On September 20, 2006, we executed a formal asset purchase agreement relating to the purchase of assets of the Hunter Gold Mining Corporation, a corporation incorporated under the laws of British Columbia, Canada, which assets includes the Bates-Hunter Mine in Central City, Colorado, the Golden Gilpin Mill located in Black Hawk, Colorado and the associated real and personal property assets. On March 1, 2007, we executed an amendment to the asset purchase agreement, whereby the Golden Gilpin Mill and adjacent real property were removed from the transaction. On May 31, 2007, we executed a further amendment to the asset purchase agreement, whereby the closing of the transaction contemplated by the asset purchase agreement has been extended to March 31, 2008, or sooner should we complete our due diligence. The Bates-Hunter Mine was a prior producing gold mine from the 1860's until the 1930's. We are continuing with a defined work program, which includes dewatering the existing mine shaft and performing a surface drilling program.
On December 18, 2006, we entered into a formal joint venture agreement with Journey Resources Corp., a corporation formed under the laws of the Province of British Columbia ("Journey") and Minerales Jazz S.A. De C.V., a corporation duly organized pursuant to the laws of Mexico, a wholly owned subsidiary of Journey. Pursuant to the terms of the joint venture agreement, we own a twenty five percent undivided beneficial interest in "located mineral claims" in the property known as the Vianey Mine Concession located in the State of Guerrero, Mexico ("Vianey"). In addition to located mineral claims, our interest includes all surface rights, personal property and permits associated with Vianey and all other claims, leases and interests in minerals acquired within two kilometers of the external perimeter of Vianey. The joint venture agreement provided us with the exclusive right and option to acquire up to an additional twenty five percent undivided beneficial interest in the project. The additional twenty five percent interest required us to pay an additional $500,000 to Journey by September 30, 2007 (to be used for exploration work) of which $100,000 was paid in January 2007. We had been in negotiations with Journey regarding an amendment to the joint venture agreement prior to September 30, 2007, and on October 31, 2007, we executed an amendment to the joint venture agreement, whereby we issued 1,600,000 shares of our unregistered common stock to Journey in lieu of the $400,000 payment for funding work expenditures and received our additional twenty five percent interest.
We hold a 35 percent equity interest in Kwagga Gold (Barbados) Limited ("Kwagga"), which, through its wholly owned subsidiary Kwagga Gold (Proprietary) Limited, holds mineral exploration rights in South Africa. This project is referred to as the "FSC Project." The exploration efforts that have been conducted are adjacent to the historic Witwatersrand Basin. The last completed drill hole on this property occurred in 2005. Kwagga is a subsidiary of AfriOre International (Barbados) Limited, a corporation formed under the laws of Barbados. On February 16, 2007, Lonmin Plc announced that it acquired all of the equity interest of AfriOre. Lonmin Plc is a primary producer of Platinum Group Metals (PGMs) with its headquarters in London. We are currently in negotiations with Lonmin to revise our current agreement in order to continue with the FSC Project.
On April 20, 2007, we entered into an Agreement and Plan of Merger and Reorganization (the "Merger Agreement") with Easyknit Enterprises Holdings Limited, a Bermuda corporation with its principal place of business in Hong Kong and listed on the Hong Kong Stock Exchange (SEHK: 0616) ("Easyknit"), and Race Merger, Inc., a Minnesota corporation and wholly owned subsidiary of Easyknit ("Merger Sub"), whereby Merger Sub would merge with and into us, and we would constitute the surviving corporation to the merger and would have become a wholly owned subsidiary of Easyknit following completion of the merger. On May 21, 2007, the parties entered into Amendment No. 1 to the Merger Agreement, whereby the parties amended the Merger Agreement to, among other things, clarify the terms of the exchange ratio applicable to the merger and to set the break up fee applicable to the Merger Agreement at US$30 million, under certain specific conditions, instead of three percent of the aggregate merger consideration. On August 15, 2007, we filed a declaratory judgment action in the District Court in the Fourth Judicial District of the State of Minnesota against Easyknit and Race Merger pursuant to which we were seeking a declaration by the court that (i) we were entitled to terminate the Merger Agreement, in our sole and absolute discretion, (ii) that our due diligence has caused us to conclude that the merger transaction is not in the best interests of our shareholders and (iii) alternatively that there has been a material adverse change in the financial condition of Easyknit. By filing this action, we had not terminated the merger. Then on November 1, 2007, we delivered to Easyknit and Race Merger a formal notice of termination of the Merger Agreement pursuant to Sections 7.03(e), 7.03(g) and 8.01(i) of the Merger Agreement. See Legal Proceedings in Part II that follows for details relating to this litigation matter.
On July 27, 2007, we entered into (1) a Sale and Shares and Claims Agreement with SSC Mandarin Group Limited ("SSC Mandarin Group") and China Global Mining Resources Limited, a company incorporated under the laws of the British Virgin Islands ("CGMR"), pursuant to which we acquired from SSC Mandarin Group 100% of the equity interest in CGMR, whereby CGMR became a wholly owned subsidiary. CGMR holds rights to acquire interests in certain nickel (the Xing Wang Mine) and iron ore mining properties (Maanshan Zhaoyuan Mining Co. Ltd., Xiaonanshan Mining Co., Ltd., and Changjiang Mining Company Limited) located in the People's Republic of China (the "PRC"); and (2) an Option Agreement with SSC Mandarin Financial and SSC-Sino Gold Consulting Co. Limited, a company incorporated under the laws of the PRC ("SSC-Sino Gold"), pursuant to which we acquired a three-year option to purchase a 60% equity interest in SSC-Sino Gold. SSC-Sino Gold holds rights to acquire an 80% interest in Tongguan Taizhou Gold Mining Co., Ltd., which holds licenses relating to a gold mine located in the Shaanxi province of the PRC. The consummation of any of these transactions is subject to the completion of definitive agreements, receipt of various governmental approvals, the completion of due diligence, and the required capital funding, among other conditions. Until the consummation of any of these PRC properties, we hold only the right or option to acquire and as of the date of this report, we do not hold title to any of these properties. Furthermore, on October 15, 2007, we received a notice of termination of the CGMR Agreements from SSC Mandarin Group. See Legal Proceedings in Part II that follows for details relating to this litigation matter.
In June 2003, we acquired the Holdsworth Project from Hawk Uranium Inc. (f/k/a Hawk Precious Minerals Inc.) ("Hawk"). Hawk is an affiliate of ours as H. Vance White (our Chairman of the Board) is an officer and director of Hawk. The rights we held allowed us to explore only through a limited surface depth, with the remaining below-surface rights belonging to Hawk. We had not expended any funds on the Holdsworth since its acquisition. On September 19, 2007, we sold all of our rights and claims in the Holdsworth back to Hawk for $50,000 Canadian (US$47,260). We retained a one percent gross gold royalty for any gold extracted from the limited surface depth and Hawk retains the right to purchase one half of the royalty from us for $500,000 Canadian. We have estimated that the value of the one percent royalty is immaterial and therefore have not recorded the possibility of a future gain.
As of September 30, 2007, we do not directly own any permits, we possess only a few pieces of equipment and we employ insufficient numbers of personnel necessary to actually explore and/or mine for minerals. Therefore, we are substantially dependent on the third party contractors we engage to perform such operations.
In the future, we will continue to seek new areas for exploration and the rights that would allow us to be either owners or participants. These rights may take the form of direct ownership of mineral exploration or, like our interest in Kwagga, these rights may take the form of ownership interests in entities holding exploration rights. Furthermore, although our main focus has been in gold exploration projects, future projects will involve other minerals.
Our principal office is located at 900 IDS Center, 80 South Eighth Street, Minneapolis, Minnesota 55402-8773. Our telephone number is (612) 349-5277 and our Internet address is www.witsbasin.com. Our securities trade on the Over-the-Counter Bulletin Board under the symbol "WITM."
