History
Canyon Resources struggled with a blocked Montana project, an accounting restatement and repeated share sales, then agreed in 2008 to merge into Atna Resources.
2001-2003: Royalties, a court loss and a debt cleared
Canyon's story in these records centres on its Briggs Mine gold operation and its McDonald Gold Project in Montana. In October 2001 it signed a deal with Franco-Nevada Mining Corporation, giving Franco-Nevada a 2% royalty on the first 175,000 ounces of Briggs gold, plus 1% above that. In return Canyon issued 1,050,000 unregistered shares. Franco-Nevada could undo the deal if the shares were not registered by March 31, 2002, or if Canyon issued too much other stock.
The bigger setback came in December 2002, when a Montana state court ruled against Canyon and the Seven-Up Pete Venture in their lawsuit against the I-137 anti-mining initiative. The court also upheld the end of the venture's state mineral leases. McDonald stayed blocked. In March 2003 Canyon completed a $3,299,000 convertible debenture financing (debt that can turn into shares) and said its Briggs Mine debt was fully paid off. In October 2003 it announced a pre-feasibility study for a redesigned McDonald project, projecting 6.22 million ounces of gold over 14 years at a $350 gold price, but development still depended on I-137 being removed.
2004-2005: Restatement and fundraising
In March 2004 Canyon sold 3,202,593 shares at $4.37 for about $14.0 million, lifting shares outstanding from 26,131,956 to 29,334,549, about 12% more. Within months, trouble followed. In August it said it could not file its quarterly report on time because it was re-examining how it tested the Briggs Mine assets for impairment (a write-down when assets may be worth less than recorded). In September it told investors not to rely on its 2003 and earlier accounts or its first-quarter 2004 accounts. It had used an inappropriate impairment model, a loan to a private exploration company should have been expensed, and it was reviewing restricted stock issued for services.
The American Stock Exchange warned Canyon that it was out of compliance because of the late report, and set an October 25, 2004 deadline. The restated 2003 and first-quarter 2004 financials were filed on that date. PricewaterhouseCoopers, the auditor, reported a material weakness in internal controls and was replaced on November 15, 2004 by Ehrhardt, Keefe, Steiner & Hottman, P.C. The filings reported no disagreements with PwC.
In March 2005 Canyon sold 5,302,932 shares and 2,651,466 warrants. In January 2005 it had also taken an option to buy the Hycroft Mine near Winnemucca, Nevada from Vista Gold Corp. for $4.0 million cash plus $6.0 million in Canyon equity units. In August it decided not to exercise it, after spending $0.6 million on drilling and studies; no reason was given. In December 2005 it raised $2.5 million gross by selling 3,300,004 shares at $0.76, with warrants attached.
2006-2007: Uranium, Newmont and more shares
In January 2006 Canyon formed the Converse Joint Venture in Wyoming with New Horizon Uranium Corporation. New Horizon could earn 50% by spending $1,000,000 over three years, rising to 70% and 75% with further spending and a feasibility study. In June 2006 Canyon sold 5.1 million shares at $1.00 for $5.1 million gross, with warrants attached.
On December 29, 2006 Canyon signed an asset exchange with Newmont subsidiaries. It acquired Newmont's 3% royalty on the Briggs mine and handed Newmont mineral rights, leases and facilities near Lincoln, Montana, with Newmont taking on the reclamation liability. Canyon kept a 3% royalty on what it gave up. It also gained an option on Newmont's Adelaide and Tuscarora gold projects in Nevada, by spending $3.0 million over five years. In May 2007 it raised $4.95 million more, selling 8.83 million shares with Series A and Series B warrants.
2007-2008: Merger with Atna
On November 16, 2007 Canyon agreed to merge with Atna Resources Ltd. of British Columbia. Each Canyon share would become 0.32 Atna shares, and warrants would convert at the same ratio. A termination fee of about $975,000 could apply in certain cases. A special meeting was set for early March 2008.
In February 2008 Canyon optioned Adelaide and Tuscarora to Golden Predator Mines US Inc., which took on Canyon's obligations to Newmont and paid about $507,000 at closing, with up to $1.05 million more over four years. Canyon kept a royalty. Golden Predator could return the properties on 60 days' notice. Canyon also announced a new feasibility study on its Reward Gold Project near Beatty, Nevada, though the results were not in the filing text.
On March 13, 2008 stockholders approved the merger, with 27,075,379 shares for, 8,828,954 against and 491,796 abstaining, out of 53,629,841 eligible. Closing was expected on March 18. On March 19, 2008, the latest date in the record, Canyon deregistered its securities, ending its duty to file reports with the SEC, and its exchange filed to remove its shares from listing.
Written from the 24 story beats below (2001 to 19 Mar 2008), which come from the company's own announcements and filings.