As
filed with the Securities and Exchange Commission on December 4,
2009
Registration
No. 333-132929
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 1 ON
FORM
S-3
TO
FORM S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
Searchlight
Minerals Corp.
(Exact
name of registrant as specified in its charter)
Nevada
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98-0232244
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S. Employer
Identification
Number)
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2441
West Horizon Ridge Pkwy., Suite 120
Henderson,
Nevada 89052
(702)
939-5247
(Address,
including zip code and telephone number, including
area
code, of registrant’s principal executive offices)
Ian
R. McNeil
Chief
Executive Officer
2441
West Horizon Ridge Pkwy., Suite 120
Henderson,
Nevada 89052
(702)
939-5247
(Name,
address, including zip code and telephone number,
including
area code, of agent for service)
With
copies to:
Jeffrey
P. Berg, Esq.
Kenneth
M.H. Hoff, Esq.
Baker
& Hostetler LLP
12100
Wilshire Boulevard
Suite
1500
Los
Angeles, California 90025-7120
(310)
820-8800
Approximate date of commencement of
proposed sale to the public:
From time to time after the
effective date of this Registration Statement.
If the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box.
¨
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.
x
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under
the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective Registration Statement
for the same offering.
¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
o
If this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box.
o
If this
Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box.
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large
accelerated filer
¨
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Accelerated
filer
x
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Non-accelerated
filer
¨
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Smaller
reporting company
¨
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(Do
not check if a smaller reporting
company)
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CALCULATION
OF REGISTRATION FEE
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Title of Each Class of
Securities to be
Registered
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Amount to be
Registered
(1)
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Proposed Maximum
Aggregate Offering Price
Per Share
(2)
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Proposed Maximum
Aggregate Offering
Price
(1)
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Amount of
Registration Fee
(3)
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Common
stock,$0.001 par value
(2)
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3,225,645
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$
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3.45
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$
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11,128,475
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$
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341.64
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Common
Stock Purchase Rights
(4)
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(1) 3,225,645
shares of common stock, par value $0.001 per share, of Searchlight Minerals
Corp., a Nevada corporation (the “Company”), are being registered
hereunder. The shares consist of 3,225,645 shares underlying certain
of the Company's outstanding common stock purchase warrants.
In
accordance with Rule 416(a) under the Securities Act of 1933, as amended (the
“Securities Act”), the Registrant is also registering hereunder an indeterminate
number of shares that may be issued and resold resulting from stock splits,
stock dividends or similar transactions.
(2) Estimated
solely for the purpose of calculating the registration fee pursuant to Rule
457(c) of the Securities Act in connection with the Company’s previous filing of
Amendment No. 3 to this registration statement on June 15, 2007 (the date on
which the shares offered for resale hereunder were first included in the
registration statement) with respect to the shares of common stock registered
hereunder, based upon the price of $3.45 which was the average of the high and
low prices for the Company’s common stock on the Over-the-Counter Bulletin Board
(the “OTCBB”) on June 11, 2007.
(3) Computed
in accordance with Section 6(b) of the Securities Act as in effect on June 11,
2007. This amount has already been paid with the filing of this
registration statement.
(4) The
common stock purchase rights are attached to and traded with the shares of
common stock being registered. The value attributable to the common
stock purchase rights, if any, is reflected in the value attributable to the
common stock.
THE REGISTRANT HEREBY AMENDS THIS
REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE
AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
EXPLANATORY
NOTE
The
Registration Statement, of which this prospectus forms a part, is a
post-effective amendment to a Registration Statement on Form S-1/A (Commission
File No. 333-132929), which was declared effective by the Securities and
Exchange Commission on October 2, 2009.
The
information in this prospectus is not complete and may be
changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is
effective. This preliminary prospectus is not an offer to sell these
securities nor does it seek an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
Subject
to Completion, dated December 4, 2009
3,225,645
Shares
SEARCHLIGHT
MINERALS CORP.
Common
Stock
We are
registering 3,225,645 shares of our common stock for sale by our stockholders
issuable, from time to time, upon the exercise of outstanding common stock
purchase warrants.
The
selling stockholders identified in this prospectus, or their pledgees, donees,
transferees or other successors-in-interest, may offer the shares from time to
time through public or private transactions at prevailing market prices, at
prices related to prevailing market prices or at privately negotiated
prices. We will not receive any proceeds from the sale of the
shares. We may receive proceeds in connection with the exercise of
warrants for the underlying shares of our common stock, which may in turn be
sold by the selling stockholders under this prospectus. The selling
stockholders may resell the common stock to or through underwriters,
broker-dealers or agents, who may receive compensation in the form of discounts,
concessions or commissions. The selling stockholders will bear all
commissions and discounts, if any, attributable to the sales of
shares. We will bear all costs, expenses and fees in connection with
the registration of the shares.
Investing
in our common stock involves a high degree of risk. See “Risk
Factors” beginning on page 6 for certain risks and uncertainties that you should
consider.
Our
common stock is quoted on the OTC Bulletin Board under the symbol
“SRCH.” The last reported sale price of our common stock on December
3, 2009 was $1.45 per share.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date
of this prospectus is ______________, 2009
TABLE
OF CONTENTS
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Page
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Summary
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2
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Special
Note Regarding Forward-Looking Statements
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6
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Risk
Factors
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6
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Use
of Proceeds
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23
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Selling
Stockholders
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24
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Plan
of Distribution
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31
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Legal
Matters
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33
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Experts
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33
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Incorporation
of Certain Information By Reference
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33
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Where
You Can Find Additional Information
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34
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You
should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information that is different
from that contained in this prospectus. This prospectus is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The information in this
prospectus is complete and accurate only as of the date of the front cover
regardless of the time of delivery of this prospectus or of any sale of
shares. Except where the context requires otherwise, in this
prospectus, the words “Company,” “Searchlight,” “we,” “us” and “our” refer to
Searchlight Minerals Corp., a Nevada corporation.
This
summary highlights selected information from this prospectus. It does
not contain all of the information that is important to you. We
encourage you to carefully read this entire prospectus and the documents to
which we refer you. The following summary is qualified in its
entirety by reference to the detailed information appearing elsewhere in this
prospectus.
Our
Company
Exploration Stage
Company
. We are an exploration stage company engaged in the
acquisition and exploration of mineral properties and slag reprocessing
projects. Our business is presently focused on our two mineral
projects in which we hold interests:
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the
Clarkdale Slag Project, located in Clarkdale, Arizona, is a reclamation
project to recover precious and base metals from the reprocessing of slag
produced from the smelting of copper ore mined at the United Verde Copper
Mine in Jerome, Arizona; and
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the
Searchlight Gold Project, which involves exploration for precious metals
on mining claims near Searchlight,
Nevada.
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Clarkdale Slag
Project
. The Clarkdale Slag Project, located in Clarkdale,
Arizona, is a reclamation project to recover precious and base metals from the
reprocessing of slag produced from the smelting of copper ore mined at the
United Verde Copper Mine in Jerome, Arizona. Metallurgical testing
and project construction on the Clarkdale Slag Project have been ongoing since
2005, initially under the direction of the prior owners, thereafter with our
participation in a joint venture with the prior owners in 2005, and currently
solely by us since we acquired 100% of the Clarkdale Slag Project in
2007.
Since our
acquisition of 100% of the Clarkdale Slag Project in 2007, we have devoted
considerable effort to the designing and engineering of our first production
module, which included finalizing the production flow sheet, sourcing and
purchasing equipment as well as refurbishing the module building and
constructing the electrowinning building. The module and
electrowinning buildings house the first production module, which has been
designed to allow for the grinding, leaching, filtering and extraction of
precious and base metals from the slag material and is expected to process
between 100 and 250 tons of slag material per day. During 2008, we
completed the refurbishing and construction of the module and electrowinning
buildings, respectively, and we installed all the necessary equipment in the two
buildings for the operation of the first production module. During
2009, we have been executing our plan of operation on the Clarkdale Slag
Project, which includes the start-up and operation of the first production
module, in an effort to achieve consistent levels of gold and silver extraction
that would support the economic feasibility of a commercial production
facility.
Searchlight Gold
Project
. The Searchlight Gold Project involves exploration for
precious metals on mining claims near Searchlight, Nevada. We have
been engaged in an exploration program on our Searchlight Gold Project since
2005. Our Searchlight Claims are comprised of non-patented placer
mining claims located on federal land administered by the United States Bureau
of Land Management (“BLM”). Drilling and mining activities on the
Searchlight Claims must be carried out in accordance with a Plan of Operations
or permit issued by the BLM.
The
former Searchlight Claim owners had previously obtained a BLM approved Plan of
Operations, which included permission to drill eighteen holes on the 3,200 acre
project area and to mine a 36-acre pit on our RR304 claim. We had
anticipated conducting our early stage exploratory work on the Searchlight
Claims property by utilizing the Plan of Operations issued to the former
Searchlight Claim owners, until such time as we would obtain a permit for
exploration and development in our own name or the former Searchlight Claim
holder’s permit was transferred to us.
Although
the Plan of Operations was accepted and registered in the name of a former
Searchlight Claim owner, which is an affiliate of K. Ian Matheson, one of our
principal stockholders and a former officer and director, in September 2007, we
learned that the BLM had issued an order (the “BLM Order”) for “Immediate
Suspension of All Activities” notice on May 12, 2006 against Mr. Matheson and
certain of his affiliates with respect to a dispute with the BLM on a project
unrelated to the Searchlight Gold Project. The issuance of the BLM
Order restricted our ability to rely upon the Plan of Operations to conduct our
early stage exploratory work on the Searchlight Claims property until such time
that we may obtain our own Plan of Operations. The BLM Order
effectively covered all projects tied to Mr. Matheson.
As a
result of the BLM Order, we have been delayed in our ability to drill on the
Searchlight Gold Project property. However, we have anticipated that
regulatory and other delays would take place, which are typical in our
industry. We have applied for a new Plan of Operations in our name
and are currently in the course of the BLM’s review process. In
addition, we have continued and will continue with our surface sampling and
metallurgical testing program while awaiting approval of a new Plan of
Operations.
After a
series of correspondence between us and the BLM, on December 15, 2008, we
received a letter from the BLM advising us that the BLM had closed our Notice of
Intent from consideration and that a new Plan of Operations would be required
based on two issues relating to the Desert Tortoise (Gopherus asassizii), a
Federally listed Threatened Species: (i) the proximity of the project area to a
nearby “Areas of Critical Environmental Concern” (ACEC); and (ii) the future
likelihood of tortoises being present on the land within the project area which
is involved in the application.
We
conformed the new Plan of Operations with the previously approved Environmental
Assessment and, after a further series of correspondence between us and the BLM,
on October 13, 2009, we received a letter from the BLM regarding our Plan of
Operations confirming that the BLM considers our Plan of Operations to conduct
drilling complete and that the BLM will conduct a final review of the previously
approved Environmental Assessment to determine its adequacy. The
BLM’s letter also advised that they would be sending letters addressing the
Conditions of Approval and the bond determination under separate
cover.
There is
no regulatory time frame for the BLM to review our Plan of
Operations. We understand that the average time frame for approval of
a plan of operation by the Las Vegas, Nevada branch office of the BLM since
January 1, 2000 has been approximately four years and five
months. Although we understand that the average time frame of the
application process by the Las Vegas branch office of the BLM relating to an
environmental assessment in connection with a plan of operations is
approximately eleven months, the “threatened species” issue raised by the BLM
requires the BLM to consult with the U.S. Fish and Wildlife Service of the
Department of Interior, and the BLM has no control over the length of this
consultation process in order to develop any necessary environmental mitigation
measures.
Our work
on the project site will be limited to the scope within the Plan of
Operations. However, the Plan of Operations approval process will
delay the start of our drilling program for an undetermined period of
time. To perform any additional drilling or mining on the project, we
would be required to submit a new application to the BLM for approval prior to
the commencement of any such additional activities.
We do not
believe these added requirements will have a material adverse impact on our
overall business plan for the Searchlight Gold Project, given that we have
received no indication from the BLM, at this time, that the BLM will ultimately
deny our request for approval of our Plan of Operations. However,
there is no assurance of the timeline for approval by the BLM or that the BLM
will grant approval. Our drilling and mining program on this project
is dependent on obtaining the necessary approval from the
BLM. Therefore, if approval ultimately is not obtained, we may have
to scale back or abandon exploration efforts on the project. If
management determines, based on any factors including the foregoing, that
capitalized costs associated with any of our mineral interests are not likely to
be recovered, we would incur a significant impairment of our investment in such
property interests on our financial statements.
We have
not been profitable since inception and there is no assurance that we will
develop profitable operations in the future. Our net loss for the
nine months ended September 30, 2009 and 2008 was $3,194,874 and $2,363,475,
respectively. Our net loss for the years ended December 31, 2008,
2007 and 2006 was $3,128,386, $2,221,818 and $2,540,978,
respectively. As of September 30, 2009, we had an accumulated deficit
of $16,551,356. As of December 31, 2008, we had an accumulated
deficit of $13,356,482. We cannot assure you that we will have
profitable operations in the future.
Corporate
Information
. Our principal executive offices are located at
2441 W. Horizon Ridge Pkwy., Suite 120, Henderson, Nevada, 89052. Our
telephone number is (702) 939-5247. Our Internet address is
www.searchlightminerals.com
. Through
a link on the “Recent Filings” section of our website, we make available the
following filings as soon as reasonably practicable after they are
electronically filed with or furnished to the Securities and Exchange Commission
(“SEC”): our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and any amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). All such filings are available free of
charge. Information contained on our website or that is accessible
through our website should not be considered to be part of this
prospectus.
Securities
offered by the selling stockholders
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3,225,645
shares of common stock
(1)
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Common
stock outstanding as of December 3, 2009
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118,657,123
shares
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Warrants
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Each
warrant is exercisable for shares of our common stock at an initial
exercise price of $1.85 per share, subject to adjustment upon certain
events. The warrants were exercisable upon issuance and will
expire on November 12, 2012. The common stock underlying the
warrants is being registered for resale hereunder. The warrants
themselves have not been, are not hereby being, and are not expected to be
registered under the Securities Act of 1933, as amended, or the Securities
Act. Currently, there is no public market for the warrants, and
we do not expect that any such market will develop. The
warrants will not be listed on any securities exchange or included in any
automated quotation system.
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Use
of Proceeds
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We
will not receive any of the proceeds from the sale of the securities owned
by the selling stockholders. We may receive proceeds in
connection with the exercise of warrants for the underlying shares of our
common stock, which may in turn be sold by the selling stockholders under
this prospectus. We intend to use any proceeds from the
exercise of warrants for working capital and other general corporate
purposes. There is no assurance that any of the warrants will
ever be exercised for cash, if at all.
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Risk
Factors
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An
investment in our securities involves a high degree of risk and could
result in a loss of your entire investment. Prior to making an
investment decision, you should carefully consider all of the information
in this prospectus and, in particular, you should evaluate the risk
factors set forth under the caption “Risk Factors” beginning on page
6.
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OTC
Bulletin Board Symbol
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SRCH
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(1)
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Consists
of 3,225,645 shares of our common stock issuable upon the exercise of our
outstanding common stock purchase
warrants.
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SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements. Forward-looking
statements provide our current expectations or forecasts of future
events. Forward-looking statements include statements about our
expectations, beliefs, plans, objectives, intentions, assumptions and other
statements that are not historical facts. Words or phrases such as
“anticipate,” “believe,” “continue,” “ongoing,” “estimate,” “expect,” “intend,”
“may,” “plan,” “potential,” “predict,” “project” or similar words or phrases, or
the negatives of those words or phrases, may identify forward-looking
statements, but the absence of these words does not necessarily mean that a
statement is not forward-looking.
The risk
factors referred to in this prospectus could materially and adversely affect our
business, financial conditions and results of operations and cause actual
results or outcomes to differ materially from those expressed in any
forward-looking statements made by us, and you should not place undue reliance
on any such forward-looking statements. Any forward-looking statement
speaks only as of the date on which it is made and we do not undertake any
obligation to update any forward-looking statement or statements to reflect
events or circumstances after the date on which such statement is made or to
reflect the occurrence of unanticipated events. The risks and
uncertainties described below are not the only ones we face. New
factors emerge from time to time, and it is not possible for us to predict which
will arise. There may be additional risks not presently known to us
or that we currently believe are immaterial to our business. In
addition, we cannot assess the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking statements
.
If any such
risks occur, our business, operating results, liquidity and financial condition
could be materially affected in an adverse manner. Under such
circumstances, you may lose all or part of your investment.
The
industry and market data contained in this prospectus are based either on our
management’s own estimates or, where indicated, independent industry
publications, reports by governmental agencies or market research firms or other
published independent sources and, in each case, are believed by our management
to be reasonable estimates. However, industry and market data is
subject to change and cannot always be verified with complete certainty due to
limits on the availability and reliability of raw data, the voluntary nature of
the data gathering process and other limitations and uncertainties inherent in
any statistical survey of market shares. We have not independently
verified market and industry data from third-party sources. In
addition, consumption patterns and customer preferences can and do
change. As a result, you should be aware that market share, ranking
and other similar data set forth herein, and estimates and beliefs based on such
data, may not be verifiable or reliable.
RISK
FACTORS
An
investment in our common stock is very risky. Our financial condition
is unsound. You should not invest in our common stock unless you can
afford to lose your entire investment. You should carefully consider
the risk factors described below, together with all other information in this
prospectus and incorporated by reference herein, before making an investment
decision. If an active market is ever established for our common
stock, the trading price of our common stock could decline due to any of these
risks, and you could lose all or part of your investment. You also
should refer to the other information set forth, and incorporated by reference,
in this prospectus, including our financial statements and the related
notes.
Risks
Relating to Our Business
We
lack an operating history and have losses which we expect to continue into the
future. As a result, we may have to suspend or cease exploration activities if
we do not obtain additional financing, and our business will fail.
We were
incorporated on January 12, 1999 and initially were engaged in the business of
biotechnology research and development. In February, 2005, we changed
our business to mineral exploration. We have a limited history upon
which we may make an evaluation of the future success or failure of our current
business plan.
We have a
history of operating losses and have an accumulated deficit. Our net
loss for the nine months ended September 30, 2009 and 2008 was $3,194,874 and
$2,363,475, respectively. We recorded a net loss of $3,128,386,
$2,221,818 and $2,540,978 for the years ended December 31, 2008, 2007 and 2006,
respectively, and have incurred cumulative net losses from operations of
$16,551,356, $13,356,482, $10,228,096 and $8,006,278, as of September 30, 2009,
December 31, 2008, 2007 and 2006, respectively. In addition, we had
cash reserves of approximately $13,690,278, $7,055,591 and $12,007,344 at
November 30, 2009, December 31, 2008 and 2007, respectively. We have
not commenced our proposed mineral processing and mining operations and are
still in the exploration stages of our proposed operations. Prior to
completion of our exploration stage, we anticipate that we will incur increased
operating expenses without realizing any revenues. We therefore
expect to incur significant losses into the foreseeable future.
We have
not attained profitable operations and are dependent upon obtaining financing to
pursue our plan of operation. Our ability to achieve and maintain
profitability and positive cash flow will be dependent upon, among other
things:
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our
ability to locate a profitable mineral
property;
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positive
results from our feasibility studies on the Searchlight Gold Project and
the Clarkdale Slag Project;
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positive
results from the operation of our initial test module on the Clarkdale
Slag Project; and
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our
ability to generate revenues.
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We may
not generate sufficient revenues from our proposed business plan in the future
to achieve profitable operations. If we are not able to achieve
profitable operations at some point in the future, we eventually may have
insufficient working capital to maintain our operations as we presently intend
to conduct them or to fund our expansion plans. In addition, our
losses may increase in the future as we expand our business
plan. These losses, among other things, have had and will continue to
have an adverse effect on our working capital, total assets and stockholders’
equity. If we are unable to achieve profitability, the market value
of our common stock will decline and there would be a material adverse effect on
our financial condition.
Our
exploration and evaluation plan calls for significant expenses in connection
with the Clarkdale Slag Project and the Searchlight Gold
Project. Over the next twelve months, our management anticipates that
the minimum cash requirements for funding our proposed exploration, testing and
construction program and our continued operations will be approximately
$9,000,000. On November 12, 2009, we completed a private placement of
12,078,596 units of our securities at a purchase price of $1.25 per unit,
resulting in aggregate gross proceeds to us of $15,098,245. Based on
the net proceeds received by us from the private placement, we estimate that our
current financial resources are sufficient to allow us to meet the anticipated
costs of our exploration, testing and construction programs for the 2010 fiscal
year. However, if actual costs are greater than we have anticipated,
we will require additional financing in order to fund our exploration, testing
and construction plans for 2010. We do not currently have any
financing arrangements in place for such additional financing, and there are no
assurances that we will be able to obtain additional financing in an amount
sufficient to meet our needs or on terms that are acceptable to us.
Obtaining
additional financing is subject to a number of factors, including the market
prices for the mineral property and base and precious metals. These
factors may make the timing, amount, terms or conditions of additional financing
unavailable to us. If adequate funds are not available or if they are
not available on acceptable terms, our ability to fund our business plan could
be significantly limited and we may be required to suspend our business
operations. We cannot assure you that additional financing will be
available on terms favorable to us, or at all. The failure to obtain
such a financing would have a material, adverse effect on our business, results
of operations and financial condition.
If
additional funds are raised through the issuance of equity or convertible debt
securities, the percentage ownership of current stockholders will be reduced and
these securities may have rights and preferences superior to that of current
stockholders. If we raise capital through debt financing, we may be
forced to accept restrictions affecting our liquidity, including restrictions on
our ability to incur additional indebtedness or pay dividends.
For these
reasons, the report of our auditor accompanying our financial statements filed
herewith includes a statement that these factors raise substantial doubt about
our ability to continue as a going concern. Our ability to continue
as a going concern will be dependent on our raising of additional capital and
the success of our business plan.
Actual
capital costs, operating costs and economic returns may differ significantly
from our estimates and there are no assurances that any future activities will
result in profitable mining operations.
We are an
exploration stage company and are still in the process of exploring and testing
our mineral projects. We do not have any historical mineral
operations upon which to base our estimates of costs. Decisions about
the exploration, testing and construction of our mineral properties will
ultimately be based upon feasibility studies. Feasibility studies
derive cost estimates based primarily upon:
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anticipated
tonnage, grades and metallurgical characteristics of the ore to be mined
and processed;
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anticipated
recovery rates of gold and other metals from the
ore;
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cash
operating costs of comparable facilities and equipment;
and
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anticipated
weather/climate conditions.
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To date,
we have only conducted an internal pre-feasibility study of the Clarkdale Slag
Project. In particular:
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we
have conducted limited amounts of drilling at the
site;
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process
testing has been limited to smaller scale pilot plants and bench scale
testing;
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our
mine plans, slag processing concepts, metallurgical flow sheets and
estimated recoveries are still in exploration stages;
and
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actual
metallurgical recoveries may fail to meet preliminary estimates when
scaled up from pilot plant scale to production
scale.
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We
incurred delays during the construction of our production module, including
delays in receiving large pieces of equipment from manufacturers, engineering
related delays due to the complexity of installing the production module
equipment in a World War I era module building and the decision to construct a
separate building to house the electrowinning equipment after it was determined
that the electrowinning equipment would not adequately fit in the module
building. Consequently, the construction timeline for completing the
production module was extended by approximately twelve months from what we
originally anticipated and there was an approximately 55% increase in costs from
what we had originally projected.
In order
to demonstrate the large scale viability of the project, we will need to
complete final feasibility studies that address the economic viability of the
project. Capital and operating costs and economic returns, and other
estimates contained in our final feasibility studies may differ significantly
from our current estimates. There is no assurance that our actual
capital and operating costs will not exceed our current estimates. In
addition, delays to construction schedules may negatively impact the net present
value and internal rates of return for our mineral properties. There
are no assurances that actual recoveries of base and precious metals or other
minerals processed from our mineral projects will be economically feasible or
that actual costs will match our pre-feasibility estimates.
Feasibility
estimates typically underestimate future capital needs and operating
costs. Our projected operating and capital cost estimates are in
preliminary stages and may be subject to significant, upward adjustment based on
future events, including the results of any final feasibility study which we may
develop.
If
the results from our feasibility studies and the results from the operation of
our first proposed production module are not sufficiently positive for us to
proceed with the construction of our processing facility we will have to scale
back or abandon our proposed operations on the Clarkdale Slag
Project.
We intend
to continue the exploration, testing and construction of our production module
at the Clarkdale Slag Project site, which is anticipated to consist of a full
scale production and processing cycle. This first production module
is expected to be used to conduct a final test of the economic feasibility of
the Clarkdale Slag Project. However, if the results of our
pre-feasibility studies on the Clarkdale Slag Project and the results from the
operation of the first production module are not positive, we will have to scale
back or abandon our proposed operations of the Clarkdale Slag
Project. There is no assurance that actual recoveries of base and
precious metals or other minerals re-processed from the slag pile will be
economically feasible. If metal recoveries are less than projected,
then our metal sales will be less than anticipated and may not equal or exceed
the cost of mining and recovery. In such event, we will have
difficulty in raising additional capital to maintain operations and that would
result in a material adverse effect on our operating results, financial
condition and our ability to remain in business.
If
we are unable to achieve projected mineral recoveries from our exploration
mining activities at the Clarkdale Slag Project and Searchlight Gold Project,
then our financial condition will be adversely affected.
As we
have not established any reserves on either our Clarkdale Slag Project or
Searchlight Gold Project to date, there is no assurance that actual recoveries
of minerals from material mined during exploration mining activities will equal
or exceed our exploration costs on our mineral properties. To date,
we have completed only a limited amount of drilling and sampling on the
Clarkdale Slag Project site and the process testing of results has been limited
to small pilot plants and bench scale testing. There is no assurance
that if we move to production scale from pilot plant scale that our actual
results will match pre-feasibility estimates. If mineral recoveries
are less than projected, then our sales of minerals will be less than
anticipated and may not equal or exceed the cost of exploration and recovery, in
which case our operating results and financial condition will be materially,
adversely affected.
We
have no known mineral reserves and if we cannot find any, we will have to cease
operations.
We have
no known mineral reserves. Mineral exploration is highly
speculative. It involves many risks and is often
non-productive. Even if we are able to find mineral reserves on our
property our production capability is subject to further risks
including:
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costs
of bringing the property into production including exploration work,
preparation of production feasibility studies, and construction of
production facilities;
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availability
and costs of financing;
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ongoing
costs of production; and
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environmental
compliance regulations and
restraints.
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The
marketability of any minerals acquired or discovered may be affected by numerous
factors which are beyond our control and which cannot be accurately predicted,
such as market fluctuations, the lack of milling facilities and processing
equipment near the Searchlight Gold Project, the success of our drilling and
sampling activities on the Clarkdale Slag Project and such other factors as
government regulations, including regulations relating to allowable production,
exporting of minerals, and environmental protection. If we do not
find a mineral reserve or if we cannot explore the mineral reserve, either
because we cannot obtain an approved Plan of Operations, do not have the money
to do so or because it will not be economically feasible to do so, we will have
to cease operations.
Our
rights under the Searchlight Claims may be difficult to retain and may not apply
to all metals and minerals located on the Searchlight property.
Our
rights in the 20 placer mineral claims with respect to a contiguous,
approximately 3,200-acre site located (the “Searchlight Claims”) on Federal land
administered by the BLM near Searchlight, Nevada are the subject of unpatented
mining claims (mining claims to which the deeds from the U.S. Government have
not been received) made under the General Mining Law of 1872. The
Searchlight Claims were assigned to us in June 2008 by the original locators
(those persons who locate, or are entitled to locate, land or mining claims, and
fix the boundaries of land claims) of such claims under an Option Agreement for
the Searchlight Claims. Legal title to the Searchlight property is
held by the United States and there are numerous conditions that must be met for
a mining claimant to obtain and retain legal rights in the land and minerals
claimed. Because title to unpatented mining claims is subject to
inherent uncertainties, it is difficult to determine conclusively the ownership
of such claims. These uncertainties relate to such things as
sufficiency of mineral discovery, proper posting and marking of boundaries and
possible conflicts with other claims not determinable from descriptions of
record. Since a substantial portion of all mineral exploration,
development and mining in the United States now occurs on unpatented mining
claims, this uncertainty is inherent in the mining industry.
The
present status of our unpatented mining claims located on public lands allows us
the exclusive right to mine and remove valuable metals, such as precious and
base metals, that are in placer form (mineral which has been separated from its
host rock by natural processes). We also are allowed to use the
surface of the land solely for purposes related to mining and processing the
metal-bearing ores. However, legal ownership of the land remains with
the United States. Placer mining claims (ground with defined
boundaries that contains metals in the earth, sand, or gravel, and is not fixed
in the rock) are not sufficient to claim lode mineralization (a deposit in
consolidated rock as opposed to a placer deposit), and any metals in veins or in
bedrock need to be separately claimed by lode claims. Therefore, we
may not have legal rights with respect to any lode deposits within the property
that is the subject of the Searchlight Claims.
In order
for us to assert a valid right in the 160 acre Searchlight Claims which we
acquired in June 2008, there must have been a discovery with respect to the
Searchlight Claims prior to their transfer. The concept of the
validity of the “discovery” of a mining claim is a legal
standard. Generally, the BLM considers a discovery to be the
identification of adequate amounts of minerals such that a reasonable person
would seek to develop the claim as a commercial enterprise. Based on
the results of our testing and sampling on the properties prior to transfer of
title to the related Searchlight Claims to us, we believe that we have a valid
basis to assert that we have made a discovery with respect to the claims located
on the contiguous property that is the subject of the Searchlight
Claims. Further, we are working to explore the Searchlight property
and to evaluate and plan for the exploration of the Searchlight
Claims. However, if the BLM was to determine that a discovery was not
made on any of the 20 (160 acre) association placer claims (a placer location
made by an association of persons in one location covering up to 160 acres)
before any of such claims were conveyed by the related group of locators of a
particular claim to us, any of such claims could implode to a 20-acre parcel
surrounding the point of discovery and potentially result in the loss of our
rights in the surrounding 140 acres of the particular claim. Further,
placer mining claims ultimately are required to have discovery on each 10-acre
portion in order to be considered valid in their entirety. Therefore,
if the BLM was to determine that a discovery was not made on any of the 10-acre
portions of the association placer claims before any of such claims were
conveyed to us, any of such claims could implode to a 10-acre parcel and
potentially result in the loss of our rights in the surrounding 150 acres of the
particular claim. At this time, there are no adversarial proceedings
by the BLM to challenge any of the 20 association placer
claims. However, there can be no assurances that adversarial
proceedings will not occur in the future, and if such proceedings occur, the BLM
will not successfully challenge these claims, which could have a material
adverse effect on the Searchlight Project and our operations.
During
the second quarter of 2008, we “double staked” the Searchlight property by
filing, with the BLM and the Clark County, Nevada Recorder, 142 new and separate
20-acre placer claims overtop of the twenty existing 160-acre
claims. We were only able to “double stake” 2,840 acres out of the
3,200 acre site due to various regulatory restrictions on staking of certain of
the smaller land parcels on the site. We have maintained the twenty
prior 160-acre claims to provide us with a basis to retain the priority of and
defend our existing 160-acre mining claims. However, we are subject
to the risk that when we, a single entity, acquire title to association placer
claims from an association of prior, multiple locators, there could be potential
problems for us in the future:
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First,
the validity of the association of the prior locators could always be
challenged by the BLM if the BLM believed that the association was not
properly assembled or if there were any “dummy locators” (place-holder
locators who did not contribute to the association). A
“properly assembled” placer association is comprised of 2–8 individuals or
companies who each may claim 20 acres and each owns a full interest in the
claim. The individuals may not be employees of one of the
companies. These individuals and/or entities must be involved
actively in the business of developing the claim. Use of an
uninvolved individual or entity as a locator for the purpose of acquiring
additional acreage may constitute fraud, and the entire claim could be
declared void. A “dummy locator” is an individual or entity who
is not actively involved with the development of the claims, and whose
name has been used for the purpose of acquiring additional
acreage. The action of using dummy locator(s) may constitute
fraud, and under existing laws, the claim located by use of dummy
locator(s) can be declared void from its
inception.
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Second,
if there was deemed to be a discovery on any 160-acre claim following the
transfer to us, the claims could implode to a 20-acre parcel surrounding
the point of discovery of each claim and potentially leave the surrounding
140 acres unavailable for re-staking, and potentially to a 10-acre parcel
and leave the surrounding 150 acres unavailable for
re-staking.
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Third,
the location of the 20-acre claims may cause an implied abandonment of the
older claims. Should a problem occur in the future with the
160-acre claims, we could revert to the 20-acre or 10-acre claims, if
necessary. Also, we will incur additional costs because we have
to maintain two sets of claims.
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We
believe that “double staking” the property enhances our existing claims because
“double staking” with 20-acre claims provides a more secure basis for asserting
our claim rights than our existing 160-acre claims because they were located and
are held solely by us, as a single entity and not as an association of two or
more entities. Holding 20-acre claims as a single entity reduces the
likelihood that the BLM will challenge the validity of the claims based on the
existence of “dummy locators.” If the BLM challenges the validity of
the 160-acre claims or we are forced to abandon such claims, we would revert to
the 20-acre claims covering only the 2,840 acres. Any regulatory
permits that we have applied or may apply for (i.e., drilling, and mining) would
have to be conducted within the related 2,840 acres. However, if the
BLM was to determine that a discovery was not made on any of the 10-acre
portions of the 20-acre association placer claims, any of such claims could
implode to a 10-acre parcel and potentially result in the loss of our rights in
the adjoining 10 acres of the particular claim.
Further,
we are required to make annual rental payments to the Federal government in
connection with our claims. If we fail to make our required payments
in the future, the related claims would be void.
In
addition, the BLM has been excluding significant amounts of land in southern
Nevada from mining and development over the past few decades. The BLM
has designated this excluded land as an ACEC. Any person that wishes
to stake mining claims would not be able to do so in these affected
areas. However, if a person already owns valid claims before the land
is designated as an ACEC, the claimant would have those claims grandfathered
in. In the case of the Searchlight Claims, the Searchlight Project
has not been designated as an ACEC and our 160-acre claims were originally
located between 1990 and 2003. The BLM has advised us, however, that
due to the proximity of our claims to an ACEC we would be required to file a
Plan of Operations for our desired drilling program. We do not
believe these added requirements will have a material adverse impact on our Plan
of Operations for the Searchlight Gold Project. However, the Plan of
Operations approval process will delay the start of our drilling program for an
undetermined period of time. If the BLM decides in the future to
designate the Searchlight Project site as an ACEC, and also challenges our
160-acre claims, we would have to rely on our “double staked” claims to preserve
the Searchlight Claims. Although we believe that, in such event, our
“double staked” claims would survive a challenge by the BLM, there can be no
assurances to that effect and the successful challenge of some or all of the
Searchlight Claims would have a material adverse effect on the Searchlight
Project and our operations.
We do not currently have a government
approved Plan of Operations for our Searchlight Gold Project, and if we are not
able to obtain an approved Plan of Operations, we will not be able to fulfill
our business plan with respect to the Searchlight Gold
Project
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The
former Searchlight Claim owners had previously obtained a BLM approved Plan of
Operations, which included permission to drill eighteen holes on the 3,200 acre
project area and to mine a 36-acre pit on our RR304 claim. We had
anticipated conducting our early stage exploratory work on the Searchlight
Claims property by utilizing the Plan of Operations issued to the former
Searchlight Claim owners, until such time as we would obtain a permit for
exploration and development in our own name or the former Searchlight Claim
holder’s permit was transferred to us. Although we did not acquire
the Searchlight Claims with a written agreement to purchase the Plan of
Operations, the prior owners verbally agreed to cooperate with us in attempting
to transfer their Plan of Operations into our name.
Although
the Plan of Operations was accepted and registered in the name of a former
Searchlight Claim owner, which is an affiliate of K. Ian Matheson, one of our
principal stockholders and a former officer and director, in September 2007, we
learned that the BLM had issued the BLM Order on May 12, 2006 against Mr.
Matheson and certain of his affiliates (Pass Minerals, Inc., Kiminco, Inc. and
Pilot Plant Inc., which also were prior Searchlight Claim owners and are our
stockholders) with respect to a dispute with the BLM on a project unrelated to
the Searchlight Gold Project. The dispute between the BLM and Mr.
Matheson arose due to the BLM’s determination that Mr. Matheson and his
affiliates had engaged in willful mineral trespass for the unauthorized removal
of sand and gravel from public lands by Mr. Matheson and his affiliates or their
predecessors. The BLM had demanded payment of approximately
$2,530,000 for the willful trespass. After failure by Mr. Matheson
and his affiliates to pay the amount, the BLM issued the BLM
Order. The issuance of the BLM Order restricted our ability to rely
upon the Plan of Operations to conduct our early stage exploratory work on the
Searchlight Claims property until such time that we may obtain our own Plan of
Operations. An appeal by Mr. Matheson of the BLM Order with the
Interior Board of Land Appeals affirmed the BLM’s decision, keeping the BLM
Order in effect. The BLM Order effectively covered all projects tied
to Mr. Matheson.
As a
result of the BLM Order, we have been delayed in our ability to drill on the
Searchlight Gold Project property. However, we have anticipated that
regulatory and other delays would take place, which are typical in our
industry. We have applied for a new Plan of Operations in our name
and are currently in the course of the BLM’s review process. In
addition, we have continued and will continue with our surface sampling and
metallurgical testing program while awaiting approval of a new Plan of
Operations.
In the
third quarter of 2008, we submitted a Plan of Operations to the BLM in our name,
substantially similar to the original Plan of Operations, which included a
request to drill eighteen holes on the project area and to mine a 36-acre mining
pit. On August 27, 2008, the BLM responded, in part, by advising that
the previous bond that we posted of $180,500 for the previous Plan of Operations
would not be transferrable to the new one and that a new bond would have to be
posted. At the time, we considered the recovery of the reclamation
bond to be uncertain and, therefore, we have established a full allowance
against the reclamation bond with the offsetting expense to project exploration
costs. Based on continued discussions with the BLM, we may be able to
recover the bond upon request, however, we have not chosen to make such a
request at this time.
In
September 2008, we decided that we would only continue to pursue the permits to
drill on the project area and forgo the 36-acre pit until a later date since we
believed that by keeping the pit area in the Plan of Operations, it might delay
the BLM’s approval process for our Plan of Operations. Although the 36-acre pit
had been part of the Plan of Operations obtained by the prior owners of the
Searchlight Claims, we do not believe that digging and mining a 36-acre pit
would be a material aspect of the Plan of Operations at this stage of the
Searchlight Gold Project. Therefore, we decided to remove the 36-acre pit from
the Plan of Operations. Further, by reducing the scope of the permit, we decided
that we could submit the application in the form of a Notice of Intent, a
shorter and less complex application form than a Plan of Operations.
Consequently, on September 24, 2008, we withdrew the Plan of Operations and
submitted a Notice of Intent with the BLM, pursuant to which we sought
permission to drill eighteen 500-foot drill holes on the Searchlight project
area.
After a
series of correspondence between us and the BLM, on December 15, 2008, we
received a letter from the BLM advising us that the BLM had closed our Notice of
Intent from consideration and that a new Plan of Operations would be required
based on two issues relating to the Desert Tortoise (
Gopherus asassizii
), a
Federally listed Threatened Species: (i) the proximity of the project area to a
nearby ACEC; and (ii) the future likelihood of tortoises being present on the
land within the project area which is involved in the application.
On
January 13, 2009, we filed a Notice of Appeal of the BLM’s decision regarding
the closing of our Notice of Intent. However, the BLM’s decision was
upheld on appeal by the U.S. Department of Interior on September 9,
2009.
During
the course of the appeal, we determined that, due to the standard lengthy time
required to have a Plan of Operations approved by the BLM and should we be
unsuccessful with our appeal, it would be prudent to begin the approval process
immediately by filing for our Plan of Operations. Thus, on March 23,
2009, we submitted a new Plan of Operations to the BLM, taking into account the
Desert Tortoise issue. In our Plan of Operations, we have requested
permission to drill eighteen drill holes on the project area. In the
event of the approval of our Plan of Operations, we will be required to post a
new reclamation bond with the BLM, which we anticipate will be approximately
$16,000. After a further series of correspondence between us and the
BLM, on September 15, 2009, we received a comment letter from the BLM regarding
our Plan of Operations. We have reached an understanding with the BLM
that we will use the Environmental Assessment previously approved by the BLM
under the prior Plan of Operations in connection with the new Plan of
Operations, and the BLM has requested that we conform certain aspects of the new
Plan of Operations with the previously approved Environmental
Assessment.
There is
no regulatory time frame for the BLM to review our Plan of
Operations. We understand that the average time frame for approval of
a plan of operation by the Las Vegas, Nevada branch office of the BLM since
January 1, 2000 has been approximately four years and five
months. Although we understand that the average time frame of the
application process by the Las Vegas branch office of the BLM relating to an
environmental assessment in connection with a plan of operations is
approximately eleven months, the “threatened species” issue raised by the BLM
requires the BLM to consult with the U.S. Fish and Wildlife Service of the
Department of Interior, and the BLM has no control over the length of this
consultation process in order to develop any necessary environmental mitigation
measures.
Our work
on the project site will be limited to the scope within the Plan of
Operations. However, the Plan of Operations approval process will
delay the start of our drilling program for an undetermined period of
time. To perform any additional drilling or mining on the project, we
would be required to submit a new application to the BLM for approval prior to
the commencement of any such additional activities.
We do not
believe these added requirements will have a material adverse impact on our
overall business plan for the Searchlight Gold Project, given that we have
received no indication from the BLM, at this time, that the BLM will ultimately
deny our request for approval of our Plan of Operations. However,
there is no assurance of the timeline for approval by the BLM or that the BLM
will grant approval. Our drilling and mining program on this project
is dependent on obtaining the necessary approval from the
BLM. Therefore, if approval ultimately is not obtained, we may have
to scale back or abandon exploration efforts on the project. If
management determines, based on any factors including the foregoing, that
capitalized costs associated with any of our mineral interests are not likely to
be recovered, we would incur a significant impairment of our investment in such
property interests on our financial statements.
If
we do not complete the construction of an Industrial Collector Road pursuant to
an agreement with the Town of Clarkdale, Arizona by January 2011, we may lose
our conditional use permit from the Town of Clarkdale with respect to the
Clarkdale Slag Project, and we do not currently have sufficient funds to
complete construction of the road. The loss of the permit would have
a material adverse effect on the Clarkdale Slag Project and our
operations.
In
January 2009, we submitted a development agreement to the Town of Clarkdale for
the construction of an Industrial Collector Road. The purpose of the
road is to provide us with the capability to enhance the flow of industrial
traffic to and from the Clarkdale Slag Project. The construction of
the road is a required infrastructure improvement under the terms of our
conditional use permit with the Town of Clarkdale. The Town of
Clarkdale approved the development agreement on January 9, 2009.
The
development agreement provides that its effective date will be the later of (i)
30 days from the approving resolution of the agreement by the Clarkdale Town
Council; or (ii) the date on which the Town of Clarkdale obtains a connection
dedication from separate property owners who have land that will be utilized in
construction of the road; or (iii) the date on which the Town of Clarkdale
receives the proper effluent permit. The Town of Clarkdale has
approved the development agreement, and the remaining two contingencies with
respect to the effectiveness of the development agreement are beyond our
control.
Under the
development agreement, we are obligated to complete the construction of the road
within two years after the effective date of the agreement. If we do not
complete the road within the two year period, we may lose our conditional use
permit from the Town of Clarkdale. Further, as a condition of our developing any
of our property that is adjacent to the Clarkdale Slag Project, we will be
required to construct additional enhancements to the road. We will have ten
years from the start of construction on the road in which to complete the
additional enhancements. However, we do not currently have any defined plans for
the development of the adjacent property.
We
estimate that the initial cost of construction of the road will be approximately
$3,500,000 and that the cost of the additional enhancements will be
approximately $1,200,000. We will be required to fund the costs of
this construction. Based on the uncertainty of the timing of these
contingencies, we have not included these costs in our current operating plans
or budgets. However, we will require additional project financing or
other financing in order to fund the construction of the road and the additional
enhancements. There are no assurances that we will be able to obtain
additional financing in an amount sufficient to meet our needs or on terms that
are acceptable to us. The failure to complete the road and the
additional enhancements in a timely manner under the development agreement would
have a material adverse effect on the Clarkdale Slag Project and our
operations.
The
nature of mineral exploration and production activities involves a high degree
of risk; we could incur a write-down on our investment in any
project.
Exploration
for minerals is highly speculative and involves greater risk than many other
businesses. Investors should be aware of the difficulties normally
encountered by new mineral exploration companies and the high rate of failure of
such enterprises. The likelihood of success must be considered in
light of the problems, expenses, difficulties, complications and delays
encountered in connection with the exploration of the mineral properties that we
plan to undertake. These potential problems include, but are not
limited to, unanticipated problems relating to exploration, and additional costs
and expenses that may exceed current estimates. The expenditures to
be made by us in the exploration of the mineral claim may not result in the
discovery of mineral deposits. If funding is not available, we may be
forced to abandon our operations.
Many
exploration programs do not result in the discovery of mineralization and any
mineralization discovered may not be of sufficient quantity or quality to be
profitably mined. Uncertainties as to the metallurgical amenability
of any minerals discovered may not warrant the mining of these minerals on the
basis of available technology. Our operations are subject to all of
the operating hazards and risks normally incident to exploring for and
developing mineral properties, such as:
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encountering
unusual or unexpected formations;
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environmental
pollution;
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personal
injury and flooding;
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decrease
in recoverable reserves due to lower precious and base metal prices;
and
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changing
environmental laws and regulations.
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If
management determines, based on any factors including the foregoing, that
capitalized costs associated with any of our mineral interests are not likely to
be recovered, we would incur a write-down on our investment in such property
interests on our financial statements. Further, we may become subject
to liability for such hazards, including pollution and other hazards against
which we cannot insure or against which we may elect not to
insure. At the present time, we have no coverage to insure against
these hazards. Such a write-down or the payment of such liabilities
may have a material adverse effect on our financial position.
Our
industry is highly competitive, mineral lands are scarce and we may not be able
to obtain quality properties.
In
addition to us, many companies and individuals engage in the mining business,
including large, established mining companies with substantial capabilities and
long earnings records. There is a limited supply of desirable mineral
lands available for claim staking, lease, or acquisition in the United States
and other areas where we may conduct exploration activities. We may
be at a competitive disadvantage in acquiring mining properties since we must
compete with these individuals and companies, many of which have greater
financial resources and larger technical staffs. Mineral properties
in specific areas which may be of interest or of strategic importance to us may
be unavailable for exploration or acquisition due to their high cost or they may
be controlled by other companies who may not want to sell or option their
interests at reasonable prices. In addition, the Clarkdale slag pile
is a finite, depleting asset. Therefore, the life of the Clarkdale
Slag Project will be finite, if it is ever developed to the point of economic
feasibility. Our long-term viability depends upon finding and
acquiring new resources from different sites or properties. There can
be no assurances that the Clarkdale Slag Project will become economically
viable, and if so, that we will achieve or obtain additional successful economic
opportunities.
As
we undertake exploration of our mineral claims, we will be subject to compliance
with government regulation that may increase the anticipated cost of our
exploration program.
There are
several governmental regulations that materially restrict mineral
exploration. We will be subject to the laws of the State of Nevada
and applicable federal laws as we carry out our exploration program on the
Searchlight Gold Project. We are required to obtain work permits,
post bonds and perform remediation work for any physical disturbance to the land
in order to comply with these laws. Further, the United States
Congress is actively considering amendment of the federal mining
laws. Among the amendments being considered are imposition of
significant royalties payable to the United States and more stringent
environmental and reclamation standards, either of which would increase the cost
of operations of mining projects. While our planned exploration
program budgets for regulatory compliance, there is a risk that new regulations
could increase our costs of doing business and prevent us from carrying out our
exploration program.
We are
required to obtain work permits, post bonds and perform remediation work for any
physical disturbance to the land in order to comply with these
laws. If we enter the production phase, the cost of complying with
permit and regulatory environment laws will be greater because the impact on the
project area is greater. Permits and regulations will control all
aspects of the production program if the project continues to that stage.
Examples of regulatory requirements include:
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water
discharge will have to meet drinking water
standards;
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dust
generation will have to be minimal or otherwise
remediated;
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dumping
of material on the surface will have to be re-contoured and re-vegetated
with natural vegetation;
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an
assessment of all material to be left on the surface will need to be
environmentally benign;
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ground
water will have to be monitored for any potential
contaminants;
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the
socio-economic impact of the project will have to be evaluated and if
deemed negative, will have to be remediated;
and
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there
will have to be an impact report of the work on the local fauna and flora
including a study of potentially endangered
species.
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There is
a risk that new regulations could increase our costs of doing business and
prevent us from carrying out our exploration program. We will also
have to sustain the cost of reclamation and environmental remediation for all
exploration work undertaken. Both reclamation and environmental
remediation refer to putting disturbed ground back as close to its original
state as possible. Other potential pollution or damage must be
cleaned-up and renewed along standard guidelines outlined in the usual
permits. Reclamation is the process of bringing the land back to its
natural state after completion of exploration
activities. Environmental remediation refers to the physical activity
of taking steps to remediate, or remedy, any environmental damage
caused. The amount of these costs is not known at this time as we do
not know the extent of the exploration program that will be undertaken beyond
completion of the recommended work program. If remediation costs
exceed our cash reserves we may be unable to complete our exploration program
and have to abandon our operations.
We
must comply with complex environmental regulations which are increasing and
costly.
Our
exploration operations are regulated by both Federal and State environmental
laws that relate to the protection of air and water quality, hazardous waste
management and mine reclamation. These regulations will impose
operating costs on us. If the regulatory environment for our
operations changes in a manner that increases the costs of compliance and
reclamation, then our operating expenses may increase. This would
result in an adverse effect on our financial condition and operating
results.
Compliance
with environmental quality requirements and reclamation laws imposed by Federal,
State and local governmental authorities may:
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require
significant capital outlays;
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materially
affect the economics of a given
property;
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cause
material changes or delays in our intended activities;
and
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These
authorities may require us to prepare and present data pertaining to the effect
or impact that any proposed exploration for or production of minerals may have
upon the environment. The requirements imposed by any such
authorities may be costly, time consuming, and may delay
operations. Future legislation and regulations designed to protect
the environment, as well as future interpretations of existing laws and
regulations, may require substantial increases in equipment and operating costs
and delays, interruptions, or a termination of operations. We cannot
accurately predict or estimate the impact of any such future laws or
regulations, or future interpretations of existing laws and regulations, on our
operations.
Affiliates of our management and
principal stockholders have conflicts of interest which may differ from those of
ours and yours and we only have one independent board
member
.
We have
ongoing business relationships with affiliates of our management and principal
stockholders. In particular, we have continuing obligations under the
agreements under which we acquired the assets relating to our Clarkdale Slag
Project. We remain obligated to pay a royalty which may be generated
from the operations of the Clarkdale Slag Project to Nanominerals Corp.
(“Nanominerals”), one of our principal stockholders, which is an affiliate of
two members of our executive management and board of directors, Carl S. Ager and
Ian R. McNeil. We also have engaged Nanominerals as a paid consultant
to provide technical services to us. In addition, we have a similar
royalty arrangement with Verde River Iron Company (“VRIC”), an affiliate of
another member of our board of directors, Harry B. Crockett. Further,
one of our board members, Robert D. McDougal, serves as the chief financial
officer and a director of Ireland Inc., a publicly traded, mining related
company, which is an affiliate of Nanominerals. For these reasons,
Martin B. Oring is the sole independent member of our board of
directors. We had negotiated the revenue sharing agreements with each
of Nanominerals and VRIC prior to the time that Messrs. Ager, McNeil and
Crockett, as applicable, became board members. These persons are
subject to a fiduciary duty to exercise good faith and integrity in handling our
affairs. However, the existence of these continuing obligations may
create a conflict of interest between us and our board members and senior
executive management, and any disputes between us and such persons over the
terms and conditions of these agreements that may arise in the future may raise
the risk that the negotiations over such disputes may not be subject to being
resolved in an arms’ length manner. In addition, Nanominerals’
interest in Ireland Inc. and its other mining related business interests may
create a conflict of interest between us and our board members and senior
executive management who are affiliates of Nanominerals. Further, the
interests of K. Ian Matheson, one of our principal stockholders (and a former
officer and director), in Royal Mines and Minerals Corp., a publicly traded
mining company based in Nevada, of which Mr. Matheson is an affiliate, and other
mining related business interests may create a conflict of interest between us
and Mr. Matheson.
Although
our management intends to avoid situations involving conflicts of interest and
is subject to a Code of Ethics, there may be situations in which our interests
may conflict with the interests of those of our management or their
affiliates. These could include:
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competing
for the time and attention of
management;
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potential
interests of management in competing investment ventures;
and
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the
lack of independent representation of the interests of the other
stockholders in connection with potential disputes or negotiations over
ongoing business relationships.
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Although
we only have one independent director, the board of directors has adopted a
written Related Person Transactions Policy, that describes the procedures used
to identify, review, approve and disclose, if necessary, any transaction or
series of transactions in which: (i) we were, are or will be a participant; (ii)
the amount involved exceeds $120,000; and (iii) a related person had, has or
will have a direct or indirect material interest. There can be no
assurance that the above conflicts will not result in adverse consequences to us
and the interests of the other stockholders.
We
may suffer adverse consequences as a result of our reliance on outside
contractors to conduct our operations.
A
significant portion of our operations are currently conducted by outside
contractors. As a result, our operations are subject to a number of
risks, some of which are outside our control, including:
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negotiating
agreements with contractors on acceptable
terms;
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the
inability to replace a contractor and its operating equipment in the event
that either party terminates the
agreement;
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reduced
control over those aspects of operations which are the responsibility of
the contractor;
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failure
of a contractor to perform under its agreement with
us;
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interruption
of operations in the event that a contractor ceases its business due to
insolvency or other unforeseen
events;
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failure
of a contractor to comply with applicable legal and regulatory
requirements, to the extent it is responsible for such compliance;
and
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problems
of a contractor with managing its workforce, labor unrest or other
employment issues.
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In
addition, we may incur liability to third parties as a result of the actions of
our contractors. The occurrence of one or more of these risks could
have a material adverse effect on our business, results of operations and
financial condition.
Because
our management does not have formal training specific to the technicalities of
mineral exploration, there may be a higher risk that our business will
fail.
Our
executive officers and directors do not have any formal training as geologists
or in the technical aspects of management of a mineral exploration
company. With no direct training or experience in these areas, our
management may not be fully aware of the specific requirements related to
working within this industry. Our management's decisions and choices
may not take into account standard engineering or managerial approaches mineral
exploration companies commonly use. Consequently, our operations,
earnings, and ultimate financial success could suffer irreparable harm due to
management's lack of experience in this industry.
Mineral,
and base and precious metal prices are volatile and declines may have an adverse
effect on our share price and business plan.
The
market price of minerals is extremely volatile and beyond our
control. Basic supply/demand fundamentals generally influence gold
prices. The market dynamics of supply/demand can be heavily
influenced by economic policy. Fluctuating metal prices will have a
significant impact on our results of operations and operating cash
flow. Furthermore, if the price of a mineral should drop
dramatically, the value of our properties which are being explored or developed
for that mineral could also drop dramatically and we might not be able to
recover our investment in those properties. The decision and
investment necessary to put a mine into production must be made long before the
first revenues from production will be received. Price fluctuations
between the time that we make such a decision and the commencement of production
can completely change the economics of the mine. Although it is
possible for us to protect against some price fluctuations by entering into
derivative contracts (hedging) in certain circumstances, the volatility of
mineral prices represents a substantial risk which no amount of planning or
technical expertise can eliminate.
If
the price of base and precious metals declines, our financial condition and
ability to obtain future financings will be impaired.
The price
of base and precious metals is affected by numerous factors, all of which are
beyond our control. Factors that tend to cause the price of base and precious
metals to decrease include the following:
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sales
or leasing of base and precious metals by governments and central
banks;
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a
low rate of inflation and a strong U.S.
dollar;
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decreased
demand for base and precious metals in industrial, jewelry and investment
uses;
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high
supply of base and precious metals from production, disinvestment, scrap
and hedging;
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sales
by base and precious metals producers, foreign transactions and other
hedging transactions; and
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devaluing
local currencies (relative to base and precious metals prices in U.S.
dollars) leading to lower production costs and higher production in
certain major base and precious metals producing
regions.
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Our
business is dependent on the price of base and precious metals. We
have not undertaken hedging transactions in order to protect us from a decline
in the price of base and precious metals. A decline in the price of
base and precious metals may also decrease our ability to obtain future
financings to fund our planned exploration programs.
The restatement of certain of our
historical consolidated financial statements may have an adverse effect on
us
.
We have
restated certain items on our consolidated balance sheets and statements of
operations. On our consolidated balance sheets: (i) mineral
properties have been restated to include the market value of certain shares
issued by us under the terms of our option agreements for the acquisition of the
mineral claims making up the Searchlight Gold Project and for the computation of
deferred tax liability assumed in the acquisition; and (ii) the Clarkdale Slag
Project has been restated to include revision of acquisition costs related to
issuance of warrants, consideration of certain terms with respect to future
payments that should have been recorded as contingent consideration and related
deferred future income tax liability in connection with our acquisition of
Transylvania International, Inc. (“Transylvania”). Our statement of
operations for the year ended December 31, 2005, has been restated to reclassify
other comprehensive income as discontinued operations and to reflect income tax
benefit related to the acquisition accounting for the Searchlight Claims and the
Clarkdale Slag Project. Our statement of operations for the year
ended December 31, 2006 has been restated to reclassify foreign currency
translation adjustments as general and administrative expenses and to reflect
income tax benefit related to the acquisition accounting for Searchlight
Claims. Our consolidated statement of operations for the year ended
December 31, 2007, has been restated to reflect the recomputation of the income
tax benefit related to net operating losses as a result of changes to the
purchase accounting for the Clarkdale Slag Project. There was no
other impact on the results of operations. Our consolidated statement
of operations for the period from inception to December 31, 2007 has been
restated to reflect the cumulative totals impacted by the 2005, 2006 and 2007
restated amounts, as well as to reclassify net losses prior to January 1, 2005
as losses from discontinued operations. Related to these issues, our
balance sheets for the periods ended December 31, 2005, 2006 and consolidated
balance sheet for 2007 have been restated to reclassify accumulated other
comprehensive loss as accumulated deficit during the exploration
stage. Details regarding the restatement and its underlying
circumstances are discussed in the Explanatory Notes in Notes 1, 3, 4 and 16 of
the Notes to the consolidated financial statements included in this
prospectus. As a result of the events described above, we may become
subject to a number of significant risks, which could have an adverse effect on
our business, financial condition and results of operations, including: we may
be subject to potential civil litigation, including stockholder class action
lawsuits and derivative claims made on behalf of us, and regulatory proceedings
or actions, the defense of which may require us to devote significant management
attention and to incur significant legal expense and which litigation,
proceedings or actions, if decided against us, could require us to pay
substantial judgments, settlements or other penalties.
We
identified material weaknesses in our internal control over financial reporting
and concluded that such controls were not effective. If we fail to
maintain effective internal control over financial reporting, we may not be able
to accurately report our financial results. We can provide no
assurance that we will at all times in the future be able to report that our
internal control is effective.
As a
registrant under the Exchange Act and a public company, and under Section 404 of
the Sarbanes-Oxley Act of 2002, we are required to include a management report
of our internal controls over financial reporting in our annual report, which
contains management’s assessment of the effectiveness of the company’s internal
controls over financial reporting. We are required to report, among
other things, control deficiencies that constitute material weaknesses or
changes in internal control that, or that are reasonably likely to, materially
affect internal control over financial reporting. A “material
weakness” is a significant deficiency or combination of significant deficiencies
that results in more than a remote likelihood that a material misstatement of
the annual or interim financial statements will not be prevented or
detected. If we fail to comply with the requirements of Section 404
of the Sarbanes-Oxley Act of 2002 or report a material weakness, we might be
subject to regulatory sanction and investors may lose confidence in our
financial statements, which may be inaccurate if we fail to remedy such material
weakness.
Our
independent registered public accounting firm is required to attest to and
report on management’s assessment of the effectiveness of the company’s internal
controls over financial reporting. Our management may conclude that
our internal controls over our financial reporting are not
effective. Moreover, even if our management concludes that our
internal controls over financial reporting are effective, our independent
registered public accounting firm may still decline to attest to our
management’s assessment or may issue a report that is qualified if it is not
satisfied with our controls or the level at which our controls are documented,
designed, operated, or reviewed, or if it interprets the relevant requirements
differently from us. Our reporting obligations as a public company
will place a significant strain on our management, operational, and financial
resources and systems for the foreseeable future. Effective internal
controls, particularly those related to revenue recognition, are necessary for
us to produce reliable financial reports and are important to help prevent
fraud. As a result, our failure to achieve and maintain effective
internal controls over financial reporting could result in the loss of investor
confidence in the reliability of our financial statements, which in turn could
harm our business and negatively impact the trading price of our
stock. Furthermore, we anticipate that we will incur considerable
costs and use significant management time and other resources in an effort to
comply with Section 404 and other requirements of the Sarbanes-Oxley
Act.
Based on
the restatements described above, our management concluded that our system of
internal control over financial reporting was not effective during the period
from March 31, 2005 through September 30, 2008, which resulted in the
restatements described above. Management had identified internal
control deficiencies which, in management’s judgment, represented material
weakness in internal control over financial reporting. The control
deficiencies generally related to controls over the accounting for complex
transactions to ensure such transactions are recorded as necessary to permit
preparation of financial statements and disclosure in accordance with generally
accepted accounting principles. Such complex transactions included
capital asset acquisitions and accounting for income taxes. At this
time, management has remediated all of our deficiencies in internal controls
which, in management’s judgment, represented material weakness in internal
control over financial reporting. We can provide no assurance that we
will at all times in the future be able to report that our internal control over
financial reporting is effective. If we fail to maintain an effective
system of internal controls, we may not be able to accurately report our
financial results or prevent fraud.
Risks
Relating to Our Securities
There
has been a very limited public trading market for our securities, and the market
for our securities may continue to be limited and be sporadic and highly
volatile.
There is
currently a limited public market for our common stock. Our common
stock is quoted on the Over-the-Counter Bulletin Board (the
“OTCBB”). We cannot assure you that an active market for our shares
will be established or maintained in the future. The OTCBB is not a
national securities exchange, and many companies have experienced limited
liquidity when traded through this quotation system. Holders of our
common stock may, therefore, have difficulty selling their shares, should they
decide to do so. In addition, there can be no assurances that such
markets will continue or that any shares, which may be purchased, may be sold
without incurring a loss. The market price of our shares, from time
to time, may not necessarily bear any relationship to our book value, assets,
past operating results, financial condition or any other established criteria of
value, and may not be indicative of the market price for the shares in the
future.
In
addition, the market price of our common stock may be volatile, which could
cause the value of our common stock to decline. Securities markets
experience significant price and volume fluctuations. This market
volatility, as well as general economic conditions, could cause the market price
of our common stock to fluctuate substantially. Many factors that are
beyond our control may significantly affect the market price of our shares.
These factors include:
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price
and volume fluctuations in the stock
markets;
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changes
in our earnings or variations in operating
results;
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any
shortfall in revenue or increase in losses from levels expected by
securities analysts;
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changes
in regulatory policies or law;
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operating
performance of companies comparable to us;
and
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general
economic trends and other external
factors.
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Even if
an active market for our common stock is established, stockholders may have to
sell their shares at prices substantially lower than the price they paid for the
shares or might otherwise receive than if an active public market
existed.
Future
financings could adversely affect common stock ownership interest and rights in
comparison with those of other security holders.
Our board
of directors has the power to issue additional shares of common stock without
stockholder approval. If additional funds are raised through the
issuance of equity or convertible debt securities, the percentage ownership of
our existing stockholders will be reduced, and these newly issued securities may
have rights, preferences or privileges senior to those of existing
stockholders.
If we
issue any additional common stock or securities convertible into common stock,
such issuance will reduce the proportionate ownership and voting power of each
other stockholder. In addition, such stock issuances might result in
a reduction of the per share book value of our common stock.
We do not
currently have an authorized class of preferred stock. However, we
intend to submit a proposal to our stockholders to authorize a class of up to
40,000,000 shares of preferred stock, and have filed a proxy statement with the
SEC to that effect. There can be no assurances that our stockholders
will approve the proposed authorization of a class of preferred
stock.
The
proposed class of preferred stock is commonly known as “blank check” preferred
stock. The preferred stock may be issued from time to time in one or
more series, and the board of directors, without further approval of our
stockholders, would be authorized to fix the relative rights, preferences,
privileges and restrictions applicable to each series of preferred
stock. Such shares of preferred stock, if and when issued, may have
rights, powers and preferences superior to those of our common
stock. Although there are no current plans, commitments or
understandings, written or oral, to issue any preferred stock, in the event of
any issuances, the holders of common stock will not have any preemptive or
similar rights to acquire any preferred stock.
The
proposed class of preferred stock could, under certain circumstances, have an
anti-takeover effect. For example, in the event of a hostile attempt
to take over control of us, it may be possible for us to endeavor to impede the
attempt by issuing shares of preferred stock, thereby diluting or impairing the
voting power of the other outstanding shares of common stock and increasing the
potential costs to acquire control of us. The proposed class of
preferred stock therefore may have the effect of discouraging unsolicited
takeover attempts, thereby potentially limiting the opportunity for our
stockholders to dispose of their shares at the higher price generally available
in takeover attempts or that may be available under a merger
proposal. The proposed class of preferred stock may have the effect
of permitting our current management, including the current board of directors,
to retain its position, and place it in a better position to resist changes that
stockholders may wish to make if they are dissatisfied with the conduct of our
business.
Our
anti-takeover provisions or provisions of Nevada law, in our articles of
incorporation and bylaws and the common share purchase rights that accompany
shares of our common stock could prevent or delay a change in control of us,
even if a change of control would benefit our stockholders.
Provisions
of our articles of incorporation and bylaws, as well as provisions of Nevada
law, could discourage, delay or prevent a merger, acquisition or other change in
control of us, even if a change in control would benefit our stockholders. These
provisions:
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classify
our board of directors so that only one-third of the directors are elected
each year and require the vote of 66 2/3% of the outstanding stock
entitled to vote in the election of directors to amend these
provisions;
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prohibit
stockholder action by written consent and require that all stockholder
actions be taken at a meeting of our stockholders;
and
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establish
advance notice requirements for nominations for election to the board of
directors or for proposing matters that can be acted upon by stockholders
at stockholder meetings and require the vote of 66 2/3% of the outstanding
stock entitled to vote in the election of directors to amend these
provisions,
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In
addition, the Nevada Revised Statutes contain provisions governing the
acquisition of a controlling interest in certain publicly held Nevada
corporations. These laws provide generally that any person that
acquires 20% or more of the outstanding voting shares of certain publicly held
Nevada corporations, such as us, in the secondary public or private market must
follow certain formalities before such acquisition or they may be denied voting
rights, unless a majority of the disinterested stockholders of the corporation
elects to restore such voting rights in whole or in part. These laws
provide that a person acquires a "controlling interest" whenever a person
acquires shares of a subject corporation that, but for the application of these
provisions of the Nevada Revised Statutes, would enable that person to exercise
(1) one-fifth or more, but less than one-third, (2) one-third or more, but less
than a majority or (3) a majority or more, of all of the voting power of the
corporation in the election of directors. The Control Share
Acquisition Statute generally applies only to Nevada corporations with at least
200 stockholders, including at least 100 stockholders of record who are Nevada
residents, and which conduct business directly or indirectly in
Nevada. Our Bylaws provide that the provisions of the Nevada Revised
Statutes, known as the “Control Share Acquisition Statute” apply to the
acquisition of a controlling interest in us, irrespective of whether we have 200
or more stockholders of record, or whether at least 100 of our stockholders have
addresses in the State of Nevada appearing on our stock ledger. These
laws may have a chilling effect on certain transactions if our articles of
incorporation or bylaws are not amended to provide that these provisions do not
apply to us or to an acquisition of a controlling interest, or if our
disinterested stockholders do not confer voting rights in the control
shares.
Each
currently outstanding share of our common stock includes, and each newly issued
share of our common stock will include, a common share purchase
right. The rights are attached to and trade with the shares of common
stock and generally are not exercisable. The rights will become
exercisable if a person or group acquires, or announces an intention to acquire,
15% or more of our outstanding common stock. However, the applicable
threshold percentage will not exceed 20% or more of our outstanding common stock
in the case of any person or group who owned 15% or more of our outstanding
common stock as of August 24, 2009. These persons may be deemed to
include certain of our officers, directors and principal
stockholders. The rights have some anti-takeover effects and
generally will cause substantial dilution to a person or group that attempts to
acquire control of us without conditioning the offer on either redemption of the
rights or amendment of the rights to prevent this dilution. The
rights are designed to provide additional protection against abusive or unfair
takeover tactics, such as offers for all shares at less than full value or at an
inappropriate time (in terms of maximizing long-term stockholder value), partial
tender offers and selective open-market purchases. The rights are
intended to assure that our board of directors has the ability to protect
stockholders and us if efforts are made to gain control of us in a manner that
is not in the best interests of us and our stockholders. The rights
could have the effect of delaying, deferring or preventing a change of control
that is not approved by our board of directors, which in turn could prevent our
stockholders from recognizing a gain in the event that a favorable offer is
extended and could materially and negatively affect the market price of the
common stock.
A
substantial number of our shares are available for sale in the public market and
sales of those shares could adversely affect our stock price.
Sales of
a substantial number of shares of common stock into the public market, or the
perception that such sales could occur, could substantially reduce our stock
price in the public market for our common stock, and could impair our ability to
obtain capital through a subsequent sale of our securities.
Our
common stock is subject to “penny stock” regulations that may affect the
liquidity of our common stock.
Our
common stock is subject to the rules adopted by the SEC that regulate
broker-dealer practices in connection with transactions in “penny
stocks.” Penny stocks are generally equity securities with a price of
less than $5.00 (other than securities registered on certain national securities
exchanges, for which current price and volume information with respect to
transactions in such securities is provided by the exchange or
system).
The penny
stock rules require that a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the SEC, which contains the
following:
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a
description of the nature and level of risk in the market for penny stocks
in both public offerings and secondary
trading;
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a
description of the broker’s or dealer’s duties to the customer and of the
rights and remedies available to the customer with respect to violation of
such duties or other requirements of securities
laws;
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a
brief, clear, narrative description of a dealer market, including “bid”
and “ask” prices for penny stocks and significance of the spread between
the “bid” and “ask” price;
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a
toll-free telephone number for inquiries on disciplinary actions,
definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks;
and
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such
other information and in such form (including language, type, size and
format), as the SEC shall require by rule or
regulation.
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Prior to
effecting any transaction in penny stock, the broker-dealer also must provide
the customer the following:
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the
bid and offer quotations for the penny
stock;
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the
compensation of the broker-dealer and its salesperson in the
transaction;
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the
number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market
for such stock;
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the
liquidity of the market for such stock;
and
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monthly
account statements showing the market value of each penny stock held in
the customer’s account.
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In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser’s written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement. These disclosure requirements may have the effect of
reducing the trading activity in the secondary market for a stock such as our
common stock if it is subject to the penny stock rules.
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of the shares of common stock issuable
upon the exercise of our outstanding common stock purchase warrants by the
selling stockholders pursuant to this prospectus. We may receive
proceeds from the issuance of shares of our common stock upon the exercise of
common stock purchase warrants. These warrants are exercisable at a
weighted average exercise price of $1.85 per share. We intend to use
any proceeds from the exercise of warrants for working capital and other general
corporate purposes. These warrants and the exercise of these warrants
by the selling stockholders are not being offered under this prospectus;
however, the shares of our common stock issuable upon exercise of the warrants
are being offered under this prospectus by the selling
stockholders.
There is
no assurance that any of the warrants will ever be exercised for cash, if at
all. If all of these outstanding warrants are exercised for cash, we
would receive aggregate gross proceeds of approximately
$5,967,443.
SELLING
STOCKHOLDERS
Pursuant
to various registration rights agreements with the selling stockholders, we have
agreed to file with the SEC a registration statement pursuant to the Securities
Act covering the resale of our registrable securities owned by such selling
stockholders that are subject to the registration rights
agreements. Accordingly, we have filed a registration statement on
Form S-3, of which this prospectus forms a part, with respect to the resale of
these securities from time to time. In addition, we agreed in the
registration rights agreements with the investors to register securities of ours
they hold and to use our best efforts to keep the registration statement
effective until the securities they own covered by this prospectus have been
sold or may be sold without registration or prospectus delivery requirements
under the Securities Act, subject to certain restrictions. These
agreements include contractual penalty provisions for failure to comply with
these registration rights provisions.
All the
shares beneficially underlying the warrants owned by the selling stockholders
which are being offered for resale by the selling stockholders were acquired in
connection with the following private placement transactions:
|
·
|
On
February 23, 2007, we completed a private placement of 575,000 units of
our securities resulting in aggregate gross proceeds of
$1,725,000. Each unit consisted of one share of our common
stock and a purchase warrant to purchase one half of one share (with each
whole warrant entitling the subscriber to purchase one additional share
for a period of two years from the closing date at an exercise price of
$4.50 per share). The warrants issued to subscribers of the
offering are callable by us if our common stock trades above $6.50 per
share for 20 consecutive trading days. We have agreed to file a
registration statement to cover the shares underlying the units and not to
exercise our call rights until the registration statement has been
declared effective by the SEC. We paid commissions to the
agents in connection with the private placement of $111,100 and warrants
(without call provisions) to purchase 12,300 shares of our common stock at
a price of $4.50 per share, exercisable for a period of two years from the
closing date.
|
|
·
|
On
February 23, 2007, we completed a private placement of 4,520,666 units of
our securities resulting in aggregate gross proceeds of
$13,562,002. Each unit consisted of one share of our common
stock and one half of one share purchase warrant (with each whole warrant
entitling the subscriber to purchase one additional share for a period of
two years from the closing date at an exercise price of $4.50 per
share). The warrants issued to subscribers of the offering are
callable by us if our common stock trades above $6.50 per share for 20
consecutive trading days. We have agreed to file a registration
statement to cover the shares underlying the units and not to exercise our
call rights until the registration statement has been declared effective
by the SEC. We paid commissions to the agents in connection
with the private placement of $381,990 and warrants (without call
provisions) to purchase 90,870 shares of our common stock at a price of
$4.50 per share, exercisable for a period of two years from the closing
date.
|
|
·
|
On
March 22, 2007, we completed a private placement of 2,226,161 units of our
securities resulting in gross proceeds of $6,678,483. Each unit
consisted of one share of our common stock and one half of one share
purchase warrant (with each whole warrant entitling the subscriber to
purchase one additional share for a period of two years from the closing
date at an exercise price of $4.50 per share). The warrants
issued to subscribers of the offering are callable by us if our common
stock trades above $6.50 per share for 20 consecutive trading
days. We have agreed to file a registration statement to cover
the shares underlying the units and not to exercise our call rights until
the registration statement has been declared effective by the
SEC. We paid commissions to the agents in connection with the
private placement of $525,386 and warrants (without call provisions) to
purchase 75,175 shares of common stock at an exercise price of $4.50 per
share for a period of two years from the closing of the private
placement.
|
On
December 29, 2008, our board of directors unilaterally determined, without any
negotiations with the warrant holders, to: (i) extend the expiration date of all
of the warrants in the private placements to March 1, 2010, (ii) reduce the
exercise price of the warrants to $2.40 per share, and (iii) revise the call
provision in the warrants so that all of such warrants are callable for
cancellation by us if the volume weighted average price of the common stock
exceeds $4.40 per share for 20 consecutive trading days and there is an
effective registration statement registering the shares of common stock
underlying the warrants at the time of the call of the
warrants.
On April
30, 2009, after further consideration by us in response to comments from the
SEC’s staff with respect to this Registration Statement, our board of directors
unilaterally determined, without any negotiations with the warrant holders, to
amend and restate the call provisions in the warrants further so that the terms
of such amended and restated call provisions are identical to the terms of the
warrants on their original dates of issuance. As a result: (i) all of
the warrants issued to subscribers of the offerings are callable for
cancellation by us if the volume weighted average price of the common stock
exceeds $6.50 per share for 20 consecutive trading days and there is an
effective registration statement registering the shares of common stock
underlying the warrants at the time of the call of the warrants, and (ii) the
warrants issued to brokers for the offerings will not have a call
provision.
On
November 12, 2009, our board of directors determined to: (i) extend the
expiration date of all of the warrants in the private placements to November 12,
2012, and (ii) reduce the exercise price of the warrants to $1.85 per
share
We
believe that the distribution of the new warrant certificates in connection with
such unilateral modifications will not constitute a “sale” or “offer,” as
defined in Section 2(3) of the Securities Act and that no investment decision
has been made with respect to such unilateral modifications by the warrant
holders. Further, we believe that such a distribution is exempt from
the registration provisions of the Securities Act pursuant to Section 3(a)(9)
thereof because the modified warrants will be exchanged with existing warrant
holders exclusively, and no commission or other remuneration will be paid or
given, directly or indirectly, in connection with such exchange.
Selling
Stockholders Table
We have
filed a registration statement with the SEC, of which this prospectus forms a
part, with respect to the resale of our securities covered by this prospectus
from time to time under Rule 415 of the Securities Act. Our
securities being offered by this prospectus are being registered to permit
secondary public trading of our securities. Subject to the
restrictions described in this prospectus, the selling stockholders may offer
our securities covered under this prospectus for resale from time to
time. In addition, subject to the restrictions described in this
prospectus, the selling stockholders may sell, transfer or otherwise dispose of
all or a portion of our securities being offered under this prospectus in
transactions exempt from the registration requirements of the Securities
Act. See “Plan of Distribution.”
The table
below presents information, as of December 3, 2009, regarding the selling
stockholders and the securities that the selling stockholders (and their
pledgees, assignees, transferees and other successors in interest) may offer and
sell from time to time under this prospectus. More specifically, the
following table sets forth as to the selling stockholders:
|
·
|
the
number of shares of our common stock that the selling stockholders
beneficially owned prior to the offering for resale of any of the shares
of our common stock being registered by the registration statement of
which this prospectus is a part;
|
|
·
|
the
number of shares of our common stock that may be offered for resale for
the selling stockholders’ account under this prospectus;
and
|
|
·
|
the
number and percent of shares of our common stock to be held by the selling
stockholders after the offering of the resale securities, assuming all of
the resale securities are sold by the selling stockholders and that the
selling stockholders do not acquire any other shares of our common stock
prior to their assumed sale of all of the resale
shares.
|
The table
is prepared based on information supplied to us by the selling
stockholders. We do not know when or in what amounts a selling
stockholder may offer shares for sale. Although we have assumed for
purposes of the table below that the selling stockholders will sell all of the
securities offered by this prospectus, because the selling stockholders may
offer from time to time all or some of their securities covered under this
prospectus, or in another permitted manner, no assurances can be given as to the
actual number of securities that will be resold by the selling stockholders or
that will be held by the selling stockholders after completion of the
resales. The selling stockholders might not sell any or all of the
shares offered by this prospectus. In addition, the selling
stockholders may have sold, transferred or otherwise disposed of the securities
in transactions exempt from the registration requirements of the Securities Act
since the date the selling stockholders provided the information regarding their
securities holdings. However, for purposes of this table, we have
assumed that, after completion of the offering, none of the shares covered by
the prospectus will be held by the selling stockholders. Information
covering the selling stockholders may change from time to time and changed
information will be presented in a post-effective amendment to this registration
statement if and when necessary and required. Except as described
above, based on information provided to us by the selling stockholders and to
our knowledge, there are currently no agreements, arrangements or understandings
with respect to the resale of any of the securities covered by this
prospectus.
Where
applicable, we have indicated in the footnotes to the following table the name
and title of the individuals which we have been advised have the power to vote
or dispose of the securities listed in the following table.
Where
applicable, we have indicated in the footnotes to the following table the name
and title of the individuals which we have been advised have the power to vote
or dispose of the securities listed in the following table.
|
|
Shares Beneficially
Owned
Before Offering
(1)
|
|
|
Number of Shares
Being Offered
(2)
|
|
|
Shares Beneficially Owned
After Offering
(1)
|
|
Name of Selling Security Holder
|
|
Number
|
|
|
Percent
|
|
|
|
|
|
Number
|
|
|
Percent
|
|
Andrew
Adamson and Jone Panavas
|
|
|
12,792
|
|
|
|
*
|
|
|
|
4,264
|
|
|
|
8,528
|
|
|
|
*
|
|
AGF
Canadian Growth Equity
(3)
|
|
|
1,052,051
|
|
|
|
*
|
|
|
|
236,534
|
|
|
|
815,517
|
|
|
|
*
|
|
Avonlea
Ventures #2 Inc.
(4)
|
|
|
392,500
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
342,500
|
|
|
|
*
|
|
Mark
Beychok
|
|
|
95,000
|
|
|
|
*
|
|
|
|
47,500
|
|
|
|
47,500
|
|
|
|
*
|
|
Kenneth
L. and Sue A. Brush
|
|
|
122,760
|
|
|
|
*
|
|
|
|
17,500
|
|
|
|
105,260
|
|
|
|
*
|
|
Anthony
David Bune
|
|
|
445,000
|
|
|
|
*
|
|
|
|
217,000
|
|
|
|
228,000
|
|
|
|
*
|
|
Bruce
Burnam Trust of 1992
(5)
|
|
|
315,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
265,000
|
|
|
|
*
|
|
Bush
Family Trust
(6)
|
|
|
83,000
|
|
|
|
*
|
|
|
|
25,000
|
|
|
|
58,000
|
|
|
|
*
|
|
William
D. Corbett
|
|
|
8,167
|
|
|
|
*
|
|
|
|
8,167
|
|
|
|
0
|
|
|
|
*
|
|
Robert
Crosbie
|
|
|
1,031,500
|
|
|
|
*
|
|
|
|
16,667
|
|
|
|
1,014,833
|
|
|
|
*
|
|
Crown
Growth Partners II, L.P.
(7)
|
|
|
122,500
|
|
|
|
*
|
|
|
|
122,500
|
|
|
|
0
|
|
|
|
*
|
|
Leigh
S. Curry
|
|
|
21,250
|
|
|
|
*
|
|
|
|
5,000
|
|
|
|
16,250
|
|
|
|
*
|
|
Cutler
Family Trust UTD 5/4/89
(8)
|
|
|
75,000
|
|
|
|
*
|
|
|
|
25,000
|
|
|
|
50,000
|
|
|
|
*
|
|
Kenneth
G. Dallamora
|
|
|
536,557
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
486,667
|
|
|
|
*
|
|
D&D
Securities Company
(9)
|
|
|
1,071,175
|
|
|
|
*
|
|
|
|
72,675
|
|
|
|
998,500
|
|
|
|
*
|
|
Robert
Edwards
|
|
|
313,750
|
|
|
|
*
|
|
|
|
33,333
|
|
|
|
280,417
|
|
|
|
*
|
|
EFG
Eurofinanciere D'Investissements
(10)
|
|
|
45,000
|
|
|
|
*
|
|
|
|
15,000
|
|
|
|
30,000
|
|
|
|
*
|
|
Fred
Fialkow
|
|
|
7,500
|
|
|
|
*
|
|
|
|
5,000
|
|
|
|
2,500
|
|
|
|
*
|
|
T.
Chen Fong
|
|
|
150,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
*
|
|
Robert
M. Franklin
|
|
|
234,500
|
|
|
|
*
|
|
|
|
7,167
|
|
|
|
227,333
|
|
|
|
*
|
|
Gaia
Resources Fund
(11)
|
|
|
55,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
5,000
|
|
|
|
*
|
|
Galaxy
Players Ltd.
(12)
|
|
|
189,000
|
|
|
|
*
|
|
|
|
33,000
|
|
|
|
156,000
|
|
|
|
*
|
|
Giso
Finance SA
(13)
|
|
|
15,000
|
|
|
|
*
|
|
|
|
5,000
|
|
|
|
10,000
|
|
|
|
*
|
|
Gunther
Family Trust
(14)
|
|
|
842,500
|
|
|
|
*
|
|
|
|
100,000
|
|
|
|
742,500
|
|
|
|
*
|
|
GWL
Canadian Resources
(15)
|
|
|
262,500
|
|
|
|
*
|
|
|
|
59,200
|
|
|
|
203,600
|
|
|
|
*
|
|
Hebrides
II Offshore Fund Ltd.
(16)
|
|
|
820,800
|
|
|
|
*
|
|
|
|
20,000
|
|
|
|
800,800
|
|
|
|
*
|
|
Hebrides
LP
(17)
|
|
|
2,496,000
|
|
|
|
2.10
|
%
|
|
|
80,000
|
|
|
|
2,416,000
|
|
|
|
2.03
|
%
|
E.
Franklin Hirsch
|
|
|
12,500
|
|
|
|
*
|
|
|
|
4,167
|
|
|
|
8,333
|
|
|
|
*
|
|
Paul
R. Hobson
|
|
|
40,000
|
|
|
|
*
|
|
|
|
10,000
|
|
|
|
30,000
|
|
|
|
*
|
|
Robert
Hover
|
|
|
3,000
|
|
|
|
*
|
|
|
|
2,500
|
|
|
|
500
|
|
|
|
*
|
|
Howard
Rocket Holdings Ltd.
(18)
|
|
|
17,000
|
|
|
|
*
|
|
|
|
5,000
|
|
|
|
12,000
|
|
|
|
*
|
|
Iroquois
Master Fund Ltd.
(19)
|
|
|
62,500
|
|
|
|
*
|
|
|
|
62,500
|
|
|
|
0
|
|
|
|
*
|
|
Sander
Jacobs
|
|
|
114,583
|
|
|
|
*
|
|
|
|
29,167
|
|
|
|
85,416
|
|
|
|
*
|
|
Hayes
Jackson
|
|
|
15,000
|
|
|
|
*
|
|
|
|
5,000
|
|
|
|
10,000
|
|
|
|
*
|
|
Jennifer
Jackson
|
|
|
15,000
|
|
|
|
*
|
|
|
|
5,000
|
|
|
|
10,000
|
|
|
|
*
|
|
Barbara
Jaffe TTE Barbara Jaffe Revocable Trust dtd 10/13/97
(20)
|
|
|
275,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
225,000
|
|
|
|
*
|
|
Fred
and Lenore Kayne Family Trust Dated March 29, 2004
(21)
|
|
|
1,475,200
|
|
|
|
1.24
|
%
|
|
|
150,000
|
|
|
|
1,325,200
|
|
|
|
1.12
|
%
|
Brian
W. Lawrence UDT 7/1/99
(22)
|
|
|
2,639,994
|
|
|
|
2.22
|
%
|
|
|
150,000
|
|
|
|
2,489,950
|
|
|
|
2.09
|
%
|
Bruce
E. Lazier
|
|
|
1,258,500
|
|
|
|
1.06
|
%
|
|
|
35,000
|
|
|
|
1,223,500
|
|
|
|
1.03
|
%
|
Anthony
C. Lisa II Revocable Trust
(23)
|
|
|
52,500
|
|
|
|
*
|
|
|
|
17,500
|
|
|
|
35,000
|
|
|
|
*
|
|
London
Life Canadian Resources
(24)
|
|
|
153,900
|
|
|
|
*
|
|
|
|
37,600
|
|
|
|
116,300
|
|
|
|
*
|
|
Brenda
Mackie
|
|
|
75,000
|
|
|
|
*
|
|
|
|
25,000
|
|
|
|
50,000
|
|
|
|
*
|
|
James
Mackie
|
|
|
75,000
|
|
|
|
*
|
|
|
|
25,000
|
|
|
|
50,000
|
|
|
|
*
|
|
Sandra
MacNaughton
|
|
|
4,200
|
|
|
|
*
|
|
|
|
1,400
|
|
|
|
2,800
|
|
|
|
*
|
|
Peter
McRae
|
|
|
15,000
|
|
|
|
*
|
|
|
|
5,000
|
|
|
|
10,000
|
|
|
|
*
|
|
Midsouth
Investor Fund LP
(25)
|
|
|
150,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
*
|
|
Jeanelle
Mitchell
|
|
|
370,500
|
|
|
|
*
|
|
|
|
15,500
|
|
|
|
355,000
|
|
|
|
*
|
|
Diwan
Nesicolaci and Tracey Nesicolaci
|
|
|
25,000
|
|
|
|
*
|
|
|
|
8,333
|
|
|
|
16,777
|
|
|
|
*
|
|
E.
Wayne Nordberg
|
|
|
90,000
|
|
|
|
*
|
|
|
|
30,000
|
|
|
|
60,000
|
|
|
|
*
|
|
Jayme
Nozzi
|
|
|
3,000
|
|
|
|
*
|
|
|
|
2,500
|
|
|
|
500
|
|
|
|
*
|
|
Martin
B. Oring
(26)
|
|
|
853,683
|
|
|
|
*
|
|
|
|
62,500
|
|
|
|
791,183
|
|
|
|
*
|
|
Pinetree
Resource Partnership
(27)
|
|
|
125,000
|
|
|
|
*
|
|
|
|
125,000
|
|
|
|
0
|
|
|
|
*
|
|
James
Pledger
|
|
|
5,000
|
|
|
|
*
|
|
|
|
2,500
|
|
|
|
2,500
|
|
|
|
*
|
|
Precious
Capital Global Mining & Metals Fund
(28)
|
|
|
50,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
*
|
|
Rahn
& Bodner
(29)
|
|
|
100,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
*
|
|
Michele
I. Reis, Trust of 21 May 1993
(30)
|
|
|
37,500
|
|
|
|
*
|
|
|
|
12,500
|
|
|
|
25,000
|
|
|
|
*
|
|
Ralph
I. Reis Revocable Trust
(31)
|
|
|
254,500
|
|
|
|
*
|
|
|
|
12,500
|
|
|
|
242,000
|
|
|
|
*
|
|
Rosalind
M. Reis, Trust of 18 June 1993
(32)
|
|
|
37,500
|
|
|
|
*
|
|
|
|
12,500
|
|
|
|
25,000
|
|
|
|
*
|
|
Christoph
Richter
|
|
|
20,000
|
|
|
|
*
|
|
|
|
5,000
|
|
|
|
15,000
|
|
|
|
*
|
|
Detlef
Rostock
|
|
|
120,000
|
|
|
|
*
|
|
|
|
20,000
|
|
|
|
100,000
|
|
|
|
*
|
|
Robocheyne
Consulting, Ltd.
(33)
|
|
|
831,250
|
|
|
|
*
|
|
|
|
100,000
|
|
|
|
731,250
|
|
|
|
*
|
|
S&P
Investors, Inc.
(34)
|
|
|
66,420
|
|
|
|
*
|
|
|
|
36,420
|
|
|
|
30,000
|
|
|
|
*
|
|
SLP
Investments Ltd.
(35)
|
|
|
50,000
|
|
|
|
*
|
|
|
|
16,667
|
|
|
|
33,333
|
|
|
|
*
|
|
Cary
Schwartz
|
|
|
30,500
|
|
|
|
*
|
|
|
|
12,500
|
|
|
|
18,000
|
|
|
|
*
|
|
Seneca
Holdings Limited
(36)
|
|
|
150,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
*
|
|
Stephen
Sharpe
|
|
|
70,320
|
|
|
|
*
|
|
|
|
12,500
|
|
|
|
57,820
|
|
|
|
*
|
|
Bruce
Shpiner
|
|
|
19,500
|
|
|
|
*
|
|
|
|
10,000
|
|
|
|
9,500
|
|
|
|
*
|
|
Signalta
Capital Corporation
(37)
|
|
|
284,500
|
|
|
|
*
|
|
|
|
16,667
|
|
|
|
267,833
|
|
|
|
*
|
|
Robert
and Ellen Snyder
|
|
|
12,000
|
|
|
|
*
|
|
|
|
4,000
|
|
|
|
8,000
|
|
|
|
*
|
|
John
H. Staab and Nancy Staab
|
|
|
7,500
|
|
|
|
*
|
|
|
|
2,500
|
|
|
|
5,000
|
|
|
|
*
|
|
Kenneth
Sutherland
|
|
|
133,333
|
|
|
|
*
|
|
|
|
16,667
|
|
|
|
116,666
|
|
|
|
*
|
|
Synergy
Asset Management Ltd.
(38)
|
|
|
140,000
|
|
|
|
*
|
|
|
|
20,000
|
|
|
|
120,000
|
|
|
|
*
|
|
John
C. Thompson
|
|
|
150,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
*
|
|
Glen
Tobias
|
|
|
2,407,150
|
|
|
|
2.02
|
%
|
|
|
75,000
|
|
|
|
2,332,150
|
|
|
|
1.96
|
%
|
T.R.L.
Investments Limited
(39)
|
|
|
50,250
|
|
|
|
*
|
|
|
|
16,750
|
|
|
|
33,500
|
|
|
|
*
|
|
WES-TEX
Drilling Company, L.P.
(40)
|
|
|
537,500
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
487,500
|
|
|
|
*
|
|
Robert
Allen White
|
|
|
51,000
|
|
|
|
*
|
|
|
|
17,000
|
|
|
|
34,000
|
|
|
|
*
|
|
Dagmar
Wintersteller
|
|
|
120,000
|
|
|
|
*
|
|
|
|
20,000
|
|
|
|
100,000
|
|
|
|
*
|
|
Gregor
Wintersteller
|
|
|
300,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
250,000
|
|
|
|
*
|
|
Jeremy
A. Wise
|
|
|
7,500
|
|
|
|
*
|
|
|
|
2,500
|
|
|
|
5,000
|
|
|
|
*
|
|
Donald
Wohl, TTE Donald Wohl Revocable Trust dtd. 6/8/05
(41)
|
|
|
702,000
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
652,000
|
|
|
|
*
|
|
Todd
Wohl
|
|
|
38,500
|
|
|
|
*
|
|
|
|
12,500
|
|
|
|
26,000
|
|
|
|
*
|
|
Joe
Wolfe
|
|
|
105,865
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
55,865
|
|
|
|
*
|
|
Yendor
Investments Ltd.
(42)
|
|
|
37,500
|
|
|
|
*
|
|
|
|
12,500
|
|
|
|
25,000
|
|
|
|
*
|
|
Zuri
Invest Limited
(43)
|
|
|
140,000
|
|
|
|
*
|
|
|
|
12,300
|
|
|
|
127,700
|
|
|
|
*
|
|
1471158
Ontario Ltd.
(44)
|
|
|
35,000
|
|
|
|
*
|
|
|
|
25,000
|
|
|
|
10,000
|
|
|
|
*
|
|
(1)
|
Beneficial
ownership is determined in accordance with the rules of the
SEC. Shares of common stock subject to options or warrants
currently exercisable or exercisable within 60 days of the date of
this prospectus, are deemed outstanding for computing the
percentage ownership of the stockholder holding the options or warrants,
but are not deemed outstanding for computing the percentage ownership of
any other stockholder. Unless otherwise indicated in the
footnotes to this table, we believe stockholders named in the table have
sole voting and sole investment power with respect to the shares set forth
opposite such stockholder's name. Unless otherwise indicated,
the officers, directors and stockholders can be reached at our principal
offices. Percentage of ownership is based on 118,657,123 shares
of common stock outstanding as of the date of December 3,
2009.
|
(2)
|
The
shares of common stock being offered by the selling stockholders include
the number of shares underlying warrants set forth in this column which
have an exercise price of $1.85 per share. The warrants are
fully vested and expire on November 12,
2012.
|
(3)
|
W.R.
Farguharson has power to vote and dispose of the shares that this selling
stockholder owns.
|
(4)
|
Michael
A. Steele has power to vote and dispose of the shares that this selling
stockholder owns.
|
(5)
|
Bruce
Burnam has power to vote and dispose of the shares that this selling
stockholder owns.
|
(6)
|
Irving
M. Bush has power to vote and dispose of the shares that this selling
stockholder owns.
|
(7)
|
Anthony
C. Lisa II has power to vote and dispose of the shares that this selling
stockholder owns.
|
(8)
|
Burton
Cutler has power to vote and dispose of the shares that this selling
stockholder owns.
|
(9)
|
D&D
Securities Company acted as our agent with respect to our March 22, 2007
and September 2, 2005 private placements under Regulation S. As
a commission for the services provided by D&D in connection with the
March 22, 2007 private placement, D&D received a cash commission of
$526,224 and warrants to purchase 75,175 shares of our common stock at an
exercise price of $4.50 per share (and which exercise price was reduced to
$1.85 per share on November 12, 2009). As a commission for the
services provided by D&D in connection with the September 2, 2005
private placement, D&D received a commission of $205,250 and 639,000
broker unit warrants exercisable at a price of $0.25 per unit
warrant. Each broker unit consisted of one share of our common
stock, one half of one share purchase warrant (with each whole warrant
entitling D&D to purchase one additional share for a period of nine
months from the closing of private placement at an exercise price equal to
$0.625 per share). Joe Pavao, President of D&D, has power
to vote and dispose of the shares that this selling stockholder
owns.
|
(10)
|
Each
of Jean-Claude Gourrut and Philippe Ragaz has power to vote and dispose of
the shares that this selling stockholder
owns.
|
(11)
|
John
Coast Sullenger has power to vote and dispose of the shares that this
selling stockholder owns.
|
(12)
|
Each
of Jerry Sapieha and Brian Lawrence has power to vote and dispose of the
shares that this selling stockholder
owns.
|
(13)
|
Each
of Leo Frank Docsal and Roland Isler has power to vote and dispose of the
shares that this selling stockholder
owns.
|
(14)
|
Richard
S. Gunther has shared power to vote and dispose of the shares that this
selling stockholder owns.
|
(15)
|
W.R.
Farguharson has power to vote and dispose of the shares that this selling
stockholder owns.
|
(16)
|
Anthony
Bune has power to vote and dispose of the shares that this selling
stockholder owns.
|
(17)
|
Anthony
Bune has power to vote and dispose of the shares that this selling
stockholder owns.
|
(18)
|
Dr.
Howard Rocket has power to vote and dispose of the shares that this
selling stockholder owns.
|
(19)
|
Joshua
Silverman has power to vote and dispose of the shares that this selling
stockholder owns.
|
(20)
|
Barbara
Jaffe has power to vote and dispose of the shares that this selling
stockholder owns.
|
(21)
|
Each
of Fred Kayne and Lenore Kayne has power to vote and dispose of the shares
that this selling stockholder owns.
|
(22)
|
Brian
W. Lawrence has power to vote and dispose of the shares that this selling
stockholder owns.
|
(23)
|
Susan
Vissers Lisa has power to vote and dispose of the shares that this selling
stockholder owns.
|
(24)
|
W.R.
Farguharson has power to vote and dispose of the shares that this selling
stockholder owns.
|
(25)
|
Lyman
O. Heidtke has power to vote and dispose of the shares that this selling
stockholder owns.
|
(26)
|
Mr.
Oring is a member of our board of directors. Mr. Oring has been
a member of our board of directors since October 6,
2008.
|
(27)
|
Larry
Goldberg has power to vote and dispose of the shares that this selling
stockholder owns.
|
(28)
|
Patrick
Michaels has power to vote and dispose of the shares that this selling
stockholder owns.
|
(29)
|
Martin
Bidermann has power to vote and dispose of the shares that this selling
stockholder owns.
|
(30)
|
Michele
I. Reis has power to vote and dispose of the shares that this selling
stockholder owns.
|
(31)
|
Ralph
I. Reis has power to vote and dispose of the shares that this selling
stockholder owns.
|
(32)
|
Rosalind
M. Reis has power to vote and dispose of the shares that this selling
stockholder owns.
|
(33)
|
Each
of Martin Cheyne and Robert Rose has power to vote and dispose of the
shares that this selling stockholder
owns.
|
(34)
|
S&P
Investors, Inc. acted as our agent with respect to our January 18, 2006
and February 23, 2007 private placements under Regulation D. As
a commission for the services provided by S&P in connection with the
January 18, 2006 private placement, S&P received a cash commission of
$87,750 and warrants to purchase 390,000 shares of our common stock at a
price of $0.65 per share. As a commission for the services
provided by S&P in connection with the February 23, 2007 private
placement, S&P received a cash commission of $254,940 and warrants to
purchase 36,420 shares of our common stock at an exercise price of $4.50
per share (and which exercise price was reduced to $1.85 per share on
November 12, 2009). Stuart G. Potter has power to vote and
dispose of the shares that this selling stockholder
owns.
|
(35)
|
Stuart
G. Potter has power to vote and dispose of the shares that this selling
stockholder owns.
|
(36)
|
Lord
Reay has power to vote and dispose of the shares that this selling
stockholder owns.
|
(37)
|
Robert
M. Franklin has power to vote and dispose of the shares that this selling
stockholder owns.
|
(38)
|
Majid
El Solh has power to vote and dispose of the shares that this selling
stockholder owns.
|
(39)
|
Richard
M. Cooper has power to vote and dispose of the shares that this selling
stockholder owns.
|
(40)
|
Dewayne
Chitwood has power to vote and dispose of the shares that this selling
stockholder owns.
|
(41)
|
Donald
Wohl has power to vote and dispose of the shares that this selling
stockholder owns.
|
(42)
|
Lisa
Sharpe Ruscica has power to vote and dispose of the shares that this
selling stockholder owns.
|
(43)
|
Zuri
Invest Limited acted as our agent with respect to our February 23, 2007
private placement under Regulation S. As a commission for the
services provided by Zuri in connection with the February 23, 2007 private
placement, Zuri received a cash commission of $111,100 and warrants to
purchase 12,300 shares of our common stock at an exercise price of $4.50
per share (and which exercise price was reduced to $1.85 per share on
November 12, 2009). Andrew Michaels has power to vote and
dispose of the shares that this selling stockholder
owns.
|
(44)
|
Robert
Calvent has power to vote and dispose of the shares that this selling
stockholder owns.
|
PLAN
OF DISTRIBUTION
The
selling stockholders may, from time to time, sell any or all of their securities
on any stock exchange, market or trading facility on which the shares are traded
or in private transactions. There is a limited public trading market
for our common stock. Our common stock is quoted under the symbol
“SRCH” on the OTCBB.
The
selling stockholders may use any one or more of the following methods when
selling securities:
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
broker-dealers
may agree with the selling stockholders to sell a specified number of such
shares at a stipulated price per
share;
|
|
·
|
a
combination of any such methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Broker-dealers
engaged by the selling stockholders may arrange for other broker-dealers to
participate in sales. Broker-dealers may receive commissions or
discounts from the selling stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions
involved. Any profits on the resale of shares of common stock by a
broker-dealer acting as principal might be deemed to be underwriting discounts
or commissions under the Securities Act. Discounts, concessions,
commissions and similar selling expenses, if any, attributable to the sale of
shares will be borne by a selling stockholder. The selling
stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act.
The
selling stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus after we have filed a supplement to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act supplementing or
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this
prospectus.
The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed a supplement to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act supplementing or amending the
list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this
prospectus.
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares of common stock purchased by them may be deemed to
be underwriting commissions or discounts under the Securities Act.
We are
required to pay all fees and expenses incident to the registration of the shares
of common stock. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling stockholder. If we are
notified by any selling stockholder that any material arrangement has been
entered into with a broker-dealer for the sale of shares of common stock, if
required, we will file a supplement to this prospectus. If the
selling stockholders use this prospectus for any sale of the shares of common
stock, they will be subject to the prospectus delivery requirements of the
Securities Act.
Under
applicable rules and regulations under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), any person engaged in the distribution of the
resale shares may not simultaneously engage in market making activities with
respect to our common stock for a period of two business days prior to the
commencement of the distribution. In addition, the selling
stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including Regulation M, which may limit
the timing of purchases and sales of shares of our common stock by the selling
stockholders or any other person. We will make copies of this
prospectus available to the selling stockholders and have informed them of the
need to deliver a copy of this prospectus to each purchaser at or prior to the
time of the sale.
Each of
D&D Securities Company and S&P Investors, Inc., who are selling
stockholders, has identified itself to us as a registered broker-dealer, and as
a result, each is an underwriter within the meaning of Section 2(a)(11) of the
Securities Act in connection with the sale of the shares registered hereunder
underlying such warrants. In addition, Paul R. Hobson, Bruce E.
Lazier, Stuart G. Potter and Midsouth Investor Fund LP, who also are selling
stockholders, have represented to us that they are affiliates of one or more
registered broker-dealers. Such persons also have represented to us
that they purchased the warrants relating to the shares registered hereunder in
the ordinary course of business, and at the time of the purchase of such
securities, such persons had no agreements or understandings, directly or
indirectly, with any other person to distribute such securities. In
addition, Martin B. Oring is a member of our board of
directors.
LEGAL
MATTERS
The
validity of the shares of common stock offered hereby will be passed upon for us
by Baker & Hostetler LLP, Los Angeles, California.
EXPERTS
The
financial statements included in the prospectus and elsewhere in the
registration statement, have been included in reliance on the reports of Brown
Armstrong, Paulden, McCown, Starbuck, Thornburgh & Keeter Accountancy
Corporation and Kyle L. Tingle, CPA, LLC, independent registered public
accountants, to the extent and for the periods indicated in their respective
reports, given on each of such firm’s authority as experts in accounting and
auditing.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC
allows us to “incorporate by reference” the information we file with it, which
means that we can disclose important information to you by referring you to
those documents instead of having to repeat the information in this
prospectus. The information incorporated by reference is considered
to be part of this prospectus, and later information that we file with the SEC
will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, between the date of this prospectus and the termination of the offering,
and also between the date of the initial registration statement and prior to
effectiveness of the registration statement:
|
·
|
our
quarterly reports on Form 10-Q for: (a) the quarter ended September 30,
2009, filed on November 13, 2009, (b) the quarter ended June 30, 2009,
filed on August 7, 2009, and (c) the quarter ended March 31, 2009, filed
on May 8, 2009;
|
|
·
|
our
annual report on Form 10-K for the year ended December 31, 2008, filed on
March 16, 2009 (and as amended on July 24, 2009, August 31, 2009 and
December 4, 2009);
|
|
·
|
our
current reports on Form 8-K or Form 8-K/A filed on January 5, 2009,
February 13, 2009, February 17, 2009, March 31, 2009, April 29, 2009, May
6, 2009, July 7, 2009, August 25, 2009, September 24, 2009 and November
13, 2009;
|
|
·
|
the
description of our common stock contained in our registration statement on
Form 10-SB, filed on July 11, 2000, including any amendment on reports
filed for the purpose of updating such
description;
|
|
·
|
the
description of our common stock purchase rights contained in our
registration statement on Form 8-A, filed on August 25, 2009 (and as
amended on September 24, 2009), including any amendment on reports filed
for the purpose of updating such description;
and
|
|
·
|
all
documents filed by us with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and before
termination of this offering.
|
To the
extent that any information contained in any filings we have made or will make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, or
any exhibit thereto, was furnished, rather than filed with the SEC, such
information or exhibit is specifically not incorporated by reference in this
prospectus.
This
prospectus is part of a registration statement on Form S-3 that we have filed
with the SEC under the Securities Act. The rules and regulations of
the SEC allow us to omit from this prospectus certain information included in
the registration statement. For further information about us and our
securities, you should refer to the registration statement and the exhibits and
schedules filed with the registration statement. With respect to the
statements contained in this prospectus regarding the contents of any agreement
or any other document, in each instance, the statement is qualified in all
respects by the complete text of the agreement or document, a copy of which has
been filed as an exhibit to the registration statement.
These
documents may also be accessed on our website at
www.searchlightminerals.com. Except as otherwise specifically
incorporated by reference in this prospectus, information contained in, or
accessible through, our website is not a part of this prospectus.
You may
request a copy of any or all of the information incorporated by reference, at no
cost, by writing or telephoning us at the following address:
Searchlight
Minerals Corp.
2441 W.
Horizon Ridge Pkwy., Suite 120
Henderson,
Nevada, 89052
Attention:
Corporate Secretary
(702)
939-5247
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have
filed with the SEC a registration statement on Form S-3 under the Securities Act
with respect to the shares of common stock offered hereby. This
prospectus, which constitutes a part of the registration statement, does not
contain all of the information set forth in the registration statement or the
exhibits and schedules filed therewith. For further information about
us and the common stock offered hereby, reference is made to the registration
statement and the exhibits and schedules filed therewith. Statements
contained in this prospectus regarding the contents of any contract or any other
document that is filed as an exhibit to the registration statement are not
necessarily complete, and each such statement is qualified in all respects by
reference to the full text of such contract or other document filed as an
exhibit to the registration statement.
A copy of
the registration statement and the exhibits and schedules filed therewith may be
inspected without charge at the public reference room maintained by the SEC,
located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and copies of
all or any part of the registration statement may be obtained from such offices
upon the payment of the fees prescribed by the SEC. Please call the
SEC at 1-800-SEC-0330 for further information about the public reference
room. We also file annual, quarterly and current reports, proxy
statements and other information with the SEC. The SEC also maintains
an Internet web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
SEC. The address of the site is
www.sec.gov
.
This
prospectus includes statistical data obtained from industry
publications. These industry publications generally indicate that the
authors of these publications have obtained information from sources believed to
be reliable but do not guarantee the accuracy and completeness of their
information. While we believe these industry publications to be
reliable, we have not independently verified their data.
TABLE
OF CONTENTS
|
Page
|
Summary
|
2
|
Special
Note Regarding Forward-Looking Statements
|
6
|
Risk
Factors
|
6
|
Use
of Proceeds
|
23
|
Selling
Stockholders
|
24
|
Plan
of Distribution
|
31
|
Legal
Matters
|
33
|
Experts
|
33
|
Incorporation
of Certain Information By Reference
|
33
|
Where
You Can Find Additional Information
|
34
|
You
should rely only on the information contained in this document. We
have not authorized anyone to give any information that is
different. This prospectus is not an offer to sell these securities
and is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted. The information in this prospectus is
complete and accurate as of the date on the cover, but the information may
change in the future.
SEARCHLIGHT
MINERALS CORP.
3,225,645
SHARES
Common
Stock
PROSPECTUS
____________,
2009
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution
The
following table sets forth the costs and expenses payable by Searchlight
Minerals Corp. in connection with the sale of the common stock being registered
hereby. The selling security holders will not bear any portion of
such expenses. All amounts are estimates except the SEC registration
fee.
Description
|
|
Amount to be Paid
|
|
|
|
|
|
SEC
registration fee
|
|
$
|
341.64
|
|
Legal
fees
|
|
|
804,000.00
|
|
Accounting
fees
|
|
|
102,000.00
|
|
Printing
and related expenses
|
|
|
25,000.00
|
|
|
|
|
|
|
TOTAL
|
|
$
|
931,341.64
|
|
Item
15. Indemnification of Directors and Officers
Our
Bylaws include provisions for the indemnification of our directors, officers and
certain other persons, to the fullest extent permitted by applicable Nevada
law.
Section
78.7502 of the Nevada Revised Statutes permits a corporation to indemnify its
directors, officers and certain other persons, as follows:
A
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, except an
action by or in the right of the corporation, by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with the action, suit or proceeding if he:
|
·
|
is
not liable pursuant to Nevada Revised Statues 78.138;
or
|
|
·
|
acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
|
The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person is liable pursuant to Nevada
Revised Statutes 78.138 or did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, or that, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
A
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if
he:
|
·
|
is
not liable pursuant to Nevada Revised Statutes 78.138;
or
|
|
·
|
acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the
corporation.
|
Indemnification
may not be made for any claim, issue or matter as to which such a person has
been adjudged by a court of competent jurisdiction, after exhaustion of all
appeals therefrom, to be liable to the corporation or for amounts paid in
settlement to the corporation, unless and only to the extent that the court in
which the action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such expenses as
the court deems proper.
To the
extent that a director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections 1 and 2 above, or in defense of any claim,
issue or matter therein, the corporation shall indemnify him against expenses,
including attorneys' fees, actually and reasonably incurred by him in connection
with the defense.
In
addition, Section 78.751 of the Nevada Revised Statutes permits a corporation to
indemnify its directors, officers and certain other persons, as
follows:
Any
discretionary indemnification pursuant to Nevada Revised Statues 78.7502, unless
ordered by a court or advanced pursuant to subsection 2, may be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
|
·
|
by
the board of directors by majority vote of a quorum consisting of
directors who were not parties to the action, suit or
proceeding;
|
|
·
|
if
a majority vote of a quorum consisting of directors who were not parties
to the action, suit or proceeding so orders, by independent legal counsel
in a written opinion; or
|
|
·
|
if
a quorum consisting of directors who were not parties to the action, suit
or proceeding cannot be obtained, by independent legal counsel in a
written opinion.
|
The
articles of incorporation, the bylaws or an agreement made by the corporation
may provide that the expenses of officers and directors incurred in defending a
civil or criminal action, suit or proceeding must be paid by the corporation as
they are incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any
rights to advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or otherwise by
law.
The
indemnification pursuant to Nevada Revised Statues 78.7502 and advancement of
expenses authorized in or ordered by a court pursuant to this
section:
|
·
|
does
not exclude any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under the articles of
incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his office, except
that indemnification, unless ordered by a court pursuant to Nevada Revised
Statues 78.7502 or for the advancement of expenses made pursuant to
subsection 2, may not be made to or on behalf of any director or officer
if a final adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was
material to the cause of action,
and
|
|
·
|
continues
for a person who has ceased to be a director, officer, employee or agent
and inures to the benefit of the heirs, executors and administrators of
such a person.
|
We have
liability insurance coverage for our directors and officers in the aggregate
amount of $15 million. We also intend to enter into separate
indemnification agreements with each of our directors and executive officers
that provide the maximum indemnity allowed to directors and executive officers
by the Nevada Revised Statutes and which allow for certain additional procedural
protections.
These
indemnification provisions and the indemnification agreements which we may enter
into with our officers and directors may be sufficiently broad to permit
indemnification of our officers and directors for liabilities (including
reimbursement of expenses incurred) arising under the Securities
Act.
Item
16. Exhibits
EXHIBIT
INDEX
The
following is a complete list of exhibits filed as part of this Registration
Statement, some of which are incorporated herein by reference from the reports,
registration statements and other filings of the issuer with the Securities and
Exchange Commission, as referenced below:
Reference
Number
|
|
Item
|
|
|
|
3.1
|
|
Articles
of Incorporation, as amended and restated to date
(1)
|
|
|
|
3.2
|
|
Amended
and Restated Bylaws
(2)
|
|
|
|
4.1
|
|
Specimen
Stock Certificate
(3)
|
|
|
|
4.2
|
|
Rights
Agreement, dated as of August 24, 2009, between Searchlight Minerals Corp.
and
Empire
Stock Transfer Inc.
(4)
|
|
|
|
4.3
|
|
Form
of US Warrant Certificate dated February 23, 2007, as amended
(5)
|
|
|
|
4.4
|
|
Form
of US Broker’s Warrant Certificate dated February 23, 2007, as amended
(5)
|
|
|
|
4.5
|
|
Form
of Non-US Warrant Certificate dated February 23, 2007, as amended
(5)
|
|
|
|
4.6
|
|
Form
of Non-US Broker’s Warrant Certificate dated February 23, 2007, as amended
(5)
|
|
|
|
4.7
|
|
Form
of Warrant Certificate dated March 21, 2007, as amended
(5)
|
|
|
|
4.8
|
|
Form
of Broker’s Warrant Certificate dated March 21, 2007, as amended
(5)
|
|
|
|
4.9
|
|
Form
of subscription agreement for February 2007 private placement (US
investors)
(6)
|
|
|
|
4.10
|
|
Form
of subscription agreement for February 2007 private placement (non-US
investors)
(6)
|
|
|
|
4.11
|
|
Form
of subscription agreement for March 2007 private placement (non-US
investors)
(6)
|
|
|
|
5.1
|
|
Legal
opinion of Baker & Hostetler LLP
|
|
|
|
23.1
|
|
Consent
of Dr. Richard F. Hewlett
|
|
|
|
23.2
|
|
Consent
of Nanominerals Corp.
|
|
|
|
23.3
|
|
Consent
of Mountain States R&D International Inc.
|
|
|
|
23.4
|
|
Consent
of Independent Mining Consultants, Inc.
|
|
|
|
23.5
|
|
Consent
of Arrakis, Inc.
|
|
|
|
23.6
|
|
Consent
of Baker & Hostetler LLP (contained in Exhibit 5.1)
|
|
|
|
23.7
|
|
Consent
of Brown Armstrong Paulden McCown Starbuck Thornburgh & Keeter
Accountancy Corporation
|
23.8
|
|
Consent
of Scott W. Lindsay
|
|
|
|
23.9
|
|
Consent
of Canadian Environmental & Metallurgical Inc.
|
|
|
|
23.10
|
|
Consent
of SGS Lakefield Research Limited
|
|
|
|
23.11
|
|
Consent
of Kyle L. Tingle, CPA, LLC
|
|
|
|
24.1
|
|
Power
of Attorney (included in the signature page to the Registration
Statement)
|
(1)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form S-1/A
(No. 333-133929) filed on December 23,
2008.
|
(2)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
April 29, 2009.
|
(3)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form 10-SB
originally filed on July 11, 2000.
|
(4)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form 8-A filed
on August 25, 2009 (No. 000-30995), which includes as Exhibit A thereto
the Form of Right Certificate and as Exhibit B thereto the Summary of
Common Stock Purchase Rights.
|
(5)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on May
6, 2009.
|
(6)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form S-1/A
(No. 333-133929) filed on May 7,
2009.
|
Item
17. Undertakings
The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To
include any prospectus required by section 10(a)(3) of the Securities Act of
1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of this registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the “Calculation of Registration Fee”
table in the effective registration statement;
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement;
provided,
however, that paragraphs (1)(i), (1)(ii) and (1)(iii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the SEC by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement, or is contained in a
form of prospectus filed pursuant to Rule 424(b) that is part of the
registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) That,
for purposes of determining liability under the Securities Act:
(i) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to
be part of the registration statement as of the date the filed prospectus was
deemed part of, and included in, the registration statement; and
(ii) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as
part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
providing the information required by section 10(a) of the Securities Act shall
be deemed to be part of and included in the registration statement as of the
earlier of the date such form of prospectus is first used after effectiveness or
the date of the first contract of sale of securities in the offering described
in the prospectus. As provided in Rule 430B, for liability purposes
of the issuer and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof. Provided,
however , that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such effective date.
(5) For
purposes of determining any liability under the Securities Act, each filing of
the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan’s
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(6) Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(7) That,
for the purpose of determining liability of the registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the
securities: The undersigned registrant undertakes that in a primary
offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned
registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Henderson, State of Nevada, on December 4, 2009.
SEARCHLIGHT
MINERALS CORP.
|
|
|
By:
|
/s/ Ian R. McNeil
|
|
Ian
R. McNeil
|
|
President
and Chief Executive Officer
|
|
(Principal
Executive Officer)
|
KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Ian R. McNeil and Carl S. Ager, and each of them acting
individually, his true and lawful attorneys-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to sign any registration
statement for the same offering covered by this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) promulgated under the
Securities Act of 1933, as amended, and all post-effective amendments thereto,
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that such attorneys-in-fact
and agents or any of them, or his or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer, President and Director
|
|
December 4, 2009
|
Ian R. McNeil
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
Vice President, Secretary, Treasurer and Director
|
|
December 4, 2009
|
Carl S. Ager
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer
|
|
December 4, 2009
|
Melvin L. Williams
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
Harry B. Crockett
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
December 4, 2009
|
Robert D. McDougal
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
December 4, 2009
|
Martin B. Oring
|
|
|
|
|
EXHIBIT
INDEX
The
following is a complete list of exhibits filed as part of this Registration
Statement, some of which are incorporated herein by reference from the reports,
registration statements and other filings of the issuer with the Securities and
Exchange Commission, as referenced below:
Reference
Number
|
|
Item
|
|
|
|
3.1
|
|
Articles
of Incorporation, as amended and restated to date
(1)
|
|
|
|
3.2
|
|
Amended
and Restated Bylaws
(2)
|
|
|
|
4.1
|
|
Specimen
Stock Certificate
(3)
|
|
|
|
4.2
|
|
Rights
Agreement, dated as of August 24, 2009, between Searchlight Minerals Corp.
and
Empire
Stock Transfer Inc.
(4)
|
|
|
|
4.3
|
|
Form
of US Warrant Certificate dated February 23, 2007, as amended
(5)
|
|
|
|
4.4
|
|
Form
of US Broker’s Warrant Certificate dated February 23, 2007, as amended
(5)
|
|
|
|
4.5
|
|
Form
of Non-US Warrant Certificate dated February 23, 2007, as amended
(5)
|
|
|
|
4.6
|
|
Form
of Non-US Broker’s Warrant Certificate dated February 23, 2007, as amended
(5)
|
|
|
|
4.7
|
|
Form
of Warrant Certificate dated March 21, 2007, as amended
(5)
|
|
|
|
4.8
|
|
Form
of Broker’s Warrant Certificate dated March 21, 2007, as amended
(5)
|
|
|
|
4.9
|
|
Form
of subscription agreement for February 2007 private placement (US
investors)
(6)
|
|
|
|
4.10
|
|
Form
of subscription agreement for February 2007 private placement (non-US
investors)
(6)
|
|
|
|
4.11
|
|
Form
of subscription agreement for March 2007 private placement (non-US
investors)
(6)
|
|
|
|
5.1
|
|
Legal
opinion of Baker & Hostetler LLP
|
|
|
|
23.1
|
|
Consent
of Dr. Richard F. Hewlett
|
|
|
|
23.2
|
|
Consent
of Nanominerals Corp.
|
|
|
|
23.3
|
|
Consent
of Mountain States R&D International Inc.
|
|
|
|
23.4
|
|
Consent
of Independent Mining Consultants, Inc.
|
|
|
|
23.5
|
|
Consent
of Arrakis, Inc.
|
|
|
|
23.6
|
|
Consent
of Baker & Hostetler LLP (contained in Exhibit 5.1)
|
|
|
|
23.7
|
|
Consent
of Brown Armstrong Paulden McCown Starbuck Thornburgh & Keeter
Accountancy Corporation
|
|
|
|
23.8
|
|
Consent
of Scott W. Lindsay
|
|
|
|
23.9
|
|
Consent
of Canadian Environmental & Metallurgical Inc.
|
|
|
|
23.10
|
|
Consent
of SGS Lakefield Research Limited
|
|
|
|
23.11
|
|
Consent
of Kyle L. Tingle, CPA, LLC
|
|
|
|
24.1
|
|
Power
of Attorney (included in the signature page to the Registration
Statement)
|
(1)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form S-1/A
(No. 333-133929) filed on December 23,
2008.
|
(2)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
April 29, 2009.
|
(3)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form 10-SB
originally filed on July 11, 2000.
|
(4)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form 8-A filed
on August 25, 2009 (No. 000-30995), which includes as Exhibit A thereto
the Form of Right Certificate and as Exhibit B thereto the Summary of
Common Stock Purchase Rights.
|
(5)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on May
6, 2009.
|
(6)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form S-1/A
(No. 333-133929) filed on May 7,
2009.
|
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