Item 2.01 below are hereby incorporated by reference
into this Item 1.01.
Item
2.01 Completion of Acquisition or Disposition of Assets.
On
June
12, 2008, pursuant to the terms of the Asset Purchase Agreement discussed in
Item 1.01 above, Registrant and Hunter Bates Mining completed the acquisition
of
certain real estate and mining claims known as the “Bates-Hunter Mine” and
associated real and personal property relating to the Bates-Hunter Mine (the
“Acquired
Property”)
in
consideration of (i) a limited recourse promissory note of Hunter Bates payable
to George E. Otten in the original principal amount of $6,750,000 Canadian
dollars (the “Note”)
and
(ii) 3,620,000 unregistered shares of the Registrant’s $0.01 par value common
stock (the “Common
Stock”).
The
Note
requires Hunter Bates to pay to George E. Otten the following: (i) $250,000
on
or before December 1, 2008; (ii) a quarterly installment of accrued interest
plus the Production Revenue Payment (as defined below) commencing on April
1,
2010 and continuing until the earlier of: (a) the fifth anniversary of the
first
Production Revenue Payment or (b) December 31, 2015 (the “Maturity Date”);
(iii)
on the Maturity Date, the entire remaining principal balance together with
any
unpaid accrued interest. The Note is interest-free until January 1, 2010, and
from such date shall bear interest at a rate of 6% per annum.
In
addition to the interest payments due under the Note, Hunter Bates shall be
required to pay, on the first payment date following the any calendar quarter
in
which Hunter Bates realizes Profit (as defined below) in excess of $100,000
U.S.
dollars from the Acquired Property, and continuing on each payment date
thereafter until the Note is repaid in full, the following payments (each a
“Production
Revenue Payment”):
(1) For
all
calendar quarters ending on or prior to December 31, 2012, 75% of the Profit
realized by Hunter Bates for the immediately preceding calendar quarter,
and
(2) For
calendar quarters ending after December 31, 2012, the greater of (a) 75% of
the
Profit realized by Hunter Bates for the immediately preceding calendar quarter
or (b) $300,000.00 Canadian dollars.
Notwithstanding
the foregoing, if Hunter Bates has not been obligated to make a Production
Revenue Payment by December 31, 2012, then beginning on April 1, 2013 and
continuing on each payment date until Hunter Bates has become obligated to
make
a Production Revenue Payment, Hunter Bates shall make principal payments in
the
amount of $550,000 Canadian dollars. Upon Hunter Bates becoming obligated to
make a Production Revenue Payment at anytime after April 1, 2013, Hunter Bates
shall thereafter make Production Revenue Payments in accordance with subsection
(2) above. “Profit”
is
defined as any positive number comprising all revenue received by Hunter Bates
from sales of minerals or mineral by-products from the Acquired Property, less
all expenses of Hunter Bates, including interest expense but excluding
depreciation, distributions or dividends paid to shareholders of Hunter Bates,
incurred in connection with such sales or the operation of the Acquired Property
for the immediately preceding calendar quarter.
Hunter
Bates’ payment of the Note is secured by a deed of trust relating to the
Acquired Property granted by Hunter Bates in favor of Gilpin County Public
Trustee for the benefit of George E. Otten (the “Deed
of Trust”).
If an
event of default occurs under the Deed of Trust, Hunter Bates and the Registrant
shall be jointly and severally liable solely for a limited recourse amount
of
$2,000,000 Canadian dollars less the aggregate of (i) all payments of principal
and interest under the Note, (ii) any cash proceeds received by or on behalf
of
George E. Otten from the cash sale, prior to such default, of the Common Stock
(calculated on the basis of $0.5525 Canadian dollars per share) and (iii) any
deemed proceeds resulting from the in specie disposition of the Common Stock
by
George E. Otten to any of the Sellers or the Covenantor and/or their
shareholders (calculated on the basis of $0.5525 Canadian dollars per share).
George E. Otten’s sole recourse for any amounts due upon default of the Note
that are over and above the limited recourse amount set forth above shall be
the
secured property described in the Deed of Trust.
A
copy of
the Note and Deed of Trust is filed herewith as Exhibits 10.2 and 10.3,
respectively, and are incorporated herein by reference.
Item
9.01. Financial Statements and Exhibits.
(a)
Financial Statements of Businesses Acquired.
Not
applicable.
(b)
Pro
Forma Financial Information.
Not
applicable.
(d)
Exhibits
|
Exhibit
|
Description
of Document
|
|
10.1
|
Fifth
Amendment to Asset Purchase Agreement
|
|
10.2
|
Limited
Recourse Promissory Note of Hunter Bates Mining Corp issued in favor
of
George E. Otten
|
|
10.3
|
Deed
of Trust and Security Agreement of Hunter Bates Mining Corp issued
in
favor of Gilpin County Public Trustee
|
|
99.1
|
Press
Release dated June 13, 2008
|
SIGNATURES
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
| Wits Basin Precious Minerals Inc. | ||
| |
|
|
| Date: June 18, 2008 | By: | /s/ Mark D. Dacko |
| Mark D. Dacko | ||
| Chief Financial Officer | ||
EXHIBIT
INDEX
|
Exhibit
|
Description
of Document
|
|
10.1
|
Fifth
Amendment to Asset Purchase Agreement
|
|
10.2
|
Limited
Recourse Promissory Note of Hunter Bates Mining Corp issued in favor
of
George E. Otten
|
|
10.3
|
Deed
of Trust and Security Agreement of Hunter Bates Mining Corp issued
in
favor of Gilpin County Public Trustee
|
|
99.1
|
Press
Release dated June 13, 2008
|