash provided by operating activities was $4,904,000 in 1999 compared to $7,175,000 in 1998 and $8,868,000 in 1997. The decrease in the current year was primarily the result of decreases in the Company's copper production and in the price realized for that production.
Cash used in investing activities included capital expenditures for property and equipment and exploration and development costs. Capital expenditures of $5,000 in 1999, $440,000 in 1998 and $473,000 in 1997 primarily relate to additions to plant, mining and milling equipment at Girilambone. Capitalized deferred exploration and development costs in 1999 of $1,235,000 primarily relate to costs incurred by the Girilambone exploration joint venture. Capitalized costs in 1998 of $6,726,000 related to costs incurred on the Ramu property and by the Girilambone joint venture. Capitalized costs in 1997 of $10,720,000 include costs incurred at Ramu and by the Girilambone joint venture, as well as costs incurred at Tabar.
Cash provided by financing activities consists of borrowings under long-term bank financing agreements and from Resources, offset by repayments, and proceeds from the issuance of common shares.
In December 1998, the Company restructured its Girilambone financing agreement. The agreement requires that all cash proceeds generated from Girilambone mining operations be deposited in a cash collateral account with the lender and to be used to pay any operating costs and expenses, bank fees, interest and principal, and to fund a reserve account with the lender. Any remaining proceeds are then available at the lender's discretion for use by the Company. The lender, as collateral for the loan, holds a security interest in all of the Company's Australian assets including the Company's share of assets at and production from the Girilambone Mines. At December 31, 1999, the balance on the loan was $2,400,000. Principal payments are payable quarterly at the greater of 50% of available cash flow, as defined, for the quarter ending on the relevant repayment date or the amount required to reduce the amount outstanding to $1,100,000 on March 31, 2000 and to zero on June 30, 2000.
On December 12, 1997, the Company completed the sale of 600,000 shares of Common Stock to MRDC, a corporation wholly owned by the Government of Papua New Guinea. These shares were sold at a price of US$4.50 (C$6.40) per share and gross proceeds totaled US$2,700,000 (C$3,840,000). After payment of legal and issuance costs, net proceeds totaled US$2,677,000.
On July 3, 1997, the Company closed its public stock offering in Canada for the sale of 2,460,000 units at 5.00 per unit. Each unit consisted of one share of the Company's common stock and one- half of one purchase warrant. Each whole purchase warrant entitled the holder to purchase one share of common stock at C$9.00. In connection with the offering, the Company issued 225,000 warrants to the underwriter. Each of those warrants entitled the underwriter to purchase common shares at C$6.90. Gross proceeds from the Canadian offering totaled $12,300,000 (C$16,974,000). After payment of commissions, legal fees and other associated costs, net proceeds totaled $10,684,000 (C$14,574,000).
In October 1996, Resources agreed to make available to the Company, at Resources' discretion, an operating loan of up to $2,000,000, which was increased to $4,000,000 in May 1997, payable upon demand and bearing interest at prime plus 1%. Funds advanced under the operating loan from October 1996 to June 1997 totaled $3,748,000. Concurrent with the closing of the offering described above, the Company repaid $2,000,000 to Resources and Resources agreed to convert the remaining $1,748,000 balance due them to 349,549 Units at $5.00 per unit.
The Company believes funds required for its ongoing overhead expenses will be available from cash provided by Girilambone mining operations. Should development proceed on the Tritton copper project or the Simberi Island gold project, the Company will be required to seek funds for such development through additional debt and/or equity financings. There can be no assurance that the Company will be able to obtain sufficient financing to develop these projects on terms acceptable to the Company. Should financing not be available on acceptable terms, the Company may attempt to sell a portion of its interest in these projects for cash or seek additional partners to assist in the development efforts.
ITEM 7A.
ITEM 7A. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk, including the effects of adverse changes in commodity prices, foreign currency exchange rates and interest rates as discussed below.
Commodity Price Risk
The Company sells copper produced from its Girilambone mine in Australia. As a result, the Company's financial results are affected when the price of copper fluctuates. In order to protect the selling price of a portion of the production from the mine, the Company has entered into swap agreements covering approximately 27% of the Company's share of production from the mine for 2000. Under the terms of the swap agreements, the Company receives the difference between a fixed price of copper and the current market price of copper at the date of settlement if the current market price is lower. If the current market price is higher, the Company pays the difference. As of December 31, 1999 the Company had entered into swap agreements covering a total of 3,960,000 pounds of copper at a fixed price of $.80 per pound. Swaps covering 331,000 pounds are scheduled to settle each month during 2000. Since the swap agreements are designated as hedges of anticipated copper sales, any gains or losses realized upon settlement of the swaps are included in sales when the hedged production is sold.
Foreign Currency Risk
A substantial portion of the operating costs of the Girilambone mine are incurred in Australian dollars. Since the functional currency of the Company's Australian operations is the US dollar, the Company is exposed to changes in the exchange rate between the US dollar and the Australian dollar. The Company has entered into foreign currency forward exchange contracts which are designed to protect against the effect of exchange rate fluctuations on a portion of the operating costs of Girilambone. Outstanding contracts at December 31, 1999 totaled $9,450,000 at an average exchange rate of A$1.00 = US$0.742. The amounts maturing in 2000 are as follows: January, $1,949,575; February, $750,000; March, $750,000; April, $750,000; May, $750,000; June, $750,000; July, $750,000; August, $750,000; September, $1,500,000; and October, $750,000. Since these contracts relate to the foreign currency exchange risk of anticipated transactions, under current accounting standards, realized and unrealized gains or losses on these contracts are included currently in the results of operation. As of December 31, 1999, cumulative unrealized losses of $1,150,000 have been recognized in the income statement and recorded as a liability.
Interest Rate Risk
The Company has long term debt outstanding of $2,400,000 at December 31, 1999. The loan bears interest at the Singapore Interbank Offered Rate (SIBOR) plus 1 1/2% (7.52% at December 31, 1999). Principal payments are payable quarterly at the greater of 50% of available cash flow, as defined, for the quarter ending on the relevant payment date or the amount required to reduce the amount outstanding to $1,100,000 at March 31, 2000 and to zero on June 30, 2000. Since the interest rate on the loan outstanding is variable and is reset periodically, the Company is exposed to interest rate risk.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements as of December 31, 1999 and 1998 and for each of the years in the three-year period ended December 31, 1999 follow.
Independent Auditors' Report
The Board of Directors Nord Pacific Limited:
We have audited the accompanying consolidated balance sheets of Nord Pacific Limited and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about 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. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nord Pacific Limited and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles in Canada.
Accounting principles generally accepted in Canada vary in certain significant respects from accounting principles generally accepted in the United States. Application of accounting principles generally accepted in the United States would have affected results of operations for the years ended December 31, 1999 and 1998 and stockholders' equity as of December 31, 1999 and 1998, to the extent summarized in note 14 to the consolidated financial statements.
KPMG LLP
Denver, Colorado April 5, 2000
Independent Auditor's Report
Board of Directors and Shareholders Nord Pacific Limited:
We have audited the accompanying consolidated statements of operations, shareholders' equity, and cash flows of Nord Pacific Limited and subsidiaries (the Company) for the year ended December 31, 1997 (all expressed in U.S. dollars). These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated statements of operations, shareholders' equity and cash flows present fairly, in all material respects, the results of the operations and cash flows of the Company for the year ended December 31, 1997 in conformity with accounting principles generally accepted in Canada.
DELOITTE & TOUCHE Chartered Accountants Hamilton, Bermuda March 20, 1998
(1) Summary of Significant Accounting Policies
(a) Company Description and Basis of Presentation
Nord Pacific Limited and its subsidiaries (collectively, the Company) are engaged in the production of copper and in the exploration for gold, copper, and other minerals in Australia, Papua New Guinea (PNG), and North America.
In June 1998, the Company's shareholders approved the discontinuance of the Company from Bermuda and approved its continuance into the Province of New Brunswick, Canada, effective September 30, 1998. As a Canadian Company, the Company is required to report its financial statements in accordance with generally accepted accounting principles in Canada. These principles differ in certain respects from those in the United States as described in Note 14.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and its 40% interest in the Girilambone copper property in Australia and its 50% interest in the Girilambone North Project (collectively Girilambone). The financial statements include the Company's proportionate share of the assets, liabilities and operations of Girilambone. All significant intercompany accounts and transactions are eliminated at consolidation.
(c) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(d) Cash and Cash Equivalents
The Company considers all investments with an original maturity of three months or less to be cash equivalents. The carrying amount of cash and cash equivalents approximates fair value.
(e) Inventories
Inventories are valued at the lower of cost (first-in, first-out method) or market.
(f) Deferred Costs Associated with Ore Under Leach
Costs at Girilambone incurred with respect to ore under leach are deferred and amortized using the units of production method over the remaining estimated reserves. The Company continually evaluates and refines estimates used to determine the amortization and carrying amount of deferred costs associated with ore under leach based upon actual copper recoveries and mine operating plans.
(g) Property, Plant and Equipment
Plant, mining and milling equipment at Girilambone is depreciated using the units-of-production method over the estimated remaining reserves. Furniture and fixtures are depreciated using the straight-line method over the estimated useful lives of the assets which range from two to five years.
(h) Deferred Exploration and Development Costs
All costs directly attributable to exploration and development are deferred. Costs related to producing properties are amortized using the units-of-production method over the estimated recoverable reserves. Deferred costs are carried at cost, not in excess of anticipated future recoverable value, and are expensed when a project is no longer considered commercially viable.
(i) Impairment of Mining Properties and Projects
Mining projects and properties are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Events or circumstances that may indicate that the carrying amount may not be recoverable include a significant decrease in current or forward commodity prices, a significant reduction in estimates of proven and probable reserves, and significant increases in operating costs, capital requirements or reclamation costs. If estimated future cash flows expected to result from the use of the mining project or property and its eventual disposition are less than the carrying amount of the mining project or property, an impairment is recorded to reduce the carrying amount of the mining project or property to its estimated net recoverable amount.
Impairments are generally assessed for each individual mining project, except where it is not practical to separately identify the net recoverable amount of related properties which are operated on a combined basis.
(j) Debt Issuance Costs
Professional fees and other costs relating to the issuance of debt are capitalized and amortized over the term of the related borrowings.
(k) Foreign Currency Translation
The functional currency for operations conducted in Australia is the U.S. dollar. Adjustments to monetary assets and liabilities denominated in Australian dollars as a result of changes in the exchange rate between U.S. dollars and Australian dollars are recognized currently in the statement of operations as foreign currency transaction gains and losses.
(l) Financial Instruments
Gains and losses related to qualifying hedges of anticipated copper sales are deferred and recognized in the statement of operations as a component of sales at the settlement date. Option premiums paid are deferred until the date of settlement or expiration of the option.
Realized and unrealized gains and losses on foreign currency forward exchange contracts and other derivative financial instruments that do not qualify as hedges are recognized currently in the statement of operations. Unrealized gains or losses are included as assets or liabilities in the balance sheet.
(m) Earnings (Loss) Per Common Share
Basic earnings (loss) per common share is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding during the year. Diluted earnings per share is calculated based on the weighted average number of common shares outstanding adjusted for the dilutive effect of stock options and warrants outstanding. For the years ended December 31, 1999, 1998 and 1997, the assumed exercise of options and warrants was antidilutive and therefore not included in the weighted average shares computation.
(2) Girilambone
The Company is a 40% joint venturer in the Girilambone Copper Property and a 50% joint venturer in the Girilambone North Copper Property in Australia. In 1996, mining commenced in the Girilambone North Project area and the ore from this property is being processed through the existing Girilambone plant. Following is a condensed balance sheet of Girilambone and the corresponding amounts included in the Company's financial statements:
The difference between the net assets of Girilambone and the Company's investment in Girilambone is being amortized using the units-of-production method as a reduction of depletion expense.
Debt incurred related to Girilambone is the separate responsibility of each venturer and is not included in the joint venture's financial statements. Copper production is distributed to each venturer based on their respective ownership interest. The sale of copper produced is the responsibility of each venturer. Cost and expense data related to the operation of the mine is as follows:
Year ended December 31, 1999 1998 1997 (In thousands)
Cost of copper sales: Total Girilambone $ 27,173 24,563 21,048 Included in financial 12,827 10,251 8,696 statements
General and administrative: Total Girilambone $ 416 398 538 Included in financial 190 182 242 statements
(3) Property, Plant and Equipment
December 31, 1999 1998 (In thousands)
Land $ 362 362 Plant, mining and milling 9,373 9,439 equipment Furniture and fixtures 722 708
10,457 10,508
Less accumulated depreciation (8,175) (6,904) -------- ------- $ 2,282 3,605
(4) Deferred Exploration and Development Costs
Deferred exploration and development costs by prospect are as follows:
December 31, 1999 1998 (In thousands)
Ramu $ 5,250 9,519 Tabar Islands 4,886 4,355 Girilambone exploration area 5,249 5,006 (including Tritton) Other 206 261 ------- ------ $15,591 19,141
(a) Ramu
Through December 31, 1998 the Company owned a 35% interest in the Ramu Joint Venture (Ramu) which was formed to explore for nickel and cobalt in PNG. A feasibility study conducted in 1998 found that commercial production of nickel and cobalt would be economically feasible at Ramu.
During 1999, a third party exercised its right to acquire a 10% interest in the project by agreeing to fund its share of future development costs. Each of the joint venture partners' original interests were reduced proportionately.
In November 1999, the Company reached an agreement to sell its 31.5% interest in Ramu to an unrelated third party for $5,250,000. The Company is also entitled to two additional payments of $250,000 upon the completion of financing and upon achievement of commercial production. Upon execution of the agreement, the Company recognized an impairment charge of $4,750,000 to reduce the carrying value of the property to the sales price. The sale closed in March 2000.
(b) Tabar Islands
The Company owns a 100% interest in a gold exploration project in the Tabar Islands (Tabar), north of PNG. On December 3, 1996, the Company was granted a mining lease to develop and operate a gold mine on Simberi Island. While the government of PNG will have no participating interest, if production commences, a royalty of 2% of sales will be payable to the government.
At December 31, 1997, the Company owed one of Tabar's former owners $650,000 upon the issuance of a Special Mining Lease by the Government of PNG. In 1998, it was determined that a Special Mining Lease would not be issued. Accordingly, the Company eliminated the note payable with a corresponding credit to deferred exploration and development costs.
Tabar's former owners have an option to reacquire 50% of the project if feasibility studies indicate that the project could produce 150,000 ounces or more of gold annually. If the option is exercised, the former owners would be required to pay to the Company 250% of its cumulative expenditures for mine development from July 1994 to the date the option is exercised.
Due to the precipitous decline in gold prices during the fourth quarter of 1997, the Company reviewed the carrying costs of and anticipated cash flows from the project to determine if it was impaired. The Company determined that future cash flows, based on estimated resources, were insufficient at projected gold prices to support the $17,656,000 carrying value of the project. The Company therefore recorded a provision for impairment of $13,381,000 at December 31, 1997 to reduce the carrying value of the project to its estimated net recoverable amount of $4,275,000.
(c) Girilambone Exploration Area
The Company has a 50% interest in an exploration joint venture formed to explore areas adjacent to its Girilambone copper mine. Under the terms of the joint venture agreement the Company is required to fund its 50% share of exploration costs. Exploration efforts are continuing in the Girilambone exploration area to identify additional mineable reserves.
The Company is seeking additional financing to develop its properties. The Company cannot predict whether financing will be available to develop these properties and thus whether the deferred exploration and development costs will ultimately be recovered.
(5) Long-Term Debt December 31, 1999 1998 (In thousands)
Girilambone financing agreement $ 2,400 3,000 Less current maturities (2,400) (600) --------- ------ Long-term debt $ - 2,400
The Girilambone financing agreement provided for borrowings of up to $3,600,000. The loan bears interest at Singapore Interbank Offered Rates (SIBOR) plus 1-1/2% (7.52% at December 31, 1999). Principal payments are payable quarterly at the greater of 50% of available cash flow, as defined, for the quarter ending on the relevant repayment date or the amount required to reduce the amount outstanding to $1,100,000 on March 31, 2000 and to zero on June 30, 2000. The agreement also contains certain debt coverage ratio requirements. As collateral for the loan, the lender has a security interest in the Australian assets of the Company, including the Company's share of assets of and production from Girilambone.
Under the agreement, all cash proceeds generated from Girilambone operations are required to be deposited with the lender to be used to pay any costs and expenses related to the project, bank fees, interest and principal and to fund a reserve account with the lender. Any remaining proceeds are available, at the lender's discretion, for use by the Company.
The estimated fair value of the Company's outstanding debt at December 31, 1999 and 1998 approximates its carrying amount.
(6) Financial Instruments
The Company utilizes certain financial instruments, primarily copper hedging agreements and foreign currency forward exchange contracts, to reduce the risk associated with the volatility of commodity prices and fluctuations in foreign currency exchange rates, particularly the Australian dollar.
(a) Copper Agreements
The Company's strategy has been to enter into put options and swap agreements which are designated as hedges of future copper production.
At December 31, 1999, the Company had entered into swap agreements covering a total of 11,905,000 pounds of copper at a fixed price of $.75 per pound. Contracts totaling 992,000 pounds of copper settled each month during 1999. Upon settlement the Company received the difference between the fixed price and the current price of copper if the current price was lower, or the Company paid the difference if the current price was higher. As a result, the Company was assured of receiving a price of $.75 per pound for this hedged production.
In November 1996, the Company purchased put options at a cost of $.08 per pound of copper covering 4,000,000 pounds of copper. In 1997, the Company purchased put options for an additional 11,900,000 pounds of copper at a cost of $.05 per pound of copper. These put options matured ratably each month from January 1998 through December 1998. This hedging program assured that the Company received a minimum gross price of $.90 per pound of copper, and benefited from any increases in the copper price above $.90 per pound.
The Company entered into swap and call option agreements with a single counterparty covering a total of 13,200,000 pounds of copper which settled each month during 1997. The swap agreements locked in a fixed forward price as a floor, and the call options permitted the Company to benefit from an increase in copper price above the call price. Under this combination swap and call option arrangement, at the settlement date for each copper contract during 1997, the Company received $l.02 per pound plus the excess, if any, of the market price of copper (as quoted on the London Metals Exchange) over $1.11 per pound. The copper swap agreements equal to the anticipated level of copper sales were designated as hedges, with gains and losses reflected as the hedged copper was sold. The swap agreements in excess of the anticipated copper sales and the call options did not qualify as hedges and were marked to market with unrealized and realized gains or losses included in earnings.
Sales for the years ended December 3l, 1999, 1998 and 1997, include gains of $403,000, gains of $1,616,000 and losses of $54,000, respectively, that were realized in settlement of copper hedging contracts.
The Company has entered into swap agreements covering a total of 3,960,000 pounds of copper at a fixed price of $.80 per pound, representing approximately 30% of the Company's share of budgeted production for 2000. Contracts totaling 330,000 pounds of copper are settled monthly. Upon settlement, the Company receives the difference between the fixed price and the current price of copper if the current price is lower, or the Company pays the difference if the current price is higher. As a result, the Company is assured of receiving a price of $.80 per pound for this hedged production.
The following table summarizes the market value of the copper contracts determined based upon price quotes received from the counterparty to the agreements.
Notional Strike Fair amount price value - per asset pound (in thousands)
At December 31, 1999: Swap 3,960,000 $ .80 (295) contracts pounds
At December 31, 1998: Swap 11,905,000 .75 737 contracts pounds
(b) Foreign Currency Forward Exchange Contracts
The Company has entered into foreign currency forward exchange contracts to protect against Australian currency fluctuations related to payment of a portion of the expected operating costs of Girilambone. Since these contracts are not specifically identified with anticipated transactions, realized and unrealized gains and losses on these contracts are included currently in the results of operations. For the year ended December 31, 1999, the Company recorded realized and unrealized gains of $901,000 compared to losses of $606,000 and $2,399,000 in 1998 and 1997, respectively. Outstanding contracts at December 31, 1999 totaled $9,450,000 at an average exchange rate of A$1.00 = US$0.742. The amounts maturing in 2000 are as follows: January, $1,949,575; February, $750,000; March, $750,000; April, $750,000; May, $750,000; June, $750,000; July, $750,000; August, $750,000; September, $1,500,000; and October, $750,000.
(c) Counterparty Risk
The Company is exposed to credit risks in the event of nonperformance by the counterparties to the various agreements described above. The Company anticipates, however, that the counterparties will be able to fully satisfy their obligations under the agreements. The Company does not obtain collateral or other security to support financial instruments subject to credit risk.
(7) Nord Resources Corporation
Nord Resources Corporation (Resources) owned approximately 28.5% of the outstanding common stock of the Company as of December 31, 1999 and 1998.
Accounts payable to affiliates includes amounts payable to Resources of $1,378,000 and $443,000 at December 31, 1999 and 1998, respectively. The balance at December 31, 1999 includes a note payable in the amount of $750,000 due September 30, 2000 with interest payable at 10%. The remaining amounts payable to Resources are on open account and do not bear interest. These amounts represent amounts due under an agreement entered into with Resources in 1998 to share office space, administrative personnel and other expenses on a 50/50 basis. Subsequent to December 31, 1999 the note was repaid in full. Interest expense on the note for 1999 was $18,000. Accounts payable to affiliates also include amounts payable to the Company's joint venture partner in Girilambone for operating costs of the mine.
In 1997, Resources provided certain services to the Company under a management agreement. Under the terms of the agreement, Resources was paid a monthly fee of $7,000 and was reimbursed for all direct expenses incurred on behalf of the Company. Management believes that the costs that would have been incurred had the Company obtained such services on a stand-alone basis would have approximated the amounts paid to Resources. The total amount paid to Resources was $566,000 for the year ended December 31, 1997.
In October 1996, the Board of Directors of Resources unanimously agreed to make available to the Company, at Resources' discretion, an operating loan payable on demand and bearing interest at the prime rate plus 1%. In June 1997, advances made to the Company by Resources, net of repayments, totaled $3,747,745. In July and August 1997, the Company repaid $2,000,000 of the amount outstanding. Concurrent with the closing of the Company's Canadian offering on July 3, 1997, Resources converted the remaining amount outstanding into 349,549 Units at $5.00 per unit. Each Unit consisted of one share of common stock and one-half of one purchase warrant. The purchase warrants expired unexercised in 1998. Interest expense paid to Resources totaled $114,000 for the year ended December 31, 1997.
(8) Operating Leases
The Company leases its office space and certain equipment under operating leases. Certain of the leases contain renewal options and escalation clauses. Minimum annual lease payments under non-cancelable operating leases for the years ended December 31 are as follows (in thousands):
2000 $ 140 2001 141 2002 142 2003 143 2004 79 Thereafter 11 ------- $ 656
Rent expense for operating leases was $144,082, $112,433 and $125,885 for the years ended December 31, 1999, 1998 and 1997, respectively.
(9) Shareholders' Equity
(a) Canadian Offering
On July 3, 1997, the Company closed its public stock offering in Canada. The offering consisted of the sale of 2,460,000 units, consisting of one common share and one-half of one purchase warrant. Each whole purchase warrant entitled the holder to purchase one share of common stock at C$9.00. The Company also issued 225,000 warrants to the underwriter. Each warrant entitled the underwriter to purchase one share of common stock at C$6.90 prior to July 3, 1998. All of these warrants expired unexercised on July 3, 1998. Gross proceeds from the offering totaled US$12,300,000 (C$16,974,000). The Company received net proceeds of US$10,684,000 (C$14,574,000) after payment of commissions, certain legal fees, and other related costs.
(b) Private Placement to Mineral Resources Development Company Pty, Limited (MRDC)
On December 12, 1997, the Company completed the sale of 600,000 common shares to MRDC, a corporation wholly owned by the Government of Papua New Guinea. These shares were sold at a price of US$4.50 (C$6.40) per share and gross proceeds totaled US$2,700,000 (C$3,840,000). After payment of certain legal and issuance costs, net proceeds were US$2,677,000.
(c) Stock Option Plans and Other Option Grants
The Company has established three incentive stock option plans, the 1989 Stock Option Plan, the 1991 Stock Option Plan and the 1995 Stock Option Plan (the Plans) for the benefit of employees and directors of the Company. The Company has also granted options which are not governed by the terms of the Plans (the Non-Plan Options). At December 31, 1999, Non-Plan Options covering 787,000 shares have been granted to officers and Directors of the Company and are outstanding. During 1998 and 1997, Non- Plan Options covering 49,000 and 53,000 shares, respectively, were issued to certain consultants to the Company.
Options are granted at an exercise price equal to or in excess of the quoted market price on the date of the grant. Options are generally exercisable beginning six months to three years from date of grant and expire over a five to ten year period from date of grant. At December 31, 1999, 104,080 shares are available for future option grants under the terms of the Plans.
A summary of the status of the Company's outstanding stock options as of December 31, 1999, 1998 and 1997 and changes during the years then ended follows:
The following table summarizes information about stock options outstanding at December 31, 1999:
Exercise Weighted prices Options average Options per share outstanding contract exercisable life (years)
$ 2.41 100,000 3.42 50,000 2.54 216,000 1.02 216,000 2.75 383,000 4.99 292,000 3.91 36,000 2.25 36,000 4.00 362,000 0.12 362,000 4.26 272,800 3.95 272,800 4.38 84,000 4.26 84,000 4.50 309,120 1.09 309,120 4.80 12,000 4.03 12,000 5.25 111,078 5.72 111,078 5.69 150,000 1.75 150,000
$ 2.41-5.69 2,035,998 3.85 1,894,998
(d) Stock Bonus Plan
The 1990 Stock Bonus Plan provides for the issuance of up to 80,000 common shares as incentive bonuses. At December 31, 1999, 76,193 shares have been awarded and 3,807 shares are available for future awards.
(10) Significant Customers
Sales in 1999 included copper sales to two customers of $7,246,000 and $1,551,000. Sales in 1998 included copper sales to two customers of $8,026,000 and $3,051,000. Sales in 1997 included copper sales to three customers of $8,277,000, $2,991,000 and $2,507,000. Management does not believe that the loss of any of these customers would have a material adverse effect on the Company.
(11) Income Taxes
Income tax expense (benefit) consists entirely of future income taxes payable in Australia. These amounts differ from the amounts computed by applying the U.S. statutory income tax rate of 35% to consolidated income (loss) before income tax expense as a result of the following:
Year ended December 31, 1999 1998 1997
Income taxes (benefit) at $ (3,151) (250) (4,060) statutory rate
Foreign income taxes at effective rates in excess of the U.S. 112 14 (98) statutory rate
Change in the valuation allowance for deferred tax assets 718 (176) 4,266
Non-deductible losses of 113 233 1,832 subsidiaries
Expiration of exploration cost carryforwards in Papua 750 - - New Guinea
Adjustment of deferred taxes provided for in prior years in - (1,250) - Australia
Other 177 689 360
Total $ (1,281) (740) 2,300
The tax effects of temporary differences that give rise to future income tax assets and future income tax liabilities for Australia, the United States, Papua New Guinea and Mexico are as follows:
December 31, 1999 1998 (In thousands)
Australia: Future income tax liabilities: Deferred leach costs $ (2,962) (3,389) Exploration and development costs (977) (1,626) Plant, property and equipment (52) (245) Other (28) (40)
Total Australia $ (4,019) 5,300
United States: Future income tax asset - net operating loss carryforwards 1,492 1,518
Valuation allowance (1,492) (1,518)
Total United States $ - -
Papua New Guinea: Future income tax assets: Net operating loss carryforwards $ 1,438 - Exploration cost carryforwards 5,058 5,802 Valuation allowance (6,496) (5,802)
Total Papua New Guinea $ - -
Mexico: Future income tax asset - net operating loss carryforwards $ 775 725
Valuation allowance (775) (725)
Total Mexico $ - -
A valuation allowance has been provided for all of the Company's net future income tax assets in the United States, Papua New Guinea and Mexico based on the history of operating losses for the Company in these countries and limitations on the use of the carryforwards. The Company's operations in Canada are not significant.
(12) Pension Plans
The Company has a defined contribution pension plan covering certain employees of its Australian operations. Under the terms of the plan, the Company contributes an amount equal to 10% of the employee's wages. Pension costs were $41,000, $38,000 and $48,000 for the years ended December 31, 1999, 1998 and 1997 respectively.
The Company has an unfunded non-contributory defined benefit program for two of its executive officers. Under the terms of the program for one of the executive officers, the Company is obligated to pay a lump sum benefit that matches the difference, if any, between the present value of the executive's retirement benefit and the cash surrender value of an insurance policy owned by the executive at age 62. At December 31, 1999 and 1998, the cash surrender value of the policy of $319,670 and $275,265, respectively, has been offset against the accrued retirement benefit liability.
The following tables set forth the changes in the projected benefit obligation for the years ended December 31, 1999, 1998 and 1997 and the funded status of the plan and amounts recognized in the Company's balance sheet at December 31, 1999 and 1998:
December 31, 1999 1998 1997 (In thousands)
Change in projected benefit obligation Benefit obligation, $ 271 350 501 beginning of period Service cost 25 23 - Interest cost 18 15 - Actuarial gain (44) (117) (151)
Benefit obligation, end $ 270 271 350 of period
December 31, 1999 1998 (In thousands)
Funded status: Projected benefit obligation $ (270) (271) Unrecognized net loss (gain) (36) 9 Unrecognized prior service cost 86 103
Net amount recognized $ (220) (159)
Amounts recognized in the balance sheet: Accrued benefit liability $ (270) (271) Intangible asset 50 112
Net amount recognized $ (220) (159) The following tables set forth the components of net periodic benefit costs for the years ended December 31, 1999, 1998 and 1997: Year ending December 31, 1999 1998 1997 (In thousands)
Components of net periodic benefit cost: Service cost $ 25 23 - Interest cost 18 15 - Amortization of prior 17 17 - service cost
Net periodic $ 60 55 - benefit cost
Assumptions: Discount rate 7.75% 6.75% 7.25% Expected return on N/A NA NA plan assets Rate of compensation - - - increase
(13) Employment Agreements The Company has agreements with two of its officers which contain change in control provisions which would entitle one officer to receive 50% of his salary and the other officer to receive 200% of his salary in the event of a change in control of the Company and a change in certain conditions of their employment. The maximum contingent liability under these agreements is approximately $470,000 at December 31, 1999.
(14) Difference Between Canadian and U.S. Generally Accepted Accounting Principles The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada (Canadian GAAP), which differ in certain respects from those principles and practices that the Company would have followed had its consolidated financial statements been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP).
Canadian accounting principles provide for the deferral of exploration expenditures until such time as the property is put into production or the property is abandoned or disposed of through sale, or when it is no longer considered to be commercially viable. For U.S. GAAP purposes, the Company has expensed all exploration costs until such time as the Company establishes, generally by completing a detailed feasibility study, that a commercially mineable deposit exists. During 1999, the Company changed its method of accounting for completing detailed feasibility studies on its properties to expense those costs as incurred. The cumulative effect of this change, calculated as of January 1, 1999 was $4,355,000, which amount was charged to operations in 1999 as the cumulative effect of a change in accounting principle for U.S. GAAP purposes. Management believes the newly adopted accounting method is preferable because it is the more predominant method used in the mining industry and it will better reflect operating income and cash flow. Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income, requires that a company classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of the balance sheet. Under U.S. GAAP, the accumulated other comprehensive income at both December 31, 1999 and 1998, is $798,000, representing cumulative foreign currency translation adjustments. Since there was no change in this amount in 1999, 1998 or 1997 comprehensive income under U.S. GAAP is equal to the net loss under U.S. GAAP for those periods presented below.
Other differences between Canadian GAAP and U.S. GAAP as they relate to these financial statements are not significant.
The application of U.S. GAAP would have had the following effect on the Company's balance sheets:
December 31, 1999 1998 Canadian U.S. Canadian U.S. GAAP GAAP GAAP GAAP (In thousands)
Deferred exploration and $ 15,591 5,250 19,141 11,897 development costs
Deferred tax $ 4,019 2,129 5,300 3,498 liability
Shareholders' $ 17,617 9,166 25,339 19,898 equity
The application of U.S. GAAP would have had the following effect on the Company's statements of operations:
Year ended December 31, 1999 1998 1997 (In thousands)
Net earnings (loss) - $ (7,722) 25 (14,327) Canadian GAAP
Accounting for 1,258 (322) 10,385 exploration costs
Income tax effect 87 370 638
Earnings (loss) before cumulative effect of change in method of (6,377) 73 (3,304) accounting - U.S. GAAP
Cumulative effect of change in method of (4,355) - - accounting
Net earnings (loss)- $ (10,732) 73 (3,304) U.S. GAAP
Year ended December 31, 1999 1998 1997 (In thousands)
Loss per share before cumulative effect of change in method of $ (.49) - (.30) accounting - U.S. GAAP
Change in method of accounting - U.S. GAAP $ (.34) - -
Loss per share - U.S. $ (.83) - (.30) GAAP
(a) Additional Disclosures Required Under U.S. GAAP - Stock Compensation
For U.S. GAAP purposes, the Company has elected to measure compensation cost for stock options issued to employees using the intrinsic value based method under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, which is consistent with the method used for Canadian GAAP. Had compensation cost for the Company's option grants in 1995 and subsequent years been determined based on the fair value of the options at the grant dates consistent with the provisions of SFAS No. 123, the Company's net loss and loss per share under U.S. GAAP would have been reduced to the pro forma amounts indicated below:
Year ended December 31, 1999 1998 1997 (In thousands)
Net loss - As $ (10,732) (73) (3,304) U.S. GAAP reported Pro forma (10,848) (614) (3,770)
Loss per share - U.S. GAAP As (.83) - (.30) reported Pro forma (.84) (.05) (.34)
No options were granted during 1999. The assumptions used in determining the fair value of options granted during 1998 and 1997 are as follows:
1998 1997
Expected volatility 73% 55% Expected life of grant 3 years 2.5 years Risk-free interest rate 5.567% 6.05% Expected dividend rate None None
The weighted average fair value of options granted during the years ended December 31, 1998 and 1997 was $1.14 and $2.06, respectively.
(b) New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board (the FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133 establishes standards for derivative instruments, including certain derivative instruments imbedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in its balance sheet and measure those instruments at fair value. This statement is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. The Company has not yet determined the effect of SFAS No. 133 on its financial statements prepared under U.S. GAAP and does not believe that such a determination will be meaningful until closer to the date of initial adoption.
(15) Environmental Contingencies
At December 31, 1999, the Company had reserves of approximately $133,000 for remediation of certain Australian and Papua New Guinea sites and other environmental costs which have been provided for in accordance with the Company's policy to record liabilities for environmental expenditures when it is probable that obligations have been incurred and the costs can reasonably be estimated.
The amounts of these liabilities are very difficult to estimate due to such factors as the unknown extent of the remedial actions that may be required and, in the case of sites not owned by the Company, the unknown extent of the Company's probable liability in proportion to the probable liability of other parties.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by the above Items 10-13 is incorporated by reference to the Company's Proxy Statement to be filed with the Securities and Exchange Commission on or before April 30, 2000.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
The following consolidated financial statements of Nord Pacific Limited as of December 31, 1999 and 1998 and for each of the years in the three-year period ended December 31, 1999 are included in Part II, Item 8 of this Form 10-K:
Independent Auditor's Reports Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements
2. Financial Statement Schedules
None
3. Exhibits
See "Exhibit Index" on Page 63
(b) Reports on Form 8-K
No reports on Form 8-K were filed in the quarter ended December 31, 1999.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NORD PACIFIC LIMITED
/s/ Edgar F. Cruft Edgar F. Cruft Chairman of the Board March 29, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
/s/ Edgar F. Cruft Edgar F. Cruft Chairman of the Board April 12, 2000
/s/ W. Pierce Carson W. Pierce Carson Chief Executive Officer, President and Director April 12, 2000
/s/ John P. Griffith John P. Griffith Acting Chief Financial Officer April 12, 2000
/s/ Terence H. Lang Terence H. Lang Director April 12, 2000
/s/ Leonard Lichter Leonard Lichter Director April 12, 2000
Lucile Lansing Director April 12, 2000
John B. Roberts Director April 12, 2000
Ray W. Jenner Director April 12, 2000
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NORD PACIFIC LIMITED
Edgar F. Cruft Chairman of the Board March 29, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
Edgar F. Cruft Chairman of the Board April 12, 2000
W. Pierce Carson Chief Executive Officer, President and Director April 12, 2000
John P. Griffith Acting Chief Financial Officer April 12, 2000
Terence H. Lang Director April 12, 2000
Leonard Lichter Director April 12, 2000
Lucile Lansing Director April 12, 2000
John B. Roberts Director April 12, 2000
Ray W. Jenner Director April 12, 2000
3.1 Registrant's Amended Memorandum of Association. Reference is made to Exhibit 3.2 to Registrant's 1993 Form 10-K.
3.2 Registrant's Amended By-Laws. Reference is made to Exhibit 3.3 to Registrant's 1993 Form 10-K.
10.1 Amended Joint Venture Agreement of Nord- Highlands Mineral Venture-I. Reference is made to Exhibit 10.1 in Registrant's Registration Statement on Form S-4 (33- 25683).
10.2 Trust Deed dated December 28, 1978 between Nord Australex Nominee Pty. Ltd. and Nord Australex Limited Partnership. Reference is made to Exhibit 10.4 in Registrant's Registration Statement on Form S-4 (33- 25683).
10.3 Memorandum of Association and Articles or Association of Nord Australex Nominees Pty. Ltd. Reference is made to Exhibit 10.5 in Registrant's Registration Statement on Form S-4 (33-25683).
10.4 Deed of Acknowledgement dated February 6, 1981 of Nord Australex Nominees Pty. Ltd. Reference is made to Exhibit 10.6 in Registrant's Registration Statement on Form S-4 (33-25683).
10.5 Memorandum of Association and Articles of Association of Nord Resources (Pacific) Pty. Ltd. Reference is made to Exhibit 10.7 in Registrant's Registration Statement on Form S-4 (33-25683).
10.6 Management Agreement dated December 29, 1978 between Nord Australex Nominees Pty. Ltd. and Nord Resources (Pacific) Pty. Ltd. Reference is made to Exhibit 10.8 in Registrant's Registration Statement on Form S-4 (33-25683).
10.7 Trust Deed dated December 29, 1978 between Nord Australex Nominees (PNG) Pty. Ltd. and Nord Australex Limited Partnership. Reference is made to Exhibit 10.9 in Registrant's Registration Statement on Form S-4 (33-25683).
10.8 Memorandum of Association and Articles of Association of Nord Australex Nominees (PNG) Pty. Ltd. Reference is made to Exhibit 10.10 in Registrant's Registration Statement on Form S-4 (33-25683).
10.9 Deed of Acknowledgment dated February 8, 1981 of Nord Australex Nominees (PNG) Pty. Ltd. Reference is made to Exhibit 10.11 in Registrant's Registration Statement on Form S-4 (33-25683).
10.10 Memorandum of Association and Articles of Association of Nord Exploration Company (Pty.) Limited. Reference is made to Exhibit 10.12 in Registrant's Registration Statement on Form S-4 (33-25683).
10.11 Management Agreement dated December 29, 1978 between Nord Australex Nominees (PNG) Pty. Ltd. and Nord Exploration Company (Pty.) Ltd. Reference is made to Exhibit 10. 13 in Registrant's Registration Statement on Form S-4 (33-25683).
10.12 Joint Venture Agreement dated November 17, 1978 among Nord Exploration Company (Pty.) Limited, Carpentaria Exploration Company Pty. Ltd. and Eastern Pacific Mines Pty. Limited. Reference is made to Exhibit 10.23 in Registrant's Registration Statement on Form S-4 (33-25683).
10.13 Deed of Variation dated November 29, 1986 among Nord Australex Nominees (PNG) Ltd., Nord Exploration Company (PNG) Limited, Carpentaria Exploration Company Pty. Ltd. and Eastern Pacific Mines Pty. Limited. Reference is made to Exhibit 10.24 in Registrant's Registration Statement on Form S-4 (33-25683).
10.14 Deed of Assignment dated October 3, 1987 among Carpentaria Exploration Company Pty. Ltd., Nord Australex Nominees (PNG) Pty. Ltd., Eastern Pacific Mining Pty. Limited and Highlands Gold Properties Pty. Limited. Reference is made to Exhibit 10.25 in Registrant's Registration Statement on Form S-4 (33-25683).
10.15 Prospecting Authority No: 192 dated February 27, 1992 (Ramu River). Reference is made to Exhibit 10.20 to Registrant's 1991 Form 10-K.
10.16 Extension of Prospecting Authority No. 609 dated July 29, 1993 (Tabar Islands). Reference is made to Exhibit 10.19 to Registrant's 1993 Form 10-K.
10.17 Management Agreement dated April 2, 1990 between Registrant and Nord Resources Corporation. Reference is made to Exhibit 10.24 to Registrant's Form 10-K for 1990.
10.18 Registrant's 1989 Stock Option Plan. Reference is made to Exhibit 10.25 to Registrant's Form 10-K for 1990.
10.19 Registrant's 1990 Stock Bonus Plan. Reference is made to Exhibit 10.26 to Registrant's Form 10-K for 1990.
10.20 Registrant's 1991 Stock Option Plan. Reference is made to Exhibit 10.31 to Registrant's 1991 Form 10-K.
10.21 Assumption agreement of W. Pierce Carson. Split Dollar Insurance and Supplemental Compensation Plan. Reference is made to Exhibit 10.37 to Registrant's 1991 Form 10- K.
10.22 Joint Venture Agreement between Registrant and Straits Engineers Contracting Pte Ltd. Reference is made to Exhibit 2.2 to Registrant's Form 8-K filed on December 23, 1991. 10.23 Severance agreement. W. Pierce Carson dated April 1, 1992. Reference is made to Exhibit 10.33 to Registrant's 1992 Form 10-K.
10.24 Severance agreement. Mark R. Welch dated April 2, 1992. Reference is made to Exhibit 10.34 to Registrant's 1992 Form 10-K.
10.25 Amendment to Ramu Joint Venture Agreement the Registrant and High lands Gold Ltd. dated May 13, 1992. Reference is made to Exhibit 10.36 to Registrant's 1992 Form 10-K.
10.26 Girilambone Mining Joint Venture Agreement between Registrant and Straits Resources Pty. Ltd. dated August 26, 1992. Reference is made to Exhibit 10.37 to Registrant's 1992 Form 10-K.
10.27 Girilambone Exploration Joint Venture Agreement between Registrant and Straits Resources Pty. Ltd. dated August 26, 1992. Reference is made to Exhibit 10.28 to Registrant's 1992 Form 10-K.
10.28 Girilambone Project Co-Ordination Agreement between Registrant and Straits Resources Pty. Ltd. dated August 26, 1992. Reference is made to Exhibit 10.39 to Registrant's 1992 Form 10-K.
10.29 Girilambone Variation Agreement between Registrant and Straits Resources Pty. Ltd. dated August 26, 1992. Reference is made to Exhibit 10.40 to Registrant's 1992 Form 10-K.
10.30 Girilambone Facility Agreement between the Registrant and the R&I Bank of Western Australian Ltd. dated January 12, 1993. Reference is made to Exhibit 10.41 to Registrant's 1992 Form 10-K.
10.31 Girilambone Facility Agreement between Registrant and Rothschild Australia Ltd. dated February 5, 1993. Reference is made to Exhibit 10.42 to Registrant's 1992 Form 10-K.
10.32 Commodity Swap Agreement between Registrant and R&I Bank of Western Australia dated January 12, 1993. Reference is made to Exhibit 10.43 to Registrant's 1992 Form 10-K.
10.33 Commodity Option Agreement between Registrant and R&I Bank of Western Australia dated January 12, 1993. Reference is made to Exhibit 10.44 to Registrant's 1992 Form 10-K.
10.34 Deed Polls regarding the Nord Australex Exploration (Australian) Trust entered into by Nord Gold Company, Registrant and Nord-Highlands Mineral Venture-I dated January 12, 1993. Reference is made to Exhibit 10-45 to Registrant's 1992 Form 10-K.
10.35 Underwriting Agreement between Registrant and Prudential-Bache Securities (Australia) Limited dated December 17, 1993. Reference is made to Exhibit 10.50 to Registrant's 1993 Form 10-K.
10.36 Deed of Agreement between Registrant, Straits Engineers Contracting PTE Ltd. and Straits Resources Pty. Ltd. regarding Girilambone Copper Project Joint Venture. Reference is made to Exhibit 10.53 to Registrant's 1993 Form 10-K.
10.37 Purchase Agreement between Registrant and Kennecott Explorations (Australia) Ltd. and Niugini Mining Limited dated August 30, 1993. Reference is made to Exhibit 10.58 to Registrant's 1993 Form 10-K.
10.38 Nord Pacific Limited Stock Option effective April 7, 1994. Reference is made to Exhibit 10.39 to Registrant's 1994 Form 10-K.
10.39 ADR Deposit Agreement with Bank of New York. Reference is made to Exhibit 10.41 to Registrant's 1995 Form 10-K.
10.40 Copper hedge executed December 5, 1996 with Rothschild Australia Limited. Reference is made to Exhibit 10.41 to Registrant's 1996 Form 10-K.
10.41 Amended and Restated Facility Agreement between the Registrant and Bank of Western Australia Ltd. dated February 28, 1997. Reference is made to Exhibit 10.42 to Registrant's 1996 Form 10-K.
10.42 Promissory Note between the Registrant and Nord Resources Corporation dated October 24, 1996. Reference is made to Exhibit 10.43 to Registrant's 1996 Form 10-K.
10.43 Subscription Agreement dated July 3, 1997 between Registrant and Nord Resources Corporation. Reference is made to Exhibit 10.43 to Registrant's 1997 Form 10-K.
10.44 Employment Agreement between Registrant and W. Pierce Carson. Reference is made to Exhibit 10.44 to Registrant's 1997 Form 10-K.
10.45 Employment Agreement between the Registrant and Edgar F. Cruft. Reference is made to Exhibit 10.45 to Registrant's 1997 Form 10-K.
10.46 Common Stock Purchase Agreement between the Registrant and Mineral Resources Development Company Pty., Limited dated December 3, 1997. Reference is made to Exhibit 10.1 to Registrant's Form 8-K filed on December 24, 1997
10.47 Letter from Deloitte & Touche to the Securities and Exchange Commission dated April 28, 1998. Reference is made to Exhibit 10.47 to Registrant's Form 8-K filed on May 1, 1998.
10.48 Articles of Continuance dated August 13, 1998. Reference is made to Exhibit 10.48 to Registrant's Form 8-K filed on October 19, 1998.
10.49 Amended and Restated Facility Agreement between the Registrant and Bank of Western Australia Ltd. dated December 29, 1998. Reference is made to Exhibit 10.49 to registrant's 1998 Form 10-K.
11.1 Computation of Earnings Per Share - 1994. Reference is made to Exhibit 11.1 to Registrant's 1994 From 10-K. 21.1 Subsidiaries of Registrant. Reference is made to Exhibit 22.1 to Registrant's 1992 Form 10-K.
23.1 Consent of KPMG LLP.
23.2 Consent of Deloitte & Touche
27.1 Financial Data Schedule for fiscal year end 1999.
28.1 Assurance under The Exempted Undertaking Tax Protection Act, 1966, issued by the Minister of Finance of the Island of Bermuda. Reference is made to Exhibit 28.3 in Registrant's Registration Statement on Form S-4 (33-25683).