UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of SEPTEMBER, 2004.
Commission File Number: 0-30464
IMA EXPLORATION INC.
--------------------------------------------------------------------------------
(Translation of registrant's name into English)
#709 - 837 West Hastings Street, Vancouver, British Columbia, V6C 3N6, Canada
--------------------------------------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F: FORM 20-F [X] FORM 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): _______
Indicate by check mark whether the registrant by furnishing the information
contained in this Form, is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
YES [ ] NO [ ]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3- 2(b): 82-_____________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
IMA EXPLORATION INC.
-------------------------------------
Date: SEPTEMBER 10, 2004 /s/ Joseph Grosso
------------------------------ -------------------------------------
Joseph Grosso,
President & CEO
IMA EXPLORATION INC.
TERMINAL CITY CLUB TOWER
SUITE 709
837 WEST HASTINGS STREET
VANCOUVER, BC V6C 3N6
TELEPHONE: (604) 687-1828
FACSIMILE: (604) 687-1858
INITIAL ANNUAL INFORMATION FORM
FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2003
SEPTEMBER 7, 2004
TABLE OF CONTENTS
Page
PRELIMINARY NOTES.............................................................ii
GLOSSARY OF TERMS..............................................................1
CORPORATE STRUCTURE............................................................3
Name, Address and Incorporation......................................3
Intercorporate Relationships..........................................4
GENERAL DEVELOPMENT OF THE BUSINESS............................................5
Three Year History....................................................5
Financings and Other Corporate Developments...........................6
Reorganization........................................................7
DESCRIPTION OF BUSINESS........................................................7
Overview..............................................................7
Principal Properties of IMA...........................................8
Navidad Project..............................................8
Navidad Area Properties (Other than the Navidad Project)....20
Taquetren Property..........................................20
Regalo Property.............................................20
Noel Property...............................................21
Trucha Property.............................................21
Mara Property...............................................21
Condor And Alamo Properties.................................21
Nina And Carlota Properties.................................21
Pampa 3 Property............................................21
Colonia Property............................................22
Julie Property..............................................22
Sierra 1 Property...........................................22
Sierra 2 Property...........................................22
Sierra 3 Property...........................................22
Employees............................................................22
Risk Factors.........................................................23
Dividends.....................................................................28
General Description of Capital Structure......................................28
market for securities.........................................................29
Escrowed Securities...........................................................29
directors and officers........................................................30
Name, Occupation and Security Holding................................30
Cease Trade Orders, Bankruptcies, Penalties or Sanctions.............31
Conflicts of Interest................................................32
Legal Proceedings.............................................................32
Interest of management and others in material transactions....................32
Transfer Agents and Registrars................................................33
Material Contracts............................................................33
interests of experts..........................................................34
additional information........................................................34
ii
PRELIMINARY NOTES
INCORPORATION OF DOCUMENTS BY REFERENCE
This Annual Information Form ("AIF") incorporates by reference certain parts of
the Company's Management Information Circular dated May 14, 2004 (the "IMA
Circular"). Copies of all materials incorporated by reference herein may be
obtained from SEDAR, under the Company's name, at www.sedar.com.
DATE OF INFORMATION
All information contained in this AIF is as of August 31, 2004, unless otherwise
stated.
CURRENCY AND EXCHANGE RATES
Unless otherwise specified, in this AIF, all references to "dollars" or to "$"
are to Canadian dollars and all references to "U.S. dollars" or to "US$" are to
U.S. dollars.
The following table sets forth: (i) the rate of exchange for the Canadian
dollar, expressed in United States dollars in effect at the end of the periods
indicated, (ii) the average of exchange rates in effect on the last day of each
month during such periods, and (iii) the high and low exchange rates during such
periods based on the noon rate of exchange as reported by the Bank of Canada for
conversion of Canadian dollars into United States dollars.
YEAR ENDED DECEMBER 31
2003 2002 2001
US $ US $ US $
U.S. DOLLAR PER CANADIAN DOLLAR
Rate at end of period: 0.7617 0.6413 0.6278
Average rate for period: 0.7136 0.6368 0.6458
High for period: 0.7710 0.6598 0.6688
Low for period: 0.6338 0.6179 0.6230
The noon rate of exchange on August 31, 2004, as reported by the Bank of Canada
for the conversion of Canadian dollars into United States dollars was Canadian
$1.00 equals US$0.7595.
FINANCIAL INFORMATION AND ACCOUNTING PRINCIPLES
The summaries of financial information contained in this AIF are reported in
Canadian dollars. All such financial information is derived from the annual
financial statements of the Company for the financial year end December 31, 2003
which have been prepared in accordance with Canadian generally accepted
accounting principles.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this AIF constitute "forward-looking
statements". When used in this document, the words "may", "would", "could",
"will", "intend", "plan", "propose", "anticipate", "believe", "estimate",
"expect" and similar expressions, as they relate to the Company or its
management, are intended to identify forward-looking statements. Such statements
reflect the Company's current views with respect to future events and are
subject to certain risks, uncertainties and assumptions. Many factors could
cause the Company's actual results, performance or achievements that may be
expressed or implied by such forward-looking statements, including, among
others, business conditions in the general economy; changes in governmental
regulation of the mining industry; gold price volatility; volatility of
commodity prices; mining industry operational hazards and environment concerns;
uncertainty of estimates of mineral deposits; government regulation and
iii
requirements for permits and licenses and competition in addition to those which
are discussed under the heading "Risk Factors". Should one or more of these
risks or uncertainties materialize, or should assumptions underlying the
forward-looking statements prove incorrect, actual results may vary materially
from those described herein as intended, planned, anticipated, believed,
estimated or expected. The Company does not intend, and does not assume any
obligation, to update these forward-looking statements.
The terms "Mineral Resource" "Measured Mineral Resource", "Indicated Mineral
Resource" and "Inferred Mineral Resource" used in the Company's disclosure are
Canadian mining terms as defined in accordance with National Instrument 43-101 -
Standards of Disclosure for Mineral Projects under the guidelines set out in the
Canadian Institute of Metallurgy and Petroleum Standards. Mineral Resources
which are not Mineral Reserves do not have demonstrated economic viability.
-1-
GLOSSARY OF TERMS
Except as otherwise defined, the following terms, when used herein, shall have
the following meanings:
Breccia A rock containing generally angular fragments of itself or
some other rock.
Cateo In Argentina, a cateo is an exploration concession granted
for a period of up to 1,100 days. In areas where field work
seasons are limited, only the available field season will be
considered in determining the 1,100 days. A cateo gives the
holder the exclusive right to explore the area, subject to
certain pre-existing rights of owners of mines within the
area and abutting owners of cateos. Through the process of
exploration, the owner of the cateo may make and file
"manifestations" of discovery (see below) and petition the
mining authority for the granting of mines (see below). A
cateo may be up to 10,000 hectares in size. A single legal
person may not hold more than 20 cateos or 200,000 hectares
of cateos in any one province. When the cateo is officially
granted, a one time payment of about US $0.35 (Pesos $0.80)
per hectare is required.
Clastic Rock components consisting of fragments derived by
mechanical erosion of pre-existing rocks.
G/T grams per tonne
Km Kilometre
Mine In Argentina, a mine or "mina" is a real property interest.
It is a right of exploration granted on a permanent basis
after the completion of an official survey for as long as
the right is diligently utilized and semi-annual payments of
US$17.50 (Pesos $40) per claim are made. A mine may consist
of one or several claims or "pertinencias". In the case of
vein deposits, each claim is a maximum of 200 by 300 meters
or six hectares; for disseminated deposits, each claim is up
to one square kilometer or 100 hectares.
Navidad Area The Navidad Project and certain other mineral properties
Properties held indirectly by IMA in central Chubut Province,
Argentina.
Navidad Project IMA's silver-lead-copper project located in Chubut
Province,Argentina.
Ppb parts per billion
Ppm parts per million
SEDAR The System for Electronic Document Analysis and Referral.
Sedimentary Rocks Descriptive term for a rock formed of sediment, namely solid
material both mineral and organic, deposited from suspension
in a liquid.
Stream Sediment A sample of fine sediment derived from the mechanical action
Sample of the stream.
Sulfide A compound of sulfur combined with one or more metallic or
semi-metallic elements.
TSX-V TSX Venture Exchange
Veins An occurrence of minerals, having been intruded into another
rock, forming tabular shaped bodies.
-2-
METALS
Ag Silver
As Arsenic
Au Gold
Bi Bismut
Ca Calcium
Cd Cadmium
Co Cobalt
Cu Copper
Fe Iron
Hg Mercury
Mg Magnesium
Mn Manganese
Mo Molybdenum
Ni Nickel
P Phosphorus
Pb Lead
S Sulfur
Sb Antimony
T1 Thallium
Zn Zinc
MINERALS
Biotite An iron and magnesium bearing mica mineral.
Carbonate A mineral containing the radical CO3.
Hornblende A complex hydrated aluminosilicate of magnesium, iron and
sodium.
Pyroxene An aluminosilicate of magnesium and iron.
ROCK TYPES
Limestone A sedimentary rock consisting chiefly of calcium carbonate.
Sandstone A clastic sedimentary rock composed largely of sand-sized
grains, principally quartz.
Shale A clastic sedimentary rock derived from very fine-grained
sediment (mud).
-3-
CORPORATE STRUCTURE
NAME, ADDRESS AND INCORPORATION
IMA Exploration Inc. ("IMA" or the "Company") was incorporated under the Company
Act (British Columbia, Canada) (the "Company Act") on September 17, 1979, as
Gold Star Resources Ltd. On May 1, 1990, IMA filed an Altered Memorandum to
reflect its name change to EEC Marketing Corp. On January 13, 1992, IMA filed an
Altered Memorandum to reflect its name change to Amera Industries Corp. IMA
filed another Altered Memorandum on February 9, 1995 to reflect its name change
to International Amera Industries Corp. On February 20, 1996, IMA filed an
Altered Memorandum, changing its name to IMA Resource Corporation. On July 7,
1998, IMA filed an Altered Memorandum, changing its name to IMA Exploration Inc.
On March 29, 2004, the new British Columbia Business Corporations Act (the
"BCBCA") came into force in British Columbia and replaced the Company Act, which
is the statute that previously governed IMA. Under the BCBCA, IMA has two years
within which to transition ("Transition") itself under the new statute. The
Board of Directors (the "Board") of IMA approved the Transition of IMA under the
BCBCA on April 29, 2004. IMA filed a transition application with the Registrar
of Companies British Columbia and completed the Transition on May 4, 2004.
The head office of the Company is located at Terminal City Club Tower, Suite
709, 837 West Hastings Street, Vancouver, BC V6C 3N6. The Company's registered
office is located at Suite 3350 - 1055 Dunsmuir Street, Vancouver, British
Columbia, V7X 1L2.
-4-
INTERCORPORATE RELATIONSHIPS
IMA presently carries on its business operations through the following
subsidiaries:
----------------------
IMA EXPLORATION INC.
(B.C.)
----------------------
|
|
|
100%
|
|
----------------------
IMA HOLDINGS CORP.
(B.C.)
----------------------
|
Canada |
--------------------------------------------------------------------------------
|
100%
|
|
----------------------
IMA NAVIDAD (BVI) INC.
(BVI)
----------------------
|
|
|
100%
|
|
-----------------------------------
INVERSIONES MINERAS ARENGTINAS INC.
(BARBADOS)
-----------------------------------
|
BVI/Barbados |
--------------------------------------------------------------------------------
Argentina |
100%
|
|
-----------------------------------
INVERSIONS MINERAS ARGENTINAS S.A.
(ARGENTINA)
-----------------------------------
|
|
------------
NAVIDAD AREA
PROPERTIES
------------
-5-
GENERAL DEVELOPMENT OF THE BUSINESS
THREE YEAR HISTORY
IMA has been actively acquiring and exploring mineral properties in Peru and
Argentina since 1996 . In most cases, IMA has conducted the exploration work on
the properties, however in certain cases, the properties were optioned out and
the work was conducted by third parties.
ARGENTINEAN PROPERTIES
In a 1997 agreement with the Company, Barrick Gold Corporation ("Barrick")
subscribed to a $1.5 million private placement, of which the Company had to
spend a minimum of $1,125,000 on its Valle de Cura properties in northwestern
Argentina before August 17, 2000. An August 1999 agreement granted Barrick an
option to earn a 50% interest in either the Rio de las Taguas or Potrerillos
properties in the Valle de Cura region for a US$250,000 payment and exploration
expenditure commitments. In 2000, Barrick exercised warrants for net proceeds to
the Company of $2.25 million, part of which were used to fund the Company's
exploration program in the Valle de Cura region from October 2000 to March 2001.
In December 2003, Barrick served notice that they would not be exercising the
option to earn a 50% interest in either the Rio de las Taguas or Potrerillos
properties.
In March 2001, IMA granted Rio Tinto Mining and Exploration Limited ("Rio
Tinto") an option to earn up to a 70% interest in the Mogote copper gold
property. Rio Tinto terminated the option in December 2001 citing budget
constraints.
In February 2003, IMA announced that it acquired by staking the Navidad Project
in Chubut Province, Argentina. From that point, IMA focused its efforts on its
Navidad properties in Chubut Province located in southern Argentina. The
preliminary results of its initial exploration efforts were very encouraging. A
Phase I drilling program commenced in November 2003 and continued into March
2004. A second phase commenced in late May 2004. IMA believes that the Navidad
project is worthy of its primary interest and accordingly has focused the
majority of its available resources on this project and expects to continue to
do so.
In January 2004, IMA announced that it entered into an option agreement with
Amera Resources Corporation ("Amera") pursuant to which Amera was granted an
option to acquire 51% interest in the Mogote Property in San Juan, Argentina. In
April 2004, IMA and Amera amended this agreement to allow Amera to earn up to a
75% interest in the Mogote Property.
On May 25, 2004, IMA announced that Snowden Mining Industry Consultants Inc. had
completed a Resource estimate (the "Snowden Report") at Galena Hill on the
Navidad Property. The Snowden Report concluded that Galena Hill contained an
indicated resource of 63.6 million tones grading 101 g/t silver and 1.76% lead
using a 50 gram per tonne silver equivalent cut off grade. See "Description of
Business - Principal Properties of IMA - Navidad Property - Resource Estimate".
Under the Arrangement (described below under "Reorganization"), all of IMA's
Argentinean properties other than the Navidad Project and certain other Navidad
area properties, have been transferred to Golden Arrow.
PERUVIAN PROPERTIES
From 1997 to June 2002, IMA had been actively exploring the Rio Tabaconas
property in Peru. In June 2002, IMA announced that it would take a more measured
approach to exploring this property. This action was taken based on the advice
of expert advisors and as a result of general scepticism in Peru and opposition
towards various types of regional development, including power plants and mining
activity. Since June 2002, IMA has not conducted any further exploration
activity on this property, but has been attempting to finalize a
Company/Community Plan to deal with the issues cited.
-6-
The Peruvian properties, known as Rio Tabaconas, have been transferred to Golden
Arrow pursuant to the Arrangement (described below under "Reorganization").
FINANCINGS AND OTHER CORPORATE DEVELOPMENTS
The following is a summary of the major financing and other corporate events
since January 1, 2001.
In July 2001, the Company completed a non-brokered private placement of 3
million units at a price of 26 cents per unit for gross proceeds of $780,000.
The proceeds were used to help finance the companies exploration programs in
Peru and for general working capital.
On July 19, 2001, the Company announced the granting of 1,635,500 stock options
exercisable for 5 years at a price of 40 cents per share. In addition, the
Company amended the terms of 2,195,000 and 1,397,167 outstanding warrants to
extend the expiry date from September 15, 2001, April 19, 2002 and March 16,
2002 to September 15, 2004, April 19, 2005 and March 16, 2005, respectively.
In January 2002, IMA completed a private placement to raise gross proceeds of
$1,026,000 through the sale of 2,700,000 units at 38 cents per unit. The funds
were used to help finance the Company's exploration programs in Peru and for
general working capital. Each whole warrant entitled the holder to purchase 1
additional common share for a period of one year from closing at 45 cents per
share.
In April 2002, IMA raised gross proceeds of $800,000 through an offering of
1,777,778 units at 45 cents per unit. The proceeds from the financing were used
for further exploration, property payments and for general working capital.
Canaccord Capital Corporation acted as lead agent on this financing.
In May 2002, IMA completed a non-brokered private placement for gross proceeds
of $775,000 through the sale of 1,722,222 units at 45 cents per unit. The funds
were used to help finance the Company's exploration programs in Peru and for
general working capital.
In September 2002, IMA completed a financing for gross proceeds of $730,810
through the sale of 1,154,915 units at a price of 47 cents per unit. The
proceeds of the financing were used for general working capital.
In November 2002, IMA amended the expiry dates for 1,237,800 warrants from
December 18, 2002 and 382,200 warrants from January 29, 2003 to March 31, 2003.
In April 2003, IMA completed a financing for gross proceeds of $2,610,000
through the sale of 2,900,000 units at a price of 90 cents per unit. The
proceeds were used for general working capital.
In September 2003, IMA announced that it entered into an agreement with
Canaccord Capital Corporation and First Associates Investments Inc. who agreed
to purchase on a bought deal basis, 2 million units of the Company at purchase
price of $2.25 per unit for total proceeds of 4.5 million.
On October 6, 2003, IMA announced that it received a letter from Toronto based
Aquiline Resources Inc. suggesting that the company used confidential
information to acquire the Navidad Property. In October 2003, IMA commenced a
legal action in the Supreme Court of British Columbia against Aquiline Resources
Inc. claiming damages, an injunction and costs for injurious falsehood,
interference with contractual relations, interference with economic interests
and other claims. See "Legal Proceedings". On October 6, 2004, the Company's
press release indicated that the bought deal financing had been cancelled.
In February 2004, IMA completed a bought deal financing for gross proceeds of
$4.65 million with a syndicate of underwriters led by Canaccord Capital
Corporation and including First Associates. The proceeds of the financing were
used primarily for exploration of the Navidad Project.
-7-
In March 2004, IMA announced that Minera Aquiline Argentine SA, a wholly owned
subsidiary of Aquiline Resources Inc., had commenced an action in British
Columbia asserting that the Company unlawfully used confidential information and
seeking a constructive trust over the Navidad Project in Argentina and damages.
In April 2004, IMA filed a statement of defence to the claim of Aquiline. See
"Legal Proceedings".
On May 3, 2004, IMA announced its proposed reorganization to spin off its non
Navidad Properties into a new public company to be called Golden Arrow Resources
Corporation. See "Reorganization" below.
REORGANIZATION
Effective July 7, 2004 (the "Effective Date"), IMA's assets were reorganized
into two separate public companies, IMA, and Golden Arrow Resources Corporation
("Golden Arrow"). The reorganization was carried out via a statutory plan of
arrangement (the "Arrangement") under the provisions of the BCBCA pursuant to an
arrangement agreement (the "Arrangement Agreement") dated May 14, 2004 among the
Company, Golden Arrow and IMA Holdings Corp. ("IMA Holdco"). Under the
Arrangement, IMA's most advanced project, the Navidad silver-lead-copper project
and certain other Navidad area properties in central Chubut Province, remained
in IMA, while IMA's other properties and related assets and $750,000 cash were
transferred to Golden Arrow. Golden Arrow will be committed to grass roots
exploration while IMA will retain the Navidad project and focus on its
development. As of the Effective Date, IMA and Golden Arrow had the same
shareholders.
The Arrangement was intended to enhance shareholder value by enabling each
company to focus on the development of its own properties, and by allowing
shareholders to hold an interest in Golden Arrow which reflects the value of
IMA's portfolio of exploration projects other than the Navidad properties
Shareholder approval was received at the Company's June 24, 2004 Annual and
Special General Meeting and court and regulatory approvals have been received.
Pursuant to the Arrangement Agreement, the common shares of Golden Arrow were
distributed to shareholders of IMA in proportion to their present shareholdings
in IMA and on the basis of one Golden Arrow share for every 10 IMA shares held.
Golden Arrow's common shares commenced trading on the TSX-V on July 9, 2004
under the symbol "GRG".
Under the Arrangement, all outstanding common share purchase warrants (the "IMA
Warrant") of IMA on the Effective Date will upon exercise of such IMA Warrant
after the Effective Date, entitle the holder thereof to receive one common
shares of IMA and one tenth of a Golden Arrow common share at the exercise price
per share provided in the certificate representing such IMA Warrant, subject to
the terms and conditions of such certificate. The proceeds from the exercise of
the IMA Warrants will be split between IMA and Golden Arrow based on a formula
set out in the Arrangement.
IMA and Golden Arrow have the same Board of Directors as IMA, and it is intended
that Golden Arrow will be managed by the same management team as IMA.
Further details of the Arrangement are set out in the IMA Circular under the
heading "The Arrangement" which section is incorporated by reference into this
AIF. This document has been filed on SEDAR and is available for review at
www.sedar.com.
DESCRIPTION OF BUSINESS
OVERVIEW
The Company is a natural resource company engaged in the business of
acquisition, exploration and development of mineral properties in Argentina. The
Company's strategy has been to acquire properties for the purpose of mineral
exploration and exploitation. In the event the Company discovers mineralization
capable of economic production, it intends to develop or seek a joint venture
partner and/or to sell all or a portion of its interest in the subject property
to finance the development of such property. At present, the Company has no
producing properties and consequently has no current operating income or cash
flow. As of this date the Company is an exploration stage company and has not
generated any revenues. There is no assurance that a commercially viable mineral
-8-
deposit exists on any of the properties. Further exploration will be required
before a final evaluation as to the economic and legal feasibility of the
Navidad properties is determined.
PRINCIPAL PROPERTIES OF IMA
NAVIDAD PROJECT
On February 3, 2003 IMA announced the discovery of high-grade silver-lead-copper
mineralization at its 100% owned 10,000 hectare (24,700 acres) Navidad Project
in north central Chubut, Argentina. The mineralization had been discovered by
prospecting on December 10, 2002 and was a new discovery as there were no
recorded occurrences of silver mineralization in the area. This was surprising
due to the fact that high-grade, structurally-controlled mineralization and the
moderate-grade replacement style mineralization with abundant visible lead and
copper mineralization outcrops and subcrops over a strike length of thousands of
meters. There was no evidence of prior prospecting or sampling activity anywhere
despite the area being inhabited. Furthermore a fence line passes through the
central part of the outcropping high-grade mineralization and blocks of rock
containing obvious green copper oxides had been used to prop up fence posts.
The following disclosure with respect to the Navidad Project (other than under
the headings "Resource Estimate" and "Planned Future Work") is based upon the
Technical Report for the Navidad Project dated May 12, 2004. The Technical
Report for the Navidad Project was prepared by Dr. Paul Lhotka, P. Geo. PH.D.
Dr. Lhotka is a "qualified person" for the purposes of National Instrument
43-101 - Standards of Disclosure for Mineral Projects. The Technical Report with
respect to the Navidad Project has been filed on SEDAR and is available for
review at www.sedar.com.
Property description and location
The Navidad Project comprises 10,000 hectares consisting of one individual claim
(cateo) in the Gastre Department of the Province of Chubut. It is centered at
approximately 42.415 decimal degrees south latitude and 68.82 decimal degrees
west longitude in the Campo Inchauspe datum. The above point has been located in
the field by professional surveyors and has the coordinates 2,514,856.53 east
and 5,304,454.84 north in Gauss Kruger Campo Inchauspe zone 2 and was assigned
the local grid coordinates 50,000E, 10,000N with an elevation of 1218.18 m
(Height Above Ellipsoid WGS1984). The local grid is rotated 30 degrees to the
east of Gauss Kruger north.
Mineral Titles included in the Navidad Project:
File Number Year Date Type Name Hectares
----------- ---- ---------------- ----- ---- --------
13984 2002 December 6, 2002 CATEO Gan 10,000
Accessibility and infrastructure
The property is located in the north-central part of the Province of Chubut
within the prominent Gastre structural lineament in a somewhat uplifted area.
Minimum elevation within the Gan cateo is 1060m while the maximum elevation is
1460m. Relief is gentle with minor local exceptions.
Vegetation is sparse and comprises grasses and low brush. Trees are absent. The
climate is characterized as continental semi-arid with moderate temperatures in
summer often accompanied by high winds. Winters are cold with temperatures often
dipping below zero Celsius, but are generally not characterized by extended
sub-zero periods. Most of the precipitation falls in winter as both rain and
snow and as such conditions may not favor field work in the winter, but
depending on the year, work may be possible even during winter.
Access to the property is possible year around by two-wheel drive pick-up truck
except in very wet periods. Gastre is the nearest town some 40km to the west and
the town of Gan Gan is about the same distance to the east; both are along Route
4, a gravel highway. The nearest airport with scheduled (rare) service is in
Esquel four hours drive to the southwest by gravel road. To the north about two
hours drive, in the province of Rio Negro, is the town of Ingenerio Jacobacci
which is larger than Gastre and has much better services including banking. From
Ingenerio Jacobacci it is another three and a half hours to the west to
-9-
Bariloche, a city with multiple daily flights and a centre for tourism year
around. From Gastre to the Atlantic Coast it is approximately seven hours drive
virtually all on gravel roads. Along the coast infrastructure is much better
with paved, roads, ports and airports and larger population centers.
During normal road conditions the trip from Gastre to the Navidad Project is
about 30 minutes.
A high voltage power line running from the Futaleufu site to an aluminum smelter
at Puerto Madryn passes roughly 50km south of the Navidad Project. The
government has announced a contract tendered to construct this power line to the
national power grid at Choele Choel in Rio Negro to the north in order to
facilitate expansion of the aluminum smelter and other projects. Construction of
the connection will bring the national power grid within easy reach of Navidad.
History
The Navidad Project has no known exploration history and there is no indication
that any of the showings were previously discovered or sampled. The only nearby
sign of previous mining activity lies about 3km north west of Navidad Hill where
some barite veins were opened up by trenches presumably with the idea of selling
barite as an industrial mineral to the petroleum industry. Sampling during the
surface work showed these veins have very low values of silver, copper and lead.
Verbal reports suggest the trenching was done about 20 years ago. Effectively
the exploration history of Navidad Project began on December 10, 2002 with the
discovery of outcropping mineralization by an IMA geologist. Subsequent surface
work comprised extensive geological mapping, rock sampling, soil sampling and
geophysics including magnetic, induced polarization and gravity surveys.
Regional and local geology
According to the preliminary map 4369-II at 1:250,000 scale of SEGEMAR, the
national geological service of Argentina, the Navidad Project mineralization is
mapped as part of the Upper Jurassic Canadon Asfalto Formation. Province wide
geological maps of Chubut by the same organization indicate that the Canadon
Asfalto is restricted to the central part of Chubut. The type section of the
formation is located along the Rio Chubut southwest of the project area between
Paso Sapo and Paso de Indios.
Much of the remainder of the Navidad Project is underlain by the Lonco Trapial
Formation of Lower Jurassic age and finally older, poorly age-defined basement
granitic rocks of Paleozoic age.
The Canadon Asfalto Formation comprises fine sandstones, limestones and
volcanics of continental and lacusterine environment. It appears significant
regional variations in composition and depositional environment are present
within the formation as currently defined. Both fossils and a K/Ar radiometric
age of 173 +/-4 Ma indicate a middle to upper Jurassic age.
The Lonco Trapial Formation, including Tacquetren Formation and other
equivalents, is more widely distributed in Chubut excluding the Andean portion.
The formation is volcanic dominant and appears to be the first phase of infill
of local grabens in the developing San Jorge Basin. Again, significant regional
variability in composition and depositional facies is indicated, with
compositions ranging from felsic to mafic.
Apparently one of the controlling features of the San Jorge Basin is the
long-lived, major structure known as the Gastre Fault. This fault is a wide,
northwest-trending zone of fracturing that appears to have controlled deposition
of units and then dismembered them from the Jurassic through the present.
Faulting related to the Gastre Fault is present in the Navidad Project area, but
the most striking structural elements in the area are a series of northwest
trending folds.
-10-
Diamond Drilling Program
Connors Argentina S. A. ("Connors") of Mendoza Argentina commenced drilling on
November 26, 2003 and finished drilling on March 10, 2004, including a 29 day
break during the Christmas/New Years holidays. During the program 8853.58m were
drilled in 53 holes for an average of 118m per day including moves and
breakdowns and excepting only the holiday break noted above.
All but one of the holes recovered HQ diameter (61mm) core. The exception was
NV03-04 which was cored to 244.20m with HQ and then recovered NQ core to the end
of the hole at 284.98m. The drill supplied was containerized and mounted on a
tracked undercarriage capable of moving itself. Water for drilling was brought
to the drilling sites by a water truck of 9,000 liters that was subcontracted by
Connors. The water was trucked from several local sources under agreement with
local surface land owners.
Down hole surveys of the holes were done on all but one hole using a Tropari
instrument. This instrument is a magnetic compass and inclinometer with a timing
mechanism that blocks the instrument once it has stabilized in the hole. It is
then retrieved and read by the geologist. In general the holes had little
deviation because of the relatively large diameter of the drill string and the
relatively short lengths of the holes.
Surveyed coordinates and orientations of Navidad drillholes
Dip
E GK faja 2 N GK faja 2 Az wrt Down
(Campo (Campo Elevation GK CI from Length
Hole ID Local E Local N Inchauspe) Inchauspe) m HAE North Vertical (m)
NV03-01 50,000.6 10,005.0 2,514,819.5 5,304,458.8 1,219.5 210.0 -45.0 109.50
NV03-02 50,000.0 9,971.1 2,514,802.0 5,304,429.8 1,211.2 30.0 -45.0 154.50
NV03-03 51,160.5 9,660.1 2,515,651.6 5,303,580.3 1,178.4 210.0 -45.0 178.50
NV03-04 51,160.1 9,669.6 2,515,655.9 5,303,588.6 1,178.6 30.0 -45.0 284.98
NV03-05 51,160.1 9,802.1 2,515,722.2 5,303,703.3 1,176.6 30.0 -60.0 217.70
NV03-06 49,961.7 9,972.3 2,514,769.5 5,304,449.9 1,218.4 30.0 -45.0 136.20
NV03-07 49,919.7 9,965.9 2,514,729.9 5,304,465.4 1,222.2 30.0 -45.0 108.90
NV03-08 49,959.8 10,016.3 2,514,789.8 5,304,489.0 1,226.4 210.0 -45.0 146.00
NV03-09 49,919.9 10,027.4 2,514,760.8 5,304,518.6 1,231.4 210.0 -45.0 106.10
NV03-10 49,961.9 9,953.4 2,514,760.2 5,304,433.5 1,215.1 30.0 -45.0 150.70
NV03-11 49,625.2 10,040.0 2,514,511.9 5,304,676.8 1,209.2 120.0 -45.0 133.20
NV04-12 51,160.6 9,577.9 2,515,610.5 5,303,509.0 1,155.4 30.0 -65.0 220.00
NV04-13 50,876.5 10,015.0 2,515,583.1 5,304,029.5 1,179.4 30.0 -45.0 142.70
NV04-14 50,997.6 9,911.7 2,515,636.3 5,303,879.6 1,178.1 210.0 -70.0 158.00
NV04-15 51,159.8 9,910.5 2,515,776.1 5,303,797.4 1,167.0 30.0 -60.0 139.55
NV04-16 51,161.0 9,451.4 2,515,547.6 5,303,399.2 1,138.2 30.0 -55.0 250.50
NV04-17 50,998.8 9,614.4 2,515,488.6 5,303,621.4 1,156.7 30.0 -85.0 164.20
NV04-18 51,001.3 9,364.5 2,515,365.9 5,303,403.8 1,137.0 30.0 -55.0 274.70
NV04-19 51,001.9 9,826.2 2,515,597.2 5,303,803.4 1,181.7 210.0 -80.0 188.10
NV04-20 50,801.6 9,897.6 2,515,459.5 5,303,965.3 1,163.0 210.0 -70.0 70.90
NV04-21 50,997.6 9,948.5 2,515,654.7 5,303,911.4 1,174.2 30.0 -45.0 198.10
NV04-22 50,998.5 9,977.9 2,515,670.2 5,303,936.4 1,171.9 210.0 -75.0 193.75
NV04-23 51,000.7 9,713.6 2,515,540.0 5,303,706.4 1,177.3 210.0 -85.0 191.10
NV04-24 50,804.7 10,023.1 2,515,524.9 5,304,072.4 1,173.8 30.0 -50.0 145.60
NV04-25 51,204.1 9,014.3 2,515,366.4 5,302,999.1 1,140.0 210.0 -45.0 199.80
NV04-26 50,802.1 9,728.9 2,515,375.6 5,303,818.9 1,153.5 32.0 -75.0 134.00
NV04-27 50,100.7 9,719.0 2,514,763.2 5,304,161.1 1,164.0 30.0 -45.0 181.50
-11-
Dip
E GK faja 2 N GK faja 2 Az wrt Down
(Campo (Campo Elevation GK CI from Length
Hole ID Local E Local N Inchauspe) Inchauspe) m HAE North Vertical (m)
NV04-28 51,164.5 9,865.2 2,515,757.6 5,303,755.8 1,170.6 30.0 -60.0 158.00
NV04-29 51,299.1 9,847.6 2,515,865.4 5,303,673.3 1,157.6 210.0 -80.0 158.00
NV04-30 51,300.4 9,765.7 2,515,825.5 5,303,601.7 1,159.8 210.0 -80.0 209.00
NV04-31 51,160.7 9,666.8 2,515,655.1 5,303,585.9 1,178.5 30.0 -80.0 296.00
NV04-32 50,598.0 10,088.9 2,515,378.9 5,304,232.8 1,154.7 30.0 -45.0 154.50
NV04-33 50,598.4 10,016.4 2,515,343.0 5,304,169.8 1,154.8 210.0 -80.0 149.00
NV04-34 50,180.9 9,955.5 2,514,950.9 5,304,325.8 1,180.0 30.0 -45.0 228.20
NV04-35 51,199.5 9,251.1 2,515,480.9 5,303,206.5 1,134.2 30.0 -80.0 293.00
NV04-36 50,898.2 9,988.0 2,515,588.3 5,303,995.3 1,176.5 210.0 -80.0 77.00
NV04-37 50,899.9 9,914.7 2,515,553.2 5,303,931.0 1,173.8 210.0 -80.0 102.50
NV04-38 50,897.2 9,819.7 2,515,503.3 5,303,850.0 1,164.4 30.0 -80.0 107.00
NV04-39 50,400.2 9,982.9 2,515,154.5 5,304,239.9 1,157.1 210.0 -80.0 215.00
NV04-40 50,399.8 10,098.9 2,515,212.2 5,304,340.5 1,155.9 30.0 -45.0 127.20
NV04-41 51,080.8 9,943.4 2,515,724.2 5,303,865.4 1,174.9 30.0 -45.0 145.20
NV04-42 51,080.4 9,938.8 2,515,721.5 5,303,861.6 1,174.5 210.0 -80.0 187.90
NV04-43 51,080.4 9,853.2 2,515,678.7 5,303,787.4 1,180.3 210.0 -75.0 230.60
NV04-44 51,079.3 9,750.3 2,515,626.3 5,303,698.9 1,188.1 210.0 -75.0 232.90
NV04-45 51,230.9 9,861.1 2,515,813.0 5,303,719.1 1,164.0 210.0 -80.0 167.00
NV04-46 51,232.3 9,760.2 2,515,763.8 5,303,630.9 1,168.6 210.0 -80.0 239.00
NV04-47 51,236.7 9,681.0 2,515,728.1 5,303,560.2 1,176.6 30.0 -75.0 236.00
NV04-48 51,302.3 9,980.9 2,515,934.8 5,303,787.1 1,147.2 30.0 -45.0 67.50
NV04-49 51,301.0 9,915.2 2,515,900.8 5,303,730.8 1,150.5 30.0 -80.0 82.80
NV04-50 51,159.9 9,954.9 2,515,798.5 5,303,835.8 1,165.7 30.0 -80.0 113.00
NV04-51 51,159.1 9,971.9 2,515,806.2 5,303,850.9 1,165.5 30.0 -45.0 100.50
NV04-52 50,896.0 9,948.4 2,515,566.7 5,303,962.1 1,173.4 30.0 -45.0 100.50
NV04-53 50,796.8 9,954.7 2,515,483.9 5,304,017.1 1,169.2 30.0 -50.0 97.50
--------
Total m 8,853.58
========
All core designated for sampling was cut with an electric-powered table saw with
a diamond tipped blade. The core was sawn in half and one half was sampled and
the remainder was stored in the core box. In a few areas the core was broken or
rubbley and could not be sawn. In such cases the recovered material was sampled
by spoon and if necessary was split with a knife or chisel. Rarely, due to hard
core or problems with the saw, core was split with a mechanical splitter.
Alex Stewart (Assayers) Argentina S.A. ("Alex Stewart") of Mendoza, Argentina
was the primary lab for all drill core samples. All samples are weighed on
receipt in the sample bag prior to drying and this weight is reported with the
analytical data. Sample preparation comprised drying at 90(degree) C for up to
40 hours, followed by crushing of the entire sample to #10 mesh. Next the sample
was split down to 1.5 kg with a riffle splitter for pulverization to 85% passing
#200 mesh. Between each sample the crusher and the pulverizor were cleaned with
barren quartz.
All drill core samples were submitted for 30 gram fire-assay for silver with
gravimetric finish and also a fire assay for Au (with AAS finish). The lab is
required to report all sample weights used in fire assays.
In addition, all samples were analyzed by Alex Stewart's ICP-ORE technique which
uses a strong multi-acid attack on a sample size of 0.2 grams. The method has
been optimized to handle a wide range or concentrations of base and other
metals, but with some sacrifice in the higher than normal detection limits for
typical ICP analyses. Elements included in the package are Ag, As, Bi, Ca, Cd,
Co, Cu, Fe, Hg, Mg, Mn, Mo, Ni, P, Pb, S, Sb, Tl and Zn. Extensive testing was
-12-
undertaken by IMA on the ICP-ORE technique that confirmed its suitability for
the Navidad mineralization. That testing included a precision test on 30 samples
as well as a blind duplicate pulp test on 32 samples both with satisfactory
results. Furthermore, ICP-ORE was used in characterization of the in-house
standards developed (see below) and was found to correlate well with methods
used by other labs. In fact all of the ICP-ORE results for Cu and Pb lay within
the two standard deviation limit and hence were used in the definition of the
accepted values for the standards.
Quality Control
A comprehensive quality control and quality assurance program for analyses of
drill core was put in place well prior to the start of the drilling campaign.
This program comprises controls including blind certified standards, blanks and
core duplicates and a secondary laboratory. The primary laboratory for all
drilling samples was Alex Stewart and the secondary lab was ALS-Chemex La Serena
and/or Vancouver. In each set of 42 samples sent to the primary lab blind
high-grade, low-grade, blank and duplicate core sample were included in
randomized positions.
In addition to the above, a systematic program of reanalysis of pulps by a
second independent lab has been used throughout the program. Randomly
pre-selected samples are sent from the primary laboratory and they include
blanks and standards. Two samples form each set of 42 samples, or 4.8% percent
of the pulps are therefore being checked. At the date of the Technical Report,
results were available for 144 duplicates.
The purpose of this work is to confirm the reproducibility of the analytical
method at a second lab.
Results of the control by the secondary lab and through the inclusion of blanks,
standards, and duplicates confirm the high quality of the data generated in the
drilling program.
Chain of Custody
Core is delivered to the core shack by the drill contractor or picked-up by IMA
employees and stored in the core shack in Gastre. The core shack is kept under
lock and key when IMA employees are not present.
Core cutting is supervised by the geologist logging core who ensures that the
sequence of blanks, duplicates and standards is followed. Cut core is placed
into clean new transparent plastic sample bags into which two pre-printed custom
sample tickets are placed. The lab uses one of these for the pulp bag and one
for the reject bag. A third sample ticket is stapled into the core tray along
with the meterage represented by the sample. The fourth and final sample ticket
remains in the sample tag book with the hole numbers and meterages filled in.
Once samples have been cut and bagged the bags are double sealed with two
zip-strips. The first ordinary zip strip will close the bag around the neck of
the bag under as much tension as it will support. A second, custom printed
zip-strip seal with IMA's name and the matching sample number to the sample
ticket inside will be affixed to the bag above the zip-strip under tension. The
numbered seal will pierce the bag above the neck of the bag where it is sealed
by the first zip strip so as to make it impossible to slip the ordinary
zip-strip over the neck of the back. The lab is required to notify IMA if the
samples do not arrive with the IMA seals intact. All seals are being stored by
the assay lab to present as proof of use.
Sealed sample bags are placed in rice sacks in sequence for shipment to the lab.
A record of all samples shipped is kept by the geologist sending the sample
shipment. Samples are transported by a company contracted to transport samples
directly from the core shack in Gastre to the assay laboratory in Mendoza (some
1500km). They are not allowed to carry other cargo or make other stops.
General Geological Understanding
Drilling of the Navidad Hill, Galena Hill and intervening areas has greatly
increased the geological understanding of the main geological units and their
relationships. Most of the new information was gained by drilling at Galena Hill
as that is where the drilling was concentrated, but advances were made at
Navidad and Esperanza as well.
-13-
Stratigraphy at Galena Hill is comprised of four primary sedimentary and
volcanic units, from lowest to uppermost these are: a "lower" cycle comprised of
epiclastic, volcaniclastic and volcanic rocks which are unmineralized and
unaltered that dips toward grid south. This is overlain by a volcanic cycle
comprising latitic volcanic rocks, generally with quartz eyes, that is altered
and mineralized with silver and lead. The latite sequence comprises massive
flows, amygdaloidal flows, flow breccias and volcaniclastic breccias. The
latites are in turn overlain by pelitic mudstones and limestones of which the
lowermost portion may be highly mineralized with silver and lead. The latites
form a steadily thickening wedge towards grid south. It is unclear whether the
geometry of the uppermost sediments indicates tectonic folding or perhaps just
local slumping.
The contact between the lower volcanic cycle and the latite cycle is of great
interest due to the dramatic change between unaltered and unmineralized rocks
below and high mineralized rocks above. The upper part of the lower cycle is
generally reddish as if affected by a lateritic weathering. On some sections
such as 51,160E the contact is quite planar whereas on others it is quite
irregular, possible due to faulting or paleotopography. In some cases a dark
grey, soft material with an unusual texture and structure of partings and slip
surfaces is present below the latites on the contact. This could be interpreted
as fault gouge or a paleosol.
The latite sequence dramatically thickness towards grid south (southwest
relative to true north). It is absent to the north and thickens to over 220m
within some 500m. While the capping sedimentary sequence varies in thickness
from zero to about 40m in thick on top of Galena Hill in hole NV04-35 it attains
a thickness of about 140m on section 51,200E but 200m further grid south than
NV04-16 shown in figure 23. In hole NV04-35 the latite sequence is at least 150m
thick, but the base was not intersected.
Galena Hill Drilling Results
Results of the initial drilling at Galena Hill have been very positive. The
amount and continuity and grade of the mineralization in the subsurface exceeded
even the expectations that existed based on the surface work.
The geometry of the mineralization, a gently-dipping, exposed to
shallowly-buried zone of significant thickness suggests potential for bulk
mining. Hence in determining how to select the mineralized intercepts for
tabulation and data manipulation is was decided to use a minimum of about 50 g/t
silver irrespective of the copper, lead and zinc grades. The minimum grade was
not strictly applied to the selection of the intercepts as samples with
sub-fifty gram per tonne silver values were permitted for several samples in
some instances. In some cases where there were long intercepts of mineralization
somewhat below 50 g/t silver, but where there were significant lead values these
intercepts were also listed below. At this time definitive "cut-off" grade can
not be established since metallurgical and engineering parameters have not been
determined. The following intercepts reflect the potential of Galena Hill in a
bulk mining scenario. Some higher grade intercept are also shown. These higher
grades tend to occur at or near the upper contact of the latite sequence with
the overlying mudstones, or even in the lower part of the mudstones.
In total, 35 drill holes have been drilled into the Galena Hill deposit. These
holes outline a silver-lead deposit ranging in vertical thickness from about 10
to 115 metres with horizontal dimensions of approximately 400 by 500 metres at
generally greater than 50 g/t silver. The top of the mineralized body is exposed
at surface in some areas and in other areas is covered by as much as 40 metres
of barren sedimentary cap rock. The shape and aspect of the mineralized body
suggests that it could be bulk mineable. Grade distributions show a zone of
high-grade silver values with lesser copper and relatively low lead values along
the northeastern boundary of the deposit; this area is interpreted to be the
source or feeder zone for mineralizing fluids which created the deposit. Moving
to the southwest from this feeder zone, lead:silver ratios increase and are
interpreted as more distal portions of the deposit.
-14-
Mineralized Intercepts from drillholes at the Galena Hill Deposit
Composite Vertical g/t % % %
(3) From To Length Thickness Silver Copper Lead Zinc
DDH Dip Metres Metres Metres Metres LWA LWA LWA LWA
NV03-03 -45 3.00 178.50 175.50 124.61 26.2 0.00 1.35 0.04
including 3.00 128.30 125.30 88.96 33.0 0.00 1.68 0.05
including 72.50 107.50 35.00 24.85 49.9 0.01 3.47 0.06
including 86.20 95.45 9.25 6.57 76.8 0.01 5.43 0.06
NV03-04 -45 2.80 266.70 263.90 187.37 74.1 0.00 2.04 0.08
including 2.80 203.00 200.20 142.14 92.3 0.00 2.49 0.11
including 39.60 176.45 136.85 97.16 117.3 0.00 2.99 0.14
including 39.60 121.25 81.65 57.97 141.5 0.00 3.15 0.14
including 39.60 94.70 55.10 39.12 164.3 0.00 2.97 0.10
including 65.00 94.70 29.70 21.09 189.5 0.00 3.06 0.10
including 65.00 83.50 18.50 13.14 241.2 0.00 3.40 0.10
NV03-05 -60 43.30 126.25 82.95 72.17 229.2 0.01 4.24 0.20
including 46.70 113.25 66.55 57.90 271.8 0.01 4.82 0.20
including 46.70 55.90 9.20 8.00 578.9 0.04 6.82 0.36
including 89.00 107.25 18.25 15.88 503.0 0.01 11.19 0.36
NV04-12 -65 18.80 27.80 9.00 8.19 41.6 0.00 8.01 2.56
including 27.80 35.45 7.65 6.96 70.8 0.00 9.60 0.54
combined 18.80 35.45 16.65 15.15 55.0 0.00 8.74 1.64
within 18.80 60.60 41.80 38.04 35.5 0.00 4.46 0.68
NV04-13 -45 20.00 64.70 44.70 31.74 223.4 0.16 0.56 0.09
NV04-14 -70 27.70 142.80 115.10 109.35 453.6 0.08 5.26 0.50
including 27.70 75.10 47.40 45.03 775.6 0.17 6.42 0.92
including 32.70 50.70 18.00 17.10 1,421.2 0.42 5.24 1.69
NV04-15 -60 46.55 115.65 69.10 60.12 113.5 0.02 1.46 0.13
including 47.05 55.55 8.50 7.40 461.7 0.08 6.54 0.49
NV04-16 -55 63.45 72.45 9.00 7.56 34.2 0.00 2.47 0.07
NV04-17 -85 21.20 40.20 19.00 18.81 96.7 0.01 7.79 0.70
including 30.20 40.20 10.00 9.90 161.6 0.02 12.98 0.42
NV04-18 -55 232.00 244.00 12.00 9.96 70.1 0.06 0.40 0.01
NV04-19 -80 24.00 90.50 66.50 65.17 100.3 0.00 2.74 0.14
including 25.10 37.10 12.00 11.76 165.2 0.02 3.20 0.34
including 49.35 57.75 8.40 8.23 177.4 0.02 4.22 0.14
including 74.00 81.55 7.55 7.40 174.0 0.00 4.69 0.11
NV04-20 -70 35.50 40.60 5.10 4.79 54.8 0.02 1.82 0.03
NV04-21 -45 42.45 126.00 83.55 56.81 321.7 0.23 0.47 0.21
including 49.95 70.50 20.55 13.97 703.0 0.47 0.54 0.40
-15-
Composite Vertical g/t % % %
(3) From To Length Thickness Silver Copper Lead Zinc
DDH Dip Metres Metres Metres Metres LWA LWA LWA LWA
NV04-22 -75 38.65 101.65 63.00 61.11 418.4 0.15 1.82 0.32
including 42.50 55.60 13.10 12.71 923.3 0.26 1.70 0.56
NV04-23 -85 48.40 71.20 22.80 22.57 26.3 0.00 0.47 0.02
NV04-24 -50 3.00 5.65 2.65 1.88 917.9 0.28 1.13 0.18
NV04-26 -75 none 0.00
NV04-28 -60 45.70 134.75 89.05 77.47 120.4 0.01 1.77 0.32
including 45.70 67.75 22.05 19.18 23.0 -0.01 0.65 0.90
including 67.75 134.75 67.00 58.29 152.5 0.01 2.14 0.12
including 68.10 71.55 3.45 3.00 760.9 0.05 10.96 0.60
NV04-29 -80 28.50 38.65 10.15 9.95 71.8 0.00 1.84 0.05
NV04-30 -80 44.80 52.70 7.90 7.74 47.8 0.00 1.11 0.04
NV04-31 -80 3.05 23.85 20.80 20.38 51.7 0.00 1.25 0.05
and 47.35 78.45 31.10 30.48 71.0 0.00 2.62 0.31
including 73.85 75.95 2.10 2.06 618.6 -0.01 18.82 3.58
NV04-36 -80 8.00 57.90 49.90 48.90 179.1 0.08 1.21 0.17
including 35.30 49.30 14.00 13.72 209.5 0.10 0.97 0.15
NV04-37 -80 12.80 89.10 76.30 74.77 139.4 0.04 1.28 0.12
including 13.80 17.70 3.90 3.82 597.4 0.02 7.23 0.58
NV04-38 -80 20.70 61.20 40.50 39.69 104.5 0.04 0.40 0.10
including 34.10 52.55 18.45 18.08 166.8 0.07 0.15 0.13
NV04-41 -45 58.10 129.00 70.90 50.34 78.5 0.08 0.33 0.20
NV04-42 -80 48.35 161.55 113.20 110.94 150.8 0.03 1.98 0.11
including 67.90 121.90 54.00 52.92 239.1 0.04 3.04 0.16
including 148.90 161.55 12.65 12.40 121.6 0.04 1.74 0.11
NV04-43 -75 44.20 127.25 83.05 81.39 153.2 0.01 5.48 0.90
including 44.20 89.00 44.80 43.90 216.9 0.01 6.81 1.06
NV04-44 -75 13.35 103.90 90.55 88.74 177.8 0.01 5.33 0.22
including 13.35 28.90 15.55 15.24 445.3 0.02 8.77 0.14
NV04-45 -80 43.00 69.85 26.85 26.31 355.4 0.00 5.34 0.33
including 43.00 51.05 8.05 7.89 958.4 0.01 15.31 0.87
NV04-46 -80 30.40 167.00 136.60 133.87 30.9 0.00 1.06 0.05
including 30.40 65.00 34.60 33.91 61.8 0.00 1.51 0.06
NV04-47 -75 12.90 131.00 118.10 113.38 36.6 0.00 2.06 0.13
including 84.50 116.00 31.50 30.24 59.5 0.00 4.31 0.25
NV04-48 -45 16.50 32.85 16.35 11.61 30.6 0.00 0.53 0.18
including 26.70 31.80 5.10 3.62 49.7 0.01 0.54 0.25
-16-
Composite Vertical g/t % % %
(3) From To Length Thickness Silver Copper Lead Zinc
DDH Dip Metres Metres Metres Metres LWA LWA LWA LWA
NV04-49 -80 63.45 82.80 19.35 18.96 31.6 0.00 0.38 0.05
NV04-50 -80 20.80 101.00 80.20 78.60 254.7 0.14 0.93 0.19
including 20.80 65.00 44.20 43.32 391.0 0.23 0.44 0.26
NV04-51 -45 64.50 81.85 17.35 12.32 185.9 0.05 2.37 0.46
NV04-52 -45 16.50 62.55 46.05 32.70 270.6 0.10 0.62 0.21
NV04-53 -50 15.70 30.80 15.10 10.72 52.0 0.04 0.72 0.85
Notes:
1. All length weighted average (LWA) results are "uncut"
2. Vertical thicknesses are calculated considering the dip of the drill holes
and assuming flat lying body.
3. Inclincation
Navidad Hill Drilling Results
Much less drilling has been done at Navidad Hill than at Galena Hill. The
results of the eight holes drilled to date are listed below: all have
intersections of silver mineralization. Seven of these holes were drilled on
three sections separated at 40m intervals while the eighth is located some 300m
to the northwest. Holes at Navidad Hill were drilled at close-spacing and as
"scissors" crossing each other from opposite sides of the mineralized zone to
determine the dip and continuity of the narrow high grade structures that hosted
the mineralization at surface.
While these holes did confirm that the dip of the structures is near vertical,
two somewhat unexpected aspects were encountered: firstly, significant amounts
of clay alteration (argillic) are present; secondly, in between the known
structures there are many areas with minor veins and stockwork veinlets. High
silver grades were intersected in some of the structures in the drill holes (see
table below); however, in general the grades in the drill holes are
significantly less than the average grades of the structures on surface which
were often in the range of 5,000 to 20,000 grams per tonne silver. This
combination of the features suggests that Navidad Hill should be considered a
bulk target rather than as individual high grade vein targets. Like Galena Hill,
intercepts have been calculated at a 50 g/t silver minimum grade again somewhat
loosely applied at this early stage. All of the seven holes in the main area
drilled have significant intercepts ranging from 48.0 to 143.5 m in core length
with 97.8 to 246.9 g/t silver with the best individual intercept being NV03-07
83.65m of 246.9 g/t silver with minor copper and lead values. Assuming vertical
dips the true width of the mineralized intercept ranges from about 34 to 101m in
width. In most cases holes were started within the mineralized zone and the full
true width was not crossed by single holes and is only seen when considering the
scissor pair. Despite the high base metal grades of the individual structures in
the detailed surface sampling and in the core samples the grades of copper and
lead over the width of the bulk zone are generally less than 0.3%. This marks a
significant difference from the central part of the Galena Hill deposit.
Mineralization in the main group of Navidad Hill drill holes is hosted by
massive latite to latite breccias that generally appear to be massive flows or
flow domes. No internal stratigraphy has been recognized to date. None of the
holes penetrated the base of the latite sequence nor cut any obvious sedimentary
or volcaniclastic units with it. Mineralized structures appear to be of two main
types; firstly, sharp-walled structures filled with brecciated and re-brecciated
clasts of gangue and mineral and secondly, veinlets and stockwork of gangue and
mineral. Gangue minerals include: calcite which ranges from massive crystalline
to finely banded; quartz as chalcedonic to crystalline silica; and crystalline
barite. "Ore" minerals visible by eye include minor amounts of sulphides
included pyrite, a grey sulphide (tetrahedrite or chalcocite), minor galena,
rare native copper, green copper oxides (probably mainly malachite) and black
copper oxides (probably mainly neotocite or copper wad). No native silver was
observed by eye or hand lens. No clear division between oxide mineralization and
sulphide mineralization can be made with depth. Minor amounts of sulphides are
present at surface and are also present a depth. Copper oxides are present at
surface and to the bottom of the zone tested to date (about 80m below surface).
-17-
Mineralized Intercepts from the Navidad Hill Drilling
Composite True g/t % % %
(3) From To Length Width Silver Copper Lead Zinc
DDH Location Dip Metres Metres Metres Metres LWA LWA LWA LWA
NV03-01 Navidad -45 3.05 61.45 58.40 41.29 111.1 0.22 0.06 0.07
Hill
including 10.10 31.35 21.25 15.03 233.3 0.35 0.09 0.11
including 10.10 17.50 7.40 5.23 535.6 0.81 0.07 0.14
including 15.70 16.50 0.80 0.57 2677.6 3.07 0.30 0.24
NV03-02 Navidad -45 2.50 50.50 48.00 33.94 97.8 0.15 0.06 0.05
Hill
including 6.45 6.70 0.25 0.18 858.0 8.07 0.26 0.02
including 17.60 25.00 7.40 5.23 227.1 0.25 0.16 0.09
including 40.40 41.45 1.05 0.74 1320.3 0.82 0.28 0.14
NV03-06 Navidad -45 3.00 63.20 60.20 42.57 161.6 0.26 0.10 0.06
Hill
including 23.30 28.80 5.50 3.89 424.7 0.74 0.20 0.10
NV03-07 Navidad -45 3.00 86.65 83.65 59.15 246.9 0.32 0.27 0.05
Hill
including 3.00 40.75 37.75 26.69 474.9 0.54 0.35 0.07
including 3.00 6.90 3.90 2.76 1997.9 0.92 0.32 0.07
including 30.85 33.25 2.40 1.70 2129.6 3.34 0.60 0.09
NV03-08 Navidad -45 2.50 146.00 143.50 101.47 146.0 0.20 0.19 0.04
Hill
including 2.50 71.10 68.60 48.51 274.5 0.35 0.40 0.06
including 26.10 40.15 14.05 9.93 1084.2 1.25 1.69 0.11
including 26.10 28.40 2.30 1.63 2660.7 1.64 2.63 0.16
including 35.45 37.20 1.75 1.24 3042.6 4.31 0.86 0.11
NV03-09 Navidad -45 2.50 84.30 81.80 57.84 125.4 0.12 0.10 0.04
Hill
including 21.00 21.70 0.70 0.49 5067.5 0.36 1.41 0.04
including 65.25 66.20 0.95 0.67 1440.7 1.62 0.86 0.07
NV03-10 Navidad -45 3.50 78.50 75.00 53.03 111.1 0.23 0.05 0.04
Hill
including 3.50 9.40 5.90 4.17 669.7 1.25 0.09 0.06
NV03-11 Navidad -45 1.52 12.10 10.58 n/a 98.3 0.53 0.02 0.12
Hill West
Notes
1. All length weighted average (LWA) results are "uncut"
2. True widths are calculated assuming -45 degree drill holes and vertical
structures.
3. Inclination
-18-
Other Areas Drilling Results
Eight drill holes were collared in areas outside of Galena or Navidad Hills.
These holes were drilled to test stratigraphy or suspected mineralization in
additional zones.
Mineralized Intercepts from Drilling Other Targets
Composite True g/t % % %
(3) From To Length Width Silver Copper Lead Zinc
DDH Location Dip Metres Metres Metres Metres LWA LWA LWA LWA
NV04-32 Connector -45 46.50 96.05 49.55 35.04 77.9 0.04 0.14 0.03
Zone
NV04-33 Connector -80 none
Zone
NV04-34 Connector -45 10.50 29.20 18.70 13.22 75.1 0.01 0.70 0.05
Zone
NV04-39 Connector -80 none
Zone
NV04-40 Connector -45 43.20 91.20 48.00 33.94 108.5 0.04 0.22 0.16
Zone
including 67.20 88.20 21.00 14.85 160.4 0.08 0.19 0.09
NV04-25 Esperanza -45 162.70 170.65 7.95 5.62 303.4 0.03 0.31 0.05
Trend
NV04-35 recce -80 none
NV04-27 recce -45 7.00 7.73 0.73 unknown 61.5 0.01 0.56 2.25
and 66.90 68.10 1.20 unknown 377.2 0.01 0.10 0.05
Notes
1. All length weighted average (LWA) results are "uncut"
2. True widths are calculated assuming -45 degree drill holes and vertical
structures.
3. Inclination
Resource Estimate
The following is the Summary from the technical report dated June 22, 2004
entitled "Galena Hill, Navidad Project, Chabut Province, Argentina prepared for
the Company by Neil Burns M.Sc., P. GEO of Snowden Mining Industry Consultants.
The entire report has been filed on SEDAR and is available for review at
www.sedar.com.
Snowden Mining Industry Consultants (Snowden) was engaged by IMA Exploration
Inc. (IMA) to provide a resource estimate for the Galena Hill deposit, located
in IMA's Navidad Project, Chubut Province, Argentina. The area referred to as
Galena Hill includes the sub area known as Connector Zone. The project is at an
advanced stage of exploration and is not considered a development or production
property. The resource estimation work was undertaken in compliance with CIM
Mineral Resource and Mineral Reserve definitions that are referred to in
National Instrument (NI) 43-101, Standards of Disclosure for Mineral Projects.
This Technical Report has been prepared in compliance with the requirements of
Form 43-1O1F.
The site was visited by the author between 5th and 6th April 2004. The
geological mapping, results of diamond core drilling programs and IMA's
geological interpretation were reviewed for reasonableness. The author reviewed
the core logging procedures at site and concluded that it was done in a
systematic fashion, competently and in accordance with industry standards. The
sampling, analytical procedures and QA/QC results described by IMA either
conform to or surpass the industry norms expected for an initial drilling
program. The author has not reviewed the land tenure situation and has not
independently verified the legal status or ownership of the properties or any
agreements that pertain to the Navidad Project.
-19-
Mineral resources at Galena Hill have been estimated in compliance with CIM
Standards of Mineral Resources and Reserves (CIM 2000). Three dimensional (3D)
modeling methods and parameters were used in accordance with principles accepted
in Canada. A geological volume model was created by Snowden from the drill hole
logs and interpretations supplied by IMA. Statistical and grade continuity
analyses were completed to characterize the mineralization and subsequently used
to develop grade interpolation parameters. The mineralized units were
partitioned into 7 zones to reflect the relative metal abundances and elemental
correlations within IMA's host rock units.
Gemcom mining software was used for establishing the 3D block model and
subsequent grade estimates. The impact of grade outliers was assessed. Grade
caps were applied to zinc estimates of Zones 4 and 5 prior to estimation, to
restrict the influence of grade outliers. The relationships between base metal
(and sulfur) grades and density were applied to assign bulk density values to
the block model.
A mineral resource classification scheme consistent with the logic of CIM
guidelines (CIM 2000) was applied. The estimates are categorized as Indicated
and Inferred mineral resources and reported above a grade cutoff that is
appropriate for a potentially bulk mineable deposit.
The classified Mineral Resource at Galena Hill is reported with respect to
silver equivalence cutoff values in the following table:
GRADE
------------------------------------------
Metric Ag Eq Ag Pb Cu Zn
CLASSIFICATION Tonnes g/t g/t % % %
-------------- ------ ------------------------------------------
Measured - - - - - -
Indicated 63.6 191 101 1.76 0.03 0.24
MEA Plus IND 63.6 191 101 1.76 0.03 0.24
Inferred 16.9 91 67 0.34 0.03 0.12
At a cutoff grade of 50 grams silver equivalent per tonne, the currently defined
Indicated Mineral Resource at Galena Hill is 63.6 million tonnes grading 101 g/t
Ag, 1.76% Pb, 0.03% Cu and 0.24% Zn or a silver equivalent of 191 g/t. Inferred
Resources are estimated at 16.9 million tonnes grading 67 g/t Ag, 0.34% Pb,
0.03% Cu, and 0.12% Zn or a silver equivalent of 91 g/t. above the same silver
equivalent cutoff grade.
Equivalent grades were calculated using the following metal prices and formulae:
- Silver price = $5.50/oz or $0.1 60397/g;
- Lead price = $0.30/lb or $0.000661/g;
- Copper price = $1.10/lb or $0.002425/g;
- Zinc price = $0.40/lb or $0.000882/g; and
- Silver equivalence (AgEq) = Ag + Pb x 10,000/242.5 + Cu x 10,000/66.1
+ Zn x 10,000/181.9.
The resource model is considered appropriate for use in a Preliminary Assessment
or Scoping Study.
-20-
Ongoing and Planned Future Work
A 43-101 report on the Phase II drilling program at Navidad has not been
completed as the program is still in progress. Drilling in the Phase II program
has focused on the Esperanza Trend, the Barite Hill target, and on the Navidad
Hill and Connector Zone targets. Two drill holes were completed within the
Galena Hill indicated resource to obtain samples for metallurgical testing.
Results from the Phase II program to date have been described in News Releases
dated July 8 and July 27, 2004.
Phase II drilling at Navidad Hill has returned intersections of 104.6m of 126g/t
silver, including 35.5m of 295 g/t silver, from hole NV04-54, 85m of 83 g/t
silver in hole NV04-70, 1.4m of 3,975 g/t silver in hole NV04-73, and 19m of 149
g/t silver in hole NV04-71. In addition to the structurally controlled
mineralization previously identified at Navidad Hill, near-surface
stratigraphically controlled silver mineralization has now been identified along
the southwest and southeast flanks of Navidad Hill (drill holes NV04-68 and
NV04-73). This new style of mineralization demonstrates potential for moderate
grade, bulk-tonnage silver targets around the south, east and west sides of
Navidad Hill and into the Connector Zone. Results include 29.55m of 145 g/t
silver in NV04-68 starting at 52.2m downhole, and 33m of 92 g/t silver starting
from surface in hole NV04-73, including 7.90m of 286 g/t silver.
At the 6 km Esperanza Trend, results include 2.7m of 831 g/t silver in hole 62
and 800m to the northwest hole 63 intersected 45.8m of 94 g/t silver, including
4.0m of 246 g/t silver. These results confirm the high grades and potential for
a significant structurally controlled zone at Esperanza.
Eight drill holes have been completed to date at Barite Hill. The first three
holes (NV04-58 through 60) contain significant near surface intersections of
galena matrix breccia similar in style to that at Galena hill, but with
generally lower silver and lead values.
The remaining portion of the Phase II program will be utilized to increase the
density of drill data within the Navidad Hill - Connector Zone area in order to
allow the estimation of an indicated resource.
A budget of approximately $2,100,000 has been estimated for the Phase II
program. Based on the results of the Phase II program the Company will decide on
its plans for future work.
NAVIDAD AREA PROPERTIES (OTHER THAN THE NAVIDAD PROJECT)
The following properties are 100% owned by IMA unless stated otherwise.
TAQUETREN PROPERTY
The Taquetren claim (File Number: 14015/03; 10,000 hectares) is located directly
east of the Rio Chubut, approximately 70 kilometres to the southwest of the
Navidad Project. The area is mapped as being underlain by Jurassic Canadon
Asphalto and Lonco Trapial Formation volcanic and sedimentary rocks similar to
those that host the Navidad discovery. Very preliminary prospecting and stream
sediment sampling has shown anomalous values of antimony; no source has yet been
located for this anomaly. Regional mapping and terrain analysis shows an
important northwest trending structure to bisect the Taquetren property; this
orientation is similar to structures that control mineralization at the Navidad
Project.
REGALO PROPERTY
The Regalo claim (File Number: 14016/03; 10,000 hectares) covers ground mapped
as prospective Jurassic Canadon Asphalto and Lonco Trapial Formation rocks and
includes several regionally-important northwest trending structures. Preliminary
stream-sediment sampling has returned highly anomalous gold values. Gold values
from nine stream sediment samples, along 6 kilometres of one drainage (and
adjoining tributaries), range in value from 134 to 831 ppb. IMA has entered into
an option agreement with Consolidated Pacific Bay Minerals Ltd. ("Consolidated
Pacific Bay") whereby Consolidated Pacific Bay can acquire up to a 70-per-cent
interest in the Regalo mineral claim through the issuance of 900,000 shares of
Consolidated Pacific Bay to IMA, and work expenditures totalling US$625,000 over
three years. Consolidated Pacific Bay must issue all 900,000 shares and expend
-21-
US$50,000 on the property by Aug. 12, 2004, in order to earn a 51-per-cent
interest in the claims. Consolidated Pacific Bay has issued the 900,000 shares
and meet the commitment for work expenditures to date. A further 19-per-cent
interest in the claims can be earned by Consolidated Pacific Bay if it completes
a feasibility study and finances the property to production. A second cateo
(Regalo II) has been staked to the north of the primary Regalo claim, adding
another 10,000 hectares to the property subject to IMA's agreement with
Consolidated Pacific Bay. Consolidated Pacific Bay carried out a three-week
geochemical sampling program on the Regalo property in March 2004 outlining
extensive gold anomalies in dry wash sediment samples. Consolidated Pacific Bay
is currently planning an expanded exploration program.
NOEL PROPERTY
The Noel claim (File Number: 14036/03; 10,000 hectares) is adjacent to the
Regalo and Trucha claims and also contains a significant, multi-sample,
gold-in-stream sediment anomaly. Government maps show the claim to be underlain
primarily by Canadon Asphalto Formation sedimentary and volcanic rocks, with
overlying Cretaceous sandstone along the eastern side of the claim. Five stream
sediment samples taken from two drainages over approximately 5 kilometres range
in value from 114 to 1,570 ppb gold. The apparent source area for these
extremely anomalous values has not been prospected to date and is considered a
high-priority target for follow-up work.
TRUCHA PROPERTY
The Trucha claim (File Number: 14014/03; 10,000 hectares) is contiguous with the
Regalo and Noel claims and also includes a stream sediment sample highly
anomalous in gold (single sample, 556 ppb Au). Regional mapping shows the claim
to be underlain by prospective Jurassic Canadon Asphalto and Lonco Trapial
Formation rocks, cut by several regional-scale structures. In conjunction with
evaluation of the Noel claims, the Trucha claim requires detailed prospecting to
identify the source of gold producing the high stream-sediment values.
MARA PROPERTY
The Mara claim (File Number: 14018/03; 9,945 hectares) is located approximately
95 kilometres to the south-southwest of Navidad. Regional mapping shows the
property to be underlain by Jurassic Canadon Asphalto and Lonco Trapial
Formation rocks, which unconformably overly granitic basement rocks. Several
mapped and interpreted northwest-trending structures are present on the property
and are considered to be prospective for both Navidad-style mineralization and
traditional low-sulphidation gold veins. No fieldwork has been carried out to
date on the property.
CONDOR AND ALAMO PROPERTIES
The Condor claim (File Number: 14017/03; 10,000 hectares) and Alamo claim (file
number: 14032/03; 10,000 hectares) are located directly south of the
Regalo/Noel/Trucha claims and were staked based on prospective stratigraphy,
structure and the presence of known barite occurrences. The known barite
together with Navidad-age stratigraphy and similar structure makes these claims
highly prospective for Navidad-style mineralization. No fieldwork has been
completed on these claims to date; a first-pass evaluation is warranted.
NINA AND CARLOTA PROPERTIES
The Nina claim (file number: 14018/03; 9,945 hectares) and Carlota claim (file
number: 14018/03; 9,945 hectares) were staked based on the presence of
prospective Canadon Asphalto stratigraphy and regional northwest trending
structures. No fieldwork has been completed to date on these claims; a
first-pass evaluation is warranted.
PAMPA 3 PROPERTY
The Pampa 3 claim (File Number: 14004/03; 2,500 hectares) is located adjacent to
the Navidad Project, along trend and immediately to the southeast. Although
predominantly covered with recent alluvium, it is interpreted to be underlain by
the Canadon Asphalto Formation limestone and volcaniclastic rocks which host
mineralization at Navidad (figs. 2 and 3). Work to date has been minimal with
only two stream-sediment samples collected, both of which drain areas peripheral
to the claim.
-22-
COLONIA PROPERTY
The Colonia claim (File Number: 14005/03; 10,000 hectares) covers a large area
of highly prospective ground directly along strike from the Navidad discovery.
Most of the 10,000 hectare claim is underlain by prospective Canadon Asphalto
Formation rocks. Preliminary stream-sediment sampling has defined highly
anomalous values of antimony, an important "pathfinder" element at the Navidad
discovery. Minor prospecting (four rock samples collected) has not yet unveiled
the source of these stream-sediment values, significant additional work is
warranted.
JULIE PROPERTY
The Julie claim (File Number: 14035/03; 5,675 hectares) lies at the regional
contact between granitic rocks that underlie the prospective Jurassic
stratigraphy, and Jurassic volcanic rocks. Several important LandSat-interpreted
structures are present on this claim; regional structure has been shown to be of
critical importance at the Navidad discovery. Preliminary stream-sediment
sampling shows anomalous values of copper and antimony, although strongly
warranted, no significant follow-up work has been done.
SIERRA 1 PROPERTY
The Sierra 1 claim (File Number: 14006/03; 10,000 hectares) covers a large of
prospective Canadon Asphalto Formation rocks and the underlying volcanic rocks
and a portion of the granitic basement. Significant areas of LandSat-interpreted
alteration are present in the northeastern portion of the claim, the imagery
shows patterns very similar to those seen in the area of the Navidad discovery.
The property was subject to an option agreement with Tinka Resources Limited who
carried out a reconnaissance sampling program and has returned the property to
IMA.
SIERRA 2 PROPERTY
The Sierra 2 claim (File Number: 14007/03; 10,000 hectares) covers an
interesting area of complex geology in the hinge zone of a regional-scale
anticline. Mapped rock units include the Canadon Asphalto Formation and
overlying Cretaceous sandstone. Essentially no work has been done in the central
portions of this claim as the local land owners could not be contacted to gain
permission for entry onto their land. Mina Yanquetreu is a small abandoned
barite mine in the central portions of the claim. This occurrence is highly
encouraging as both strataform (exhalative) and vein-controlled barite is
intimately associated with the Navidad system. This area is considered highly
prospective and warrants a significant early-stage exploration program.
SIERRA 3 PROPERTY
The Sierra 3 claim (File Number: 14008/03; 10,000 hectares) covers the
southwestern portions of mapped Canadon Asphalto Formation rocks in the Navidad
area. Also present on the claim are Jurassic volcanic rocks and underlying
granitic basement. Major LandSat-interpreted structures are present as are
possible zones of alteration. Preliminary stream-sediment sampling has returned
strongly anomalous copper values of up to 105 ppm. No follow-up prospecting or
rock sampling has been undertaken to date. The Sierra 3 claim is considered
highly prospective and warrants considerable follow-up work.
EMPLOYEES
As of December 31, 2003 IMA employed approximately 10 people.
-23-
RISK FACTORS
The following risk factors currently apply to IMA.
LIQUIDITY AND CASH FLOW
As at December 31, 2003, IMA has not generated any revenues from operations to
fund ongoing operational requirements and cash commitments. IMA has financed its
operations principally through the sale of its equity securities. As at June 30,
2004, IMA had working capital of approximately $7,900,000. IMA believes it has
adequate resources to maintain its ongoing operations and will not require
additional financing for planned exploration and property acquisitions for the
remainder of fiscal 2004. However, IMA may elect to acquire new projects or plan
additional work on the Navidad project. These decisions will be based on the
results of ongoing exploration programs and the response of equity markets to
the projects and business plan.
ADDITIONAL FINANCING
IMA presently has sufficient financial resources to meet property commitments on
its existing property holdings. IMA at present does not, however, have
sufficient funds to develop the Navidad property.
There is no assurance that IMA will be successful in obtaining additional
financing or negotiating agreements with potential joint venture partners. The
failure to obtain such financing or complete joint venture arrangements could
result in the loss or substantial dilution of IMA's interests (as existing or as
proposed to be acquired) in its properties as disclosed herein. IMA's business
strategy contemplates joint ventures to fund exploration activities on its
properties. Joint ventures may involve significant risks and IMA may lose any
investment it makes in a joint venture, including IMA's interest in any
properties it contributes. IMA does not have any definitive commitment or
agreement concerning any material investment, strategic alliance or related
effort, on any of its properties. Any investments, strategic alliances or
related efforts are accompanied by risks such as:
(a) the difficulty of identifying appropriate joint venture
partners or opportunities;
(b) the time IMA's senior management must spend negotiating
agreements and monitoring joint venture activities;
(c) the possibility that IMA may not be able to reach agreement on
definitive agreements, with potential joint venture partners;
(d) potential regulatory issues applicable to the mineral
exploration business;
(e) the investment of IMA's capital or properties and the loss of
control over the return of IMA's capital or assets;
(f) the inability of management to capitalize on the growth
opportunities presented by joint ventures; and
(g) the insolvency of any joint venture partner.
There are no assurances that IMA would be successful in overcoming these risks
or any other problems encountered with joint ventures, strategic alliances or
related efforts.
EXPLORATION RISKS
Mineral exploration is highly speculative in nature, involves many risks and
frequently is nonproductive. There can be no assurance that IMA's efforts to
identify resources will be successful. Moreover, substantial expenditures are
required to establish resources through drilling, to determine metallurgical
processes to extract the metal from the ore and to construct mining and
processing facilities. During the time required to establish resources,
determine suitable metallurgical processes and construct such mining and
processing facilities, the economic feasibility of production may change because
of fluctuating prices.
-24-
PROJECT DELAY
IMA's minerals business is subject to the risk of unanticipated delays in
permitting its projects. Such delays may be caused by fluctuations in commodity
prices, mining risks, difficulty in arranging needed financing, unanticipated
permitting requirements or legal obstruction in the permitting process by
project opponents. In addition to adding to project capital costs (and possibly
operating costs), such delays, if protracted, could result in a write-off of all
or a portion of the carrying value of the delayed project.
TITLE TO PROPERTIES
The validity of mining claims, which constitute a significant portion of IMA's
undeveloped property holdings, is often uncertain and may be contested. Although
IMA has attempted to acquire satisfactory title to its undeveloped properties,
IMA, in accordance with mining industry practice, does not intend to obtain
title opinions until a decision is made to develop a property, with the
attendant risk that some titles, particularly titles to undeveloped properties,
may be subject to contest by other parties. Title to properties may be subject
to litigation claims by others. On March 5, 2004 Minera Aquiline Argentina SA, a
subsidiary of Aquiline Resources Inc., commenced an action against IMA seeking a
constructive trust over the Navidad Project and surrounding properties, and
damages. IMA believes the Aquiline legal action is without merit and will
vigorously defend itself. A Statement of Defence has been filed. The trial has
been set for October 11, 2005 in Vancouver, British Columbia. At this date the
outcome is not determinable. See "Legal Proceedings" below.
PRICE FLUCTUATIONS AND SHARE PRICE VOLATILITY
In recent years the securities markets in Canada have experienced a high level
of price and volume volatility and the market price of securities of many
companies, particularly junior mineral exploration companies, like IMA, have
experienced wide fluctuations which have not necessarily been related to the
operating performance, underlying asset values or prospects of such companies.
In particular, the price of IMA's common shares fluctuated from a high of $2.54
to a low of $0.49 during the 12-month period ending December 31, 2003. There can
be no assurance that continual fluctuations in price will not occur.
OPERATING HAZARDS AND RISKS
Mining operations involve many risks, which even a combination of experience,
knowledge and careful evaluation may not be able to overcome. Operations in
which IMA has a direct or indirect interest will be subject to all the hazards
and risks normally incidental to exploration for metals, any of which could
result in damage to or destruction of mines and other producing facilities,
damage to life and property, environmental damage and possible legal liability
for any or all damage. Although IMA maintains liability insurance in an amount
which it considers adequate, the nature of these risks is such that liabilities
could exceed policy limits, in which event IMA could incur significant costs
that could have a materially adverse effect upon its financial condition.
INSURABLE RISKS AND LIMITATIONS OF INSURANCE
IMA maintains certain insurance however, such insurance is subject to numerous
exclusions and limitations. IMA maintains a Total Office Policy in Canadian
dollars on its principal offices. Generally, the Total Office Policy provides
90% coverage on office contents, up to $160,000, with a $500 deductible. In
addition, the policy provides general liability coverage of up to $5,000,000 for
personal injury, per occurrence and $2,000,000 for legal liability for any one
premises, with a $500 deductible. IMA also has insurance coverage of up to
$5,000,000 for non-owned automobile liability.
IMA maintains a Foreign Commercial General Liability policy in U.S. dollars
which provides US$5,000,000 coverage for bodily injury or property damage per
occurrence and coverage up to US$5,000,000 per offence for personal injury or
advertising injury (libel, slander, etc.). The policy has a general aggregate
limit for all claims during each consecutive policy period, except for those
resulting from product hazards or completed operations hazards, of US$5,000,000.
-25-
The policy has a US$5,000,000 aggregate limit for each consecutive policy
period, for bodily injury or property damage liability arising out of completed
operations and products. In addition, the Foreign Commercial General Liability
policy provides for coverage of up to US$10,000 in medical expenses, per person,
with a US$10,000 limit per accident, and up to US$100,000 for each occurrence of
tenants' fire legal liability. The policy does not apply to injury or damages
occurring within Canada, the United States (including its territories and
possessions), Puerto Rico, any countries or territories against which the United
States has an embargo, sanction or ban in effect, territorial waters of any of
the foregoing, the Gulf of Mexico, or international waters or airspace when an
injury or damage occurs in the course of travel or transportation to any country
or place included in the foregoing. The policy also does not cover asbestos
related claims or liability for bodily injury or property damages arising out of
the discharge, dispersal, release or escape of smoke, vapours, soot, fumes,
acids, alkalis, toxic chemicals, liquids or gases, waste materials or other
irritants, contaminants or pollutants into or upon land, the atmosphere, or any
water-course or body of water. The policy also contains a professional liability
exclusion which applies to bodily injury or property damage arising out of
defects in maps, plans, designs or specifications prepared, acquired or used by
IMA or arising out of any act of negligence, error, mistake or omission in
rendering or failing to render professional consulting or engineering services,
whether performed by IMA or other for whom IMA is responsible.
IMA maintains a Foreign Commercial Automobile Liability Insurance policy on
owned, leased, hired and non-owned automobiles with the following liability
limitations:
- $5,000,000 bodily injury liability for each person.
- $5,000,000 bodily injury liability for each occurrence.
- $5,000,000 property damage liability for each occurrence.
- $10,000 medical expense coverage, per person.
- $10,000 medical expense coverage, per accident.
The foregoing descriptions of IMA's insurance policies do not purport to be
complete and does not cover all of the exclusions to such policies.
MANAGEMENT
IMA is dependent on the services of Joseph Grosso, the President and a director
of IMA. The loss of the services of Mr. Grosso could have an adverse affect on
IMA. Mr. Grosso provides his services to IMA through Oxbow International
Marketing Corp. ("Oxbow"). IMA does not maintain "key-man" insurance in respect
of Mr. Grosso.
COMPETITION FOR EMPLOYEES
The Company competes with other exploration corporations with the recruitment
and retention of qualified employees. There can be no assurance that the Company
will continue to be able to retain or attract qualified employees.
DEPENDENCE UPON OTHERS
The success of IMA's operations will depend upon numerous factors, many of which
are beyond IMA's control, including: (i) the ability of IMA to enter into
strategic alliances through a combination of one or more joint ventures, mergers
or acquisition transactions, (ii) the ability to discover and produce minerals;
(iii) the ability to attract and retain additional key personnel in investor
relations, marketing, technical support, and finance; and (iv) the ability and
the operating resources to develop and maintain the properties held by IMA.
These and other factors will require the use of outside suppliers as well as the
talents and efforts of IMA. There can be no assurance of success with any or all
of these factors on which IMA's operations will depend.
-26-
CONFLICTS OF INTEREST
All of IMA's directors are also directors, officers or shareholders of other
companies. Such associations may give rise to conflicts of interest from time to
time. Such a conflict poses the risk that IMA may enter into a transaction on
terms which could place IMA in a worse position than if no conflict existed. The
directors of IMA are required by law to act honestly and in good faith with a
view to the best interest of IMA and to disclose any interest which they many
have in any project or opportunity of IMA. However, each director has a similar
obligation to other companies for which such director serves as an officer or
director. IMA has no specific internal policy governing conflicts of interest.
See "Directors and Officers - Conflicts of Interest" below.
FOREIGN COUNTRIES AND REGULATORY REQUIREMENTS
The projects in which IMA has an interest are located in Argentina. Mineral
exploration and mining activities in Argentina may be affected in varying
degrees by political instability and government regulations relating to the
mining industry. Any changes in regulations or shifts in political conditions
are beyond the control of IMA and may adversely affect its business. IMA does
not maintain and does not intend to purchase political risk insurance.
Operations may be affected in varying degrees by government regulations with
respect to restrictions on production, price controls, export controls, income
taxes, expropriations of property, environmental legislation and mine safety.
The status of Argentina as a developing country may make it more difficult for
IMA to obtain any required exploration financing for its projects. The effect of
all of these factors cannot be accurately predicted. Argentina's economy has
experienced recession in recent years and there can be no assurance that the
economy will recover from such recession.
Argentina has recently experienced some economic and political instability.
Management believes the new democratic elected government is making progress in
the domestic economy and it is improving the image of the country
internationally. Additionally, management believes the economic crisis of
December 2001 has been overcome, and although the country defaulted on its
loans, it has worked out a bail-out loan agreement with the International
Monetary Fund. IMA maintains the majority of its funds in Canada and only
forwards sufficient funds to meet current obligations and overhead in Argentina.
IMA does not believe that any current currency restrictions which may be imposed
in Argentina will have any immediate impact on IMA's exploration activities.
ENVIRONMENTAL REGULATIONS
IMA's operations are subject to environmental regulations promulgated by
government agencies from time to time. Environmental legislation provides for
restrictions and prohibitions on spills, releases or emissions of various
substances produced in association with certain mining industry operations, such
as seepage from tailings disposal areas, which would result in environmental
pollution. A breach of such legislation may result in the imposition of fines
and penalties. At present, IMA does not believe that compliance with
environmental legislation and regulations will have a material affect on IMA's
operations; however, any changes in environmental legislation or regulations, or
in IMA's business, may cause compliance with such legislation and/or regulation
to have a material impact on IMA's operations. In addition, certain types of
operations require the submission and approval of environmental impact
assessments. Environmental legislation is evolving in a manner which means
stricter standards, and enforcement, fines and penalties for non-compliance are
more stringent. Environmental assessments of proposed projects carry a
heightened degree of responsibility for companies and directors, officers and
employees. The cost of compliance with changes in governmental regulations has a
potential to reduce the profitability of operations. IMA intends to ensure that
it complies fully with all environmental regulations relating to its operations
in Argentina.
The provincial government of Chubut Province, Argentina has enacted certain
anti-mining laws banning the use of cyanide and open-pit mining in metallic
extraction in the Province of Chubut. The provincial legislation is more
restrictive than current federal Argentinean mining laws. IMA has hired a mining
engineering consultant to oversee all environmental and socio-economic studies
and programs to ensure international best practices for the mining industry are
applied in the development of IMA's properties. Certain authorities believe that
the provincial legislation may be unconstitutional. However, there can be no
assurance that the provincial legislation will be repealed.
-27-
CURRENCY FLUCTUATIONS
IMA's operations in Argentina and Canada make it subject to foreign currency
fluctuations and such fluctuation may adversely affect IMA's financial position
and results. IMA's property, option and mining expenses are generally
denominated in U.S. dollars. As such, IMA's principal foreign exchange exposure
is related to the conversion of the Canadian dollar into U.S. dollars. The
Canadian dollar varies under market conditions. Continued fluctuation of the
Canadian dollar against the U.S. dollar will continue to affect IMA's operations
and financial position. IMA's foreign subsidiaries comprise a direct and
integral extension of IMA's operations. These subsidiaries are also entirely
reliant upon IMA to provide financing in order for them to continue their
activities. Consequently, the functional currency of these subsidiaries is
considered by management to be the Canadian dollar and accordingly exchange
gains and losses are included in net income. Management does not believe IMA is
subject to material exchange rate exposure from any fluctuation of the Argentine
currency. IMA does not engage in hedging activities.
NO DIVIDENDS
IMA has not paid out any cash dividends to date and has no plans to do so in the
immediate future.
PENNY STOCK REGULATION
The United States Securities and Exchange Commission has adopted rules that
regulate broker-dealer practices in connection with transactions in "penny
stocks". Generally, penny stocks are equity securities with a price of less than
US$5.00 (other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system). Since IMA's shares are traded for
less than US$5.00 per share, the shares are subject to the SEC's penny stock
rules. IMA's shares will be subject to the penny stock rules until such time as
(1) the issuer's net tangible assets exceed US$5,000,000 during the issuer's
first three years of continuous operations or US$2,000,000 after the issuer's
first three years of continuous operations; or (2) the issuer has had average
revenue of at least US$6,000,000 for three years. The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document prescribed by
the SEC that provides information about penny stocks and the nature and level of
risks in the penny stock market. The broker-dealer must obtain a written
acknowledgement from the purchaser that the purchaser has received the
disclosure document. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules, the broker-dealer must
make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to
the transaction. These requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. Such rules and regulations may make it difficult for holders
to sell the common shares of IMA, and they may be forced to hold it
indefinitely.
ENFORCEMENT OF LEGAL PROCESS
It may be difficult for U.S. investors to bring and enforce suits against the
IMA. IMA is incorporated in British Columbia. None of IMA's directors are
residents of the United States, and all or a substantial portion of their assets
are located outside of the United States. As a result, it may be difficult for
U.S. holders of IMA's common shares to effect service of process on these
persons within the United States or to enforce judgements obtained in the U.S.
based on the civil liability provisions of the U.S. federal securities laws
against IMA or their officers and directors. In addition, a shareholder should
not assume that the courts of Canada (i) would enforce judgments of U.S. courts
obtained in actions against IMA or their officers or directors predicated upon
the civil liability provisions of the U.S. federal securities laws or other laws
of the United States, or (ii) would enforce, in original actions, liabilities
against IMA or their officers or directors predicated upon the U.S. federal
securities laws or other laws of the United States.
-28-
However, U.S. laws would generally be enforced by a Canadian court provided that
those laws are not contrary to Canadian public policy, are not foreign penal
laws or laws that deal with taxation or the taking of property by a foreign
government and provided that they are in compliance with applicable Canadian
legislation regarding the limitation of actions. Also, a judgment obtained in a
U.S. court would generally be recognized by a Canadian court except, for
example:
(a) where the U.S. court where the judgment was rendered had no
jurisdiction according to applicable Canadian law;
(b) the judgment was subject to ordinary remedy (appeal, judicial
review and any other judicial proceeding which renders the
judgment not final, conclusive or enforceable under the laws
of the applicable state) or not final, conclusive or
enforceable under the laws of the applicable state;
(c) the judgment was obtained by fraud or in any manner contrary
to natural justice or rendered in contravention of fundamental
principles of procedure;
(d) a dispute between the same parties, based on the same subject
matter has given rise to a judgment rendered in a Canadian
court or has been decided in a third country and the judgment
meets the necessary conditions for recognition in a Canadian
court;
(e) the outcome of the judgment of the U.S. court was inconsistent
with Canadian public policy;
(f) the judgment enforces obligations arising from foreign penal
laws or laws that deal with taxation or the taking of property
by a foreign government; or
(g) there has not been compliance with applicable Canadian law
dealing with the limitation of actions.
DIVIDENDS
IMA has not paid any dividends on its common shares since its incorporation, nor
has it any present intention of paying dividends, as it anticipates that all
available funds will be used to undertake exploration and development programs
on its mineral properties as well as for the acquisition of additional mineral
properties. Other than lack of available funds, there is no restriction on IMA's
ability to pay dividends.
GENERAL DESCRIPTION OF CAPITAL STRUCTURE
The authorized share capital of IMA consists of an unlimited number of common
shares (the "IMA Common Shares") without par value and 100,000,000 Preferred
Shares (the "Preferred Shares") without par value, of which 18,283,053 have been
designated as Preferred Shares, Series 1.
COMMON SHARES
All of the issued IMA Common Shares are fully paid and non-assessable. All IMA
Common Shares issued rank equally as to dividends, voting rights (one vote per
share) and distribution of assets on winding up or liquidation, subject to the
prior rights of the holders of Preferred Shares. Shareholders have no
pre-emptive rights, nor any right to convert their common shares into other
securities. There are no existing indentures or agreements affecting the rights
of shareholders other than the Notice of Articles and Articles of IMA.
PREFERRED SHARES
The Preferred Shares are issuable in one or more series. The Preferred Shares
are entitled to priority over the IMA Common Shares with respect to the payment
of dividends and distributions in the event of the dissolution, liquidation or
winding-up of IMA. The Preferred Shares rank equally within their class as to
dividends, voting rights, participation and assets in all other respects. The
issued Preferred Shares are not subject to call or assessment nor pre-emptive or
conversion rights. The holders of the Preferred Shares as a class are not
entitled to receive notice of, to attend or to vote at any meeting of the
Shareholders. The Preferred Shares are subject to the rights and restrictions
attached to the IMA Preferred Shares set out in the Articles of IMA.
-29-
Preferred Shares, Series 1
The Preferred Shares, Series 1 are entitled to receive non-cumulative dividends
in an amount determined by the board of directors from time to time. IMA may
redeem at any time on payment in cash or property for each share of an amount
equal to the Redemption Amount (as that term is defined within the special
rights and restrictions attached to the Preferred Shares, Series 1) together
with all declared and unpaid dividends thereon. The holder of the Preferred
Shares, Series 1 may require IMA to redeem the shares at any time upon giving
notice. The holders of the Preferred Shares, Series 1 as a class are not
entitled to receive notice of, to attend or to vote at any meeting of the
shareholders of IMA.
As at June 30, 2004, IMA had 41,450,375 IMA Common Shares outstanding and
options, warrants or other rights entitling the holders to purchase up to an
additional 7,309,450 IMA Common Shares.
As at June 30, 2004, IMA had 18,283,053 Preferred Shares, Series I outstanding,
all of which are owned by a subsidiary of IMA.
MARKET FOR SECURITIES
The IMA Common Shares are listed and posted for trading on the TSX-V under the
symbol "IMR".
The following table sets out, for the periods indicated, the high and low sales
price and the volume of trading for the IMA Common Shares on the TSX-V during
the financial year ended December 31, 2003:
2003 HIGH LOW VOLUME
--------- ----- ----- ----------
January $0.64 $0.49 1,169,246
February $0.81 $1.62 3,588,441
March $1.06 $0.70 8,954,680
April $1.00 $0.78 2,953,770
May $1.07 $0.83 2,275,442
June $1.65 $1.04 4,664,751
July $1.95 $1.32 3,109,642
August $2.20 $1.65 3,003,740
September $2.54 $1.77 6,821,196
October $2.37 $1.48 6,802,815
November $2.17 $1.73 2,943,614
December $2.30 $1.42 4,285,421
ESCROWED SECURITIES
None of the Company's securities are held under escrow or similar arrangements.
-30-
DIRECTORS AND OFFICERS
NAME, OCCUPATION AND SECURITY HOLDING
The name, province or state and county of residence, position with and principal
business or occupation in which each director of the Company has been engaged
during the immediately preceding five years, is as follows:
NAME, POSITION, PROVINCE OR STATE PRINCIPAL OCCUPATION OR DIRECTOR
AND COUNTRY OF RESIDENCE(1) EMPLOYMENT FOR THE PAST FIVE YEARS(1) SINCE
GERALD D. CARLSON President and director of Copper Ridge Exploration Inc., 1999
Chairman and Director a public British Columbia mineral exploration company
British Columbia, Canada from March 1999 to present.
JOSEPH GROSSO Director and officer of IMA since February 1990; 1990
President, Chief Executive Officer President of Oxbow International Marketing Corp., a
and Director private BC company.
British Columbia, Canada
ART LANG (2) Chief Financial Officer of IMA since April 2, 2004; 2004
Chief Financial Officer, Consultant providing financial management services to
Vice-President and Director various clients from 1999 to March 31, 2004.
British Columbia, Canada
NIKOLAOS CACOS Corporate Secretary of IMA since 1993. 2002
Director and Secretary
British Columbia, Canada
SEAN HURD Investor relations manager for IMA from June 2001 to 2000
Director present and director since September 2000.
British Columbia, Canada
ROBERT STUART (TOOKIE) ANGUS (2) Managing Director, Mergers and Acquisitions, Endeavour 2003
Director Financial Ltd., November 2003 to present; Partner in law
British Columbia, Canada firm, Fasken Martineau DuMoulin LLP from February 2001
to October 2003; Partner in law firm, Stikeman Elliott
from 1998 to 2001.
CHET IDZISZEK (2) President, CEO and director of Madison Enterprises Corp. 2003
Director from 1993 to present; President, CEO and director of
British Columbia, Canada Adrian Resources Ltd. from June 1990 to April 2004.
DAVID TERRY Vice President, Exploration for Amera Resources 2004
Vice President, Exploration Corporation from March 2004 to present; Regional
Director geologist with the BC Ministry of Energy and Mines in
British Columbia, Canada Cranbrook, BC from May 2001 to March 2004; Project
Geologist with Boldien Limited prior to May 2001.
DAVID HORTON (2) Senior Vice-President of Canaccord Capital Corporation 2004
Director from 1996 to present
British Columbia, Canada
(1) The information as to country of residence and principal occupation, not
being within the knowledge of IMA, has been furnished by the respective
directors individually.
(2) Denotes member of Audit Committee.
-31-
The term of office for the Company's directors, officers and members of the
Company's committees expire at each annual general meeting. The board of
directors after each annual general meeting appoints the Company's officers and
committees for the ensuing year.
The Company's directors and senior officers, as a group, beneficially own,
directly or indirectly, or exercise control or direction over an aggregate of
1,216,553 IMA Common Shares that represents 2.94% of the issued and outstanding
IMA Common Shares as at the date of this AIF.
CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS
No director or executive officer of the Company, or a shareholder holding a
sufficient number of securities of the Company to affect materially control of
the Company:
(a) is, as at the date of this AIF or has been, within the 10 years before
the date hereof, a director or executive officer of any company
(including the Company), that while that person was acting in that
capacity,
(i) was the subject of a cease trade order or similar order or an
order that denied the relevant company access to any exemption
under securities legislation, for a period of more than 30
consecutive days;
(ii) was subject to an event that resulted, after the director or
executive officer ceased to be a director or executive officer,
in the company being the subject of a cease trade or similar
order or an order that denied the relevant company access to any
exemption under securities legislation, for a period of more than
30 consecutive days;
(iii)or within a year of that person ceasing to act in that capacity,
became bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency or was subject to or instituted any
proceedings, arrangement or compromise with creditors or had a
receiver, receiver manager or trustee appointed to hold its
assets; or
(b) has, within the 10 years before the date hereof, become bankrupt, made
a proposal under any legislation relating to bankruptcy or insolvency,
or become subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or
trustee appointed to hold the assets of the director, officer or
shareholder.
The foregoing information, not being within the knowledge of the Company, has
been furnished by the respective directors, officers and shareholders holding a
sufficient number of securities of the Company to affect materially control of
the Company.
No director or executive officer of the Company, or a shareholder holding a
sufficient number of securities of the Company to affect materially the control
of the Company, has been subject to:
(a) any penalties or sanctions imposed by a court relating to securities
legislation or by a securities regulatory authority or has entered into a
settlement agreement with a securities regulatory authority; or
(b) any other penalties or sanctions imposed by a court or regulatory body
that would likely be considered important to a reasonable investor in
making an investment decision regarding the Company.
The foregoing information, not being within the knowledge of the Company, has
been furnished by the respective directors, officers and shareholders holding a
sufficient number of securities of the Company to affect materially control of
the Company.
-32-
CONFLICTS OF INTEREST
All of IMA's directors and senior officers are also directors or senior officers
of other companies. For example, all of IMA's directors are also directors of
Golden Arrow, and Messrs. Grosso and Cacos are also directors of Amera Resources
Corporation. As a result, conflicts of interest may arise between their duties
as directors of IMA and as directors of other companies. To the extent that such
other companies may participate in ventures in which the Company may
participate, the directors of the Company may have a conflict of interest in
negotiating and concluding terms respecting the extent of such participation. In
the event that such conflict of interest arises at a meeting of the Company's
directors, a director who has such a conflict will abstain from voting for or
against the approval of such a participation or such terms. All such possible
conflicts are required to be disclosed in accordance with the BCBCA, and the
directors of the Company are required to act honestly, in good faith and in the
best interests of the Company.
The directors and officers of the Company are aware of the existence of laws
governing the accountability of directors and officers for corporate opportunity
and requiring disclosures by the directors of conflicts of interest and the
Company will rely upon such laws in respect of any directors' and officers'
conflicts of interest or in respect of any breaches of duty by any of its
directors and officers. All such conflicts will be disclosed by such directors
or officers in accordance with the BCBCA and they will govern themselves in
respect thereof to the best of their ability in accordance with the obligations
imposed upon them by law.
LEGAL PROCEEDINGS
In March 2004, Minera Aquiline Argentina S.A., a wholly-owned subsidiary of
Aquiline Resources Inc., commenced a legal proceeding in the Supreme Court of
British Columbia against IMA asserting that IMA unlawfully used confidential
information, and is seeking a constructive trust over the Navidad Project and
surrounding properties, and damages. IMA is defending this action. The trial has
been set for October 11, 2005 in Vancouver, British Columbia.
Pursuant to the Arrangement, Golden Arrow was added as a defendant to the action
and as a result, IMA has agreed to indemnify Golden Arrow for any loss sustained
as a result of the Aquiline litigation. To satisfy this requirement, IMA and
Golden Arrow entered into an Indemnity Agreement dated July 7, 2004 pursuant to
which IMA has agreed, among other things, to indemnify Golden Arrow and its
directors, officers, agents and employees from and against all losses, cost,
charges, damages, liabilities, claims and expenses of any nature which may be
incurred by the indemnified parties in respect of the Aquiline litigation. As
security for the indemnity obligation, IMA has pledged all of its shares of its
wholly owned subsidiary IMA Holdings Corp., to Golden Arrow.
IMA commenced an action against Aquiline Resources Inc. by way of Writ of
Summons filed on October 15, 2003 in the Supreme Court of British Columbia
Vancouver Registry Action No. S035507. In the action, IMA alleges that Aquiline
wrongfully interfered with a "bought deal" private placement financing scheduled
to close on October 2, 2003 through the issuance of a letter which falsely
asserted that IMA had misused confidential information belonging to Aquiline or
its subsidiary in staking its Navidad mineral claims. Aquiline filed an
Appearance to the claim on October 24, 2003. To date, no further steps have been
taken in the action.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Except as outlined below, the Company believes no director or executive officer
of the Company or any person or company that is the direct or indirect
beneficial owner of, or who exercise control or direction over, more than 10% of
any class or series of the Company's outstanding voting securities or any
associate or affiliate of any of the persons or companies referred to above has
any material interest, direct or indirect, in any transactions which materially
affected or would materially affect the Company or any of its subsidiaries,
occurring during the years ended December 31, 2003, 2002 and 2001 except as
follows:
1. Pursuant to an agreement dated March 6, 2003, as amended April 13,
2004, between IMA and Amera Resources Corporation ("Amera"), IMA
granted Amera an option to earn a 75% interest in a property known as
the Mogote (Arturo's) Property. To earn this interest , Amera must
issue 1,950,000 common shares to IMA and incur US$3,000,000 of
expenditures, including work programs and underlying option payments,
all over three years. Amera has committed to spend the initial
US$1,000,000 by May
-33-
30, 2007. The Mogote property and this option agreement were
subsequently transferred to Golden Arrow under the Arrangement. At the
time of the option agreement, Joseph Grosso, Nikolaos Cacos and David
Terry, all directors and/or officers of IMA, were also directors and/or
officers of Amera. Where required, these persons disclosed the nature
of their interest in these transactions to the Board of Directors and
abstained from voting on the resolutions to approve the agreements.
2. Pursuant to the Arrangement, all directors of IMA on the Effective Date
of the Arrangement (July 7, 2004) became directors of Golden Arrow. In
addition, at the time the Arrangement Agreement was entered into (May
14, 2004), Joseph Grosso, a director of IMA, was also the sole
director, officer and shareholder of Golden Arrow. This was done for
convenience only to facilitate the transaction. Mr. Grosso disclosed
this interest to the IMA board and abstained from voting on the
Arrangement and the indemnity agreement entered into in respect of the
Aquiline litigation.
3. IMA is a party to employment or consulting agreements with most of its
directors or senior management. See for example the agreement with
Oxbow International Marketing Corp. disclosed under "Material
Contracts".
TRANSFER AGENTS AND REGISTRARS
The registrar and transfer agent of IMA is Computershare Trust Company of
Canada, 2nd Floor, 510 Burrard Street, Vancouver, British Columbia V6C 3B9.
MATERIAL CONTRACTS
1. Consulting Services Agreement between Oxbow International Marketing
Corp. ("Oxbow") and IMA Resource Corporation, dated January 1, 1999 and
amended on July 1, 1996, July 1, 1999, July 1, 2001, and July 1, 2002.
Pursuant to this consulting services agreement, Oxbow, a private
company owned by Joseph Grosso, is paid a consulting fee of $8,500 per
month for making available the services of Joseph Grosso as President
and Chief Executive Officer of IMA. Under the terms of the contract, a
payment is due in the event that Oxbow's services are terminated
without cause or upon a change of control. The termination payment
would include a bonus of $6,500 per month, retroactive to July 1, 1999,
plus an additional three years of compensation at $15,000 per month.
During the fiscal year ended December 31, 2003, Oxbow was paid
$102,000.
3. Arrangement Agreement dated May 14, 2004 among IMA, Golden Arrow and
IMA Holdings Corp. See "General Development of the Business -
Reorganization".
4. Indemnity Agreement dated July 7, 2004 between IMA and Golden Arrow.
See "Legal Proceedings".
-34-
INTERESTS OF EXPERTS
The following persons have prepared reports described or included in this AIF:
# OF
SECURITIES
NAME HELD
Dr. Paul Lhotka, Qualified Person who prepared the report entitled 0%
P. Geo PH.D "Diamond Drilling of the Navidad Silver-Lead-Copper
Project, November 2003 to March 2004, Chabut Province,
Argentina, On Behalf of IMA Exploration Inc." dated May
12, 2004 and referred to in this AIF under the heading
"Description of Business - Principal Properties of IMA
-Navidad Project".
Neil R. Burns, Qualified Person who prepared the report entitled 0%
M.Sc., P Geo "Technical Report, Galena Hill, Navidad Project" dated
June 22, 2004 and referred to in this AIF under the
heading "Description of Business - Principal Properties
of IMA - Navidad Project - Resource Estimate"
ADDITIONAL INFORMATION
Additional information, including directors and officers remuneration and
indebtedness, principal holders of the Company's securities and securities
authorized for issuance under equity compensation plans, if applicable, is
contained in the Company's management proxy circular dated May 14, 2004.
Additional financial information is provided in the Company's Management
Discussion and Analysis and the audited financial statements for the year ended
December 31, 2003.
Additional information relating to the Company, including the above referenced
information, may be found under the Company's name on Sedar at www.sedar.com.