Get documents about "LINCOLN MINING CORP S-1/A Filing
Document Sample
Registration File No. _______________
As filed with the Securities and Exchange Commission on January 24, 2013
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1/A
AMENDMENT NO. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
___________
LIBERTY SILVER CORP.
(Exact name of registrant as specified in its charter)
Nevada 1000 32-0196442
(primary standard
industrial
(State or other jurisdiction of incorporation) classification code) (IRS Employer Identification Number)
181 Bay Street, Suite 2330
Toronto, Ontario, Canada, M5J 3T3
(Address of principal executive offices)
888-749-4916
Registrant’s telephone number, including area code
Copies to:
Gary S. Joiner, Esq.
Frascona, Joiner, Goodman and Greenstein, P.C.
4750 Table Mesa Drive,
Boulder, Colorado 80305
Telephone: (303) 494-3000
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans,
check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the
same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.
[ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
small reporting company. See definitions of “large accelerated filer,” “accelerated filed,” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
2
CALCULATION OF REGISTRATION FEE
Title Of Each Class Of Amount To Be Proposed Maximum Proposed Maximum Amount Of
Securities To Be Registered Registered Offering Price Aggregate Registration
Per Share (2) Offering Fee
Price (2)
Common Stock, par value $0.001
12,610,833 (1)
per share $0.73 $9,205,908 $1,255.69
TOTAL 12,610,833 $9,205,908 $1,255.69
(1)
Includes a total of (i) 2,983,333 currently issued and outstanding shares, of which 2,583,333 were issued by the
Company in conjunction with a property acquisition transaction and 400,000 were issued upon exercise of warrants;
and (ii) a total of 9,627,500 shares issuable upon exercise of outstanding warrants.
(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act
of 1933. For the purposes of this table, we have used the average of the closing bid and asked prices as of a recent
date.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay
its effective date until the Registrant shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until
this Registration Statement shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine .
3
The information in this Prospectus is not complete and may be changed. The selling stockholders may not sell these
securities until the registration statement is filed with the Securities and Exchange Commission and becomes effective.
This Prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state
where the sale is not permitted.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JANUARY 24, 2013
LIBERTY SILVER CORP.
12,610,833 SHARES OF
COMMON STOCK
This prospectus relates to the resale by the selling stockholders of up to 12,610,833 shares of common stock, including a total
of (i) 2,983,333 currently issued and outstanding shares of which 2,583,333 were issued by the Company in conjunction with
a property acquisition transaction, and 400,000 were issued upon exercise of warrants; and (ii) a total of 9,627,500 shares
issuable upon exercise of outstanding warrants. The selling stockholders may sell common stock from time to time in any
market on which the stock is traded at the prevailing market price or in negotiated transactions.
We are not selling any shares of common stock in this offering and therefore will not receive any proceeds from the sale of
common stock hereunder. We will receive the exercise price of the warrants to the extent they are not exercised on a net or
cashless exercise basis.
Our common stock is currently quoted on the Toronto Stock Exchange under the symbol “LSL.TO” and is traded on the Grey
Market under the symbol “LBSV”. The last reported sales price per share of our common stock as reported by the Toronto
Stock Exchange on January 22, 2013, was CDN $0.51. The last reported sales price per share of our common stock as
reported by the Grey Market on January 22, 2013, was US $0.47.
Investing in these securities involves significant risks. See "Risk Factors" beginning on page 8.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of
these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
No underwriter or person has been engaged to facilitate the sale of shares of common stock in this offering. None of the
proceeds from the sale of stock by the selling stockholders will be placed in escrow, trust or any similar account.
We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You
should read the entire prospectus and any amendments or supplements carefully before you make your investment decision.
The date of this prospectus is January 24, 2013.
4
TABLE OF CONTENTS
PROSPECTUS SUMMARY 6
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS 7
RISK FACTORS 8
USE OF PROCEEDS 13
DESCRIPTION OF TRANSACTIONS 13
DETERMINATION OF OFFERING PRICE 13
SELLING STOCKHOLDERS 13
PLAN OF DISTRIBUTION 16
DESCRIPTION OF SECURITIES TO BE REGISTERED 17
INTEREST OF NAMED EXPERTS AND COUNSEL 19
DESCRIPTION OF BUSINESS 19
PROPERTIES 21
LEGAL PROCEEDINGS 32
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 32
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 33
OPERATIONS
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 39
DISCLOSURE
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 39
EXECUTIVE COMPENSATION 41
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 46
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE 47
LEGAL MATTERS 49
EXPERTS 49
AVAILABLE INFORMATION 49
INDEX TO FINANCIAL STATEMENTS 50
5
PROSPECTUS SUMMARY
The following summary highlights selected information contained in this prospectus. This summary does not contain all the
information you should consider before investing in the securities. Before making an investment decision, you should read
the entire prospectus carefully, including the "risk factors" section, the financial statements and the notes to the financial
statements. As used throughout this prospectus, the terms “Liberty”, Liberty Silver”, the “Company,” the “Corporation”,
“we,” “us,” and “our” refer Liberty Silver Corp.
- Liberty Silver Corp.
Business Overview
Liberty Silver Corp. is an exploration stage company that engages principally in the acquisition, exploration, and
development of properties containing mineralized material. We have not yet begun development stage activities. We were
incorporated on February 20, 2007 under the laws of the state of Nevada under the name Lincoln Mining Corp, and changed
our name to Liberty Silver Corp. on February 11, 2010. Our current business operations are focused on exploring and then
developing the Trinity Silver property located in Pershing County, Nevada (the “Trinity Project”). We acquired our interest
in the Trinity Project through an Exploration Earn-In Agreement dated March 29, 2010. A more detailed discussion of the
Trinity Project and of the current status of our business operations is provided under the section “Description of Business”.
We are considered to be an exploration stage company because we have not yet generated any revenues from
operations. Our ability to emerge from the exploration stage into the development stage or the production stage is dependent,
among other things, upon obtaining additional financing to continue operations, and to continue to explore and develop the
Trinity Project. We do not have any current funding agreements and there cannot be any assurance that we will be able to
raise additional funding. These factors, among others, have led our auditors to raise substantial doubt about our ability to
continue as a going concern. The accompanying financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Principal Place of Business
Our executive offices are located at 181 Bay Street, Suite 2330, Toronto, Ontario, Canada, M5J3T3, and our telephone
number is 888-749-4916.
The Offering
Common stock outstanding prior to the offering 83,694,167 shares
Common stock offered by selling stockholders Up to 12,610,833 shares of common stock including: a total of (i) 2,983,333
currently issued and outstanding shares of which 2,583,333 were issued by
the Company in conjunction with a property acquisition transaction, and
400,000 were issued upon exercise of warrants; and (ii) a total of 9,627,500
shares issuable upon exercise of outstanding warrants. See “Description of
Transactions.”
Common stock to be outstanding after the offering. 93,321,667 shares (1)
Use of proceeds We will not receive any proceeds from the sale of the common stock
hereunder. We will receive the exercise price of the warrants to the extent
they are not exercised on a net or cashless exercise basis. Any proceeds
received from exercise of warrants will be used for payment of general
corporate and operating expenses. See “Use of Proceeds.”
Toronto Stock Exchange Symbol LSL.TO
Grey Market Symbol LBSV
6
(1)
Reflects the issuance of 9,627,500 shares upon exercise of all warrants being registered hereunder.
Summary Financial Information
The following is a summary of our unaudited and audited financial information for the periods indicated, including unaudited
financial statements for the interim period ended September 30, 2012 and audited financial statements for the fiscal years
ended June 30, 2012 and June 30, 2011 which are included elsewhere in this Prospectus. You should read the following data
together with the section of this Prospectus entitled “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” as well as with our financial statements and the notes thereto, which accompany this Prospectus.
Fiscal period ended Fiscal year ended Fiscal year ended
September 30, 2012 June 30, 2012 June 30, 2011
(unaudited) (audited) (audited)
Operating Statement Data:
Revenues $nil $nil $nil
Expenses $1,639,870 $5,681,977 $1,463,758
Profit (Loss) from Operations $(1,639,870) $(5,681,977) $(1,463,758)
Net Loss $1,639,951 $(5,682,146) $(1,463,065)
Net Profit (Loss) Per Share $(0.02) $(0.08) $(0.02)
Balance Sheet Data:
Total Assets $1,309,940 $1,956,416 $124,528
Total Liabilities $157,714 $167,948 $578,320
Common stock issued and 80,810,834 80,710,834 69,733,334
outstanding
Shareholders’ Equity $1,152,226 $1,788,468 $(453,792)
(Deficiency)
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain, in addition to historical information, forward-looking
statements. These statements relate to future events or our future financial performance and can be identified by the use of
forward-looking terminology such as “may,” “could,” “expect,” “anticipate,” “estimate,” “continue” or other similar words.
These forward-looking statements are based on management’s current expectations and are subject to a number of factors and
uncertainties which could cause actual results to differ materially from those described in these statements. We caution
investors that actual results or business conditions may differ materially from those projected or suggested in forward-looking
statements as a result of various factors including, but not limited to, those described in, or incorporated by reference into, the
Risk Factors section of this prospectus. We cannot assure you that we have identified all the factors that create uncertainties.
Readers should not place undue reliance on forward-looking statements. We undertake no obligation to publicly release the
result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to
reflect the occurrence of unanticipated events.
7
RISK FACTORS
THIS INVESTMENT HAS A HIGH DEGREE OF RISK. BEFORE YOU INVEST YOU SHOULD CAREFULLY
CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS
PROSPECTUS. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, OPERATING
RESULTS AND FINANCIAL CONDITION COULD BE HARMED AND THE VALUE OF OUR STOCK COULD GO
DOWN. THIS MEANS YOU COULD LOSE ALL OR A PART OF YOUR INVESTMENT.
Risks Related to Our Business
Substantial additional capital will be required for us to continue our exploration activities at the Trinity Project. If we
cannot raise additional capital as needed, our ability to execute our business plan and fund our ongoing operations will be
in jeopardy.
We require substantial additional capital to continue our exploration activities, and will need to explore various financing
alternatives to meet our projected costs and expenses related to further exploration and development of the Trinity Project.
There is no assurance that we will be able to obtain the necessary on favorable terms, or at all. Additionally, if the actual
costs to execute our business plan are significantly higher than expected, we may not have sufficient funds to cover these
costs and we may not be able to obtain other sources of financing. The failure to obtain all necessary financing would prevent
us from executing our business plan and would impede our ability to sustain operations or become profitable, and we could
be forced to cease our operations.
Our property is in the exploration stage. There is substantial risk that no commercially exploitable minerals will be found
and that funds we expend on exploration will be lost. If we do not discover any mineralized material in a commercially
exploitable quantity, our business could fail.
Exploration for minerals is a speculative venture involving substantial risk. New mineral exploration companies encounter
difficulties, and there is a high rate of failure of such enterprises. The expenditures we may make in the exploration of the
mineral concessions may not result in the discovery of commercial quantities of minerals. The likelihood of success must be
considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the
exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, additional costs and expenses that may exceed current estimates, unusual or
unexpected mineral formations, and other geological conditions. If we find mineral reserves which we decide to extract, of
which there is no guarantee, we may face additional problems, expenses, difficulties and complications which make mining
the ore unprofitable. If we encounter any or all of these unanticipated problems, we may be unable to successfully put our
Trinity Project into production.
Because we may never earn revenues from our operations and may never operate profitably, our business may fail and
cause investors to lose their entire investment in our company.
We have yet to generate revenues from operations or positive earnings and there can be no assurance that we will ever
generate revenues or operate profitably. We have a limited operating history and are in the exploration stage. Our success is
significantly dependent on the uncertain events of the discovery and exploitation of mineral reserves on our properties or
selling the rights to exploit those mineral reserves. If our business plan is not successful and we are not able to generate
revenues from operations and operate profitably, then our stock may become worthless and investors may lose all of their
investment in our company. Prior to completion of our exploration stage, we anticipate that we will incur increased operating
expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We
recognize that if we are unable to generate significant revenues from the exploration of our mineral claims in the future, we
will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the
likelihood that we will prove successful, and we can provide no assurance that we will generate any revenues or ever achieve
profitability. If we are unsuccessful in addressing these risks, our business will fail and investors may lose all of their
investment in our company.
8
Mineral operations are subject to applicable law and government regulation. Even if we discover mineralized material in a
commercially exploitable quantity, these laws and regulations could restrict or prohibit the exploitation of that mineralized
material. If we cannot exploit any mineralized material that we might discover on our properties, our business may fail.
Both mineral exploration and extraction require permits from various federal, state, and local governmental authorities and
are governed by laws and regulations, including those with respect to prospecting, mine development, mineral production,
transport, export, taxation, labor standards, occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. There can be no assurance that we will be able to obtain or maintain any of the
permits required for the exploration of our mineral properties or for the construction and operation of a mine on our
properties at economically viable costs. If we cannot accomplish these objectives, our business could fail. We believe that
we are in compliance with all material laws and regulations that currently apply to our activities but there can be no assurance
that we can continue to remain in compliance. Current laws and regulations could be amended and we might not be able to
comply with them, as amended. Further, there can be no assurance that we will be able to obtain or maintain all permits
necessary for our future operations, or that we will be able to obtain them on reasonable terms. To the extent such approvals
are required and are not obtained, we may be delayed or prohibited from proceeding with planned exploration or
development of our mineral properties.
Our rights to the Trinity Project are derived through an Exploration Earn-In Agreement with Renaissance Exploration
Inc., which is subject to the terms of an underlying Minerals Lease and Sublease between Renaissance and Newmont
Mining USA Limited, a Delaware corporation. The Minerals Lease and Sublease provides Newmont Mining USA
Limited with certain rights that, if exercised, would limit our interest in the Trinity Project.
Our rights to the Trinity Project are derived through an Exploration Earn-In Agreement with Renaissance Exploration Inc.
(“Renaissance”). Renaissance, in turn, derives its rights to the Trinity Project through a Minerals Lease and Sublease dated
July 29, 2005 (the “Lease”) with Newmont Mining USA Limited, a Delaware corporation (“Newmont”) which owns or
leases the various unpatented mining claims and portions of private land comprising the Trinity Project. The Lease provides
Newmont with certain rights that, if exercised, would limit our interest in the Trinity Project. Specifically, the Lease gives
Newmont the right to elect, in certain circumstances, to enter into a joint venture with Renaissance covering the Trinity
Project and any other real property interests that Renaissance holds or acquires within the Trinity Project, or the right to elect
to receive a royalty on all mineral production from such properties (See “PROPERTIES – Trinity Project
Agreements”). Should Newmont elect to exercise its right to participate in a joint venture with Renaissance, Newmont
would own a majority interest in the joint venture and would be appointed as the manager of the joint venture. In that event,
our interest under the Exploration Earn-In Agreement would be reduced to a minority position (we would be entitled to 70%
of the remaining interest of Renaissance in the project), and we would no longer have the authority to make management
decisions regarding future exploration and development of the property. In the event Newmont does not elect to exercise its
right to participate in a joint venture with respect to the Trinity Project, it would continue to have the right to be paid a royalty
of up to 5% of the net smelter returns generated from the properties comprising the Trinity Project. In such event,
Newmont’s right to receive a royalty would reduce the amount of revenue that we could derive from the Trinity Project.
Our ability to enforce our rights with respect to the Trinity Project may be adversely affected by the fact that rights to
mineral claims and leases often involve uncertainties, and by the fact that most of the properties comprising the Trinity
Project are held by third parties over which we have no direct control.
Rights to surface and subsurface mining properties often involve inherent risks due to the difficulties of determining the
validity of certain claims, as well as the potential for problems arising from the frequently ambiguous conveyance history
characteristic of many mining properties. These types of inherent risks and ambiguities may adversely affect our rights and
claims in the properties comprising the Trinity Project. Our rights and claims in such properties may also be adversely
affected by the fact that we do not have a direct ownership interest in most of the properties comprising the Trinity
Project. Such properties, which consist of a combination of unpatented mining claims, leased properties, and land owned in
fee title, are held by third parties over which we have no direct control. Although we believe we have valid rights and
claims in the properties comprising the Trinity Project through contractual agreements, and although we have taken what we
believe to be the remaining reasonable steps to verify and protect our rights and claims in accordance with industry standards
for the current stage of exploration of such properties, there is no assurance that the validity of our claims will not be
challenged. Our rights and claims in the properties comprising the Trinity Project could be subject to previously undetected
defects such as unregistered prior agreements or transfers, or third parties, over which we have no direct control, could assert
claims or take actions which adversely affect our ability to operate and enforce our rights with respect to the Trinity
Project.
9
Our success is dependent on retaining key personnel and on hiring and retaining additional personnel. If we fail to
retain our key personnel, we may have to cease operations.
Our ability to continue to explore and develop our mineral concessions, if warranted, is, in large part, dependent upon our
ability to attract and maintain qualified key personnel. There is competition for such personnel, and there can be no assurance
that we will be able to attract and retain them. We may not be able to find qualified geologists and mining engineers on a
timely basis or at all to pursue our business plan. Furthermore, if we are able to find qualified employees, the cost to hire
them may be too great because there may be other companies that pay at a higher rate than we are able to pay. Our progress
now and in the future will depend on the efforts of key management figures, such as R. Geoffrey ‘Geoff’ Browne, our Chief
Executive Officer, and William Tafuri, the Project Manager for the Trinity Project, and on our ability to hire additional key
personnel as needed in the future to continue to explore and develop our mineral concessions and pursue our business
plan. The loss of current key personnel or our inability to hire additional key personnel in the future could have a material
adverse effect on our business and could require us to cease operations or to cause our business to fail.
As we undertake exploration of our mineral claims, we will be subject to compliance with government regulation that may
increase the anticipated cost of our exploration program.
There are several governmental regulations that materially restrict mineral exploration. We will be subject to the federal
regulations (environmental, Bureau of Land Management) and the laws of the State of Nevada as we carry out our
exploration program. We may be required to obtain additional work permits, post bonds and perform remediation work for
any physical disturbance to the land in order to comply with these laws. While our planned exploration program budgets for
regulatory compliance, there is a risk that new regulations could increase our costs of doing business and prevent us from
carrying out our exploration program.
Mineral exploration and development is subject to extraordinary operating risks. We currently insure against these risks
on a limited basis. In the event of a cave-in or similar occurrence, our liability may exceed our resources and insurance
coverage, which would have an adverse impact on our company.
Mineral exploration, development and production involve many risks. Our operations will be subject to all the hazards and
risks inherent in the exploration for mineralized materials and, if we discover mineralized materials in commercially
exploitable quantity, our operations could be subject to all of the hazards and risks inherent in the development and
production of those mineralized materials, including liability for pollution, cave-ins or similar hazards against which we
cannot insure or against which we may elect not to insure. Any such event could result in work stoppages and damage to
property, including damage to the environment. As of the date hereof, the Company currently maintains commercial general
liability insurance with general aggregate coverage of $10,000,000, and umbrella liability insurance with aggregate coverage
of $1,000,000 against these operating hazards, in connection with its exploration program. The payment of any liabilities
that arise from any such occurrence that would not otherwise be covered under the current insurance policies would have a
material adverse impact on our company.
Silver prices are highly volatile. If a profitable silver market does not exist, we may have to cease operations.
Silver prices have been highly volatile, and are affected by numerous international economic and political factors over which
we have no control. Our long-term success is highly dependent upon the price of silver, as the economic feasibility of any
ore body discovered on our current property, or on other properties we may acquire in the future, would, in large part, be
determined by the prevailing market price of silver. If a profitable market does not exist, we may have to cease operations.
The silver exploration and mining industry is highly competitive.
The silver industry is highly competitive, and we are required to compete with other corporations and business entities, many
of which have greater resources than ours. Such corporations and other business entities could outbid us for potential projects
or produce minerals at lower costs, which would have a negative effect on our operations.
Risks Relating to the Common Stock
Our common stock is currently approved for trading on the Toronto Stock Exchange but we cannot ensure that a trading
market for our shares will be sustained.
Our common stock is currently approved for quotation on the Toronto Stock Exchange (“TSX”) under the symbol LSL.. On
October 12, 2012, the Ontario Securities Commission issued a cease trade order providing that trading in the securities of
10
Liberty Silver Corp. on the TSX (excepting issuances from treasury) shall cease until 11:59 pm EST on October 18, 2012
(the “OSC Order”). The OSC Order was effective for the same time frame as the Order of Suspension of Trading imposed
by the SEC, discussed below. Trading in the Company’s shares on the TSX in Canada resumed on October 22,
2012. There is no assurance that new cease trade orders will not be issued in the future or that other events which adversely
impact the trading will occur. Accordingly, we cannot ensure that a trading market will be maintained for our shares, and if a
market is maintained, we cannot ensure that any significant level of trading activity will be sustained or that, if sustained, that
it will constitute a liquid trading market which allows persons who purchase our common stock to promptly liquidate their
investment at any time. Persons who purchase our common stock may have difficulty liquidating their investment because of
the lack of a market or the difficulty in maintaining a market for such shares.
Our common stock is not currently listed, traded or quoted on any U.S. stock exchange or the OTC Markets, which could
make it difficult for investors to liquidate an investment in our common stock in a timely manner.
Our common stock was removed from trading on the OTCBB in October, 2012, and is not currently listed, traded or quoted
on any U.S. stock exchange, the OTC Markets or any other over-the-counter market in the U.S. From time to time, we
believe that our common stock is bought and sold in the U.S. by appointment, which is then reported by the “Grey Market”
tier of the OTC Markets. Accordingly, there is currently no established U.S. public trading market for our common
stock. Furthermore, there is currently no bid and ask information or other pre-trade data available for our common stock
from the “Grey Market” tier of the OTC Markets. Since grey market securities are not traded or quoted on an exchange or
interdealer quotation system, investor’s bids and offers are not collected in a central spot so market transparency is
diminished and best execution of orders is difficult. Although our shares currently trade outside the U.S. on the Toronto
Stock Exchange, an active U.S. trading market for our common stock may never develop. As a result, investors may not be
able to liquidate their investment in our common stock in a timely manner, thereby increasing the market risk of our
stockholders and making it more difficult for investors to obtain accurate quotations regarding our common stock or our
market value.
The price of shares of our common stock has been subject to substantial fluctuation in the past and may continue to be
volatile in the future.
The market price of our shares of common stock has been subject to substantial fluctuation in the past, and may continue to
be volatile in the future in response to various potential factors, many of which will be beyond the Company’s control. Factors
that could cause such volatility may include, among other things:
● actual or anticipated fluctuations in our quarterly operating results;
● large purchases or sales of shares of our common stock;
● additions or departures of key personnel;
● investor perception of our company ’ s business prospects;
● conditions or trends in other industry related companies;
● changes in the market valuations of publicly traded companies in general and other industry-related
companies; and
● world-wide political, economic and financial conditions.
In addition , the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the
market price of our Common Stock.
Potential future sales under Rule 144 may depress the market price for our common stock.
In general, under Rule 144, a person who acquired shares in a private placement transaction and who has satisfied a minimum
holding period of between 6 months and one-year following the date of acquisition of such shares and satisfied any other
applicable requirements of Rule 144, may thereafter sell such shares publicly. A significant number of our currently issued
and outstanding shares held by existing shareholders, including officers and directors and other principal shareholders are
currently eligible for resale pursuant to and in accordance with the provisions of Rule 144. The possible future resale of our
11
shares by our existing shareholders, pursuant to and in accordance with the provisions of Rule 144, may have a depressive
effect on the price of our common stock in the over-the-counter market.
Our common stock is currently deemed a “penny stock”, which may make it more difficult for investors to sell their
shares.
The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity
security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term
“accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in
excess of $1,000,000, exclusive of their principal residence, or annual income exceeding $200,000, or $300,000 jointly with
their spouse. 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 in a form prepared by the Securities and Exchange Commission
which provides information about penny stocks and the nature and level of risks in the penny stock market. 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. The bid and offer quotations, and the broker-dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the
customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these 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 disclosure requirements may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of
broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the
marketability of our common stock.
The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements, which may also limit a
shareholder's ability to buy and sell our stock.
In addition to the "penny stock" rules described above, FINRA has adopted rules which require that in recommending an
investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must
make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low
priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for
broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our
stock and have an adverse effect on the market for our shares.
We do not intend to pay dividends and there will thus be fewer ways in which you are able to make a gain on your
investment.
We have never paid dividends and do not intend to pay any dividends for the foreseeable future. To the extent that we may
require additional funding currently not provided for in our financing plan, our funding sources may prohibit the declaration
of dividends. Because we do not intend to pay dividends, any gain on your investment will need to result from an
appreciation in the price of our common stock. There will therefore be fewer ways in which you are able to make a gain on
your investment.
We face risks related to compliance with corporate governance laws and financial reporting standards.
The Sarbanes-Oxley Act of 2002, as well as related new rules and regulations implemented by the Securities and Exchange
Commission and the Public Company Accounting Oversight Board, require changes in the corporate governance practices
and financial reporting standards for public companies. These laws, rules and regulations, including compliance with Section
404 of the Sarbanes-Oxley Act of 2002 relating to internal control over financial reporting, referred to as Section 404,
materially increased our legal and financial compliance costs and made some activities more time-consuming and more
burdensome.
12
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock hereunder. We will receive the exercise price of the
warrants to the extent they are not exercised on a net or cashless exercise basis. Any proceeds received from exercise of
warrants will be used for payment of general corporate and operating expenses.
DESCRIPTION OF TRANSACTIONS
The following are the transactions pursuant to which the Company issued securities which are the subject of this registration
statement:
Share Issuance
On October 15, 2012, the Company entered into and closed a Purchase Agreement (the “Purchase Agreement”) with Primus
Resources, L.C. and James A. Freeman (collectively “Seller”) to acquire unpatented mining claims, Nevada BLM Serial No.
799907, 799908, 799909, 799910, and 799911 covering approximately 100 acres of property located adjacent to the former
Trinity Silver mine on the Company’s Trinity Project (the “Hi Ho Properties”). The Hi Ho Properties were previously the
only acreage not controlled by the Company or its joint venture partner Renaissance Exploration Inc. in the Trinity Project.
Under the terms of the Purchase Agreement, the Company provided cash consideration of US$250,000 and issued 2,583,333
restricted shares of common stock of the Company to Seller. In addition the Seller was granted a 2% net smelter royalty on
future production from the Hi Ho Properties pursuant to the terms of a Deed With Reservation of Royalty Hi Ho Silver
Claims. In conjunction with the entry into the Purchase Agreement, the Company entered into a Registration Rights
Agreement (the “Registration Rights Agreement”) with Seller, pursuant to which the Company agreed to file a registration
statement on Form S-1 with the United States Securities and Exchange Commission, within thirty (30) days of the closing,
which registers the common stock issued to the Seller pursuant to the Purchase Agreement. Pursuant to the Registration
Rights Agreement the Company will pay Seller additional consideration as follows:
if this registration statement is declared effective by the United States Securities Exchange Commission by
March 1, 2013, Liberty Silver will issue an additional 277,778 Liberty Silver common shares to Primus, thereby
increasing the total aggregate number of shares issued to 2,861,111 shares; or
if this registration statement is not declared effective by the United States Securities Exchange Commission by
March 1, 2013, Liberty Silver will pay Primus US$200,000. As well, if the five-day weighted average trading
price of Liberty Silver’s common shares on the Toronto Stock Exchange as of March 1, 2013 (the “Market
Price”) exceeds US$0.72 per share, Liberty Silver will issue an additional number of Liberty Silver common
shares to Primus equal to (a) 277,778 less (b) US$200,000 divided by the Market Price.
Warrant Issuances
To date the Company has issued a total of 11,360,834 warrants, of which, a total of 9,627,500 warrants remain
outstanding. This Registration Statement includes 9,627,500 shares of common stock underlying all of the outstanding
warrants, and 400,000 shares of common stock that were issued as a result of the exercise of previously outstanding warrants
by certain Selling Stockholders. The various warrant issuance transactions covered by this Registration Statement are
summarized in the Section titled “Description of Securities to Be Registered”.
DETERMINATION OF OFFERING PRICE
The Selling Stockholders will determine the offering price.
SELLING STOCKHOLDERS
This prospectus relates to the registration of shares of our outstanding common stock, plus shares issuable upon exercise of
warrants to purchase shares of our common stock. The selling stockholders are not broker-dealers or affiliates of a
broker-dealer. Because the shares were issued pursuant to exemptions from registration including the exemption from
registration provided by Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder, and the
exemption
13
provided by Regulation S under the Securities Act, and because such shares have not previously been registered with the
SEC, the selling shareholders currently hold “restricted stock.”
The following table sets forth, to the best of our knowledge, information concerning the selling stockholders, the number of
shares currently held by the selling stockholders, the number of shares to be offered and sold by the selling stockholders and
the amount and percentage of common stock that will be owned by the selling stockholders following the offering (assuming
the sale of all shares of common stock being offered) by the selling stockholders:
Number of Shares Number of Shares
Owned Before Offering Owned After Offering
Name of Selling Shareholder No. of Warrant Percent Shares No. of Percent
(1A) (1B)
Shares Shares of Class Offered Shares of Class (1C)
1 Primus Resources, L.C. (2) 1,937,500 0 2.31% 1,937,500 0 0%
2 James A. Freeman 645,833 0 0.77% 645,833 0 0%
3 Parkwood LP Fund (3) 300,000 0 0.36% 300,000 0 0%
4 Geoffrey Bertram 100,000 0 0.12% 100,000 0 0%
5 1727326 Ontario Inc. (4) 0 40,000 0% 40,000 0 0%
6 Paul Fornazzari 0 40,000 0% 40,000 0 0%
7 Richard Abraham 0 60,000 0% 60,000 0 0%
8 John David Gould 0 40,000 0% 40,000 0 0%
9 Look Back Investments, Inc. (5) 0 6,500,000 0% 6,500,000 0 0%
10 Fred Kahn 250,000 250,000 0.29% 250,000 250,000 0.27%
11 Stewart McInnes 100,000 100,000 0.12% 100,000 100,000 0.11%
12 Joy L. Miko 0 310,000 0% 310,000 0 0%
13 Reddhedd Holdings Ltd. (6) 0 200,000 0% 200,000 0 0%
14 George Wright 0 27,500 0% 27,500 0 0%
15 Kathleen Peace 50,000 50,000 0.05% 50,000 50,000 0.05%
16 Frank Salvatori 0 30,000 0% 30,000 0 0%
17 Robert Vistorino 20,000 20,000 0.02% 20,000 20,000 0.02%
18 Stephen W. Stewart 0 100,000 0% 100,000 0 0%
19 Karl P. Wohler 0 200,000 0% 200,000 0 0%
20 Investor Company (7) 0 75,000 0% 75,000 0 0%
21 Eosphoros Asset Management Fund I LP (8) 0 125,000 0% 125,000 0 0%
22 R. Geoffrey Browne (9) 5,550,000 (10) 600,000 7.05% 600,000 5,550,000 5.95%
23 William Tafuri (9) 2,643,328 (11) 110,000 3.26% 110,000 2,643,328 2.83%
24 John Barrington 1,800,000 (12) 50,000 2.19% 50,000 1,800,000 1.93%
25 George Kent (9) 1,350,000 (13) 100,000 1.72% 100,000 1,350,000 1.45%
26 Timothy Unwin (9) 1,350,000 (14) 100,000 1.72% 100,000 1,350,000 1.45%
27 Paul Haggis 1,550,000 (15) 300,000 2.19% 300,000 1,550,000 1.66%
28 W. Thomas Hodgson (9) 1,400,000 (16) 200,000 (17) 1.90% 200,000 1,400,000 1.50%
(1A) Except in the case of Officer and Director Selling Stockholders, the percentage amount is based upon 83,694,167 shares
outstanding. In the case of each different Officer and Director Selling Stockholder, the percentage amount is based upon
83,694,167 shares outstanding plus the shares deemed to be outstanding for the purposes of determining the beneficial
ownership of that Officer or Director under Rule 13d-3 of the Exchange Act.
(1B) Except for Officers and Directors of the Company, the number assumes the selling shareholder sells all of the common
shares being offered pursuant to this prospectus. For Officers and Directors of the Company, the number assumes that
the selling shareholder sells only the warrant shares being registered in this offering.
14
(1C) Percentage calculations are based upon 93,321,667 shares issued and outstanding. This figure is based upon the
assumption that Selling Stockholders exercise all outstanding warrants and sell a total of 9,627,500 warrant shares,
thereby establishing the total issued and outstanding shares at 93,321,667.
(2) Primus Resources L.C. is a Wyoming limited liability company based in Wyoming, James A. Marin, President and
Managing Member of Primus Resources L.C., makes decisions as to the voting and disposition of the securities.
(3) Parkwood LP Fund is an Ontario, Canada partnership formed under the Limited Partnership Act, R.S.O. 1990, based in
Toronto, Ontario. Parkwood GP Inc., a private Ontario, Canada Company, is the general partner of Parkwood LP Fund.
Daniel Sternberg is the sole shareholder, officer and director of Parkwood GP Inc. and makes decisions as to the voting
and disposition of the securities.
(4) 1727326 Ontario Inc. is a private Ontario, Canada company based in Toronto, Ontario. Kevin O’Connor, officer of
1727326 Ontario Inc., makes decisions as to the voting and disposition of the securities.
(5) Look Back Investments Inc. is a private Panamanian company based in Panama. Robert Genovese, officer of Look
Back Investments Inc., makes decisions as to the voting and disposition of the securities.
(6) Reddhedd Holdings Ltd. is a private Ontario, Canada company based in Toronto, Ontario. Anne Unwin, officer of
Reddhedd Holdings Ltd., makes decisions as to the voting and disposition of the securities.
(7) Investor Company is the nominee of an investment dealer, TD Securities Inc., and it is our understanding that the
beneficial holder of these securities is Eosphoros Asset Management Fund I LP (see notes to Item 15 below).
(8) Eosphoros Asset Management Fund I LP is a private investment fund based in Toronto, Ontario, Canada. EAM Inc.,
general partner of Eosphoros Asset Management Fund I LP, makes decisions as to the voting and disposition of the
securities.
(9) Officer,Director or Significant Employee of the Company
(10) Included in this number, are (i) 2,550,000 shares owned directly by Mr. Browne and (ii) 3,000,000 option shares. Mr.
Browne may be deemed to be the beneficial owner of the option shares because he holds the right to acquire these shares
within 60 days through the exercise of the options.
(11) Included in this number, are (i) 2,110,000 shares owned directly by Mr. Tafuri and (ii) 533,328 option shares. Mr.
Tafuri may be deemed to be the beneficial owner of the option shares because he holds the right to acquire these shares
within 60 days through the exercise of the options.
(12) Included in this number, are (i) 1,000,000 shares owned directly by Mr. Barrington and (ii) 800,000 option shares. Mr.
Barrington may be deemed to be the beneficial owner of the option shares because he holds the right to acquire these
shares within 60 days through the exercise of the options.
(13) Included in this number, are (i) 1,050,000 shares owned directly by Mr. Kent and (ii) 300,000 option shares. Mr. Kent
may be deemed the beneficial owner of the option shares because he holds the right to acquire these shares within 60
days through the exercise of the options.
(14) Included in this number, are (i) 1,050,000 shares owned directly by Mr. Unwin and (ii) 300,000 option shares. Mr.
Unwin may be deemed to be the beneficial owner of these shares because he holds the right to acquire the option shares
within 60 days through the exercise of the options.
(15) Included in this number, are (i) 1,250,000 shares owned directly by Mr. Haggis and (ii) 300,000 option shares. Mr.
Haggis may be deemed to be the beneficial owner of the option shares because he holds the right to acquire these shares
within 60 days through the exercise of the options.
(16) Included in this number, are (i) 500,000 shares owned directly and (ii) 600,000 owned indirectly by Mr. Hodgson and
(ii) 300,000 option shares. Mr. Hodgson may be deemed to be the beneficial owner of the option shares because he
holds the right to acquire these shares within 60 days through the exercise of the options. The 600,000 shares owned
indirectly by Mr. Hodgson are owned by Greenbrook Capital Partners Inc. Greenbrook Capital Partners Inc. a private
Ontario, Canada company based in Toronto, Ontario. W. Thomas Hodgson, officer of Greenbrook Capital Partners Inc.,
makes decisions as to the voting and disposition of securities owned by Greenbrook Capital Partners Inc.
(17) Of the 200,000 total warrant shares that Mr. Hodgson may be deemed to beneficially own, 50,000 of such warrant shares
are owned by Greenbrook Capital Partners Inc. Greenbrook Capital Partners Inc. a private Ontario, Canada company
based in Toronto, Ontario. W. Thomas Hodgson, officer of Greenbrook Capital Partners Inc., makes decisions as to the
voting and disposition of securities owned by Greenbrook Capital Partners Inc.
The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the
Securities Exchange Act of 1934, and the information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which a selling stockholders has sole or shared
voting power or investment power and also any shares, which the selling stockholders has the right to acquire within 60 days.
15
PLAN OF DISTRIBUTION
Once this registration statement is effective, each selling shareholder of the common stock of the Company and any of their
pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on the
Toronto Stock Exchange, the Grey Market, or any other stock exchange, market or trading facility on which the shares are
traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one
or more of the following methods when selling shares:
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction;
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
an exchange distribution in accordance with the rules of the applicable exchange;
privately negotiated transactions;
settlement of short sales entered into after the effective date of the registration statement of which this
prospectus is a part;
broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a
stipulated price per share;
a combination of any such methods of sale;
through the writing or settlement of options or other hedging transactions, whether through an options
exchange or otherwise; or
any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the “Securities
Act”), if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in
sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to
this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with
NASDR Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with NASDR IM-2440.
In connection with the sale of the Common Stock or interests therein, the Selling Stockholders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the Common Stock
in the course of hedging the positions they assume. The Selling Stockholders may also sell shares of the Common Stock
short and deliver these securities to close out their short positions, or loan or pledge the Common Stock to broker-dealers that
in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to
such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it
does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the
Common Stock. In no event shall any broker-dealer receive fees, commissions and markups, which, in the aggregate, would
exceed eight percent (8%).
16
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares.
The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.
Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be
subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus
which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this
prospectus. Each Selling Stockholder has advised us that they have not entered into any written or oral agreements,
understandings or arrangements with any underwriter or broker-dealer regarding the sale of the resale shares. There is no
underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling
Stockholders.
With respect to the 2,583,333 shares issued in conjunction with the acquisition of the Hi Ho Properties, we agreed to keep
this prospectus effective until the earlier of (i) the date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule 144(e) under the Securities Act or any other rule
of similar effect or (ii) all of the shares have been sold pursuant to the prospectus or Rule 144 under the Securities Act or any
other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required
under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is
available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares
may not simultaneously engage in market making activities with respect to the Common Stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will
be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M,
which may limit the timing of purchases and sales of shares of the Common Stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to
deliver a copy of this prospectus to each purchaser at or prior to the time of the sale.
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 in a form prepared by the Securities and Exchange Commission which
provides information about penny stocks and the nature and level of risks in the penny stock market. 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. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing
before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from these 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.
DESCRIPTION OF SECURITIES TO BE REGISTERED
Authorized Stock
We are authorized to issue up to 510,000,000 shares including 500,000,000 shares of $0.001 par value common stock and
10,000,000 shares of $0.001 par value preferred stock.
Common Stock
We are authorized to issue up to 510,000,000 shares including 500,000,000 shares of $0.001 par value common stock and
10,000,000 shares of $0.001 par value preferred stock. As of January 22, 2013, there were 83,694,167 shares of our common
stock issued and outstanding which shares are held by 27 stockholders of record.
Preferred Stock
We are authorized 10,000,000 shares of “blank check” preferred stock with a par value of $0.001 per share. The board of
directors of the Company have the authorization to prescribe the series and the number of shares of each series of preferred
stock to be issued, as well as the voting powers, designations, preferences, limitations, restrictions and relative rights of the
shares of each such series.
17
Voting Rights
Holders of the common stock are entitled to one vote per share on all matters to be voted upon by the stockholder.
Dividend Rights
Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors
out of funds legally available for dividends.
Liquidation Rights
Upon the liquidation, dissolution, or winding up of our company, the holders of common stock are entitled to share ratably in
all of our assets which are legally available for distribution after payment of all debts and other liabilities.
Conversion and Redemption
Holders of common stock have no preemptive, subscription, redemption or conversion rights.
Convertible Securities
Warrants
To date the Company has issued a total of 11,360,834 warrants, of which, a total of 9,627,500 warrants remain
outstanding. This Registration Statement covers 9,627,500 shares of common stock underlying the outstanding warrants, as
well as 400,000 shares of common stock issued by the Company upon exercise of previously outstanding warrants. The
various warrant issuance transactions covered by this Registration Statement are summarized below:
On April 1, 2011, the Company borrowed $150,000 from related parties. In conjunction with each $25,000 note, the
Company issued warrants to purchase 50,000 shares of the Company’s common stock at $0.55 per share for a three-year
term, commencing on the date of the note. There were a total of 300,000 warrants issued to related parties in connection
with this transaction. The shares underlying all warrants associated with this transaction are being registered pursuant to this
registration statement.
On July 27, 2011, the Company issued 200,000 units (“Units”) for cash at CDN $0.55 (US $0.58) per Unit. Each Unit
consisted of one common share and one half of a warrant to purchase a share of the Company’s common stock. Each whole
warrant entitles the holder thereof to purchase one common share of the Company’s common stock at a price of CDN$0.75
until the date which is 60 months following the closing date of the private placement offering (the “Warrant Term”),
provided, however, that the Company may accelerate the Warrant Term under certain conditions. Effective September 28,
2012, 100,000 whole warrants were exercised for gross proceeds of CDN$ 75,000; the 100,000 shares of common stock
issued as a result of the exercise of these warrants are included in this Registration Statement. There are no warrants, which
remain outstanding from the July 27, 2011 issuance of 200,000 Units.
On August 4, 2011, the Company issued 1,000,000 units (“Units”) for cash at CDN $0.55 (US $0.57) per Unit. Each Unit
consisted of one common share and one half of a warrant to purchase a share of common stock of the Company. Each whole
warrant entitles the holder thereof to purchase one common share of the Company at a price of CDN$0.75 until the date
which is 60 months following the closing date of the private placement offering (the “Warrant Term”), provided, however,
that the Company may accelerate the Warrant Term under certain conditions. Effective October 3, 2012, 300,000 whole
warrants were exercised for gross proceeds of CDN$ 225,000; the 300,000 shares of common stock issued as a result of the
exercise of these warrants are included in this Registration Statement. There are 200,000 whole warrants, which remain
outstanding from the August 4, 2011 issuance of 1,000,000 Units, and the shares underlying such warrants are being
registered pursuant to this registration statement.
On November 10, 2011, Liberty Silver issued 6,500,000 subscription receipts to an investor (the “Subscription Receipts”)
pursuant to a private placement at a price of US$ 0.50 per Subscription Receipt for gross proceeds of US $3,250,000. On
December 19, 2011, each Subscription Receipt was automatically converted for no additional consideration, into one unit of
the Company (a “Unit”) as a result of the Company’s receipt of notice that its common stock was accepted for trading on the
Toronto Stock Exchange. Each Unit consisted of one common share and one common share purchase one warrant
(“Warrant”). Each Warrant is exercisable at a price of US $0.65 per share at any time until 5:00 p.m. (Toronto time) on
18
December 31, 2013. The shares underlying all warrants associated with this transaction are being registered pursuant to this
registration statement.
On December 19, 2011, Liberty Silver completed a private placement offering, pursuant to which the Company raised a total
of US $1,313,750 through the sale of 2,627,500 units (“Units”) at a purchase price of US $0.50 per Unit. Each Unit
consisted of one common share and one common share purchase warrant (a “Warrant”). Each Warrant entitles the holder to
acquire one common share at a price of US $0.65 for a period of two years following the date of the closing of the
financing. The shares underlying all warrants associated with this transaction are being registered pursuant to this
registration statement.
INTEREST OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an
opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or
offering of the common stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a
substantial interest, directly or indirectly, in the Company or any part of its subsidiaries. Nor was any such person connected
with the Company or any of its subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer
or employee.
DESCRIPTION OF BUSINESS
The Corporation
Liberty Silver Corp. was incorporated under the laws of the state of Nevada, U.S.A on February 20, 2007 under the name
Lincoln Mining Corp. Pursuant to a Certificate of Amendment dated February 11, 2010, the Company changed its name to
Liberty Silver Corp. The Company’s registered office is located at 1802 N. Carson Street, Suite 212, Carson City Nevada
89701, and its head office is located at 181 Bay Street, Suite 2330, Toronto, Ontario, Canada, M5J3T3, and our telephone
number is 888-749-4916. As of the date of this Prospectus, the Company has no subsidiaries.
Current Operations
Overview
We were incorporated for the purpose of engaging in mineral exploration activities, and on May 24, 2007, purchased the
Zone Lode mining claim located in Elko County, Nevada, for a purchase price of $10,000. Our objective was to conduct
mineral exploration activities on the Zone Lode claim to assess whether it contained economic reserves of copper, gold,
silver, molybdenum or zinc. We were not able to determine whether this property contained reserves that were economically
recoverable and have ceased our attempts at developing this property. Our current business operations are focused on
exploring and developing the Trinity Silver property located in Pershing County, Nevada (the “Trinity Project”).
The Company acquired its interest in the Trinity Project through an Exploration Earn-In Agreement. On March 29, 2010, the
Company entered into the Earn-In Agreement relating to the Trinity Project with AuEx, Inc., a Nevada company beneficially
owned by another Nevada company AuEx Ventures, Inc. AuEx, Inc. held an exclusive interest in the Trinity Project by way
of a Minerals Lease and Sublease with Newmont Mining USA Limited, a Delaware corporation who owns or leases the
various unpatented mining claims and portions of private land comprising the Trinity Project. As part of a restructuring
transaction by AuEx Ventures, Inc., another Nevada company Renaissance Exploration Inc. (“Renaissance”) was spun out,
and on July 1, 2010 AuEx, Inc. assigned all of its interest in the Trinity Project and the Earn-In Agreement to Renaissance,
who currently holds a 100% leasehold interest in the Trinity Project. The Minerals Lease and Sublease grants to Newmont, a
right of first offer on any transfer of AuEx, Inc.’s interests in the Trinity Project to any non-affiliate of AuEx, Inc., and also
gives Newmont a right to either enter into a joint venture agreement covering the Trinity Project and any other real property
interests that AuEx, Inc. holds or acquires within the Trinity Project, or receive a royalty on all mineral production from such
properties. Currently the rights to the Trinity Project are held 100% by Renaissance, pursuant to an assignment of such rights
from AuEx, Inc. The Company entered into the Earn-In Agreement providing the Company with a right to earn a 70%
undivided interest in rights of Renaissance in the Trinity Project (the “70% Interest”).
The Trinity Project consists of a total of approximately 10,600 acres, including 5,676 acres of fee land and 253 unpatented
mining claims. Under the Earn-In Agreement, the Company may earn-in the 70% Interest in the Trinity Project during a
6-year period in consideration of (1) a signing payment of $25,000, which has been made, (2) an expenditure of a cumulative
total of $5,000,000 in exploration and development expenses on the Trinity Project by March 29, 2016, including a minimum
of $500,000 which must be expended within one year from the effective date of the Agreement, and (3) completion of a
19
bankable feasibility study on the Trinity Project on or before the 7 th anniversary date of the Agreement. Item (1) has been
completed by the Company, and the Company is current with item (2).
Our business operations are currently focused on efforts to develop the Trinity Project. The Company foresees future
operations at the Trinity Project consisting of (i) an effort to expand the known mineralized material through drilling, (ii)
permitting for operation, if deemed economically viable, (iii) metallurgical studies aimed at enhancing the recovery of the
silver and by-product lead and zinc, and (iv) engineering design related to potential construction of a new mine. Exploration
of the property will be conducted simultaneously with the mine development in order to locate additional mineralized
materials.
Products
The Company’s anticipated product will be precious and base metal-bearing concentrates and/or precious metal bullion
produced from ores from mineral deposits which it hopes to discover and exploit through exploration and acquisition. The
Company anticipates such products will be silver, lead and zinc.
Trinity Project Location
The Trinity Project is located along the west flank of the Trinity Range in Pershing County, Nevada, about 25 miles by road
northwest of Lovelock, NV, the county seat. The Trinity Project consists of approximately 10,600 acres, which includes 253
unpatented lode mining claims and portions of nine sections of private land. The specific location of the Trinity Project is
discussed in more detail the section entitled “Properties” herein.
Infrastructure
The Trinity Project is situated in western Nevada, a locale which is host to many metal mines, mining equipment companies,
drilling companies, mining and metallurgical consulting expertise, and experienced mining personnel. Its location is
accessible by all-weather road through an area of very sparse population. There is no infrastructure on the property. All
buildings have been removed, all wells have been properly abandoned, and there is no equipment on site. The mine site has
been totally reclaimed to the satisfaction of the State of Nevada. The need for power and water would be defined by a
feasibility study and mine plan both of which are premature at this point in time.
Government Regulation and Approval
The following permits will be necessary to put the Trinity Project into production.
Permit/notification Agency
- Mine registry Nevada Division of Minerals
- Mine Opening notification State Inspector of Mines
- Solid Waste Landfill Nevada Bureau of Waste Management
- Hazardous Waste Management Permit Nevada Bureau of Waste Management
- General Storm Water Permit Nevada Bureau of Pollution Control
- Hazardous material Permit State Fire Marshal
- Fire and Life Safety State Fire Marshal
- Explosives Permit Bureau of Alcohol, Tobacco, Firearms
- Notification of Commencement of Operations Mine Safety and Health Administration
- Radio License Federal Communications Commission
All of the Company's drilling operations to date have been on private land and, as a result, have not been subject to U.S.
Bureau of Land Management jurisdiction. On private land in Nevada, the Company's activities are regulated by The
Nevada Division of Environmental Protection and the Nevada Bureau of Mining Regulation and Reclamation
(“NBMRR”) and no permit is needed as long as the disturbance created is less than five acres. Our total disturbance to
date has been less than four acres, much of which has already been reclaimed, and as a result, we have not yet applied for
a NBMRR permit. However, as a matter of courtesy, we have provided written correspondence to NBMRR to advise
them of our activities.
20
Environmental Regulations
Our current exploration activities and any future mining operations (of which we currently have none planned), are subject to
extensive laws and regulations governing the protection of the environment, waste disposal, worker safety, mine construction,
and protection of endangered and protected species. We have made, and expect to make in the future, significant expenditures
to comply with such laws and regulations. Future changes in applicable laws, regulations and permits or changes in their
enforcement or regulatory interpretation could have an adverse impact on our financial condition or results of operations. In
the event that we make a mineral discovery and decide to proceed to production, the costs and delays associated with
compliance with these laws and regulations could stop us from proceeding with a project or the operation or further
improvement of a mine or increase the costs of improvement or production.
We anticipate that the following environmental permits will be necessary for our anticipated operations:
Permit for Reclamation
Water Pollution Control Permit
Air Quality Operating Permit
Industrial Artificial pond permit
Water Rights
The Company anticipates that, subject to the availability of funds or financing, it will begin soliciting bids for the programs
necessary to obtain these permits during the fiscal year ending June 30, 2013. The cost, timing, and work schedules are not
yet available.
Competition
We compete with other mining and exploration companies in connection with the acquisition of mining claims and leases on
silver and other precious metals prospects and in connection with the recruitment and retention of qualified
employees. Many of these companies are much larger than we are, have greater financial resources and have been in the
mining business much longer than we have. As such, these competitors may be in a better position through size, finances
and experience to acquire suitable exploration properties. We may not be able to compete against these companies in
acquiring new properties and/or qualified people to work on our current Trinity Project, or any other properties we may
acquire in the future.
Given the size of the world market for precious metals such as silver and gold relative to the number of individual producers
and consumers, we believe that no single company has sufficient market influence to significantly affect the price or supply
of precious metals such as silver and gold in the world market.
Employees
The Company currently has six full-time employees, R. Geoffrey Browne, the Chief Executive Officer and Chairman of the
Board of Directors, Manish Z. Kshatriya, the Chief Financial Officer and Executive Vice President, William Tafuri, the
Project Manager for the Trinity Project, H. Richard Klatt, the Vice President of Exploration, and two additional employees.
PROPERTIES
Office Space
The Company has a lease agreement for office space at 181 Bay Street, Suite 2330, Toronto, Ontario, Canada, M5J
2T3. The telephone number is: 647-749-4916. The monthly base rent is CDN $4,007 (approximately US $4,000). The
term of the lease is for fifty-four months and terminates on April 28, 2016.
The Company has a lease agreement for a field office at 808 Packer Way, Sparks, NV 89431. The phone number there is:
775-352-9375. The monthly base rent is USD $ 2,477.25 plus Common Area Reimbursement of USD $ 370 and Property
Tax of USD $250. The term of the lease is for twenty four months and terminates on January 31, 2015.
21
Trinity Project
Trinity Project Location
The Trinity Project is situated approximately 25 road miles north-northwest of Lovelock, Nevada, in Pershing County,
Nevada, on the northwest flank of the Trinity Range, in the Trinity mining district. The latitude-longitude coordinates of the
mine site are 40 o 23’ 47” N, 118 o 36’ 38” W. The JV area is situated in sections 2, 3, 4, 5, 8, 9, 10, 11, 15, 16, and 17,
Township 29 North, Range 30 East, MDB&M and sections 26-28, 33, 34, and 35, Township 30 North, Range 30 East,
MDB&M.
The Trinity Project includes located public and leased/subleased fee land consisting of the following 253 unpatented mining
claims and tracts of fee land:
(1)
248 unpatented lode mining claims consisting of: The Seka 1-6, 8-16, 61-64, 73-76, 95-112 claims, the TS 1-18 claims, and
the XXX claims located in secs. 4, 10, 16 and 21 in T29N, R30E. The Elm 1-183 in secs. 2, 4, 10, 16 T29N, R30E and secs.
26 28, 34, and 35 in T30N, R30E. The claims are located on public land open to mineral entry, currently valid, and subject to
Bureau of land management regulations. The total area covered is approximately 5,120 acres.
(2)
Hi Ho Silver 3, 5, 9, 10, and 11 unpatented lode mining claims located in sec. 10, T29N, R30E MDB&M covering approx.
100 acres.
(3)
Approximately 4,480 acres of fee land leased by Newmont Mining Corp. from Southern Pacific Land Co., and its successors,
and from Santa Fe Pacific Minerals Corporation, and its successors located in sections 3, 5, 11, and 17, Township 29 North,
Range 30 East, and sections 27, 33, and 35, Township 30 North, Range 30 East MDB&M.
(4)
Approximately 1,280 acres of fee land owned by Newmont Mining Corp. located in sections 9 and 15, Township 29 North,
Range 30 East, MDB&M.
The Company’s joint venture area of interest is currently sections 2-5, 8-11, 15-17, and 21 Township 29 North, Range 30
East, MDB&M, and sections, 26-28, 33-35, Township 30 North, Range 30 East, MDB&M. The Company’s rights, which
apply to all of the above properties include exploration, development, and production of valuable minerals except geothermal,
hydrocarbons, and sand/gravel, and also include the authority to apply for all necessary permits, licenses and other approvals
from the United States of America, the State of Nevada or any other governmental or other entity having regulatory authority
over any part of the Trinity Project.
Each claim filed with the BLM has an associated maintenance fee of $140 per year for each assessment year (which runs
from September 1 through August 31). This fee must be paid by midnight on August 31 of each year to maintain the claim's
validity for the succeeding assessment year. The fees for the claims comprising the Trinity Project are paid by Renaissance
in accordance with the Lease they hold with Newmont. The Company reimburses Renaissance for this expenditure. All of the
fees have been paid to the BLM for the 2012-2013 assessment year and all filings are current. We have 253 claims which,
based upon current maintenance fees, costs $35,420 per assessment year to maintain.
To protect and verify our claims and interests in the Trinity Project, we have completed examinations of legal title to the
property making up the Trinity Project which we have deemed to be satisfactory. In addition, a Memorandum of
Exploration Earn-In Agreement, effective March 29, 2010, has been recorded in the Office of the Recorder of Pershing
County, Nevada, a copy of which is attached hereto as Exhibit 10.17.
Location and Access
The following maps identify the location and access of the Trinity Project located in Pershing County Nevada:
22
23
24
Trinity Project Agreements
The Company acquired its interest in the Trinity Project through an Exploration Earn-In Agreement, discussed below. On
March 29, 2010, the Company entered into the Earn-In Agreement relating to the Trinity Project with AuEx, Inc., a Nevada
company beneficially owned by another Nevada company AuEx Ventures, Inc. AuEx, Inc. held an exclusive interest in the
Trinity Project by way of a Minerals Lease and Sublease with Newmont Mining USA Limited, a Delaware corporation who
owns or leases the various unpatented mining claims and portions of private land comprising the Trinity Project; the Minerals
Lease and Sublease is discussed below. As part of a restructuring transaction by AuEx Ventures, Inc., another Nevada
company Renaissance Exploration Inc. (“Renaissance”) was spun out, and on July 1, 2010, pursuant to a letter agreement by
and between AuEx, Inc., Renaissance Exploration, Inc., and Liberty Silver Corp., AuEx, Inc. assigned all of its rights in the
Exploration Earn-In Agreement to Renaissance, which currently holds a 100% leasehold interest in the Trinity Project
pursuant to the Minerals Lease and Sublease. Pursuant to the letter agreement, all parties consented to the assignment, and as
a result, the Company’s rights in the Trinity Project under the Earn-In Agreement are enforceable against Renaissance
Exploration, Inc., and are derived from and based upon the rights of Renaissance under the Minerals Lease and Sublease; a
copy of the Letter Agreement effective July 1, 2010 is attached hereto as Exhibit 10.18. Additionally, a Memorandum of
Exploration Earn-In effective March 29, 2010, has been recorded in the Office of the Recorder of Pershing County, Nevada, a
copy of which is attached hereto as Exhibit 10.17.
Lease and Sublease Agreement
Renaissance’s rights in the Trinity Project are derived through a Minerals Lease and Sublease dated July 29, 2005 (the
“Lease”) by and between Newmont Mining USA Limited, a Delaware corporation (“Newmont”) and AuEx, Inc., a Nevada
corporation.
Consideration
The Lease was granted to Renaissance for the following consideration:
a)
Renaissance agreed to pay Newmont a claim fee reimbursement of $10,955 concurrently with the
execution of the Lease (this amount was paid);
b)
Renaissance is required to expend a total of $2,000,000 in ascertaining the existence, location,
quantity, quality or commercial value of a deposit of minerals within the Trinity Project on or before
the seventh anniversary of the Lease;
c)
Prior to the commencement of any commercial production, Renaissance shall supply Newmont with
a feasibility study with respect to the Trinity Project.
To the best of our knowledge, Renaissance has complied with and is current in all of its requirements under the Lease.
Joint Venture / Royalty
The Lease gives Newmont a right to either enter into a joint venture with Renaissance covering the Trinity Project and any
other real property interests that Renaissance holds or acquires within the Trinity Project, or receive a royalty on all mineral
production from such properties.
Joint Venture: The Lease contemplates the following schedule with respect to Newmont’s rights to enter into a joint
venture with Renaissance:
a)
Before Renaissance spends $5 million and provides a feasibility study, Newmont can elect at any time to enter
into a joint venture in which event Newmont would be required to pay all future joint venture expenses up to
250% of the expenditures made by Renaissance as of the date of Newmont’s election to enter into the joint
venture.
b)
Upon Renaissance spending $5 million, but before the feasibility study, Renaissance shall deliver written notice
to Newmont containing a summary of the expenditures made by Renaissance on the Trinity Project. Newmont
may thereafter elect to enter into a joint venture by notifying Renaissance in writing of such election within 60
days of Newmont’s receipt of Renaissance’s initial notice. Under the joint venture, Newmont would be
required to pay all future joint venture expenses up to 250% of the expenditures made by Renaissance as of the
date of Newmont’s election to enter into the joint venture.
c)
After Renaissance spending $5 million, but before the feasibility study, at any time after the expiration of the 60
day period identified in section b above, Newmont can elect to enter into a joint venture in which event
25
Newmont would be required to pay Renaissance 50% of the expenditures made in the Trinity Project up to the
date of Newmont’s election to participate in a joint venture, and all future joint venture expenses up to 200% of
such expenditures.
d)
At any time within 60 days after Renaissance’s delivery of feasibility study, Newmont can elect to enter into a
joint venture at which time Newmont would be required to pay Renaissance 200% of expenditures made by
Renaissance as of the date of Newmont’s election to enter into the joint venture. Additionally, Renaissance can
elect to have Newmont finance Renaissance’s share of the joint venture expenses until the Trinity Project is put
into commercial production. Following the commencement of commercial production, Newmont shall be
entitled to recover such paid expenses with interest at the London Interbank Offering Rate. If Newmont fails to
elect to participate in the Joint Venture within 60 days following the delivery of the feasibility study,
Newmont’s right to participate in a joint venture shall terminate.
Should Newmont elect to participate in a joint venture with Renaissance, pursuant to the Lease, Newmont will serve as
the manager of the joint venture and own 51% of the joint venture with an option to acquire an additional 14% for
additional payments to Renaissance (for a total participating interest of 65%). Pursuant to the Earn-In Agreement, we
would be entitled to 70% of Renaissance’s ownership interest in the Trinity Project. Accordingly, if Newmont exercised
all of its joint venture options under the Lease, we would own a 24.5% interest in the Trinity Project, representing 70%
of the 35% interest held by Renaissance.
Royalty: In the event Newmont does not elect to participate in a joint venture, then Newmont shall have the right to receive
a royalty on all mineral production from the Trinity Project. Pursuant to the Lease, if Newmont elects to not participate in
the joint venture, then Renaissance shall pay to Newmont $1 million and the Lease shall terminate and Newmont shall
transfer title to all property comprising the Trinity Project to Renaissance, and thereafter receive a royalty payment of up to
5% of the net smelter returns generated from the properties comprising the Trinity Project.
Buyout Option
The Lease provides Renaissance with a buyout option pursuant to which Renaissance holds the right to purchase Newmont’s
rights in the Trinity Project through the payment of $1 million to Newmont. In the event Renaissance elects the buyout
option, Newmont would transfer title to the Trinity Project to Renaissance through quit claim deed while retaining certain
rights in the Trinity Project; such rights may include some form of joint venture or a royalty interest.
Ownership Interest – Earn-In Agreement
As noted above, the rights to the Trinity Project are held 100% by Renaissance, pursuant to an assignment of such rights from
AuEx, Inc. The Company entered into the Earn-In Agreement providing the Company with a right to earn a 70% undivided
interest in rights of Renaissance in the Trinity Project (the “70% Interest”), as set out below. The following is intended to be a
summary of the material terms of the Earn-In Agreement, and is subject to, and qualified in its entirety, by the full text of the
Earn-In Agreement
Consideration
The exclusive right to acquire the 70% Interest in the Trinity Project was granted to the Company for the following
consideration:
a)
The Company agreed to pay $25,000 upon execution of the Earn-In Agreement (this amount was paid);
b)
In order to obtain the 70% Interest in the Trinity Project, the Company is required to (i) produce a bankable
feasibility study by March 29, 2017 and (ii) to expend a minimum of $5,000,000 in exploration on the Trinity
Project as follows: $500,000 in the first year; $1,000,000 in the second year; $1,000,000 in the third year;
$1,000,000 in the fourth year; $1,000,000 in the fifth year; and $500,000 in the sixth year.
Any excess expenditure in any year shall be carried forward and applied to the subsequent year’s expenditure requirement,
and the Company may accelerate the expenditures at its discretion. If the Company elects not to meet the minimum
expenditure obligation during any year but wishes to maintain the Earn-In Agreement in full force and effect, or if it is
subsequently determined that the minimum amount was not expended in any given year, the Company shall pay the amount
of any deficiency to Renaissance.
In the event the Company does not meet its minimum expenditure obligation in any year, it is obligated under the terms of the
Earn-In Agreement to pay the amount of any deficiency to Renaissance Exploration, Inc. During each of the first two
26
years, the Company has exceeded its minimum expenditure obligation and not been obligated to pay any amounts to
Renaissance. The Company had an excess of approximately $133,000 in expenditures over the minimum requirement in the
first year, and an excess of approximately $162,000 in expenditures over the minimum requirement in the second year. The
Company currently anticipates that it will satisfy its entire $5,000,000 expenditure commitment by the end of the third year
and as a result, believes it will not be obligated to pay any deficiency amounts to Renaissance for the third year or any future
years.
Work Program
The Company shall be the operator and shall have full control over the content of work programs and annual expenditure
amounts during the earn-in period, including having the authority to apply for all necessary permits, licenses and other
approvals from the U.S., the State of Nevada or any other governmental or other entity having regulatory authority over any
part of the Trinity Project.
Joint Venture
Upon the Company having acquired the 70% Interest in the Trinity Project by satisfying the minimum expenditure amounts
and producing a bankable feasibility study, the Company and Renaissance shall enter into a formal joint venture agreement,
and the Company will be the operator of the joint venture.
At such time as the Company earns the 70% Interest in the Trinity Project, the parties will thereafter participate in
expenditures on the Trinity Project in accordance with their respective interests therein, or have their interest diluted in
accordance with a straight-line dilution formula, as set forth in the joint venture agreement.
If through dilution the interest of a party is reduced to less than 10%, then that party’s participating interest shall
automatically be converted to a 3% net smelter returns royalty interest. Should third party claims be acquired with royalties
within the area of interest, the 3% royalty described above would be reduced by the amount of such royalty but not below
1%. This reduction does not apply to the royalty described under the heading “Royalty upon Termination of Interest” below.
Royalty upon Termination of Interest
If the Company elects to terminate its right to earn an interest in the Trinity Project prior to completing a bankable feasibility
study by March 29, 2017, but has expended at least $3,000,000, the Company shall be entitled to a 4% net smelter returns
royalty capped at twice its expenditure on the Trinity Project.
Termination
The Company may in its sole discretion terminate the Earn-In Agreement at any time by giving not less than 30 days prior
written notice to that effect to Renaissance. Upon expiry of the 30-day notice period, the Earn-In Agreement will be of no
further force and effect. Upon such termination, the Company shall have no further obligation to incur expenses on or for the
benefit of the Trinity Project and shall have no further obligations or liabilities to Renaissance under the Earn-In Agreement
or with respect to the Trinity Project (including without limitation liability for lost profits or consequential damages as a
result of an election by the Company to terminate the agreement), other than (a) as set forth below, and (b) to reclaim (in
accordance with applicable law) any disturbances of the Trinity Project made by the Company.
At any time the Company may, at its option, terminate its interest in some but less than all of the claims comprising the
Trinity Project by written notice to Renaissance, provided that if such notice (or notice of termination of the Earn-In
Agreement in its entirety) is received by Renaissance after June 30 th of any year, the Company shall remain obligated to pay
the claim maintenance fees (and make all filings and recordings required in connection therewith) for those claims to which
such termination applies for the upcoming assessment year. To the extent the Company terminates its interest in some but
less than all of the claims, the Earn-In Agreement shall remain in full force and effect with respect to the remaining claims.
In the event the Company is in default in the observance or performance of any of the Company’s covenants, agreements or
obligations under the Earn-In Agreement, Renaissance may give written notice of such alleged default specifying the details
of same. The Company shall have 30 days following receipt of said notice within which to remedy any such default described
therein, or to diligently commence action in good faith to remedy such default. If the Company does not cure or diligently
commence to cure such default by the end of the applicable 30-day period, then Renaissance shall have the right to terminate
the Earn-In Agreement by providing 30 days advance written notice to the Company.
27
Confidentiality
All data and information coming into possession of Renaissance or the Company by virtue of the Earn-In Agreement with
respect to the business or operations of the other party, or the Trinity Project generally, shall be kept confidential and shall
not be disclosed to any person not a party thereto without the prior written consent of the other party, except: (a) as required
by law, rule, regulation or policy of any stock exchange or securities commission having jurisdiction over a party; (b) as may
be required by a party in the prosecution or defense of a lawsuit or other legal or administrative proceedings; (c) as required
by a financial institution in connection with a request for financing relating to development or mining activities; or (d) as may
be required in connection with a proposed conveyance to a third party of an interest in the Trinity Project or the Earn-In
Agreement, provided such third party agrees in writing in a manner enforceable by the other party to abide by all of the
applicable confidentiality provisions of the Earn-In Agreement with respect to such data and information.
To the extent either party intends to disclose data or information via press release or other similar format as may be required,
the disclosing party shall provide the other party with not less than five business days notice of the text of the proposed
disclosure, and the other party shall have the right to comment on the same.
Deed With Reservation of Royalty Hi Ho Silver Claims.
On October 15, 2012, the Company entered into and closed a Purchase Agreement (the “Purchase Agreement”) with Primus
Resources, L.C. and James A. Freeman (collectively “Seller”) to acquire unpatented mining claims, Nevada BLM Serial No.
799907, 799908, 799909, 799910, and 799911 covering approximately 100 acres of property located adjacent to the former
Trinity Silver mine on the Company’s Trinity Project (the “Hi Ho Properties”). The Hi Ho Properties were previously the
only acreage not controlled by the Company or its joint venture partner Renaissance Exploration Inc. in the Trinity Project.
Under the terms of the Purchase Agreement, the Company provided cash consideration of US$250,000 and issued 2,583,333
restricted shares of common stock of the Company to Seller. In addition the Seller was granted a 2% net smelter royalty on
future production from the Hi Ho Properties pursuant to the terms of a Deed With Reservation of Royalty Hi Ho Silver
Claims.
In conjunction with the entry into the Purchase Agreement, the Company entered into a Registration Rights Agreement (the
“Registration Rights Agreement”) with Seller, pursuant to which the Company agreed to file a registration statement on Form
S-1 with the United States Securities and Exchange Commission, within thirty (30) days of the closing, which registers the
common stock issued to the Seller pursuant to the Purchase Agreement. Pursuant to the Registration Rights Agreement
the Company will pay Seller additional consideration as follows:
if this registration statement is declared effective by the United States Securities Exchange Commission by
March 1, 2013, Liberty Silver will issue an additional 277,778 Liberty Silver common shares to Primus, thereby
increasing the total aggregate number of shares issued to 2,861,111 shares; or
if this registration statement is not declared effective by the United States Securities Exchange Commission by
March 1, 2013, Liberty Silver will pay Primus US$200,000. As well, if the five-day weighted average trading
price of Liberty Silver’s common shares on the Toronto Stock Exchange as of March 1, 2013 (the “Market
Price”) exceeds US$0.72 per share, Liberty Silver will issue an additional number of Liberty Silver common
shares to Primus equal to (a) 277,778 less (b) US$200,000 divided by the Market Price.
Trinity Project Technical Report
In the process of compiling and synthesizing information on the Trinity Project, on February 15, 2011, the Company
completed an independently verified mineralized materials estimate on the Trinity Project (the “Trinity Project Technical
Report”); the report was publicly released by the Company on March 2, 2011. The Technical Report for the Trinity mine
project was prepared in accordance with the Canadian Securities Administrators’ National Instrument 43-101 (“NI 43-101”)
by Mine Development Associates of Reno, Nevada. The Trinity Project Technical Report may be viewed on the Company’s
website at www.libertysilvercorp.com.
Mining history
The following disclosure regarding the mining history of the Trinity Project has been derived from information contained in
the Trinity Project Technical Report.
28
The Trinity Project lies in the Trinity mining district, which had limited production of silver, lead, zinc, and gold from 1864
through 1942, primarily from the east side of the Trinity Range. In the vicinity of the Trinity project, which is located on the
west side of the range, there was historic prospecting with unrecorded but presumed minor silver production.
Minor exploration activity took place in the vicinity of the Trinity project in the 1950s, and in the 1960s Phelps Dodge
Corporation completed trenching, IP surveying, and limited drilling in the area.
U. S. Borax and Chemical Corp. (“Borax”) became interested in what is now the Trinity project in 1982 on the basis of
reconnaissance geochemical sampling that indicated the presence of anomalous lead and silver in the Willow Canyon area.
By 1984, Borax had acquired a property position and had entered into a joint venture with Southern Pacific Land Company
(later Santa Fe Pacific Mining, Inc. (“SFPM”) and still later Newmont Mining Corp. (“Newmont”)), in which Borax was the
operator. From 1982 to 1986, Borax and its joint-venture partner explored the property and developed the Trinity mine.
Borax operated the open pit heap-leaching mine, through a mining contractor, on behalf of the joint venture from September
3, 1987 to August 29, 1988, with leaching continuing into 1989. During this period, the mine produced about five and a half
million ounces of silver from about 1.1 million tons of oxidized ore grading approx. six and a half ounces of silver per ton.
Borax drilled and conducted extensive metallurgical testing on the sulfide mineralization, but metal prices at the time were
too low to support mining of this material.
In 1984-1985, 1987-1989, and 1990, SFPM conducted exploration and drilling on their property in the vicinity of the
joint-venture lands. In 1991, SFPM acquired sole interest in the joint-venture lands, including Borax’s claims, and conducted
further exploration through 1992. SFPM’s 1990-1992 exploration work concentrated on down-dip and lateral extensions of
mineralization underlying the oxide pit and the sulfide mineralization, as well as extensions of mineralization outside the
immediate mine area.
There was no exploration on the Trinity property from 1993 to 2005. In August 2005, Renaissance leased the property from
Newmont, who had acquired SFPM’s Nevada holdings. Under an earn-in agreement with Piedmont Mining Company,
Renaissance explored the property from September 2005 through July 2009, including limited drilling in 2006 and 2007 that
encountered high-grade silver values below and adjacent to the open pit.
Liberty Silver entered into an earn-in agreement with Renaissance in March, 2010. To date, Liberty Silver has conducted
extensive data compilation and has completed geophysical surveys consisting of a magnetotelluric survey, a gravity survey,
and an induced polarization survey over portions the project. The company has also drilled approximately 20,000 ft of
reverse circulation rotary drilling consisting of 20 holes 18 of which were drilled in the vicinity of the Trinity mine. The
database of technical data for the property, developed since 1982, includes the results of soil and rock surveys, geophysical
surveys, geologic mapping, lithology logging and multi-element analyses for about 400 drill holes, and metallurgical work, as
well as data derived from the previous production of heap-leach silver. The Magnetotelluric Survey was initiated in June of
2010 and completed in August of 2010. The Gravity survey was initiated in February of 2012 completed in March of 2012.
The Induced Polarization Survey was initiated in April of 2012 completed in May of 2012. The drill program was started in
January of 2012 and completed in April of 2012 .
Work Completed by Company & Plan of Operation
As of the date of this Registration Statement, the Company has completed the following items: (a) a magnetotelluric
geophysical survey has been completed; (b) the drill hole database has been digitized; (c) a mineralized material estimate for
the original deposit identified in the Earn-In Agreement; (d) environmental and permitting work has begun, and all of the past
geologic data has been compiled.
Past exploration activities consisted of a magnetotelluric survey that was completed in August of 2010, a gravity survey that
was completed in March of 2012, an induced polarization survey that was completed in May of 2012 and a drill program that
was started in January of 2012 and completed in April of 2012, consisting of 20 reverse circulation holes comprising 22,565
ft of drill hole. The Magnetotelluric Survey was initiated in June of 2010 and completed in August of 2010. The Gravity
survey was initiated in February of 2012 completed in March of 2012. The Induced Polarization Survey was initiated in April
of 2012 completed in May of 2012. The drill program was started in January of 2012 and completed in April of 2012.
We estimate that during our fiscal year ending June 30, 2011, we incurred approximately $554,145 in exploration expenses,
and that during our fiscal year ending June 30, 2012, we incurred approximately $1,667,497 in exploration expenses. These
amounts include both direct exploration costs as well as various indirect costs related to exploration, which under the terms of
the Earn-In Agreement, are included in the calculations for purposes of determining whether we have met our minimum
annual expenditure commitment.
29
It is anticipated that additional exploration work will be needed during 2013, although specific plans for this additional work
have not yet been finalized. It is currently anticipated that the additional exploration work to be completed will include
additional drilling to upgrade our level of confidence in the mineralization and to expand the mineralized area, as well as
drilling to collect metallurgical samples. The estimated budget for this additional drilling is approximately
$1,500,000. Metallurgical testing, which is budgeted to cost approximately $300,000, is expected to be undertaken for the
purpose of defining the estimated silver recovery of the mineralized rock. Engineering design work, budgeted at
approximately $500,000, is expected to be undertaken for the purpose of studying the feasibility of developing a mine, and as
soon as design work is completed, permitting will need to start. The budget for permitting work is expected to be
approximately $100,000. No further geophysical work is currently planned.
Geology and Mineralization of Trinity Project
The following disclosure regarding the Geology and Mineralization of the Trinity Project has been derived information
contained in the Trinity Project Technical Report.
The Trinity Project lies on the western flank of the Trinity Range, one of the generally north-trending ranges formed during
Tertiary extension of the Basin and Range Province.
Within the Trinity Range, the basement rocks are comprised of the Middle Triassic to Early Jurassic near-shore deltaic
deposits of the Auld Lang Syne Group, which are represented by phyllite, argillite, quartzite, and dirty limestone at the
Trinity project. The best-represented pre-Cenozoic deformation in this portion of the Trinity Range is the Jurassic and
Cretaceous Nevadan Orogeny, which resulted in low-grade regional metamorphism, variably directed folding, and thrust
faulting. A Cretaceous intrusive episode culminated the Nevadan Orogeny and is exemplified by a Cretaceous granodiorite
stock just northeast of the Trinity project.
Tertiary volcanic and sedimentary rocks and Quaternary sediments are abundant in the Trinity project area. There is a thin
Tertiary rhyolite sequence along the central north-south axis of the property that includes the mineralized material area.
These volcanic rocks overlie the Mesozoic phyllite and argillite, exposed to the east, but are separated by an argillite breccia
that is closely associated with faulting. The rhyolite includes interbedded rhyolitic flows, welded tuffs, air-fall tuffs, epiclastic
tuffs, and lacustrine deposits. Several rhyolite domes, dikes, and sills have also been identified on the property, some of
which may be related to mineralization. Early Tertiary north- to northwest-trending faults are present in the Trinity project
area, as are younger north- to northeast-trending normal faults. Late Tertiary and/or Quaternary bench and channel gravel
deposits and Quaternary alluvium and outwash unconformably overly the rhyolites and cover the western part of the
property.
Rhyolite porphyry, aphanitic rhyolite, and volcaniclastic rocks are the principal host rocks for mineralization in the Trinity
mine area. Silicification and quartz-adularia-sericite alteration are associated with the mineralization. Tertiary rhyolitic tuffs
and flows were extensively altered and form a halo extending 1.6 miles beyond the main mineralized area. This alteration
affected the Auld Lang Syne Group only locally along faults and breccia zones.
Mineralization at the Trinity project is controlled by a northeast-trending zone of normal faults. Silver, lead, and zinc
mineralization occurs in fractures and bedding planes in Tertiary rhyolite in the hanging-wall block of the fault zone.
Although mineralization continues downward into the underlying Triassic rocks, it is more tightly constrained to fractures
that host higher-grade vein mineralization. The original Trinity silver deposit can generally be divided into two parts: a
sulfide zone below the current pit and to the northeast, and an overlying oxide zone. Borax ‟ s mining in the late 1980s
focused on a portion of the oxide zone.
Mineralization occurs as oxidized and unoxidized sulfides in veinlets, as fracture-controlled mineralization, and as
disseminations within the host rocks, including breccia matrix. Sulfide mineralization consists mainly of pyrite, sphalerite,
galena, marcasite, and minor arsenopyrite with various silver minerals, including tetrahedrite-freibergite, pyrargyrite, minor
argentite, and rare native silver, with traces of gold, pyrrhotite, stannite, and chalcopyrite. Low-grade lead and zinc have the
potential to add value as byproducts.
30
Index of Geologic Terms
TERM DEFINITION
Adularia A variety of transparent or translucent orthoclase.
Air-fall tuffs Ash exploded out of a volcano, which falls through the air and settles in beds, called tuffs when
consolidated.
Alluvium Loose, unconsolidated (not cemented together into a solid rock) soil or sediments
Aphanitic Igneous rock in which the grain or crystalline structure is too fine to be seen by the unaided eye
Argillite A fine-grained sedimentary rock composed predominantly of indurated muds and oozes.
Argillization The replacement or alteration of feldspars to form clay minerals.
Arsenopyrite The most prevalent mineral containing the element arsenic.
Breccia A rock composed of broken fragments of minerals or rock cemented together by a fine-grained matrix
that can be either similar to or different from the composition of the fragments.
Cenozoic The current and most recent geological era and covers the period from 65.5 million years ago to the
present
Chalcopyrite A major ore mineral containing copper, iron, and sulfur.
Cretaceous A geologic period from 145 to 65 million years ago.
Deltaic Pertaining to, or like a delta.
Dikes A type of sheet intrusion referring to any geologic body that cuts discordantly across rock structures.
Domes A roughly circular mound-shaped protrusion resulting from the slow extrusion of viscous lava from a
volcano.
Epiclastic Formed at the surface of the earth by consolidation of fragments of preexisting rocks.
Freibergite A complex sulfosalt mineral of silver, copper, iron, antimony, arsenic, and sulfur.
Galena The natural mineral form of lead sulfide.
Grandiorite A visibly crystalline plutonic rock composed chiefly of sodic plagioclase, alkali feldspar, quartz, and
subordinate dark-colored minerals.
Hydrothermal Relating to or produced by hot water, especially water heated underground by the Earth's internal
heat.
Jurassic The geologic period that extends from about 200 to 145 million years ago.
Lacustrine Of or relating to lakes.
Metal Sulfides A group of minerals containing both metals and sulfur.
Mesozoic A geologic era that extends from 251 to 65 million years ago
Mineral A mineral is a naturally occurring solid chemical substance having characteristic chemical
composition, highly ordered atomic structure, and specific
Mineralization The act or process of mineralizing.
Miocene A geological epoch that extends from about 23.8to 5.3 million years ago.
Nevadan Orogeny A major mountain building event that took place along the western edge of ancient North America
between the mid to late Jurassic.
Ore Mineralized material that can be mined and processed at a positive cash flow.
Orthoclase A variety of feldspar, essentially potassium aluminum silicate, which forms igneous rock.
Oxidized A process whereby the sulfur in a mineral has been removed and replaced by oxygen.
Phyllite, A type of foliated metamorphic rock primarily composed of quartz, muscovite mica, and chlorite
Pliocene The geologic epoch that extends from about 5.3 million to 1.8 million years ago.
Porphyry A variety of igneous rock consisting of large-grained crystals suspended in a fine grained matrix
Pyrargyrite A sulfosalt mineral consisting of silver, arsenic, and sulfur.
Pyrite A very common sulfide mineral consisting of iron and sulfur found in a wide variety of geological
occurrences. Commonly known as “Fools Gold”
Pyrrhotite An unusual iron sulfide mineral with a variable iron content.
Quartzite A hard metamorphic rock which was originally sandstone
Rhyolite A fine-grained volcanic rock, similar to granite in composition
Sercitization A hydrothermal or metamorphic process involving the introduction of, alteration to, or replacement by
white, fine-grained potassium mica.
Silicification A hydrothermal or metamorphic process involving the introduction of, alteration to, or replacement by
silica.
Sills A tabular sheet intrusion that has intruded between older layers of sedimentary rock, beds of volcanic
lava or tuff.
31
Sphalerite A mineral containing zinc and sulfur.
Stannite A mineral containing copper, iron, tin, and sulfur.
Sulfides Sulfide minerals are a class of minerals containing sulfur with sulfide (S 2 − ) as the major anion.
Tetrahedrite A sulfosalt mineral containing copper, antimony, and sulfur.
Triassic A geologic period that extends from about 251 to 200 million years ago.
Volcanic A rock formed from magma erupted from a volcano.
Volcaniclastic Volcanic material which been transported and reworked through mechanical action, such as by wind
or water.
Welded tuffs Rock composed of compacted volcanic ejected materials.
LEGAL PROCEEDINGS
Neither the Company nor its property is the subject of any pending legal proceedings, and no such proceeding is known to be
contemplated by any governmental authority. We are not aware of any legal proceedings in which any director, officer or
affiliate of the Company, any owner of record or beneficially of more than 5% of any class of our voting securities, or any
associate of any such director, officer, affiliate or security holder of the Company, is a party adverse to the Company or any
of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.
MARKET FOR COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
Our common stock is quoted on the on the Toronto Stock Exchange under the Symbol “LSL” and on occasion trades by
appointment on the Grey Market under the Symbol "LBSV". Prior to October 15, 2012, the Company’s shares traded on the
OTC Bulletin Board (“OTCBB”).
On October 5, 2012, Liberty Silver was named in an Order of Suspension of Trading (the "Order") from the US Securities
and Exchange Commission. Pursuant to the Order, trading in the Company's securities was suspended from October 5, 2012
through October 18, 2012. Furthermore, effective October 11, 2012, the Company had its stock quotation under the symbol
"LBSV" removed from the OTC Bulletin Board (the "OTCBB") as it became ineligible for quotation on OTCBB due to
quoting inactivity under Securities and Exchange Commission Rule 15c2-11. The Company is currently reviewing the
requirements necessary to permit its stock to resume trading on the OTCBB. There is no assurance as to when or whether
the Company’s stock will resume trading on the OTCBB.
On October 12, 2012, the Ontario Securities Commission issued a cease trade order providing that trading in the securities of
Liberty Silver Corp. (excepting issuances from treasury) shall cease until 11:59 pm EST on October 18, 2012 (the “OSC
Order”). The OSC Order was effective for the same time frame as the Order of Suspension of Trading imposed by the
SEC. Trading in the Company’s shares on the TSX in Canada resumed on October 22, 2012.
The quotations set forth below reflect inter-dealer prices, without retail mark-up, markdown or commission and may not
represent actual transactions.
The high and low closing prices of our common stock on the Toronto Stock Exchange and the OTC Bulletin Board or the
Grey Market for the periods indicated below are as follows:
TSX OTCBB/GREY MARKET
HIGH BID LOW BID HIGH BID LOW BID
PERIOD CAD$ CAD$ US$ US$
October 1, 2012 through December 31, 2012 1.580 0.40 1.55 0.40
July 1, 2012 through September 30, 2012 1.49 .60 1.50 0.60
April 1, 2012 through June 30, 2012 $ 0.95 $ 0.41 $ 0.85 $ 0.47
January 1, 2012 through March 31, 2012 $ 1.04 $ 0.75 $ 1.03 $ 0.60
October 1, 2011 through December 31, 2011 (1) $ 1.09 $ 0.72 $ 1.11 $ 0.50
July 1, 2011 through September 30, 2011 $ N/A $ N/A $ 0.80 $ 0.47
April 1, 2011 through June 30, 2011 $ N/A $ N/A $ 0.64 $ 0.30
January 1, 2011 through March 31, 2011 N/A N/A $ 0.63 $ 0.19
October 1, 2010 through December 31, 2010 N/A N/A $ 0.64 $ 0.17
July 1, 2010 through September 30, 2010 N/A N/A $ 0.61 $ 0.30
32
(1)
Common stock commenced trading on the TSX on December 22, 2011.
Holders
As of January 22, 2013, there were 83,694,167 shares of common stock issued and outstanding held by approximately 27
registered stockholders of record of the Company's common stock.
Dividends
To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on
shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if
any, our financial condition, and other factors deemed relevant by our Board of Directors.
Equity Compensation Plan Information
On April 19, 2011, subject to shareholder ratification, the Board of Directors of the Company approved the adoption of the
Liberty Silver Corp. Incentive Share Plan (the “Plan”) under which common shares of the Company’s common stock have
been reserved for purposes of possible future issuance of incentive stock options, non-qualified stock options, and stock
grants to employees, directors and certain key individuals. Under the Plan, the maximum number of common shares
reserved for issuance shall not exceed 10% of the common shares of the Company outstanding from time to time. The
purpose of the Plan shall be to advance the interests of the Company by encouraging equity participation in the Company
through the acquisition of common shares of the Company. In order to maintain flexibility in the award of stock benefits, the
Plan constitutes a single plan, but is composed of two parts. The first part is the Share Option Plan which provides grants of
both incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended, and nonqualified stock
options. The second part is the Share Bonus Plan which provides grants of shares of Company common stock. The
following chart illustrates the information regarding the Equity Compensation Plan as of June 30, 2012:
Number of Number of securities
securities remaining available
to be issued upon Weighted average for future issuance
exercise of exercise price of under equity
outstanding outstanding compensation plans
options, options, (excluding securities
warrants warrants reflected in column)
Plan category (a)
(a) (b) (c)
Equity compensation plans approved 0 0 0
by security holders
Equity compensation plans not 6,950,000 .88 1,161,083
approved by security holders
Total 6,950,000 .88 1,161,083
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS. TO THE EXTENT THAT ANY
STATEMENTS MADE IN THIS PROSPECTUS CONTAIN INFORMATION THAT IS NOT HISTORICAL, THESE
STATEMENTS ARE ESSENTIALLY FORWARD-LOOKING. FORWARD-LOOKING STATEMENTS CAN BE
IDENTIFIED BY THE USE OF WORDS SUCH AS “EXPECTS”, “PLANS”, “MAY”, “ANTICIPATES”, “BELIEVES”,
“SHOULD”, “INTENDS”, “ESTIMATES”, AND OTHER WORDS OF SIMILAR MEANING. THESE STATEMENTS
ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT CANNOT BE PREDICTED OR QUANTIFIED AND,
CONSEQUENTLY, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY
SUCH FORWARD-LOOKING STATEMENTS. SUCH RISKS AND UNCERTAINTIES INCLUDE, WITHOUT
LIMITATION, OUR ABILITY TO RAISE ADDITIONAL CAPITAL TO FINANCE OUR ACTIVITIES; THE
33
EFFECTIVENESS, PROFITABILITY AND MARKETABILITY OF OUR PRODUCTS; THE FUTURE TRADING OF
OUR COMMON STOCK; OUR ABILITY TO OPERATE AS A PUBLIC COMPANY; GENERAL ECONOMIC AND
BUSINESS CONDITIONS; THE VOLATILITY OF OUR OPERATING RESULTS AND FINANCIAL CONDITION;
AND OTHER RISKS DETAILED FROM TIME TO TIME IN OUR FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION OR OTHERWISE.
Overview
We were incorporated for the purpose of engaging in mineral exploration activities. On March 29, 2010, we entered into an
Exploration Earn-In Agreement relating to the Trinity Project located in Pershing County, Nevada and now intend to engage
in efforts to develop the Trinity Project. Our plan of operation for the fiscal year ending June 30, 2013 is to conduct
additional mineral exploration activities at the Trinity Silver property. Operations at the Trinity Project will consist of (i) an
effort to expand the known mineralized material through drilling, (ii) permitting for operation, if deemed economically
viable, (iii) metallurgical studies aimed at enhancing the recovery of the silver and by-product lead and zinc, (iv) engineering
design related to potential construction of a new mine, and (v) complete feasibility studies relating to possible re-opening the
historic mine. Exploration of the property will be conducted simultaneously with the mine development in order to locate
additional mineralized materials.
Results of Operations
The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of
our results of operation and financial condition for the fiscal year ended June 30, 2012 as compared to the fiscal year ended
June 30, 2011. Unless otherwise stated, all figures herein are expressed in U.S. dollars.
Comparison of the fiscal years ended June 30, 2012 and 2011
Revenue
During the fiscal years ended June 30, 2012 and June 30, 2011, the Company generated no revenue.
Expenses
During the fiscal year ended June 30, 2012, the Company reported total operating expenses of $5,681,977 as compared to
$1,463,758 during the fiscal year ended June 30, 2011, an increase of $4,218,219 or approximately 288%. The increase in
operating expenses is primarily due to increases in financing cost associated with valuation of warrants, exploration expense,
operation and administration expense and legal and accounting expense. The increases in these expenses were partially
offset by a decrease of $166,234 in consulting expense.
During the 2012 fiscal year, the Company completed equity financings in which 9,727,500 warrants were issued, which
resulted in an increase of $1,786,160 in the amortized financing costs associated with the issuance of warrants in 2012,
compared to 300,000 warrants issued during the 2011 fiscal year, which resulted in a full charge of $40,000 for financing
costs associated with the issuance of warrants.
Exploration expense increased by $1,146,650 during the 2012 fiscal year compared to the 2011 fiscal year. As a result of
completing equity financings in excess of $5,000,000 during fiscal 2012, the Company had the financial resources to execute
a more extensive exploration program in fiscal 2012, as compared to fiscal 2011, when the financial resources were limited,
resulting in less resources being allocated to exploration.
Operation and administration expense increased by $1,375,841 during fiscal 2012 compared to the 2011 fiscal year. The
primary reasons for the net increase in operation and administration expense were as follows. During fiscal 2012, the
Company had its shares listed on the Toronto Stock Exchange under the trading symbol “LSL”, and there were extensive
costs associated with that process; the Company established it’s corporate head office in Toronto, Canada; the management
team and support staff were expanded to enable the execution of the Company’s business plan; and the cost associated with
the issuance of stock options increased in fiscal 2012, compared to fiscal 2011.
Legal and accounting expense increased by $75,802 during the 2012 fiscal year, as compared to the 2011 fiscal year. During
fiscal 2012, the increase in corporate activity, which included the listing on the Toronto Stock Exchange, equity financings,
due diligence activities, etc., resulted in the increase in professional fees.
34
The increase in the foregoing expenses was partially offset by the decrease in consulting expense, which was due to certain
consultants being employed by the Company during fiscal 2012 and ceasing to be consultants.
Net Loss and Comprehensive Loss
The Company had a net loss and comprehensive loss of $5,689,256 for the fiscal year ended June 30, 2012, as compared to a
net loss and comprehensive loss of $1,464,253 for the fiscal year ended June 30, 2011, a change of $4,225,003 or
approximately 289%. The change in net loss and comprehensive loss was primarily due to an increase in operating expenses,
which was minimally increased by the loss from foreign exchange during the fiscal year ended June 30, 2012.
Comparison of the fiscal periods ended September 30, 2012 and 2011
Revenue
During the three-month periods ended September 30, 2012 and 2011, the Company generated no revenue.
Expenses
During the three month period ended September 30, 2012, the Company reported total operating expenses of $1,639,870
compared to $699,572 during the three month period ended September 30, 2011, an increase of $940,298, or approximately
134%. The increase in operating expenses is primarily due to increases in financing cost associated with valuation of
warrants, operation and administration expense, and exploration expense. The increase in these expenses was partially offset
by a decrease in consulting expense and legal and accounting expense.
As at September 30, 2012, the Company had 9,727,500 warrants outstanding, in relation to which the Company reported
financing costs associated with the valuation of warrants of $781,968, as compared to 2,233,334 warrants outstanding as at
September 30, 2011 when the Company reported $77,291 in financing costs associated with the valuation of warrants.
Operation and administration expense increased by $365,496 to $579,350 during the period ended September 30, 2012, as
compared to an expense of $213,854 reported during the period ended September 30, 2011. The net increase was primarily
due to: corporate development costs incurred in connection with the Company’s bid to acquire a junior exploration company
based in Canada; costs incurred in connection with the Company’s listing on the Toronto Stock Exchange under the trading
symbol “LSL”; an increase in the Company’s investor relations expense; the expansion of the Company’s management team
and support staff to enable the execution of the Company’s business plan; certain members of management ceasing to be
consultants to the Company and becoming employees of the Company; and the costs associated with the Company’s
corporate head office established in Toronto, Canada.
Exploration expense increased by $188,755 to $198,401 during the period ended September 30, 2012, as compared to an
expense of $9,646 reported during the period ended September 30, 2011. During the period ended September 30, 2011, the
Company had not secured enough equity financing to commence a meaningful exploration program, as compared to the
period ended September 30, 2012, when the Company was in the midst of an extensive exploration program that was
commenced in January of 2012, after completing equity financings in excess of $5,000,000.
The increase in the foregoing expenses was partially offset by a decrease in consulting expense and legal and accounting
expense.
Consulting expense decreased by $196,217 to $2,916 during the period ended September 30, 2012, as compared to an
expense of $199,133 reported during the period ended September 30, 2011. During the period ended September 30, 2012,
certain individuals were now employees of the Company, whereas during the period ended September 30, 2011, those
individuals served as consultants to the Company.
Legal and accounting expense decreased by $122,413 to $77,235 during the period ended September 30, 2012, as compared
to an expense of $199,648 reported during the period ended September 30, 2011. During the period ended September 30,
2011, the Company incurred increased legal fees, primarily in connection with the Company’s subsequent listing of its shares
on the Toronto Stock Exchange under the trading symbol “LSL”.
35
Net Loss and Comprehensive Loss
The Company had a net loss and comprehensive loss of $1,630,584 for the three months ended September 30, 2012,
compared to a net loss and comprehensive loss of $727,228, for the three months ended September 30, 2011, a change of
$903,356 or approximately 124%. The change in net loss and comprehensive loss was primarily due to an increase in
operating expenses as described above, partially offset by the gain from foreign exchange translations during the current
period, versus a loss from foreign exchange translations during the comparative period.
Liquidity and Capital Resources
Management currently believes that the Company may not have sufficient working capital needed to meet its current fiscal
obligations. In order to continue to meet its fiscal obligations beyond the next nine to twelve months, management has plans
to pursue various financing alternatives including, but not limited to, merger and acquisition activity, raising capital through
the equity markets and debt financing.
In order to acquire a 70% interest in the Trinity Project, the Company is required to incur $5,000,000 in exploration
expenditures over a six-year period from March 29, 2010, the date of the Earn-In Agreement, to March 29, 2016. In
addition, by the end of March 29, 2017, the Company is required to produce a bankable feasibility study. The Company
believes that it will have satisfied the $5,000,000 exploration expenditure commitment prior to March 29, 2013, the third year
of the Earn-In Agreement. The Company is currently planning to raise approximately $5,000,000 to fund additional work to
complete the bankable feasibility study and to fund ongoing working capital. The additional work will consist of engineering
and metallurgical testing, confirmation drilling, and an update of the National Instrument 43-101 compliant resource
estimate.
The primary source for capital for the Company is the equity markets. Management plans to continue its canvassing efforts
of investors and financial institutions to invest capital in the Company through private placement offerings of common shares
or units consisting of common shares and warrants. The terms and pricing of any such financing would be determined in the
context of the markets. The Company has not entered into an agency agreement or arrangement with any financial institution
to raise capital at this time.
Should the Company not be successful at raising capital through the issuance of capital stock, the Company may consider
raising capital by the issuance of debt. However, unless the appropriate features, such as convertible options, are attached to
the debt instruments, this form of financing is less desirable until such time as the Company may be in a position to
reasonably foresee the generation of cash flow to service and repay debt. The Company does not currently have plans to
issue debt.
Further, on an ongoing basis, management will review potential merger or acquisition targets to determine if certain synergies
exist for the Company and if the potential target would strengthen the Company’s financial position. Management does not
currently have any merger or acquisition target identified.
In the event that the Company raises some funds, but, due to difficult capital market conditions or other factors, is not
successful at raising all funds needed to complete the bankable feasibility study and fund ongoing working capital,
management plans to reduce overhead and maintain the Trinity Project under a care and maintenance program, until such
time as the capital markets improve for junior exploration companies. Management believes that this option is available to it,
without jeopardizing its interest in the Trinity Project, due to the accelerated pace at which it has incurred exploration
expenditures in relation to the timeline for the minimum expenditure commitment prescribed in the Earn-In Agreement.
On November 10, 2011, the Company entered into a Subscription Agreement (the “Subscription Agreement”) with Look
Back Investments, Inc. (“Investor”), pursuant to which the Investor acquired Subscription Receipts (“Subscription Receipts”)
for U.S. $0.50 per Subscription Receipt for gross proceeds of U.S. $3,250,000; the gross proceeds of U.S. $3,250,000 (the
“Escrow Proceeds”) were held in escrow pursuant to the terms of the Subscription Receipt. Each Subscription Receipt
entitled the Investor to receive one unit (a "Unit") from the Company without payment of any additional consideration upon
conditional approval by the Toronto Stock Exchange for the listing of the common shares of the Company. Each Unit
consists of one share of common stock of the Company and one common stock purchase warrant (a “Warrant”); each
Warrant is exercisable at a price of US $0.65 per share at any time until 5:00 p.m. (Toronto time) on December 31, 2013. On
December 19, 2011, each Subscription Receipt was automatically converted for no additional consideration, into one Unit of
the Company as a result of the Company’s receipt of notice that its common stock was accepted for trading on the Toronto
Stock Exchange under the trading symbol, “LSL”, effective as of December 22, 2011. On December 19, 2011, the Escrow
Proceeds were delivered to the Company from the escrow agent. As a result of the foregoing private placement transaction,
the Company currently has the necessary working capital needed to meet its current budget.
36
Additionally, on December 19, 2011, the Company completed a private placement offering, pursuant to which the Company
raised a total of US $1,313,750 through the sale of 2,627,500 Units at a purchase price of US $0.50 per Unit; there were no
underwriting discounts or commissions paid. Each Unit consisted of one share of common stock of the Company and one
common stock purchase warrant (a “Warrant”). Each whole Warrant entitles the holder to acquire one share of common stock
at a price of US $0.65 for a period of two years following the date of the closing of the financing.
Effective September 28, 2012, the Company issued 100,000 common shares upon the exercise of 100,000 whole warrants for
gross proceeds of CDN$ 75,000.
Effective October 3, 2012, the Company issued 300,000 common shares upon the exercise of 300,000 whole warrants for
gross proceeds of CDN$ 225,000.
As at the date of this registration statement, there are 9,627,500 warrants outstanding, which may be exercised at various
exercise prices, for gross proceeds of $6,247,875.
Current Assets and Total Assets
As of September 30, 2012, the unaudited balance sheet reflects that the Company had: i) total current assets of $1,152,040, as
compared to total current assets of $1,796,779 at June 30, 2012, a decrease of $644,739, or approximately 36%; and ii) total
assets of $1,309,940, as compared to total assets of $1,956,416 at June 30, 2012, a decrease of $646,476, or approximately
33%. The decrease in assets was primarily due to cash used in operating activities, partially offset by a net increase in other
working capital items.
Total Current Liabilities and Total Liabilities
As of September 30, 2012, the unaudited balance sheet reflects that the Company had total current liabilities and total
liabilities of $157,714, compared to total current liabilities and total liabilities of $167,948 at June 30, 2012, a decrease of
$10,234 or approximately 6%. The net decrease in liabilities was due to a decrease in accounts payable, partially offset by an
increase in accrued liabilities. The current liabilities of the Company are expected to be settled in the regular course of
business.
Cash Flow – for the fiscal years ended June 30, 2012 and 2011
During the fiscal year ended June 30, 2012 cash was primarily used to fund operations. The Company reported a net increase
in cash used in operating activities during the fiscal year ended June 30, 2012 as compared to June 30, 2011. See below for
additional discussion and analysis of cash flow.
For the years ended June 30,
2012 2011
$ $
Net cash provided by (used in) operating activities (3,305,094) (785,254)
Net cash used in investing activities (66,340) (72,511)
Net cash provided by financing activities 5,049,625 150,000
Net Change in Cash 1,678,191 (707,765)
During the year ended June 30, 2012, net cash used in operating activities was $3,305,094, compared to net cash used in
operating activities of $785,254 during the year ended June 30, 2011. The increase in net cash used in operating activities is
primarily due to an increase in: exploration expense; operation and administration expense; and, legal and accounting
expense. The increase in these expenses was partially offset by a small decrease in consulting expense.
During the year ended June 30, 2012, net cash used in investing activities was $66,340, comprised of $34,732 paid for the
purchase of furniture and equipment and $31,608 paid to acquire mining interests. During the year ended June 30, 2011, net
cash used in investing activities was $72,511, all of which was paid to acquire mining interests.
37
During the year ended June 30, 2012, net cash provided by financing activities was $5,049,625. The net amount was
comprised of $5,252,388 from the proceeds of the issuance of common stock, and partially offset by $202,763 of costs
associated with the issuance of the common stock. During the year ended June 30, 2011, net cash provided by financing
activities was $150,000, which represented proceeds from related party notes.
Cash Flow – for the interim periods ended September 30, 2012 and 2011
During the three months ended September 30, 2012 cash was primarily used to fund operations. The Company reported a net
decrease in cash during the three months ended September 30, 2012 as compared to a net increase in cash for the three
months ended September 30, 2011. See below for additional discussion and analysis of cash flow.
For the three months ended September 30,
2012 2011
Net cash used in operating activities $ (893,042) $ (491,366)
Net cash used in investing activities - (29,765)
Net cash from financing activities 72,692 688,639
Net Change in Cash $ (820,350) $ 167,508
During the three months ended September 30, 2012, net cash used in operating activities was $893,042, compared to net cash
used in operating activities of $491,366 during the three months ended September 30, 2011. The increase in net cash used in
operating activities of $401,676 is primarily due to: a comprehensive loss of $1,630,584 during the current period versus a
comprehensive loss of $727,228 in the comparative period; net changes in working capital items of $185,845 during the
current period versus net changes in working capital items of $41,480 during the comparative period; partially offset by
non-cash items of $923,387 during the current period versus non-cash items of $277,342 during the comparative period.
During the three months ended September 30, 2012, the Company did not use any cash for investing activities, as compared
to $29,765 used in investing activities during the comparative period when the Company invested in furniture and office
equipment.
During the three months ended September 30, 2012, net cash from financing activities was $72,692, compared to net cash
from financing activities of $688,639 during the three months ended September 30, 2011. During the current period, the
Company issued 100,000 common shares upon the exercise of 100,000 whole warrants at an exercise price of CDN $0.75 per
common share, for gross proceeds of CDN $75,000. The warrants were originally issued pursuant to a private placement
offering of 200,000 Units on July 27, 2011. The Units were comprised of one common share and one half of one common
share purchase warrant. During the comparative period, the Company issued a combined 1,200,000 Units, consisting of one
common share and one half of one common share purchase warrant, at CDN $0.55 per Unit, for gross proceeds of CDN
$660,000. The CDN$ proceeds were translated to USD $688,639.
Going Concern
The audited and unaudited financial statements included with this filing have been prepared on the going concern basis which
assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities
settled in the ordinary course of business. Accordingly, the audited financial statements do not include any adjustments
related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to
continue as a going concern.
38
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements and has not entered into any transaction involving unconsolidated
limited purpose entities.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
On February 1, 2011, the Company changed accountants. We have not had any disagreements with our accountants required
to be disclosed pursuant to Item 304 of Regulation S-K.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE .
Directors and Executive Officers
The following table sets forth the names of our directors, executive officers, significant employees, promoters and control
persons, their ages, and all offices and positions held within the Company as of January 1, 2013. Directors are elected for a
period of one year and thereafter serve until their successor is duly elected by the stockholders and qualified. Officers and
other employees serve at the will of the board of directors.
Name Age Present Position With the Company Since
R. Geoffrey Browne 58 Chief Executive Officer, President, Director October 2010
Manish Z. Kshatriya 39 Chief Financial Officer, Executive VP January 2012
John Pulos 46 Director February 2007
George Kent 82 Director October 2010
Timothy Unwin 69 Director, Chairman October 2010
W. Thomas Hodgson 59 Director December 2010
H. Richard Klatt 76 Vice President of Exploration October 2010
William J. Tafuri 71 Project Manager November 2012
Biographical Information
R. Geoffrey ‘Geoff’ Browne . Mr. Browne currently serves as our Chief Executive Officer, President and a Director of the
Company. Mr. Browne has over 30 years of experience in the financial services industry in Canada, the U.S. and London,
England. In addition to his work with the Company, since July 1996 Mr. Browne has served as the Managing Partner of
MWI & Partners, a private equity firm located in Ontario, Canada. As the managing partner of MWI & Partners, Mr.
Browne is responsible for making investments for the company. Prior to founding MWI & Partners, Inc., from September
1976 to June 1996 Mr. Browne was a senior executive with Canadian Imperial Bank of Commerce and CIBC Wood Gundy
Inc. The last position he held at CIBC was Chief of Staff for CIBC World Markets. Mr. Browne is active on numerous
other corporate and not-for-profit Boards, and is one of three independent members of the Investment Review Committee of
UBS Global Asset Management (Canada) Co. Mr. Browne is holds a B.A. in economics from the University of Western
Ontario. Mr. Browne’s over 30 years of experience in the financial services industry in Canada, the U.S. and London,
England, including his time spent as Chief of Staff for CIBC World Markets led the board to conclude that Mr. Browne
should serve as a director of the Company.
Manish Z. Kshatriya . Mr. Kshatriya has over 14 years of progressive experience in corporate finance, accounting, taxation
and auditing obtained in public accounting practice and industry. From January 2006 until October 2011, Mr. Kshatriya
worked for Augen Capital Corp., a Toronto based, Canadian listed mining merchant bank where he served as both the
Director of Finance, and most recently the Chief Financial Officer. As the Director of Finance and Chief Financial Officer,
Mr. Kshatriya was responsible for the management and oversight of all financial matters for Augen Capital Corp. Mr.
Kshatriya is a Chartered Accountant and a member of the Institute of Chartered Accountants of Ontario. He is also a Certified
Public Accountant in the United States and a member of the Colorado State Board of Accountancy.
John Pulos . Mr. Pulos currently serves as a member of the Board of Directors. Mr. Pulos has been involved in the real
estate market for the past 20 years with a focus on development, investment and obtaining land entitlements throughout the
United States and Canada as well as investing in many private and public companies. From February 2007 to present Mr.
Pulos has been a director and officer of Liberty Silver. In May 2010 Mr. Pulos became CFO and Vice President of Liberty
Silver and duties included all filings, accounts payable and help in running the day-to-day operations of Liberty. In January
2012, Mr.
39
Pulos stepped down as CFO and Vice President but remains on the Board of Directors. Mr. Pulos obtained his Bachelor of
Arts in Political Science from the University of Washington and a Masters of Science in Real Estate Finance at New York
University. John Pulos : Mr. Pulos’ experience being involved in the real estate market for the past 20 years with a focus on
development, investment and obtaining land entitlements throughout the United States and Canada as well as investing in
many private and public companies led the board to conclude that Mr. Pulos should serve as a director of the Company.
Timothy Unwin . Mr. Unwin currently serves as a Director and Chairman of the Board of the Company. In addition to his
work for the Company, Mr. Unwin is also the Chairman of the board of Evoke Neurosciences Inc., a private U.S based
company specializing in neurological testing and reporting, and from January 2008 to the present, Mr. Unwin has been a
partner emeritus at Blake, Cassels & Graydon LLP in Toronto. Additionally, from February 2009 to the present, Mr. Unwin
has served as a director and member of the Audit Committee of C.A. Bancorp Inc. From March 2004 until his retirement as
an active partner in December 2008, Mr. Unwin worked as the managing partner of the New York Office of Blake, Cassels &
Graydon LLP. As the managing partner, Mr. Unwin oversaw the management of the law firm and worked as a corporate and
securities lawyer. Prior to working as the managing partner of the New York Office of Blake, Cassels & Graydon LLP, Mr.
Unwin was also the office managing partner at Blake’s office in London, England. Mr. Unwin is a graduate of the director’s
education program at the Institute of Corporate Directors at the Rotman School of Management, University of Toronto and is
an institute certified director (ICD.D). Mr. Unwin’s experience as managing partner at the New York Office of Blake,
Cassels & Graydon LLP, where he oversaw the management of the law firm and worked as a corporate and securities lawyer
led the board to conclude that Mr. Unwin should serve as a director of the Company.
George Kent . Mr. Kent currently serves as a Director of the Company. As a Professional Engineer in geology he has been
engaged in worldwide exploration, mining, financing and education for decades, having spent eight years with Watts Griffis
and McOuat Limited and significant periods of time employed with major and minor public companies, Noranda, Dresser
Industries, Conwest Exploration, nine years as a full professor at the University of Toronto in Geo-Engineering and Arts and
Science faculties, and five years as Exploration Geologist and finally as Officer in Charge with the United Nations of an all
mineral survey over 120,000 sq kms in Ethiopia. In addition to his work for the Company, from October, 2011 to the
present, Mr. Kent has served as the President of George R. Kent & Associates Ltd since 1980 which firm is engaged in
geological and mining consulting across Canada in Ecuador, Bolivia, India, and in some other countries, assisting in public
company formation, directorships Santa Maria Mines Ltd and Canadax Mines Ltd 1980 - 1985. He was a founder, CEO, and
director of Duration Mines Limited from 1980 - 1985; of Glimmer Resources Inc. from 1986 - 2004 both successful mining,
oil and gas producing companies. He was a co-founder (2001) and still serves as Vice President Corporate Development,
CFO, and director of Taranis Resources Inc. Mr. Kent belongs to four investment groups, is a member of the Geological
Discussion Group, and is a Life Member of the Canadian Institute of Mining and Metallurgy and of the Prospectors and
Developers Association. He is very active in mining circles. Mr. Kent’s experience as a Professional Engineer in geology and
being engaged in worldwide exploration, mining, financing and education for decades, having spent eight years with Watts
Griffis and McOuat Limited and significant periods of time employed with major and minor public companies led the board
to conclude that Mr. Kent should serve as a director of the Company.
W. Thomas Hodgson . In addition to serving as a director of the Company, Mr. Hodgson is also Executive Chairman of
Lithium Americas Corp., a TSX-listed mineral exploration company, and Senior Partner and Chairman of Greenbrook
Capital Partners Inc., a financial advisory firm, and until May 2011, acted as a consultant and advisor to the Chairman Magna
International Inc., one of the world’s largest automotive companies, having a particular specialization in sourcing venture
investment opportunities for the company. Mr. Hodgson has over twenty years’ experience in capital markets research,
corporate advisory matters and consulting. He is currently a director of Helix Biopharma Corp. and Lithium Americas Corp.,
has been a board member of MI Developments Inc., and was Director, President and Chief Executive Officer of Magna
Entertainment Corp. from March 2005 to March 2006. From November 2002 to March 2005, Mr. Hodgson was President of
Strategic Analysis Corporation. Prior to that, Mr. Hodgson held senior positions with Canadian financial institutions and
U.K. companies, including Canadian Imperial Bank of Commerce, Canada Permanent Trust Co. Central Guaranty Trust,
where he served as President and Chief Executive Officer, Marathon Asset Management Inc., where he served as President,
and GlobalNetFinancial.com, where he served as Chief Operating Officer and then as President and Chief Executive
Officer. Mr. Hodgson holds an MBA from Queen’s University, Kingston, Ontario. Tom Hodgson : Mr. Hodgon’s
experience as a senior partner and chairman of Greenbrook Capital Partners Inc., a financial advisory firm led the board to
conclude that Mr. Hodgson should serve as a director of the Company.
H. Richard ‘Dick’ Klatt . Mr. Klatt currently serves as vice president of exploration for the Company. Mr. Klatt has over 40
years of diverse mining and exploration experience in precious and base metals. He has worked for a number of major
mining companies. From 2007 through 2009 he served as contract exploration manager of Yellowcake Mining, Inc., Las
Vegas Nevada, during which time he organized and oversaw exploration drilling for uranium in the Uravan mineral belt,
Colorado. From 2006 through 2007 he worked as a consulting minerals exploration geologist during which time he: (i)
40
completed an economic geology review of the La Sal uranium district for Superior Uranium, Moab, Utah; (ii) completed
extensive lithology-logging for base and precious metals for a drill program at the south rim of the Bingham copper mine,
Utah, for Grand Central Silver Mines, Carrollton, Texas; (iii) directed a 2,100 feet diamond drilling program for gold and
cobalt in the Belt-Percell basin, eastern Idaho, for Salmon River Resources, Vancouver, British Columbia, Canada; (iv)
completed a 6,000 feet diamond drilling program for zinc in western Utah for Franconia Minerals Corp., Spokane,
Washington; and (v) Directed a 6,000 m rotary drilling program for uranium in western Colorado for U.S. Energy, Riverton,
Wyoming. From 2004 through 2005, he worked as a consulting minerals exploration geologist for Kennecott Exploration
Company located in Salt Lake City, Utah. During this time he also oversaw initial development drilling for vein-hosted base
metals in the Zacatecas district, Zacatecas, Mexico, for Capstone Gold, Vancouver, British Columbia, Canada. Mr. Klatt
received his B.S. degree in geology at the University of Illinois, Urbana, Illinois.
William J. Tafuri . Mr. Tafuri currently serves as Project Manager of the Trinity Project. Mr. Tafuri has a Ph.D. in geology
and over 40 years of diverse mining and exploration experience in precious and base metals. Mr. Tafuri has worked for a
number of major international mining companies and has held management positions in both domestic and foreign locations
for Getty Mining Co., Santa Fe Pacific Gold Corp., and Kinross Gold Corp. He has extensive consulting experience, both
domestic and foreign. He has extensive exploration and mine development experience in the USA, Central Asia, Russia, and
Chile. From March 2010to the present Mr. Tafuri has been the President and COO of the Company. As March of 2010 Mr.
Tafuri was responsible for managing the operations of the Company. From January 2007 to December 2009, Mr. Tafuri was
the President of Yellowcake Mining Company, which was located in Vancouver, B.C., Canada, and was in the business of
mining. As of January 2007, Mr. Tafuri was responsible for the acquisition and exploration of uranium properties in
Wyoming and Colorado. From June 2004 to November 2006 Mr. Tafuri was the Vice President of Centrasia Mining
Company, which was located in Vancouver, B.C., Canada and was in the business of mining. As of June 2004, Mr. Tafuri
was responsible for the acquisition and exploration of mining properties in Central Asia. Mr. Tafuri received his B.S. and
M.S. degrees in geology at the University of Nevada-Reno and his Ph.D. in geology at the University of Utah.
Family Relationships
There are no family relationships between any of the current directors or officers of the Company.
Involvement in Certain Legal Proceedings
To the best of its knowledge, the Company’s directors and executive officers were not involved in any legal proceedings
during the last ten years as described in Item 401(f) of Regulation S-K.
Directorships
None of the Company’s executive officers or directors is a director of any company with a class of equity securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the requirements of the Securities
Exchange Act of 1934 or any company registered as an investment company under the Investment Company Act of 1940.
Code of Ethics
Our board of directors has adopted a code of ethics that will apply to its chief executive officer, chief financial officer and
chief accounting officer or controller and to persons performing similar functions. The code of ethics is designed to deter
wrongdoing and to promote honest and ethical conduct, full, fair, accurate, timely and understandable disclosure, compliance
with applicable laws, rules and regulations, prompt internal reporting of violations of the code and accountability for
adherence to the code. We will provide a copy of our code of ethics, without charge, to any person upon receipt of written
request for such delivered to our corporate headquarters. All such requests should be sent care of Liberty Silver Corp., Attn:
Corporate Secretary, 181 Bay Street, Suite 2330, Toronto, Ontario, Canada, M5J 2T3, phone number: 888-749-4916. The
Company’s Code of Business Conduct and Ethics has also posted on our website at, www.libertysilvercorp.com .
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, for the years indicated, all compensation paid, distributed or accrued for services,
including salary and bonus amounts, rendered in all capacities by the Company’s principal executive officer , chief financial
officer and all other executive officers ; the information contained below represents compensation paid to the Company’s
officers for their work related to the Company.
41
Non-Equity Non-qualified
Incentive Deferred
Stock Option Plan Compensation All other
Name and Salary Bonus Award(s) Award(s) Compensation Earnings Compensation Total
Principal Position Year ($) ($) ($) ($) (#) ($) ($) ($)
R. Geoffrey Browne 2012 200,004 -- -- -- -- -- -- 200,004
CEO, President 2011 166,673 -- -- 1,468,451 (2) -- -- 1,635,124
William Tafuri, 2012 120,000 -- -- -- -- -- -- 120,000
President,
COO (4) 2011 120,000 -- -- 292,251 (2) -- -- -- 412,251
2010 30,000 -- -- -- -- -- -- 30,000
Manish Z. 2012 60,357 -- -- 296,133 (2) -- -- -- 356,490
Kshatriya
CFO
H. Richard Klatt (1) 2012 96,000 -- -- -- -- -- -- 96,000
2011 93,600 -- -- 219,188 (2) -- -- -- 312,788
2010 20,000 -- -- -- -- -- -- 20,000
John Pulos 2011 -- -- -- -- -- -- -- --
CFO (3) 2010 -- -- -- -- -- -- -- --
(1) H. Richard Klatt serves as the vice president of exploration of the Company.
(2) Option awards reflect the aggregate grant date fair value computed using the Black-Scholes model; for a discussion please
refer to Note 6 in the Notes to the Financial Statements herein.
(3) John Pulos resigned as the Chief Financial Officer of the Company on January 16, 2012.
(4) Bill Tafuri resigned as the President and Chief Operating Officer of the Company on November 27, 2012.
Grant of Plan Based Awards
The following table provides a summary of equity awards granted to the Company’s executive officers during the fiscal year
ended June 30, 2012.
All Other Stock All Other Option Exercise or Grant Date
Awards: Number Awards: Number of Base Price of Fair Value of
Estimated Future Payouts Under Estimated Future Payouts Under
of Shares of Securities Option Stock and
Non-Equity Incentive Plan Awards Equity Incentive Plan Awards
Grant Stocks or Units Underlying Options Awards Option
Name Date (#) (#) ($/Sh) Awards
Target Threshold Target Maximum
Threshold ($) ($) Maximum ($) (#) (#) (#)
R. Geoffrey October
-- -- -- -- -- -- -- 3,000,000 .75 1,468,451(1)
Browne 18, 2010
William April 19,
-- -- -- -- -- -- -- 800,000 .75 292,251(1)
Tafuri 2011
Manish January 16,
-- -- -- -- -- -- -- 450,000 1.00 296,133 (1)
Kshatriya 2012
H. Richard April 19,
-- -- -- -- -- -- -- 600,000 .75 219,188(1)
Klatt 2011
John Pulos -- -- -- -- -- -- -- -- -- -- --
(1) Option awards reflect the aggregate grant date fair value computed using the Black-Scholes model; for a discussion please refer to Note
5 in the Notes to the Financial Statements herein.
42
Outstanding Stock Options Awards At Fiscal Year End.
The following table provides a summary of equity awards outstanding at June 30, 2012, for each of our named executive
officers.
Option Awards Stock Awards
________________________________________________________ _________________________________________
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Market Unearned Unearned
Plan Number of Value of Shares, Shares,
Awards: Shares or Shares or Units or Units or
Number of Number of Number of Units of Units of Other Other
Securities Securities Securities Stock Stock Rights Rights
Underlying Underlying Underlying Option That That That That
Unexercised Unexercised Unexercised Exercise Option Have Not Have Not Have Not Have Not
Options (#) Options (#) Unearned Price Expiration Vested Vested Vested Vested
Name Exercisable Unexercisable Options (#) ($) Date (#) ($) (#) ($)
R. Geoffrey
Browne 3,000,000 -- -- .75 October 18, 2015 -- -- -- --
William Tafuri 533,328 266,672 -- .75 April 19, 2016 -- -- -- --
H. Richard
Klatt 400,000 200,000 -- .75 April 19, 2016 -- -- -- --
Manish
Kshatriya 150,000 300,000 -- 1.00 July 16, 2017 -- -- -- --
There were no options or other derivative securities exercised in fiscal 2011 by our named executive officers. In addition,
there were no shares acquired by our named executive officers upon the vesting of restricted stock.
Long-Term Incentive Plans
We do not have any long-term incentive plans, pension plans, or similar compensatory plans for our directors or executive
officers.
Change of Control Agreements
We are not party to any change of control agreements with any of our directors or executive officers.
Employment Agreement; Employment Arrangement
R. Geoffrey Browne currently serves as the Chief Executive Officer and President of the Company. Pursuant to an
agreement dated October 18, 2010, (the “Agreement”) Mr. Browne is paid an annual salary of $200,000, as well as an annual
discretionary performance bonus for his services rendered as the Chief Executive Officer; the amount of the performance
bonus is at the discretion of the Company’s Board of Directors. In conjunction with the entry into the Agreement, the
Company granted Mr. Browne stock options to acquire up to 3,000,000 shares of restricted common stock of the Company at
a price of $.75 per share.
Manish Z. Kshatriya currently serves as the Chief Financial Officer of the Company. Pursuant to an arrangement with the
Company, in consideration of his services to the Company, Mr. Kshatriya’s is paid $2,500 per week; there is no written
agreement relating to the foregoing arrangement. Additionally, in January of 2012 he was granted stock options to purchase
up to a total of 450,000 shares the Company’s common stock at an exercise price of $1.00 per share. The options are subject
to the following vesting schedule: (i) 150,000 options vest six months after January 16, 2012; (ii) 150,000 options vest one and
a half years after January 16, 2012; and (iii) 150,000 options vest two and one half years after January 16, 2012.
William Tafuri currently serves as the Project Manager of the Trinity Project. Pursuant to an arrangement with the Company,
in consideration of Mr. Tafuri’s services to the Company, Mr. Tafuri is paid $120,000 annually; there is no written agreement
relating to the foregoing arrangement. Additionally, in April 2011, Mr. Tafuri was granted stock options to purchase
800,000
43
shares of the Company’s common stock at $0.75 per share for a 5-year term. Pursuant to the terms of the option agreement,
entered into between Mr. Tafuri and the Company, a total of 266,664 options vested immediately upon the grant of the
options; the remaining 533,336 options vest over a two-year period. The vesting of the remaining 533,336 options may be
accelerated in the event the Company achieves certain milestones with respect to its mining operations.
H. Richard Klatt currently serves as the Vice President of Exploration of the Company. Pursuant to an arrangement with the
Company, in consideration of Mr. Klatt’s services to the Company, Mr. Klatt is paid $96,000 annually; there is no written
agreement relating to the foregoing arrangement. Additionally, in April 2011, Mr. Klatt was granted stock options to
purchase 600,000 shares of the Company’s common stock at $0.75 per share for a 5-year term. Pursuant to the terms of the
option agreement, entered into between Mr. Klatt and the Company, a total of 200,000 options vested immediately upon the
grant of the options; the remaining 400,000 options vest over a two-year period. The vesting of the remaining 400,000
options may be accelerated in the event the Company achieves certain milestones with respect to its mining operations.
Equity Compensation Plan Information
On April 19, 2011, subject to shareholder approval, the Board of Directors of Liberty Silver Corp. approved the adoption of
the Liberty Silver Corp. Incentive Share Plan (the “Plan”) under which common shares of the Company’s common stock
have been reserved for purposes of possible future issuance of incentive stock options, non-qualified stock options, and stock
grants to employees, directors and certain key individuals. Under the Plan, the maximum number of common shares
reserved for issuance shall not exceed 10% of the common shares of the Company outstanding from time to time. The
purpose of the Plan shall be to advance the interests of the Company by encouraging equity participation in the Company
through the acquisition of common shares of the Company. In order to maintain flexibility in the award of stock benefits, the
Plan constitutes a single plan, but is composed of two parts. The first part is the Share Option Plan which provides grants of
both incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended, and nonqualified stock
options. The second part is the Share Bonus Plan which provides grants of shares of Company common stock. The
following is intended to be a summary of some of the material terms of the Plan, and is subject to, and qualified in its
entirety, by the full text of the Plan.
The Plan
The Plan is a rolling plan, under which the maximum number of Shares reserved for issuance under the Share Option Plan,
together with the Share Bonus Plan, shall not exceed 10% of the Shares outstanding (on a non-diluted basis) at any given
time. The purpose of the Plan is to advance the interests of the Corporation by (i) providing certain employees, senior
officers, directors, or consultants of the Corporation (collectively, the “Optionees”) with additional performance incentives;
(ii) encouraging Share ownership by the Optionees; (iii) increasing the proprietary interest of the Optionees in the success of
the Corporation; (iv) encouraging the Optionees to remain with the Corporation; and (v) attracting new employees, officers,
directors and consultants to the Corporation.
Share Option Plan
The following information is intended to be a brief description and summary of the material features of the Share Option
Plan:
(a)
The aggregate maximum number of Shares available for issuance from treasury under the Share Option
Plan, together with the Share Bonus Plan, at any given time is 10% of the outstanding Shares as at the date
of grant of an option under the Plan, subject to adjustment or increase of such number pursuant to the terms
of the Plan. Any Shares subject to an option which has been granted under the Share Option Plan and which
has been surrendered, terminated, or expired without being exercised, in whole or in part, will again be
available under the Plan.
(b)
The exercise price of an option shall be determined by the Board at the time each option is granted,
provided that such price shall not be less than the closing price of the Shares on the principal stock
exchange(s) upon which the Shares are listed and posted for trading on the trading day immediately
preceding the day of the grant of the option.
(c)
Options granted to persons conducting Investor Relations Activities (as defined in the Plan) for the
Corporation must vest in stages over twelve months with no more than ¼ of the options vesting in any three
month period.
44
(d)
In the event an Optionee ceases to be eligible for the grant of options under the Share Option Plan, options
previously granted to such person will cease to be exercisable within a period of 12 months following the
date such person ceases to be eligible under the Plan.
(e)
In the event that a take-over bid or issuer bid is made for all or any of the issued and outstanding Shares,
then the Board may, by resolution, permit all options outstanding to become immediately exercisable in
order to permit Shares issuable under such options to be tendered to such bid.
Share Bonus Plan
The following information is intended to be a brief description and summary of the material features of the Share Bonus Plan:
(a)
Participants in the Share Bonus Plan shall be directors, officers, employees, or consultants of the
Corporation who, by the nature of their positions are, in the opinion of the Board and upon the
recommendation of the President of the Corporation, in a position to contribute to the success of the
Corporation.
(b)
The determination regarding the amount of bonus Shares issued pursuant to the Share Bonus Plan will take
into consideration the Optionee’s present and potential contribution to the success of the Corporation and
shall be determined from time to time by the Board. However, in no event shall the number of bonus Shares
pursuant to the Share Bonus Plan, together with the Share Option Plan, exceed 10% of the issued and
outstanding Shares in the aggregate.
General Features of the Plan
In addition to the above summaries of the Share Option Plan and the Share Bonus Plan, the following is intended to be a brief
description and summary of some of the general features of the Plan:
(a)
The aggregate number of Shares reserved pursuant to the Plan for issuance to insiders of the Corporation
within any twelve-month period, under all security based compensation arrangements of the Corporation,
shall not exceed 10% of the total number of Shares then outstanding.
(b)
The aggregate number of Share reserved for issuance pursuant to the Plan to any one person in any twelve
month period shall not exceed 5% of the total number of Shares outstanding from time to time, unless
disinterested shareholder approval is obtained pursuant to the policies of the Corporation’s principal stock
exchange(s) upon which the Shares are listed and posted for trading or any stock exchange or regulatory
authority having jurisdiction over the securities of the Corporation. No more than 2% of the outstanding
Shares may be granted to any one Consultant (as defined in the Plan) in any twelve month period, or to
persons conducting Investor Relations Activities (as defined in the Plan) in any twelve month period.
Director Compensation
The general policy of the Board is that compensation for independent directors should be equity-based
compensation. Additionally, we reimburse our directors for reasonable expenses incurred during the course of their
performance. We have no long-term incentive or medical reimbursement plans. The Company does not pay employee
directors for Board service in addition to their regular employee compensation. The Board determines the amount of director
compensation. The following table provides a summary of compensation paid to directors during the fiscal year ended June
30, 2012.
45
Director Fees Stock Option Non-Equity Nonqualified All Other
Earned Awards Awards Incentive Plan Deferred Compensation
or Paid ($) ($) (1) Compensation Compensation ($)
in Cash ($) Earnings
($) Total ($)
R. Geoffrey Browne (3) -- -- -- -- -- -- --
William Tafuri (3)(4) -- -- -- -- -- -- --
John Pulos (3) -- -- -- -- -- -- --
John Barrington )(4) 120,000 (2) --- --- --- --- --- 120,000
George Kent -- --- --- --- --- --- ---
Timothy Unwin -- --- --- --- --- -- ---
Paul Haggis )(4) -- --- --- --- --- --- ---
W. Thomas Hodgson -- --- --- --- --- --- ---
(1) Option awards reflect the aggregate grant date fair value computed using the Black-Scholes model; for a discussion
please refer to Note 5 in the Notes to the Financial Statements for the fiscal year ended June 30, 2012 herein.
(2) This figure represents fees paid to John Barrington for consulting services rendered to the Company, not in his
capacity as a director.
(3) Refer to the summary compensation table in the Section titled Executive Compensation.
(4) Term expired on December 21, 2012 and did not run for reelection to the Board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of January 1, 2013, the name and the number of shares of our common stock, par value
$0.001 per share, held of record or beneficially by each person who held of record, or was known by us to own beneficially,
more than 5% of the issued and outstanding shares of our common stock, and the name and shareholdings of each director
and significant employee, and of all executive officers and directors and significant employees as a group.
Title and Class Name and Address Amount and Nature Percent of class
of Beneficial Owner of Beneficial Ownership
R. Geoffrey Browne (1) 6,150,000 (2)
Common 181 Bay Street, Suite 2330 7.05%
Toronto, Ontario, Canada, M5J 2T3
Common Manish Z. Kshatriya (1) 150,000 (3)
181 Bay Street, Suite 2330 0.18%
Toronto, Ontario, Canada, M5J 2T3
William Tafuri (1) 2,753,328 (4)
Common 808 Packer St. 3.26%
Reno, Nevada 89431
Common John Pulos (1) 10,000,000
2711 N. Sepulveda Blvd. #323 11.95%
Manhattan Beach, California 90266
Common George Kent (1) 1,450,000 (5)
181 Bay Street, Suite 2330 1.72%
Toronto, Ontario, Canada, M5J 2T3
46
Common Timothy Unwin (1) 1,450,000 (6)
181 Bay Street, Suite 2330 1.72%
Toronto, Ontario, Canada, M5J 2T3
Common W. Thomas Hodgson (1) 1,600,000 (7)
181 Bay Street, Suite 2330 1.90%
Toronto, Ontario, Canada, M5J 2T3
Common H. Richard Klatt (1) 1,400,000 (8)
808 Packer St. 1.66%
Reno, Nevada, 89431
Common Look Back Investments Inc. (9) 6,500,000 (9) 7.2%
Calle Eusebio A. Morales
Suite a-A #5
El Cangrejo, Panama City, Panama
Common All Directors, Executive Officers, or Significant 24,953,328 27.03%
Employee as a Group (8 in number)
(1) Director, Officer or Significant Employee of Company
(2) Included in this number, are (i) 2,550,000 shares owned directly by Mr. Browne, and (ii) 600,000 warrant shares and (iii) 3,000,000
option shares. Mr. Browne may be deemed to be the beneficial owner of the warrant shares and the option shares because he holds the
right to acquire these shares within 60 days through the exercise of the options and warrants.
(3) Included in this number are 150,000 option shares because Mr. Kshatriya may be deemed to be the beneficial owner of the option shares
because he holds the right to acquire these shares within 60 days through the exercise of the options.
(4) Included in this number, are (i) 2,110,000 shares owned directly by Mr. Tafuri, and (ii) 110,000 warrant shares and (iii) 533,328 option
shares. Mr. Tafuri may be deemed to be the beneficial owner of the warrant shares and option shares because he holds the right to acquire
these shares within 60 days through the exercise of the options and warrants.
(5) Included in this number, are (i) 1,050,000 shares owned directly by Mr. Kent, and (ii) 100,000 warrant shares and (iii) 300,000 option
shares. Mr. Kent may be deemed the beneficial owner of the warrant shares and option shares because he holds the right to acquire these
shares within 60 days through the exercise of the options and warrants.
(6) Included in this number, are (i) 1,050,000 shares owned directly by Mr. Unwin, and (ii) 100,000 warrant shares and (iii) 300,000 option
shares. Mr. Unwin may be deemed to be the beneficial owner of these shares because he holds the right to acquire the warrant shares and
option shares within 60 days through the exercise of the options and warrants.
(7) Included in this number, are (i) 500,000 shares owned directly and (ii) 600,000 owned indirectly by Mr. Hodgson, (ii) 200,000 warrant
shares, and (iv) 300,000 option shares. Mr. Hodgson may be deemed to be the beneficial owner of the warrant shares and option shares
because he holds the right to acquire these shares within 60 days through the exercise of the options and warrants. Of the 200,000 total
warrant shares that Mr. Hodgson may be deemed to beneficially own, 50,000 of such warrant shares are owned by Greenbrook Capital
Partners Inc. Greenbrook Capital Partners Inc. a private Ontario, Canada company based in Toronto, Ontario. W. Thomas Hodgson,
officer of Greenbrook Capital Partners Inc., makes decisions as to the voting and disposition of securities owned by Greenbrook Capital
Partners Inc. The 600,000 shares owned indirectly by Mr. Hodgson are owned by Greenbrook Capital Partners Inc.
(8) Included in this number, are (i) 1,000,000 shares owned directly by Mr. Klatt, and (ii) 400,000 option shares. Mr. Klatt may be deemed
to be the beneficial owner of the option shares because he holds the right to acquire these shares within 60 days through the exercise of the
options.
(9) This number represents 6,500,000 warrant shares owned by Look Back Investments Inc. Look Back Investments Inc. is a private
Panamanian company based in Panama. Robert Genovese, officer of Look Back Investments Inc., makes decisions as to the voting and
disposition of the securities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Transactions
Effective April 1, 2011, the Company borrowed a total of $150,000 pursuant to the terms and conditions of promissory notes
(individually referred to as a “Note” and collectively referred to as the “Notes”) entered into with six individuals who were
serving as directors of the Company, including John Barrington, R. Geoffrey Browne, Paul Haggis, Tom Hodgson, George
47
Kent and Timothy Unwin. Each Note was for $25,000 and is required to be repaid by the Company on the earlier of one
year, or when the Company raises a minimum of $2,000,000 through equity investments. The Notes are interest free for the
first six months following the date of the Note and then bear interest at a rate of 8% per annum thereafter. In conjunction
with the entry into the Notes, in lieu of the holders charging the Company interest on the outstanding principal of the Notes
for the initial six months, the Company issued each holder a warrant entitling the holder to purchase up to a total of 50,000
shares of the Company’s common stock at price of $0.55 per share for a period of three (3) years following the date of the
Note. The Notes were repaid through the issuance of shares of common stock in the Company on December 19, 2011.
John Barrington currently serves as a consultant of the Company. Pursuant to a verbal arrangement with the Company, in
consideration of his services as a consultant to the Company, Mr. Barrington is paid $10,000 per month; there is no written
agreement relating to the foregoing arrangement. Additionally, On April 19, 2011, the Board of Directors of the Company
granted John Barrington, a director of the Company, non-qualified stock options to purchase up to a total of 500,000 shares
Liberty Silver Corp. common stock at an exercise price of $.75 per share, all of which have vested.
On November 10, 2011, the Company issued 6,500,000 subscription receipts (the “Subscription Receipts”) to Look Back
Investments Inc. (“Investor”), a company controlled by, or under the direction of, Mr. R. Genovese, pursuant to a private
placement at a price of US$ 0.50 per Subscription Receipt for gross proceeds of US $3,250,000; there were no underwriting
discounts or commissions paid. On December 19, 2011, each Subscription Receipt was automatically converted for no
additional consideration, into one unit of the Company (a “Unit”) as a result of the Company’s receipt of notice that its
common stock was accepted for trading on the Toronto Stock Exchange under the trading symbol, “LSL”, effective as of
December 22, 2011. Each Unit is comprised of one common share and one common share purchase one warrant
(“Warrant”). Each Warrant is exercisable at a price of US $0.65 per share at any time until 5:00 p.m. (Toronto time) on
December 31, 2013.
In conjunction with the issuance of Subscription Receipts, the Company entered into a Registration Rights Agreement (the
“Registration Rights Agreement”) with the Investor, pursuant to which the Company agreed, following the conditional
approval by the Toronto Stock Exchange, to file a registration statement on Form S-1 with the Securities and Exchange
Commission which registers the common stock and common stock underlying the Warrants acquired by the investor for
resale. If the registration statement did not become effective on or before six months from the date of conditional approval
by the Toronto Stock Exchange for the listing of the common stock of the Company, the Investor would receive an additional
common share for each ten (10) common shares. The Company chose not to file a registration statement and as a result, on
May 31, 2012, the Company issued 650,000 common shares in satisfaction of this contractual obligation, the value for which
of $416,000 was determined by the closing market price of $0.64 per share on the date of issuance.
Aside from the foregoing, there were no material transactions, or series of similar transactions, during the Company’s last
fiscal year, or any currently proposed transactions, or series of similar transactions, to which the Company was or is to be a
party, in which the amount involved exceeded the lesser of $120,000 or one percent of the average of the small business
issuer’s total assets at year-end for the last three completed fiscal years and in which any director, executive officer or any
security holder who is known to us to own of record or beneficially more than five percent of any class of our common stock,
or any member of the immediate family of any of the foregoing persons, had an interest.
Director Independence
The Company’s common stock is currently traded on the Grey Market, and as such, is not subject to the rules of any national
securities exchange which requires that a majority of a listed company’s directors and specified committees of its board of
directors meet independence standards prescribed by such rules. For the purpose of preparing the disclosures in this
registration statement with respect to director independence, the Company has used the definition of “independent director”
within the meaning of National Instrument 52-110 – Audit Committees adopted by the Canadian Securities Administration
and as set forth in the Marketplace Rules of the NASDAQ, which defines an “independent director” generally as being a
person, other than an executive officer or employee of the company or any other individual having a relationship which, in
the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out
the responsibilities of a director.
Consistent with these standards, the Company’s board of directors has determined that W. Thomas Hodgson, Timothy
Unwin, Paul Haggis, and George Kent are “independent”.
48
LEGAL MATTERS
Fox Rothschild LLP has issued an opinion with respect to the validity of the shares of common stock being offered hereby.
EXPERTS
Our balance sheet as of June 30, 2012 and 2011 and the related statements of operations, changes in stockholders’ equity
(deficit) and cash flows for the years then ended, appearing in this prospectus have been audited by Morrill & Associates,
LLC, certified public accountants, as set forth on their report thereon appearing elsewhere in this prospectus, and are included
in reliance upon such report given upon the authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission a registration statement on Form S-1 to register the securities
offered by this prospectus. For future information about us and the securities offered under this prospectus, you may refer to
the registration statement and to the exhibits filed as a part of the registration statement. This prospectus, which forms a part
of that registration statement, does not contain all information included in the registration statement. Certain information is
omitted and you should refer to the registration statement and its exhibits. With respect to references made in this prospectus
to any contract or other document of the Company, the references are not necessarily complete and you should refer to the
exhibits attached to the registration statement for copies of the actual contract or document.
We file reports with the SEC under section 15d of the Securities Exchange Act of 1934. The reports will be filed
electronically. You may read copies of any materials we file with the SEC at the SEC's Public Reference Room at 100 F
Street, NE, Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that will contain copies of the reports
we file electronically. The address for the SEC Internet site is http://www.sec.gov .
49
INDEX TO FINANCIAL STATEMENTS
Audited Financial Statements as of June 30, 2012 and June 30, 2011
Report of Independent Registered Public Accounting Firm F-1
Balance Sheets as of June 30, 2012 and June 30, 2011 F-2
Statements of Operations and Income for the year ended June 30, 2012, for the year ended June 30, 2011 F-3
Statements of Changes in Stockholders’ Equity for the year ended June 30, 2012, for the year ended June 30, F-4
2011
Statements of Cash Flows for the year ended June 30, 2012, for the year ended June 30, 2011 F-7
Notes to Financial Statements F-9
Unaudited Financial Statements as of September 30, 2012
Balance Sheets as of September 30, 2012 F-23
Statements of Operations and Comprehensive Income for the periods ended September 30, 2012 and F-24
September 30, 2011
Statements of Cash Flows for the for the periods ended September 30, 2012 and September 30, 2011 F-25
Notes to Financial Statements F-27
50
Morrill & Associates, LLC
Certified Public Accountants
1448 North 2000 West, Suite 3
Clinton, Utah 84015
801-820-6233 Phone; 801-820-6628 Fax
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Liberty Silver Corp. (An Exploration Stage Company)
Toronto, Canada
We have audited the accompanying balance sheets of Liberty Silver Corp. (an exploration stage company) as of June
30, 2012 and 2011 and the related statements of operations, stockholders’ equity (deficit) and cash flows for the
years ended June 30, 2012 and 2011 and from inception on February 20, 2007 through June 30, 2012. These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The Company is not required to have, nor were
we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position
of Liberty Silver Corp. (an exploration stage company) as of June 30, 2012 and 2011 and the results of its operations
and cash flows for the years ended June 30, 2012 and 2011 and from inception on February 20, 2007 through June
30, 2012 in conformity with generally accepted accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going
concern. The Company has suffered recurring losses and has no operations, which raise substantial doubt about its
ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 9. The
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Morrill & Associates
Morrill & Associates
Clinton, Utah 84015
September 25, 2012
F-1
Liberty Silver Corp.
(An Exploration Stage Company)
Balance Sheets
ASSETS
June 30, June 30,
2012 2011
Current Assets
Cash and cash equivalents $ 1,694,914 $ 16,723
Accounts receivable - -
Deposit 10,906 -
Other 34,335 -
Prepaid 56,624 10,294
Total current assets 1,796,779 27,017
Property and Equipment
Furniture and office equipment 34,732 -
Accumulated depreciation (4,214) -
Mining interests 129,119 97,511
Total property and equipment 159,637 97,511
Total assets $ 1,956,416 $ 124,528
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts payable $ 96,323 $ 60,924
Accrued liabilities 71,625 367,396
Related party payable - 150,000
Total current liabilities 167,948 578,320
Total liabilities 167,948 578,320
Commitments and contingencies (note 7) - -
Stockholders’ Equity (Deficit)
Capital stock, $.001 par value,
200,000,000 shares authorized;
80,710,834 and 69,733,334 shares issued and outstanding, respectively 80,711 69,734
Additional paid-in-capital 9,734,746 1,814,207
Deficit accumulated during the exploration stage (8,026,989) (2,337,733)
Total stockholders’ equity (deficit) 1,788,468 (453,792)
Total liabilities and stockholders’ equity (deficit) $ 1,956,416 $ 124,528
The accompanying notes are an integral part of these financial statements.
F-2
Liberty Silver Corp.
(An Exploration Stage Company)
Statements of Operations
Cumulative During
the Exploration Stage
February 20, 2007
For Year Ended (inception) to
June 30, June 30,
2012 2011 2012
Revenue $ - $ - $ -
Operating expenses
Financing costs associated with valuation of warrants 1,826,160 40,000 2,388,351
Consulting 416,338 582,572 1,098,465
Exploration 1,273,491 126,841 1,491,433
Operation and administration 1,951,346 575,505 2,628,113
Legal and accounting 214,642 138,840 401,348
Impairment of mining interests - - 11,800
Total operating expenses 5,681,977 1,463,758 8,019,510
Income (loss) from operations (5,681,977) (1,463,758) (8,019,510)
Other income or gain (expense or loss)
Interest income - 882 1,220
Interest expense (169) (189) (403)
Gain (loss) foreign exchange (7,110) (1,188) (8,296)
Total other income or gain (expense or loss) (7,279) (495) (7,479)
Loss before income tax (5,689,256) (1,464,253) (8,026,989)
Provision for income taxes - - -
Net loss and comprehensive loss (5,689,256) (1,464,253) (8,026,989)
Loss per common share – basic and fully diluted $ (0.08) $ (0.02)
Weighted average common shares 75,705,683 69,733,334
The accompanying notes are an integral part of these financial statements.
F-3
Liberty Silver Corp.
(An Exploration Stage Company)
Statements of Stockholders' Equity (Deficit)
For the period February 20, 2007 (inception) through June 30, 2012
Additional Paid in Deficit Accumulated
Common Stock Capital During Exploration Stage Total Stockholders' Equity
Shares Amount
Balance,
February 20,
2007 (inception) $ -$ - $ -$ -
Shares for
cash:
Shares
issued at
$0.001 per
share 80,000,000 80,000 (76,000) - 4,000
Shares
issued at $0.01
per share 20,000,000 20,000 (10,000) - 10,000
Shares
issued at $0.05
per share 8,400,000 8,400 12,600 - 21,000
Net loss for the
period ending
June 30, 2007 - - - (1,128) (1,128)
Balance, June
30, 2007 108,400,000 108,400 (73,400) (1,128) 33,872
Net loss for the
period ending
June 30, 2008 - - - (22,248) (22,248)
Balance, June
30, 2008 108,400,000 108,400 (73,400) (23,376) 11,624
Net loss for the
period ending
June 30, 2009 - - - (31,522) (31,522)
Balance, June
30, 2009 108,400,000 $ 108,400 $ (73,400) $ (54,898) $ (19,898)
The accompanying notes are an integral part of these financial statements.
F-4
Liberty Silver Corp.
(An Exploration Stage Company)
Statements of Stockholders' Equity (Deficit)
For the period February 20, 2007 (inception) through June 30, 2012
Deficit
Accumulated
During
Additional Paid in Exploration Total Stockholders'
Common Stock Capital Stage Equity
Shares Amount
Balance, June 30, 2009 108,400,000 $ 108,400 $ (73,400) $ (54,898) $ (19,898)
Shares for cash:
Shares issued at $0.75
per share 1,333,334 1,334 998,666 - 1,000,000
Share cancellation (40,000,000) (40,000) 40,000 - -
Valuation of stock
warrants - - 522,191 - 522,191
Net loss for the period
ending June 30, 2010 - - - (818,582) (818,582)
Balance, June 30, 2010 69,733,334 $ 69,734 $ 1,487,457 $ (873,480) $ 683,711
Valuation of stock options - - 286,750 - 286,750
Valuation of stock
warrants - - 40,000 - 40,000
Net loss for the period
ending June 30, 2011 - - - (1,464,253) (1,464,253)
The accompanying notes are an integral part of these financial statements.
F-5
Liberty Silver Corp.
(An Exploration Stage Company)
Statements of Stockholders' Equity (Deficit)
For the period February 20, 2007 (inception) through June 30, 2012
Common Stock Deficit Accumulated
Additional Paid During Exploration
in Capital Stage Total Stockholde
Shares Amount
Balance, June 30,
2011 69,733,334 69,734 1,814,207 (2,337,733) (453,792)
Valuation of
stock options - - 639,731 - 639,731
Valuation of
stock warrants - - 1,826,160 - 1,826,160
Shares for cash:
Shares issued
at $0.57 per
share (1) 200,000 200 116,291 - 116,491
Shares issued
at $0.57 per
share (1) 1,000,000 1,000 571,148 - 572,148
Shares issued
at $0.50 per
share 6,500,000 6,500 3,243,500 - 3,250,000
Shares issued
at $0.50 per
share 2,627,500 2,627 1,311,122 - 1,313,749
Shares for
non-cash:(2)
Shares issued
at $0.64 per
share (2) 650,000 650 415,350 - 416,000
Issue costs - - (202,763) - (202,763)
Net loss for the
period ending
June 30, 2012 - - - (5,689,256) (5,689,256)
Balance, June 30,
2012 80,710,834 80,711 9,734,746 (8,026,989) 1,788,468
(1) Shares purchase for $0.55 CDN and was converted to $0.57
USD
(2) Shares issued to satisfy contractual obligation pursuant to a registration rights agreement
The accompanying notes are an integral part of these financial statements.
F-6
Liberty Silver Corp.
(An Exploration Stage Company)
Statements of Cash Flows
Cumulative During the
Exploration Stage
February 20,
For Year Ended 2007 (inception) to
June 30, June 30,
Cash flows from operating activities 2012 2011 2012
Net loss and comprehensive loss $ (5,689,256) $ (1,464,253) $ (8,026,989)
Adjustments to reconcile net (loss)
to net cash used in operating activities
Valuation of warrants associated with
financing 1,826,160 40,000 2,388,351
Valuation of stock option issuance 639,731 286,750 926,481
Shares issued to settle contractual obligation 416,000 - 416,000
Depreciation expense 4,214 - 4,214
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses (46,330) 8,648 (56,624)
(Increase) decrease in deposit (10,906) 850 (10,906)
Increase in other assets (34,335) - (34,335)
Increase in accounts payable 35,399 54,941 96,323
Increase (decrease) in accrued expenses (295,771) 287,810 71,625
Decrease in related party payable (150,000) - (150,000)
Net cash used in operating activities (3,305,094) (785,254) (4,375,860)
Cash flows from investing activities
Cash used for furniture and equipment (34,732) - (34,732)
Cash paid for mining interests (31,608) (72,511) (129,119)
Net cash used in investing activities (66,340) (72,511) (163,851)
Cash flows from financing activities
Proceeds from related party note - 150,000 150,000
Proceeds from issuance of common stock 5,252,388 - 6,287,388
Issue costs (202,763) - (202,763)
Net cash provided by financing activities 5,049,625 150,000 6,234,625
Increase (decrease) in cash and cash equivalents 1,678,191 (707,765) 1,694,914
Cash and cash equivalents, beginning of period 16,723 724,488 -
Cash and cash equivalents, end of period $ 1,694,914 $ 16,723 $ 1,694,914
The accompanying notes are an integral part of these financial statements.
F-7
Liberty Silver Corp.
(An Exploration Stage Company)
Statements of Cash Flows (continued)
Year ended Year ended June Accumulated from February 20, 2007
June 30, 30, (inception) through June 30,
2012 2011 2012
Supplemental Disclosures:
Cash paid for:
Interest $ 169 $ 189 $ 403
Income tax $ -$ -$ -
Non-cash financing activities:
Common stock issued to settle related party $
note $ 150,000 $ - 150,000
The accompanying notes are an integral part of these financial statements.
F-8
Liberty Silver Corp
Notes to the Financial Statement
June 30, 2012 and 2011
Note 1 – Nature and Continuance of Operations
The Company was incorporated in the State of Nevada on February 20, 2007. The Company is considered an
exploration stage company since its formation, and the Company has not yet realized any revenues from its planned
operations. The Company is primarily focused on the exploration, acquisition and development of mining and
mineral properties. Upon the location of commercially minable reserves, the Company plans to prepare for mineral
extraction and enter the development stage.
On May 24, 2007, the Company had acquired a mineral property located in Elko County, within the state of Nevada.
The Company was not able to determine whether this property contained reserves that were economically
recoverable. The Company has ceased their attempts at developing this property.
On February 11, 2010, the Company amended its articles of incorporation. The articles of incorporation were
amended for the purposes of (1) changing the name of the registrant to Liberty Silver Corp, and (2) increasing the
authorized shares of the Company from 75,000,000 shares of $0.001 par value common stock to 200,000,000 shares
of $0.001 par value common stock.
On March 29, 2010, the Company entered into an Exploration Earn-In Agreement (the “Agreement”) with AuEx
Ventures, Inc., a Nevada corporation.
The Agreement relates to the Trinity Silver property (the “Property”) located in Pershing County, Nevada, which
consists of a total of approximately 10,600 acres, including 5,700 acres of fee land and 240 unpatented mining
claims.
The Company is reviewing other potential acquisitions in the mineralized material and non-mineralized material
sectors. While the Company is in the process of completing due diligence reviews of several opportunities, there is
no guarantee that we will be able to reach any agreement to acquire such assets.
Note 2 - Significant Accounting Policies
The following is a summary of significant account policies used in the preparation of these financial statements.
a. Basis of presentation
The financial statements of the Company have been prepared in accordance with accounting principles generally
accepted in the United States of America applicable to exploration stage enterprises. The financial statements are
expressed in U.S. dollars, the functional currency. The Company’s fiscal year end is June 30.
b. Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original maturities of three months or less.
c. Mineral rights, property and acquisition costs
The Company has been in the exploration stage since its formation on February 20, 2007 and has not yet realized
any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining
properties.
The Company capitalizes acquisition and option costs of mineral rights as tangible assets. Upon commencement of
commercial production, the mineral rights will be amortized using the unit-of-production method over the life of the
mineral rights. If the Company does not continue with exploration after the completion of the feasibility study, the
mineral rights will be expensed at that time.
F-9
The costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred to
develop and expand the capacity of mines, or to develop mine areas in advance of production are also capitalized
once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to
maintain current exploration or to maintain assets on a standby basis are charged to operations. Costs of abandoned
projects are charged to operations upon abandonment. The Company evaluates the carrying value of capitalized
mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable
amount whenever events or changes in circumstances indicate that their carrying amounts may not be
recoverable. Evaluation of the carrying value of capitalized costs and any related property and equipment costs are
based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards
Codification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets .
d. Property and equipment
Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided principally on the
straight-line method over the estimated useful lives of the assets, which are generally 3 to 39 years. The cost of
repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are
capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed
from the accounts and any gain or loss is reflected in other income (expense).
The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of
the estimated useful lives of property and equipment or whether the remaining balance of property and equipment
should be evaluated for possible impairment. If events and circumstances warrant evaluation, the Company uses an
estimate of the related undiscounted cash flows over the remaining life of the property and equipment in measuring
their recoverability. The Company currently owns furniture and office equipment as its depreciable assets.
e. Impairment of long-lived assets
The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances
indicate the related carrying amounts may not be recoverable. The assets are subject to impairment consideration
under ASC 360-10-35-17, Measurement of an Impairment Loss , if events or circumstances indicate that their
carrying amount might not be recoverable. As of June 30, 2012, exploration progress is on schedule with the
Company’s exploration and evaluation plan and no events or circumstances have happened to indicate that the
related carrying values of the properties may not be recoverable. When the Company determines that an impairment
analysis should be done, the analysis will be performed using the rules of FASB ASC 930-360-35, Asset Impairment
, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets .
Various factors could impact the Company’s ability to achieve forecasted production schedules. Additionally,
commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the
Company may use in cash flow models used to assess impairment. The ability to achieve the estimated quantities of
recoverable minerals from exploration stage mineral interests involves further risks in addition to those factors
applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of
confidence that the identified mineralized material can ultimately be mined economically.
Material changes to any of these factors or assumptions discussed above could result in future impairment charges to
operations.
f. Fair Value of Financial instruments
The Company adopted FASB ASC 820-10-50, “ Fair Value Measurements. This guidance defines fair value,
establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure
requirements for fair value measures. The three levels are defined as follows:
· Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical
assets or liabilities in active markets.
F-10
· Level 2 inputs to the valuation methodology include quoted prices for similar assets and
liabilities in active markets, and inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the financial instrument.
· Level 3 inputs to valuation methodology are unobservable and significant to the fair
measurement.
The carrying amounts reported in the balance sheet for the cash and cash equivalents, and current liabilities each
qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time
between the origination of such instruments and their expected realization and their current market rate of interest.
g. Environmental expenditures
The operations of the Company have been, and may in the future, be affected from time to time, in varying degrees,
by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the
likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The
Company’s policy is to meet or, if possible, surpass standards set by relevant legislation, by application of
technically proven and economically feasible measures.
Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against
earnings as incurred or capitalized and amortized depending on their future economic benefits. Estimated future
reclamation and site restoration costs, when the ultimate liability is reasonably determinable, are charged against
earnings over the estimated remaining life of the related business operation, net of expected recoveries. No costs
have been, or may never be recognized by the Company for environmental expenditures.
h. Income taxes
The Financial Accounting Standards Board (FASB) has issued FASB ASC 740-10 (Prior authoritative literature:
Financial Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB
Statement No. 109 (FIN 48)). FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements in accordance with prior literature FASB Statement No. 109,
Accounting for Income Taxes. This standard requires a company to determine whether it is more likely than not
that a tax position will be sustained upon examination based upon the technical merits of the position. If the
more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to
recognize in the financial statements. As a result of the implementation of this standard, the Company performed a
review of its material tax positions in accordance with recognition and measurement standards established by FASB
ASC 740-10.
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the differences between the reported amounts of assets
and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date
of enactment.
i. Basic and diluted net loss per share
The Company computes net loss per share of common stock in accordance with ASC 260, Earnings per Share
(“ASC 260”). Under the provisions of ASC 260, basic net income (loss) per share is computed using the weighted
average number of common shares outstanding during the period. Diluted net loss per share is computed using the
weighted average number of common shares and, if dilutive, potential common shares outstanding during the
period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock
options and warrants and the conversion of convertible promissory notes. Stock options of 6,950,000 as of June 30,
2012 and warrants in the amount of 10,027,500 as of June 30, 2012 were considered in the calculation but not
F-11
included due to anti-dilution. The dilutive effect of these instruments is reflected in diluted earnings per share by
application of the treasury stock method.
The Company’s calculation of basic and diluted loss per share is as follows:
For the Years Ended
June 30, 2012 June 30, 2011
Basic Earnings per share:
Income (Loss) (numerator) $ (5,689,256) $ (1,464,253)
Shares (denominator) 75,705,683 69,733,334
Per Share Amount $ (0.08) $ (0.02)
For the Years Ended
June 30, 2012 June 30, 2011
Fully Diluted Earnings per share:
Income (Loss) (numerator) $ (5,689,256) $ (1,464,253)
Shares (denominator) 75,705,683 69,733,334
Per Share Amount $ (0.08) $ (0.02)
j. Stock-Based compensation
In December 2004, FASB issued FASB ASC 718 (Prior authoritative literature: SFAS No. 123R, “Share-Based
Payment”) . FASB ASC 718 establishes standards for the accounting for transactions in which an entity exchanges
its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in
exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be
settled by the issuance of those equity instruments. FASB ASC 718 focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment transactions. FASB ASC 718
requires that the compensation cost relating to share-based payment transactions be recognized in the financial
statements. That cost will be measured based on the fair value of the equity or liability instruments issued.
k. Use of estimates and assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. In these financial statements, assets, liabilities and earnings involve extensive reliance on
management’s estimates. Actual results could differ from those estimates. The Company’s periodic filing with the
Securities and Exchange Commission (“SEC”) include, where applicable, disclosures of estimates, assumptions,
uncertainties, and market that could affect the financial statements and future operations of the Company.
l. Concentrations of credit risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash
and related party payables. The Company places its cash and cash equivalents with financial institutions of high
credit worthiness. At times, its cash equivalents with a particular financial institution may exceed any applicable
government insurance limits. The Company’s management also routinely assesses the financial strength and credit
worthiness of any parties to which it extends funds and as such, it believes that any associated credit risk exposures
are limited.
F-12
m. Risks and uncertainties
The Company operates in the mineralized material exploration industry that is subject to significant risks and
uncertainties, including financial, operational, and other risks associated with operating a mineralized material
exploration business, including the potential risk of business failure.
n. Foreign currency transactions
The Company from time to time will receive invoices from service providers that are presenting their invoices using
the Canadian dollar. The Company will use its US dollars to settle the Canadian dollar liabilities and any
differences resulting from the exchange transaction are reported as gain or loss on foreign exchange. The gain or
loss reported by the Company in the financial statements represents transaction gain or loss.
Note 3 – New Technical Pronouncements
The Company has reviewed accounting pronouncements issued during the past two years and has assessed the
adoption of any that are applicable to the Company. Management has determined that none had a material impact
on the financial position, results of operations, or cash flows for the fiscal years ended June 30, 2012 and 2011.
Note 4 - Mineral Property
Pursuant to a mineral property purchase agreement dated May 24, 2007, the Company acquired a 100% undivided
right, title and interest in a mineral claim, located in Section 8 of T35N, R36E Mount Diablo Base Meridian in Elko
County, within the state of Nevada for a cash payment of $10,000. The Company must annually renew the lease on
the land with the state for $1,800 and has not renewed the lease as of fiscal year end, June 30, 2010. The lease has
expired.
Since the Company had not established the commercial feasibility of the mineral claim, the acquisition costs had
been capitalized. The Company has not depleted the mineral claims as no proven reserves have been found. The
Company was not able to keep the mineral claim in good standing due to lack of funding. The Company allowed the
mineral claim to lapse at the end of June 2009. At June 30, 2009, the Company determined that there was little, or
no, possibility of the company generating revenues related to the mining interests. This, coupled with the lapse of
the mineral claims lease, was determined to be an impairment of the asset. As such, the Company’s management
determined to fully impair the mining interests, which was a charged to the Company’s statements of operations in
the amount of $11,800.
On March 29, 2010, the Company entered into an Exploration Earn-In Agreement (the “Agreement”) with AuEx
Ventures, Inc., a Nevada corporation. The Agreement relates to the Trinity Silver property (the “Property”) located
in Pershing County, Nevada, which consists of a total of approximately 10,600 acres, including 5,700 acres of fee
land and 240 unpatented mining claims.
Under the Agreement, the Company may earn-in a 70% undivided interest in the Property during a 6-year period in
consideration of (1) a signing payment of $25,000, which has been made and has been capitalized, (2) an
expenditure of a cumulative total of $5,000,000 in exploration and development expenses on the Property by March
29, 2016, and (3) completion of a bankable feasibility study on the Property on or before the 7 th anniversary date of
the Agreement.
The Company has completed, and continues to pursue, financing opportunities to be in compliance with terms of the
Earn-In Agreement. There has been no mining of mineralized materials to date.
Subsequent to the fiscal year ended June 30, 2012, as discussed in Note 10 herein, on August 8, 2012, the Company
entered into a conditional letter agreement with Primus Resources, L.C. to acquire approximately 100 acres located
adjacent to the former Trinity Silver mine on the Company’s Trinity property in Nevada.
Note 5 - Capital Stock and Warrants
F-13
Authorized
The total authorized capital is 200,000,000 common shares with a par value of $0.001 per common share.
Issued and outstanding
In April 2007 the Company issued 4,000,000 and 1,000,000 shares of our common stock for cash at $0.001 and
$0.01 per share, respectively.
In May 2007 the Company issued 420,000 shares of our common stock for cash at $0.05 per share.
In February 2010, the board of directors authorized a 20-for-1 forward stock split of the Company’s currently issued
and outstanding common stock. Prior to approval of the forward split the Company had a total of 5,420,000 issued
and outstanding shares of $0.001 par value common stock. On the effective date of the forward split, the Company
has a total of 108,400,000 issued and outstanding shares of $0.001 par value common stock. The stock split has been
retroactively applied to all prior equity transactions.
In May 2010, the Company issued 1,333,334 units (“Units”) for cash at US $0.75 per Unit. Each Unit consisted of
one share of common stock and one warrant to purchase an additional share of common stock at a price of $1.25 per
share at any time during the 24 months following the date of closing of the private placement offering.
In May 2010, a director of the Company surrendered 40,000,000 of his common stock to the company.
On July 27, 2011, the Company issued 200,000 units (“Units”) for cash at CDN $0.55 (US $0.58) per Unit. Each
Unit consisted of one common share and one half of one common share purchase warrant (each whole such warrant,
a “Warrant”). Each Warrant entitles the holder thereof to acquire one common share of the Company (a “Warrant
Share”) at a price of CDN$0.75 until the date which is 60 months following the closing date of the private placement
offering (the “Warrant Term”), provided, however, that the Company may accelerate the Warrant Term under
certain conditions.
On August 4, 2011, the Company issued 1,000,000 units (“Units”) for cash at CDN $0.55 (US $0.57) per Unit. Each
Unit consisted of one common share and one half of one common share purchase warrant (each whole such warrant,
a “Warrant”). Each Warrant entitles the holder thereof to acquire one common share of the Company (a “Warrant
Share”) at a price of CDN$0.75 until the date which is 60 months following the closing date of the private placement
offering (the “Warrant Term”), provided, however, that the Company may accelerate the Warrant Term under
certain conditions.
On November 10, 2011, Liberty Silver issued 6,500,000 subscription receipts to an investor (the “Subscription
Receipts”) pursuant to a private placement at a price of US$ 0.50 per Subscription Receipt for gross proceeds of US
$3,250,000; there were no underwriting discounts or commissions paid. On December 19, 2011, each Subscription
Receipt was automatically converted for no additional consideration, into one unit of the Company (a “Unit”) as a
result of the Company’s receipt of notice that its common stock was accepted for trading on the Toronto Stock
Exchange under the trading symbol, “LSL”, effective as of December 22, 2011. Each Unit is comprised of one
common share and one common share purchase one warrant (“Warrant”). Each Warrant is exercisable at a price of
US $0.65 per share at any time until 5:00 p.m. (Toronto time) on December 31, 2013. In conjunction with the
issuance of Subscription Receipts, the Company entered into a Registration Rights Agreement (the “Registration
Rights Agreement”) with the investor, pursuant to which the Company agreed, following the conditional approval
by the Toronto Stock Exchange, to file a registration statement on Form S-1 with the Securities and Exchange
Commission which registers the common stock and common stock underlying the Warrants acquired by the investor
for resale. If the registration statement did not become effective on or before six months from the date of
conditional approval by the Toronto Stock Exchange for the listing of the common stock of the Company, the
investor would receive an additional common share for each ten (10) common shares. On May 31, 2012, the
Company issued 650,000 common shares in satisfaction of this contractual obligation, the value for which of
$416,000 was determined by the closing market price of $0.64 per share on the date of issuance.
F-14
On December 19, 2011, Liberty Silver completed a private placement offering, pursuant to which the Company
raised a total of US $1,313,750 through the sale of 2,627,500 units (“Units”) at a purchase price of US $0.50 per
Unit; there were no underwriting discounts or commissions paid. Each Unit consists of one common share and one
common share purchase warrant (a “Warrant”). Each Warrant entitles the holder to acquire one common share at a
price of US $0.65 for a period of two years following the date of the closing of the financing. The Units were not
registered under the Securities Act of 1933 (the “Securities Act”) in reliance upon the exemptions from registration
contained in Section 4(2) and Regulation D thereunder, and Regulation S of the Securities Act.
As of June 30, 2012, the Company had 80,710,834 shares of the common stock issued and outstanding.
Stock warrants
In May 2010, the Company commenced a private stock offering, whereby it authorized the issuance of 1,333,334
units consisting of one share of its common stock and one common stock purchase warrant for a total raise of
$1,000,000. The common stock purchase warrants are exercisable at $1.25 per share and carrying a two-year
exercise period. The offering was closed as of May 26, 2010. All 1,333,334 units were issued and $1,000,000 in
cash was received.
The amount of warrant expense related to this offering for the year ending June 30, 2010 was $522,191. The expense
was calculated using the Black-Scholes pricing model.
In April 2011, the Company borrowed $150,000 from related parties. In conjunction with each $25,000 note, the
Company issued a warrant to purchase 50,000 share of the Company’s common stock at $0.55 per share for a
three-year term, commencement on the date of the note. The total number of warrants for purchase is 300,000
shares.
The amount of warrant expense related to this related party payable for the year ending June 30, 2012 was $370,075
and was 40,000 for the year ending June 30, 2011. The expense was calculated using the Black-Scholes pricing
model.
On July 27, 2011, the Company issued 200,000 units (“Units”) for cash at CDN $0.55 (US $0.58) per Unit. Each
Unit consisted of one common share and one half of one common share purchase warrant (each whole such warrant,
a “Warrant”). Each Warrant entitles the holder thereof to acquire one common share of the Company (a “Warrant
Share”) at a price of CDN$0.75 until the date which is 60 months following the closing date of the private placement
offering (the “Warrant Term”), provided, however, that the Company may accelerate the Warrant Term under
certain conditions.
On August 4, 2011, the Company issued 1,000,000 units (“Units”) for cash at CDN $0.55 (US $0.57) per Unit. Each
Unit consisted of one common share and one half of one common share purchase warrant (each whole such warrant,
a “Warrant”). Each Warrant entitles the holder thereof to acquire one common share of the Company (a “Warrant
Share”) at a price of CDN$0.75 until the date which is 60 months following the closing date of the private placement
offering (the “Warrant Term”), provided, however, that the Company may accelerate the Warrant Term under
certain conditions.
On November 10, 2011, Liberty Silver issued 6,500,000 subscription receipts to an investor (the “Subscription
Receipts”) pursuant to a private placement at a price of US$ 0.50 per Subscription Receipt for gross proceeds of US
$3,250,000; there were no underwriting discounts or commissions paid. On December 19, 2011, each Subscription
Receipt was automatically converted for no additional consideration, into one unit of the Company (a “Unit”) as a
result of the Company’s receipt of notice that its common stock was accepted for trading on the Toronto Stock
Exchange under the trading symbol, “LSL”, effective as of December 22, 2011. Each Unit is comprised of one
common share and one common share purchase one warrant (“Warrant”). Each Warrant is exercisable at a price of
US $0.65 per share at any time until 5:00 p.m. (Toronto time) on December 31, 2013. In conjunction with the
issuance of Subscription Receipts, the Company entered into a Registration Rights Agreement (the “Registration
Rights Agreement”) with the investor, pursuant to which the Company has agreed, following the conditional
approval by the Toronto Stock Exchange, to file a registration statement on Form S-1 with the Securities and
Exchange Commission which registers the common stock and common stock underlying the Warrants acquired by
the Investor for resale. If the registration statement does not become effective on or before six months from the date
F-15
of conditional approval by the Toronto Stock Exchange for the listing of the common stock of the Company,
Investor shall receive an additional common share and Warrant for, respectively, each ten (10) common shares.
On December 19, 2011, Liberty Silver completed a private placement offering, pursuant to which the Company
raised a total of US $1,313,750 through the sale of 2,627,500 units (“Units”) at a purchase price of US $0.50 per
Unit; there were no underwriting discounts or commissions paid. Each Unit consists of one common share and one
common share purchase warrant (a “Warrant”). Each Warrant entitles the holder to acquire one common share at a
price of US $0.65 for a period of two years following the date of the closing of the financing. The Units were not
registered under the Securities Act of 1933 (the “Securities Act”) in reliance upon the exemptions from registration
contained in Section 4(2) and Regulation D thereunder, and Regulation S of the Securities Act.
The amount of warrant expense related to these investments for the year ending June 30, 2012 was $1,826,160. The
expense was calculated using the Black-Scholes pricing model.
The fair value of warrants was established at the date of grant using the Black-Scholes valuation model with the
following underlying assumptions:
1)
Risk free interest rate:
2012:
0.24% - 1.51%
2011:
1.31%
2)
Dividend yield:
2012 & 2011:
0%
3)
Volatility:
2012:
102.90% - 113.77%
2011:
200%
4)
Weighted average remaining life:
2012:
1.63 years
2011:
2.75 years
The following table summarizes information about warrants as of June 30, 2012:
Weighted Average Exercise
Number of Shares Price
Outstanding, July 1, 2009 - $ -
Warrants granted 1,333,334 1.25
Warrants expired - -
Outstanding, June 30, 2010 1,333,334 $ 1.25
Exercisable, June 30, 2010 1,333,334 $ 1.25
Weighted Average Exercise
Number of Shares Price
Outstanding, July 1, 2010 1,333,334 1.25
Warrants granted 300,000 0.55
Warrants exercised - -
Outstanding, June 30, 2011 1,633,334 $ 1.12
F-16
Exercisable, June 30, 2011 1,633,334 $ 1.12
Outstanding, July 1, 2011 1,633,334 1.12
Warrants granted 9,727,500 0.66
Warrants exercised - -
Warrants expired 1,333,334 1.25
Outstanding, June 30, 2012 10,027,500 $ 0.65
Exercisable, June 30, 2012 10,027,500 $ 0.65
The following table summarizes information about stock warrants granted to employees, advisors, investors and
board members at June 30, 2012:
Warrants Outstanding Warrants Exercisable
Weighted
Average
Weighted Remaining
Range of Average Contractual Weighted
Exercise Number Exercise Life (in Number of Average
Prices Outstanding Price years) Warrants Exercise Price
$ 0.55 300,000 $ 0.55 1.75 300,000 $ 0.55
$ 0.75 (1) 600,000 $ 0.75 (1) 4.08 600,000 $ 0.75(1)
$ 0.65 9,127,500 $ 0.65 1.47 9,127,500 $ 0.65
(1)
Figure expressed in $CDN
As of June 30, 2012, the aggregate weighted-average intrinsic value of the warrants outstanding and exercisable was
$1,604,400. The weighted-average grant-date fair value of warrants outstanding as of June 30, 2012 was $0.65.
Stock options
In October 2010, the Company granted to Geoff Browne, Chief Executive Officer, 3,000,000 stock options of the
Company’s common stock to be purchased at $0.75 per share for a 5 year term, all of which are vested. In addition,
the Company granted the directors, Paul Haggis, Timothy Unwin, John Barrington, and George Kent, each 300,000
stock options, for a total of 1,200,000, to purchase the Company’s common stock at $0.75 per share for a 5 year
term, all of which are vested.
In December 2010, the Company granted director W. Thomas Hodgson 300,000 stock options to purchase the
Company’s common stock at $0.75 per share for a 5 year term, all of which are vested.
In April 2011, the Company granted consultant Kevin O’Connor 100,000 stock options to purchase the Company’s
common stock at $0.75 per share for a 5 year term, all of which are vested.
In April 2011, the Company granted director and employee John Barrington 500,000 stock options to purchase the
Company’s common stock at $0.75 per share for a 5 year term, all of which have vested.
In April 2011, the Company granted director and officer William Tafuri 800,000 stock options to purchase the
Company’s common stock at $0.75 per share for a 5 year term. Pursuant to the terms of the option agreement,
entered into between Mr. Tafuri and the Company, a total of 266,664 options vested immediately upon the grant of
the options; the remaining 533,336 options vest over a two year period. The vesting of the remaining 533,336
F-17
options may be accelerated in the event the Company achieves certain milestones with respect to its mining
operations.
In April 2011, the Company granted employee H. Rickard Klatt 600,000 stock options to purchase the Company’s
common stock at $0.75 per share for a 5 year term. Pursuant to the terms of the option agreement, entered into
between Mr. Klatt and the Company, a total of 200,000 options vested immediately upon the grant of the options;
the remaining 400,000 options vest over a two year period. The vesting of the remaining 400,000 options may be
accelerated in the event the Company achieves certain milestones with respect to its mining operations.
In January 2012, the Company granted non-qualified stock options of 450,000 shares at an exercise price of $1.00
per share for a 5 year term to Manish Z. Kshatriya, Chief financial Officer and Executive Vice President. Pursuant to
the terms of the option agreement, entered into between Mr. Kshatriya and the Company, a total of 150,000 options
vest six months from the grant date, 150,000 options will vest 18 months following the grant date, and the remaining
150,000 options vest 30 months following the grant date of the options.
The amount of stock option compensation expense for the year ending June 30, 2011 was $639,731. The expense
was calculated using the Black-Scholes pricing model.
The fair value of stock options was established at the date of grant using the Black-Scholes valuation model with the
following underlying assumptions:
1)
Risk free interest rate:
2012:
0.79% - 2.09%
2011:
1.14% - 2.09%
2)
Dividend yield:
2012 & 2011:
0%
3)
Volatility:
2012:
95.11% - 164.27%
2011:
127.32% - 164.27%
4)
Weighted average remaining life:
2012:
3.59 years
2011:
4.52 years
The following table summarizes information about options as of June 30, 2012:
Weighted Average
Number of Shares Exercise Price
Outstanding, July 1, 2010 - $ -
Options granted 6,500,000 .75
Options expired - -
Options cancelled - -
Outstanding, June 30, 2011 6,500,000 $ -
Exercisable, June 30, 2011 6,500,000 $ -
Outstanding, July 1, 2011 6,500,000 $ .75
Options granted 450,000 1.00
Options expired - -
F-18
Options cancelled - -
Outstanding, June 30, 2012 6,950,000 $ 0.88
Exercisable, June 30, 2012 6,500,000 $ 0.75
The following table summarizes information about stock warrants granted to employees, advisors, investors and
board members at June 30, 2012:
Stock Options Outstanding Stock Options Exercisable
Weighted Weighted Average
Range of Average Remaining Weighted
Exercise Number Exercise Contractual Number of Average
Prices Outstanding Price Life (in years) Options Exercise Price
$ 0.75 6,500,000 $ 0.75 3.52 6,500,000 $ 0.75
$ 1.00 450,000 $ 1.00 4.55 450,000 $ 1.00
As of June 30, 2012, the aggregate intrinsic value of the stock options outstanding and exercisable was $0. The
weighted-average grant-date fair value of stock options granted for the year ended June 30, 2012 was $0.88.
Note 6 – Related Party Payable
Effective April 1, 2011, the Company borrowed a total of $150,000 pursuant to the terms and conditions of
promissory notes (individually referred to as a "Note" and collectively referred to as the "Notes") entered into with
six of the Company's directors. Each Note was for $25,000 and was required to be repaid by the Company on the
earlier of one year, or when the Company raised a minimum of $2,000,000 through equity investments. The Notes
were interest free for the first six months following the date of the Note and then bore interest at a rate of 8% per
annum thereafter. In conjunction with the entry into the Notes, in lieu of the holders charging the Company interest
on the outstanding principal of the Notes for the initial six months, the Company issued each holder a warrant
entitling the holder to purchase up to a total of 50,000 shares of the Company's common stock at a price of $0.55 per
share for a period of three (3) years following the date of the Note. The Notes were repaid during the year at the time
of the Company's equity financing during the year.
Note 7 – Commitments and Contingencies
Effective November 1, 2011, the Company entered into a sub-lease agreement for the lease of premises in Toronto,
Ontario, Canada, for a term of 54 months. The Company has its head office at these premises, which is
approximately 1,400 square feet. The annual base rent commitment for the Toronto head office space is CAD
$48,094.
Effective February 8, 2012, the Company entered into a lease agreement for the lease of premises in Sparks, Nevada,
USA, for a term of 12 months. The Company has its field office at these premises, which is approximately 5,500
square feet. The annual base rent commitment for the Sparks field office space is USD $27,972.
As at June 30, 2012, the Company had a commitment, for the above noted leases, of USD $196,123 remaining.
The following table outlines the remaining lease commitment at the end of the next five fiscal years based on the
leases that are currently entered into by the Company:
F-19
Year Total Lease Commitment
2012 $196,123
2013 $132,900
2014 $85,994
2015 $39,088
2016 and thereafter $0
Additionally, in the normal course of operations, certain contingencies may arise relating to legal actions undertaken
against the Company. In the opinion of management, the outcome of such potential legal actions will not have a
material adverse effect on the Company's results of operations, liquidity, or its financial position.
Note 8 - Income Taxes
The Financial Accounting Standards Board (FASB) has issued FASB ASC 740-10 (Prior authoritative literature:
Financial Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB
Statement No. 109 (FIN 48)). FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements in accordance with prior literature FASB Statement No. 109,
Accounting for Income Taxes. This standard requires a company to determine whether it is more likely than not
that a tax position will be sustained upon examination based upon the technical merits of the position. If the
more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to
recognize in the financial statements. As a result of the implementation of this standard, the Company performed a
review of its material tax positions in accordance with recognition and measurement standards established by FASB
ASC 740-10.
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the differences between the reported amounts of assets
and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date
of enactment.
As of June 30, 2012, the Company had no accrued interest and penalties related to uncertain tax positions. The
income tax provision differs from the amount of income tax determined by applying the U.S. federal and state
income tax rates of 34% to pretax income from continuing operations for the years ended June 30, 2012 and 2011
due to the following:
Deferred tax assets and the valuation account are as follows:
For the Years Ended
June 30,
2012 2011
Deferred tax asset:
Net operating loss carry forward $ 2,729,176 $ 794,829
Valuation allowance (2,729,176) (794,829)
Total $ - $ -
F-20
The components of income tax expense are as follows:
For the Years Ended
June 30,
2012 2011
Current Federal tax $ - $ -
Current State tax - -
Change in NOL benefit 1,934,347 497,846
Change in valuation allowance (1,934,347) (497,846)
Total $ - $ -
The potential income tax benefit of these losses has been offset by a full valuation allowance.
As of June 30, 2012 and 2011, the Company has an unused net operating loss carry-forward balance of $2,729,176
and $794,829 that is available to offset future taxable income. This unused net operating loss carry-forward balance
begins to expire in 2029.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Years Ended June 30,
2012 2011
Beginning balance $ - $ -
Additions based on tax positions related to current year - -
Additions for tax positions of prior years - -
Reductions for tax positions of prior years - -
Reductions in benefit due to income tax expense - -
Ending balance $ - $ -
At June 30, 2012 and 2011, the Company had no unrecognized tax benefits that, if recognized, would affect the
effective tax rate.
The Company did not have any tax positions for which it is reasonably possible that the total amount of
unrecognized tax benefits will significantly increase or decrease within the next 12 months.
As of June 30, 2012 and 2011, the Company had no accrued interest or penalties related to uncertain tax positions.
The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended June 30,
2012, 2011, 2010 and 2009.
F-21
Note 9 – Going Concern
These financial statements have been prepared on a going concern basis. The Company has incurred losses since
inception resulting in an accumulated deficit of $8,026,990 and further losses are anticipated in the development of
its business. This raises substantial doubt about the Company’s ability to continue as a going concern. Its ability to
continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the
future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal
business operations when they come due.
Management has plans to pursue various financing alternatives including, but not limited to, merger and acquisition
activity, raising capital through the capital markets and debt financing. These financial statements do not include any
adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification
of liabilities that might be necessary in the event the Company cannot continue in existence.
The ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining
additional financing to continue operations, explore and develop the mineral properties and the discovery,
development, and sale of reserves.
These factors, among others raise substantial doubt about the Company’s ability to continue as a going concern. The
accompanying financial statements do not include any adjustments that might result from the outcome of this
uncertainty.
Note 10 – Subsequent events
On August 8, 2012, Liberty Silver entered into a conditional letter agreement with Primus Resources, L.C. to
acquire approximately 100 acres located adjacent to the former Trinity Silver mine on the Company’s Trinity
property in Nevada (the “Hi Ho Properties”). The Hi Ho Properties are the only acreage not controlled by Liberty
Silver or its joint venture partner Renaissance Exploration Inc. on the Trinity land package. Under the terms of the
Agreement, Liberty Silver will provide cash consideration of US$150,000 and issue 3,000,000 common shares of
Liberty Silver stock to Primus. In addition, Primus will be granted a 2% net smelter royalty (“NSR”) on future
production from the Hi Ho Properties. The total consideration for the acquisition of the Hi Ho Properties will be
applied to Liberty Silver’s expenditure commitment under its Earn-In Agreement with Renaissance, upon
acceptance by Renaissance, pursuant to the applicable area of interest provisions. With the addition of the Hi Ho
Properties payment, Liberty Silver will have contributed in excess of 85% of its required US$5 million expenditure
commitment to earn its 70% interest in the project. Pursuant to the terms of its Earn-In Agreement with Renaissance,
the Company has until March 29, 2016 to incur the balance of its expenditure commitment and, in addition, produce
a bankable feasibility study in the following year.
As disclosed on Form CB filed with the Securities and Exchange Commission on July 17, 2012, on July 16, 2012
Liberty Silver commenced an offer (the “Offer”) to purchase all of the issued and outstanding common shares of
Sennen Resources Ltd. (“Sennen”). The Offer was open for acceptance by Sennen shareholders until 11:59 P.M. on
Monday September 10, 2012. The Offer was not accepted by the requisite number of Sennen shareholders,
therefore the Offer was terminated on September 11, 2012 at 12:00 A.M.
Liberty Silver Corp has evaluated subsequent events for the period ended June 30, 2012 through the date the
financial statements were issued, and concluded, aside from the foregoing, that there were no other events or
transactions occurring during this period that required recognition or disclosure in its financial statements.
F-22
Liberty Silver Corp.
(An Exploration Stage Company)
Balance Sheets
ASSETS
September 30, June 30,
2012 2012
(unaudited)
Current Assets
Cash and cash equivalents $ 874,564 $ 1,694,914
Deposit 11,221 10,906
Other 63,222 34,335
Prepaid 203,033 56,624
Total current assets 1,152,040 1,796,779
Property and Equipment
Furniture and office equipment 34,732 34,732
Accumulated depreciation (5,951) (4,214)
Mining interests 129,119 129,119
Total property and equipment 157,900 159,637
Total assets $ 1,309,940 $ 1,956,416
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable $ 59,634 $ 96,323
Accrued liabilities 98,080 71,625
Total current liabilities 157,714 167,948
Total liabilities 157,714 167,948
Commitments and contingencies - -
Stockholders’ Equity
Capital stock, $.001 par value,
200,000,000 shares authorized;
80,810,834 and 80,710,834 shares issued and outstanding,
respectively 80,811 80,711
Additional paid-in-capital 10,728,988 9,734,746
Deficit accumulated during the exploration stage (9,657,573) (8,026,989)
Total stockholders’ equity 1,152,226 1,788,468
Total liabilities and stockholders’ equity $ 1,309,940 $ 1,956,416
The accompanying notes are an integral part of these financial statements.
F-23
Liberty Silver Corp.
(An Exploration Stage Company)
Statements of Operations
(Unaudited)
Cumulative During the Exploration Stage
For Three Months Ended February 20, 2007 (inception) to
September 30, September 30,
2012 2011 2012
Revenue $ - $ - $ -
Operating expenses
Financing costs
associated with
valuation of warrants 781,968 77,291 3,170,319
Operation and
administration 579,350 213,854 3,207,463
Exploration 198,401 9,646 1,689,834
Consulting 2,916 199,133 1,101,381
Legal and accounting 77,235 199,648 478,583
Impairment of mining
interests - - 11,800
Total operating
expenses 1,639,870 699,572 9,659,380
Income (loss) from
operations (1,639,870) (699,572) (9,659,380)
Other income or gain
(expense or loss)
Interest income - - 1,220
Interest expense (81) (97) (484)
Gain (loss) foreign
exchange 9,367 (27,559) 1,071
Total other income
or gain (expense or
loss) 9,286 (27,656) 1,807
Loss before income tax (1,630,584) (727,228) (9,657,573)
Provision for income
taxes - - -
Net loss and
comprehensive loss (1,630,584) (727,228) (9, 657,573)
Loss per common
share – basic and fully
diluted $ (0.02) $ (0.01)
Weighted average
common shares 78,278,094 70,933,334
The accompanying notes are an integral part of these financial statements.
F-24
Liberty Silver Corp.
(An Exploration Stage Company)
Statements of Cash Flows
(Unaudited)
Cumulative During the
Exploration Stage
February 20, 2007
For Three Months Ended (inception) to
September 30, September 30,
2012 2011 2012
Cash flows from operating activities
Net loss and comprehensive loss $ (1,630,584) $ (727,228) $ (9,657,573)
Adjustments to reconcile net (loss)
to net cash used in operating activities
Valuation of warrants associated with financing 781,968 77,291 3,170,319
Valuation of stock option issuance 139,682 200,051 1,066,164
Shares issued in to settle contractual obligation - - 416,000
Depreciation expense 1,737 - 5,951
Changes in operating assets and liabilities:
(Increase) in prepaid expenses (146,409) (34,151) (203,033)
(Increase) in deposit (315) - (11,221)
(Increase) in other assets (28,887) - (63,222)
Increase (decrease) in accounts payable (36,689) (6,192) 59,634
Increase (decrease) in accrued expenses 26,455 (1,137) 98,080
Decrease in related party note - - (150,000)
Net cash used in operating activities (893,042) (491,366) (5,268,901)
Cash flows from investing activities
Cash used for furniture and equipment - - (34,732)
Cash paid for mining interests - (29,765) (129,119)
Net cash used in investing activities - (29,765) (163,851)
Cash flows from financing activities
Proceeds from related party note - - 150,000
Proceeds from issuance of common stock 75,000 688,639 6,362,387
Issue costs (2,308) - (205,071)
Net cash provided by financing activities 72,692 688,639 6,157,316
Increase (decrease) in cash and cash equivalents (820,350) 167,508 874,564
Cash and cash equivalents, beginning of period 1,694,914 16,723 -
Cash and cash equivalents, end of period $ 874,564 $ 184,231 $ 874,564
The accompanying notes are an integral part of these financial statements.
F-25
Liberty Silver Corp.
(An Exploration Stage Company)
Statements of Cash Flows (continued)
(Unaudited)
Cumulative from February 20, 2007
For Three Months ended (inception) through
September 30, September 30,
2012 2011 2012
Supplement Disclosures:
Cash paid for:
Interest $ 81 $ 97 $ 484
Income tax $ - $ - $ -
Non-cash financing activities:
Common stock issued to settle related party
note $ - $ - $ 150,000
The accompanying notes are an integral part of these financial statements.
F-26
Liberty Silver Corp.
An Exploration Stage Company
Notes to Interim Unaudited Financial Statements
For the Three Months Ended September 30, 2012
Note 1 – Basis of Presentation
The accompanying interim unaudited financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules and regulations of the United States
Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the
information and footnotes necessary for a comprehensive presentation of financial position, results of operations,
stockholders’ deficit or cash flows. It is management's opinion, however, that all material adjustments (consisting of
normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The
interim unaudited financial statements should be read in conjunction with the Company’s Annual Report on Form
10-K, which contains the annual audited financial statements and notes thereto, together with the Management’s
Discussion and Analysis, for the year ended June 30, 2012. The interim results for the period ended September 30,
2012 are not necessarily indicative of the results for the full fiscal year. The interim unaudited financial statements
are presented in USD, which is the functional currency.
Note 2 – Nature of Operations
The Company was incorporated in the State of Nevada on February 20, 2007. The Company is considered an
exploration stage company since its formation, and the Company has not yet realized any revenues from its planned
operations. The Company is primarily focused on the exploration, acquisition and development of mining and
mineral properties. Upon the location of commercially minable reserves, the Company may plan to prepare for
mineral extraction and enter the development stage.
On May 24, 2007, the Company had acquired a mineral property located in Elko County, within the state of Nevada.
The Company was not able to determine whether this property contained reserves that were economically
recoverable. The Company has since discontinued exploration activities on this mineral property.
On February 11, 2010, the Company amended its articles of incorporation. The articles of incorporation were
amended for the purposes of (1) changing the name of the registrant to Liberty Silver Corp., and (2) increasing the
authorized shares of the Company from 75,000,000 shares of $0.001 par value common stock to 200,000,000 shares
of $0.001 par value common stock.
On March 29, 2010, the Company entered into an Exploration Earn-In Agreement (the “Agreement”) with AuEx
Ventures, Inc., a Nevada corporation.
The Agreement relates to the Trinity Silver property (the “Property”) located in Pershing County, Nevada, which
consists of a total of approximately 10,600 acres, including 5,700 acres of fee land and 240 unpatented mining
claims.
The Company is reviewing other potential acquisitions in the mineralized material and non-mineralized material
sectors. While the Company is in the process of completing due diligence reviews of several opportunities, there is
no guarantee that it will be able to reach any agreement to acquire such assets.
Note 3 - Mineral Property
Pursuant to a mineral property purchase agreement dated May 24, 2007, the Company acquired a 100% undivided
right, title and interest in a mineral claim, located in Section 8 of T35N, R36E Mount Diablo Base Meridian in Elko
County, within the state of Nevada for a cash payment of $10,000. The Company was required to annually renew
the lease on the land with the state for $1,800 and has not renewed the lease as of fiscal year end, June 30, 2010. The
lease has expired.
F-27
Since the Company had not established the commercial feasibility of the mineral claim, the acquisition costs had
been capitalized. The Company has not depleted the mineral claims as no proven reserves have been found. The
Company was not able to keep the mineral claim in good standing due to lack of funding. The Company allowed the
mineral claim to lapse at the end of June 2009. At June 30, 2009, the Company determined that there was little, or
no, possibility of the company generating revenues related to the mining interests. This, coupled with the lapse of
the mineral claims lease, was determined to be an impairment of the asset. As such, the Company’s management
determined to fully impair the mining interests, which was charged to the Company’s statements of operations in the
amount of $11,800.
On March 29, 2010, the Company entered into an Exploration Earn-In Agreement (the “Agreement”) with AuEx
Ventures, Inc., a Nevada corporation. The Agreement relates to the Trinity Silver property (the “Property”) located
in Pershing County, Nevada, which consists of a total of approximately 10,600 acres, including 5,700 acres of fee
land and 240 unpatented mining claims.
Under the Agreement, the Company may earn-in a 70% undivided interest in the Property during a 6-year period in
consideration of: (1) a signing payment of $25,000, which has been made and has been capitalized; (2) an
expenditure of a cumulative total of $5,000,000 in exploration and development expenses on the Property by March
29, 2016; and, (3) completion of a bankable feasibility study on the Property on or before the 7 th anniversary date of
the Agreement.
On August 8, 2012, Liberty Silver entered into a conditional letter agreement with Primus Resources, L.C. to
acquire approximately 100 acres located adjacent to the former Trinity Silver mine on the Company’s Trinity
property in Nevada (the “Hi Ho Properties”). The Hi Ho Properties are the only acreage not controlled by Liberty
Silver or its joint venture partner Renaissance Exploration Inc. on the Trinity land package. The Company
completed the transaction on October 15, 2012, as further described in Note 6 – Subsequent Events.
The Company has completed some financing transactions, and continues to pursue additional financing
opportunities in order to obtain the capital needed to fulfill its financial obligations under the terms of the Earn-In
Agreement. There has been no mining of mineralized materials to date.
Note 4 – Capital Stock and Warrants
Authorized
The total authorized capital is 200,000,000 common shares with a par value of $0.001 per common share.
Issued and outstanding
On September 28, 2012, the Company issued 100,000 common shares upon the exercise of 100,000 whole warrants
at an exercise price of CDN $0.75 per common share, for gross proceeds of CDN $75,000. The warrants were
originally issued pursuant to a private placement offering of 200,000 Units on July 27, 2011. The Units were
comprised of one common share and one half of one common share purchase warrant.
Note 5 – Going Concern
These financial statements have been prepared on a going concern basis. The Company has incurred losses since
inception resulting in an accumulated deficit of $9,657,573 and further losses are anticipated in the development of
its business. Management currently believes that the Company may not have sufficient working capital needed to
meet its current fiscal obligations. This raises substantial doubt about the Company’s ability to continue as a going
concern. Its ability to continue as a going concern is dependent upon the ability of the Company to generate
profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its
liabilities arising from normal business operations when they come due.
In order to continue to meet its fiscal obligations beyond the next nine to twelve months, management has plans to
pursue various financing alternatives including, but not limited to, merger and acquisition activity, raising capital
through the capital markets and debt financing. These financial statements do not include any adjustments relating to
F-28
the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might
be necessary in the event the Company cannot continue in existence.
The ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining
additional financing to continue operations, explore and develop the mineral properties and the discovery,
development, and sale of reserves.
These factors, among others raise substantial doubt about the Company’s ability to continue as a going concern. The
accompanying financial statements do not include any adjustments that might result from the outcome of this
uncertainty.
Note 6 – Subsequent Events
On October 3, 2012, the Company issued 300,000 common shares upon the exercise of 300,000 whole warrants at
an exercise price of CDN $0.75 per common share, for gross proceeds of CDN $225,000. The warrants were
originally issued pursuant to a private placement offering of 1,000,000 Units on August 4, 2011. The Units were
comprised of one common share and one half of one common share purchase warrant. For the above share
issuances, the shares were not registered under the Securities Act of 1933 in reliance upon the exemptions from
registration contained in Regulation S of the Securities Act of 1933. No underwriters were used, nor were any
brokerage commissions paid in connection with the above share issuances.
On October 5, 2012, Liberty Silver was named in an Order of Suspension of Trading (the "Order") from the US
Securities and Exchange Commission (the “SEC”). Pursuant to the Order, trading in the Company's securities was
suspended from October 5, 2012 through October 18, 2012. Furthermore, effective October 11, 2012, the Company
had its stock quotation under the symbol "LBSV" removed from the OTC Bulletin Board (the "OTCBB") as it
became Ineligible for quotation on OTCBB due to quoting inactivity under Securities and Exchange Commission
Rule 15c2-11.
On October 12, 2012, the Ontario Securities Commission issued a cease trade order providing that trading in the
securities of Liberty Silver Corp. (excepting issuances from treasury) shall cease until 11:59 pm EST on October 18,
2012 (the “OSC Order”). The OSC Order was effective for the same time frame as the Order of Suspension of
Trading imposed by the SEC.
On October 15, 2012, the Company completed a transaction to acquire approximately 100 acres of land located
adjacent to the former Trinity Mine on the Company’s Property in Nevada (the “Hi Ho Property”). In closing the
Hi Ho Property transaction, Liberty Silver paid cash consideration of US$250,000 plus transaction expenses, issued
2,583,333 Liberty Silver common shares (the “Liberty Silver Shares”) to Primus Resources, L.C., a Wyoming
limited liability company, and James A. Freeman (collectively “Seller”) at a deemed value of US$1,860,000
(US$0.72 per share), and also granted Seller a 2% net smelter royalty on future production from the Hi Ho Property.
In addition, pursuant to a registration rights agreement entered into between Liberty Silver and Seller, Liberty Silver
will pay Seller additional consideration as follows:
if a registration statement is declared effective by the United States Securities Exchange Commission in
respect of the Liberty Silver Shares by March 1, 2013, Liberty Silver will issue an additional 277,778
Liberty Silver common shares to Primus, thereby increasing the total aggregate number of shares
issued to 2,861,111 shares at a deemed value of US$2,060,000 (US$0.72 per share); or
if a registration statement is not declared effective by the United States Securities Exchange
Commission in respect of the Liberty Silver Shares by March 1, 2013, Liberty Silver will pay Primus
US$200,000. As well, if the five-day weighted average trading price of Liberty Silver’s common
shares on the Toronto Stock Exchange as of March 1, 2013 (the “Market Price”) exceeds US$0.72 per
share, Liberty Silver will issue an additional number of Liberty Silver common shares to Primus equal
to (a) 277,778 less (b) US$200,000 divided by the Market Price.
F-29
The total consideration for the acquisition of the Hi Ho Property will be applied to Liberty Silver’s expenditure
commitment under its Earn-In Agreement with Renaissance pursuant to the applicable area of interest
provisions. With the addition of the Hi Ho Property payment, Liberty Silver will have contributed in excess of 85%
of its required US$5 million expenditure commitment to earn its 70% interest in the project. Pursuant to the terms
of its Earn-In Agreement with Renaissance, the Company has until March 29, 2016 to incur the balance of its
expenditure commitment and, in addition, produce a bankable feasibility study in the following year.
On October 19, 2012, the cease trade orders imposed by the Securities and Exchange Commission and the Ontario
Securities Commission expired. Trading in the Company’s shares on the TSX in Canada resumed on Monday,
October 22, 2012. The Company's stock was not immediately listed, traded or quoted on any of the OTC
Markets. The Company is taking steps to meet requirements necessary to permit its stock to resume trading on the
OTCBB. The Company’s stock may be traded in the US on the “grey market” or through US broker dealers who
have access to the TSX.
The Company has evaluated subsequent events for the interim period ended September 30, 2012 through the date
that the financial statements were issued, and concluded, aside from the foregoing, that there were no other events or
transactions occurring during this period that required recognition or disclosure in its interim financial statements.
F-30
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth estimated expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered. Liberty Silver will pay all expenses in connection with this offering.
SEC registration fee $ 1,255.69
Legal fees and expenses 40,000.00 *
Accounting fees and expenses 5,000.00 *
Miscellaneous expenses 5,000.00 *
Total $ 51,255.69 *
* Estimated
The Company has agreed to bear expenses incurred by the selling stockholders that relate to the registration of the
shares of common stock being offered and sold by the selling stockholders.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to the provisions of the Nevada Revised Statutes, a corporation incorporated under the laws of the
State of Nevada, as we are, may generally indemnify its officers and directors, even in the absence of an agreement
to do so, for expenses actually and reasonably incurred in connection with any action or proceeding:
(i)
if such officer or director (a) acted in good faith and in a manner in which he or she
reasonably believed to be in, or not opposed to, the best interests of the corporation, (b) did not
commit a breach of fiduciary duty of the type specified in Section 78.138 of the NRS, and (c)
with respect to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful; or
(ii)
with respect to an action by or in the right of the corporation, if such director or officer (a)
acted in good faith and in a manner which he or she reasonably believed to be in, or not
opposed to, the best interests of the corporation, and (b) did not commit a breach of fiduciary
duty of the type specified in Section 78.138 of the NRS, except that indemnification may not be
made for any claim, issue or matter as to which a person has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation
or for amounts paid in settlement to the corporation, unless and only to the extent that the court
determines upon application that the person is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper.
Any discretionary indemnification under the foregoing provisions of the Nevada Revised Statutes, must be
authorized upon a determination that such indemnification is proper: (i) by the stockholders, (ii) by a majority of a
quorum of disinterested directors, or (iii) by independent legal counsel in a written opinion authorized by a majority
vote of a quorum of directors consisting of disinterested directors or by independent legal counsel in a written
opinion if a quorum of disinterested directors cannot be obtained.
The Nevada Revised Statutes provide that a corporation incorporated under the laws of the State of Nevada,
as we are, is required to indemnify directors and officers for any expenses, including attorneys’ fees, actually and
reasonably incurred by any director or officer in connection with any actions or proceedings, whether civil, criminal,
administrative, or investigative, brought against such director or officer because of his or her status as a director or
officer, to the extent that the director or officer has been successful on the merits or otherwise in defense of the
action or proceeding.
51
The NRS prohibits indemnification of a director or officer if a final adjudication establishes that the
director’s or officer’s acts or omissions involved intentional misconduct, fraud, or a knowing violation of the law
and were material to the cause of action. Despite the foregoing limitations on indemnification, the NRS may permit
a director or officer to apply to the court for approval of indemnification even if the director or officer is adjudged to
have committed intentional misconduct, fraud, or a knowing violation of the law.
The NRS further provides that a corporation may purchase and maintain insurance for directors and officers
against liabilities incurred while acting in such capacities regardless of whether the corporation has the authority to
indemnify such persons under the NRS.
Our Articles of Incorporation provide for elimination of any liability of our directors and officers to the
fullest extent permitted by Nevada law, and our Bylaws provide for indemnification of our directors and officers to
the fullest extent permitted by Nevada law. In addition, as permitted by Nevada law, we have purchased and
currently maintain insurance for officers and directors against liabilities incurred while acting in such capacities,
including liabilities as to which we are not permitted to provide indemnification.
The above-described provisions relating to the exclusion of liability and indemnification of directors and
officers are sufficiently broad to permit the indemnification of such persons in certain circumstances against
liabilities arising under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors and officers and to persons controlling us pursuant to the foregoing provisions, we
have been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore, unenforceable.
ITEM 15.
SALES OF UNREGISTERED SECURITIES
During the past three years the Company has issued the following securities without registration under the Securities
Act of 1933:
# of Warrants
Name # of Shares Issued ** Dated Price per Share Amount $ Notes
VP Bank Switzerland Ltd. 300,000 300,000 4.28.10 US $0.75 US $225,000 (1)
Black Lion Development Ltd. 200,000 200,000 5.03.10 US $0.75 US $150,000 (1)
CBH Compagnie Bancaire 833,334 833,334 5.03.10 US $0.75 US $625,000 (1)
Helvetique SA
Geoffrey Bertram 200,000 100,000 7.25.11 CDN $0.55 CDN $110,000 (2)
Eosphoros Asset Management Fund I 250,000 125,000 8.17.11 CDN $0.55 CDN $137,500 (3)
L.P.
Investor Company 750,000 375,000 8.17.11 CDN $0.55 CDN $412,500 (3)
Kathleen Peace 50,000 50,000 12.19.11 US $0.50 US $25,000 (4)
Joy L. Miko 310,000 310,000 12.19.11 US $0.50 US $155,000 (4)
George Wright 27,500 27,500 12.19.11 US $0.50 US $13,750 (4)
Robert Geoffrey Browne* 550,000 550,000 12.19.11 US $0.50 US $275,000 (4)
George R. Kent* 50,000 50,000 12.19.11 US $0.50 US $25,000 (4)
Greenbrook Capital Partners Inc. 50,000 50,000 12.19.11 US $0.50 US $25,000 (4)
W. Thomas Hodgson* 100,000 100,000 12.19.11 US $0.50 US $50,000 (4)
Stephen W. Stewart 100,000 100,000 12.19.11 US $0.50 US $50,000 (4)
Dr. Fred Kahn 250,000 250,000 12.19.11 US $0.50 US $125,000 (4)
Stewart McInnes 100,000 100,000 12.19.11 US $0.50 US $50,000 (4)
52
Paul Haggis 250,000 250,000 12.19.11 US $0.50 US $125,000 (4)
Tim Unwin * 50,000 50,000 12.19.11 US $0.50 US $25,000 (4)
Frank Salvatori 30,000 30,000 12.19.11 US $0.50 US $15,000 (4)
Robert Vistorino 20,000 20,000 12.19.11 US $0.50 US $10,000 (4)
Paul Fornazzari 40,000 40,000 12.19.11 US $0.50 US $20,000 (4)
1727326 Ontario Inc. 40,000 40,000 12.19.11 US $0.50 US $20,000 (4)
John David Gould 40,000 40,000 12.19.11 US $0.50 US $20,000 (4)
Reddhedd Holdings Inc. 200,000 200,000 12.19.11 US $0.50 US $100,000 (4)
William J. Tafuri 110,000 110,000 12.19.11 US $0.50 US $55,000 (4)
Richard Abraham 60,000 60,000 12.19.11 US $0.50 US $30,000 (4)
Karl P. Wohler 200,000 200,000 12.19.11 US $0.50 US $100,000 (4)
Look Back Investments Inc. 6,500,000 6,500,000 12.19.11 US $0.50 US $3,250,00 (5)
Look Back Investments Inc. 650,000 0 5.31.12 US $0.64 US $416,000 (6)
Geoffrey Bertram 100,000 0 9.28. 12 CDN $0.75 CDN $75,000 (7)
Parkwood LP Fund 300,000 0 10.03. 12 CDN $0.75 CDN $225,000 (8)
Primus Resources, L.C. 1,937,500 0 10.15.12 US $0.72 US $1,395,000 (9)
James A. Freeman 645,833 0 10.15.12 US $0.72 US $464,999.76 (9)
* Officer and/or Director of the Company.
** Each warrant entitles the holder to purchase one share of common stock.
(1) On May 6, 2010, the Company completed a private placement offering of 1,333,334 Units at a price of $0.75
per Unit. Each Unit consisted of one share of common stock and one warrant to purchase an additional share of
common stock at a price of $1.25 per share at any time during the 24 months following the date of closing of the
offering. The Units were offered and sold solely to persons outside the United States in reliance upon the exemption
from registration provided by Regulation S under the Securities Act of 1933, for offerings made solely outside the
United States to non-U.S. persons.
(2) On July 27, 2011, the Company issued 200,000 units (“Units”) for cash at CDN $0.55 (US $0.58) per Unit. Each
Unit consisted of one common share and one half of one common share purchase warrant (each whole such warrant,
a “Warrant”). Each Warrant entitles the holder thereof to acquire one common share of the Company (a “Warrant
Share”) at a price of CDN$0.75 until the date which is 60 months following the closing date of the private placement
offering (the “Warrant Term”), provided, however, that the Company may accelerate the Warrant Term under
certain conditions. The Units were offered and sold solely to persons outside the United States in reliance upon the
exemption from registration provided by Regulation S under the Securities Act of 1933, for offerings made solely
outside the United States to non-U.S. persons.
(3) On August 4, 2011, the Company issued 1,000,000 units (“Units”) for cash at CDN $0.55 (US $0.57) per Unit.
Each Unit consisted of one common share and one half of one common share purchase warrant (each whole such
warrant, a “Warrant”). Each Warrant entitles the holder thereof to acquire one common share of the Company (a
“Warrant Share”) at a price of CDN$0.75 until the date which is 60 months following the closing date of the private
placement offering (the “Warrant Term”), provided, however, that the Company may accelerate the Warrant Term
under certain conditions. The Units were offered and sold solely to persons outside the United States in reliance
upon the exemption from registration provided by Regulation S under the Securities Act of 1933, for offerings made
solely outside the United States to non-U.S. persons.
Eosphoros Asset Management Fund I LP is a private investment fund based in Toronto, Ontario, Canada. EAM
Inc., general partner of Eosphoros Asset Management Fund I LP, makes decisions as to the voting and disposition of
the securities.
Investor Company is the nominee of an investment dealer, TD Securities Inc., and it is our understanding that the
beneficial holder of these securities is Eosphoros Asset Management Fund I LP.
53
(4) On December 19, 2011, the Company completed a private placement offering, pursuant to which the Company
raised a total of US $1,313,750 through the sale of 2,627,500 Units at a purchase price of US $0.50 per Unit; there
were no underwriting discounts or commissions paid. Each Unit consists of one share of common stock of the
Company and one common stock purchase warrant (a “Warrant”). Each whole Warrant entitles the holder to
acquire one share of common stock at a price of US $0.65 for a period of two years following the date of the closing
of the financing. The Units were not registered under the Securities Act of 1933 (the “Securities Act”) in reliance
upon the exemptions from registration contained in Section 4(2) and Regulation D thereunder, and Regulation S of
the Securities Act.
Greenbrook Capital Partners Inc. a private Ontario, Canada company based in Toronto, Ontario. W. Thomas
Hodgson, officer of Greenbrook Capital Partners Inc., makes decisions as to the voting and disposition of the
securities.
1727326 Ontario Inc. is a private Ontario, Canada company based in Toronto, Ontario. Kevin O’Connor, officer of
1727326 Ontario Inc., makes decisions as to the voting and disposition of the securities.
Reddhedd Holdings Ltd. is a private Ontario, Canada company based in Toronto, Ontario. Anne Unwin, officer of
Reddhedd Holdings Ltd., makes decisions as to the voting and disposition of the securities.
(5) On November 10, 2011, the Company issued 6,500,000 subscription receipts (the “Subscription Receipts”)
pursuant to a private placement at a price of US$0.50 per Subscription Receipt for gross proceeds of US$3,250,000;
there were no underwriting discounts or commissions paid. On December 19, 2011, each Subscription Receipt was
automatically converted for no additional consideration, into one unit of the Company (a “Unit”) as a result of the
Company’s receipt of notice that its common stock was accepted for trading on the Toronto Stock Exchange under
the trading symbol, “LSL”, effective as of December 22, 2011. Each Unit is comprised of one common share and
one warrant (“Warrant”). Each Warrant is exercisable at a price of US$0.65 per share at any time until 5:00 p.m.
(Toronto time) on December 31, 2013. The Units were offered and sold solely to persons outside the United States
in reliance upon the exemption from registration provided by Regulation S under the Securities Act of 1933, for
offerings made solely outside the United States to non-U.S. persons.
Look Back Investments Inc. is a private Panamanian company based in Panama. Robert Genovese, officer of Look
Back Investments Inc., makes decisions as to the voting and disposition of the securities.
(6) In conjunction with the issuance of Subscription Receipts identified in item (4) above, the Company entered into
a Registration Rights Agreement (the “Registration Rights Agreement”) with the investor, pursuant to which the
Company agreed, following the conditional approval by the Toronto Stock Exchange, to file a registration statement
on Form S-1 with the Securities and Exchange Commission which registers the common stock and common stock
underlying the Warrants acquired by the investor for resale. If the registration statement did not become effective
on or before six months from the date of conditional approval by the Toronto Stock Exchange for the listing of the
common stock of the Company, the investor would receive an additional common share for each ten (10) common
shares. On May 31, 2012, the Company issued 650,000 common shares in satisfaction of this contractual
obligation, the value for which of $416,000 was determined by the closing market price of $0.64 per share on the
date of issuance.
Look Back Investments Inc. is a private Panamanian company based in Panama. Robert Genovese, officer of Look
Back Investments Inc., makes decisions as to the voting and disposition of the securities.
(7) Effective September 28, 2012, 100,000 whole warrants were exercised for gross proceeds of CDN$ 75,000; the
100,000 shares of common stock issued as a result of the exercise of these warrants are included in this Registration
Statement.
(8) Effective October 3, 2012, 300,000 whole warrants were exercised for gross proceeds of CDN$ 225,000; the
300,000 shares of common stock issued as a result of the exercise of these warrants are included in this Registration
Statement.
54
Parkwood LP Fund. is an Ontario, Canada partnership formed under the Limited Partnership Act, R.S.O. 1990,
based in Toronto, Ontario. Parkwood GP Inc., a private Ontario, Canada Company, is the general partner of
Parkwood LP Fund. Daniel Sternberg is the sole shareholder, officer and director of Parkwood GP Inc. and makes
decisions as to the voting and disposition of the securities.
(9) On October 15, Liberty Silver issued 2,583,333 shares of common stock pursuant to an agreement with Primus
Resources, L.C. and James A. Freeman to acquire approximately 100 acres located adjacent to the former Trinity
Silver mine on the Trinity Project. The shares were not registered under the Securities Act of 1933 (the “Securities
Act”) in reliance upon the exemptions from registration contained in Section 4(2) and Regulation D thereunder.
Primus Resources L.C. is a Wyoming limited liability company based in Wyoming, James A. Marin, President and
Managing Member of Primus Resources L.C., makes decisions as to the voting and disposition of the securities
ITEM 16. EXHIBITS
3.1 Articles of Incorporation ( included as exhibit to Form S-1 filed with the Securities and Exchange
Commission on April 1, 2008).
3.2 Bylaws (included as exhibit to Form S-1 filed with the Securities and Exchange Commission on April 1,
2008).
3.3 Articles of Amendment (included as exhibit to Form 8-K filed with the Securities and Exchange
Commission on February 12, 2010).
3.3 Amended Bylaws (included as exhibit to Form 8-K filed with the Securities and Exchange Commission
on October 25, 2010).
3.4 Amended and Restated Bylaws of Liberty Silver Corp., December 14, 2011 (included as exhibit to Form
8-K filed with the Securities and Exchange Commission on December 14, 2011).
3.5 Amended and Restated Articles of Incorporation of Liberty Silver Corp, (included as exhibit to Form 8-K
filed with the Securities and Exchange Commission on December 28, 2012)
3.6 Amended and Restated Bylaws of Liberty Silver Corp., dated December 21, 2012. (included as exhibit to
Form 8-K filed with the Securities and Exchange Commission on December 28, 2012)
5.1 Opinion of Fox Rothschild LLP*
10.1 Mineral Property Purchase Agreement corporation (included as exhibit to Form S-1 filed with the
Securities and Exchange Commission on April 1, 2008).
10.2 Exploration Earn-In Agreement dated March 29, 2010, by and between Liberty Silver Corp, a Nevada
corporation, and AuEx Ventures, Inc., a Nevada corporation*.
10.3 Employment Agreement and accompanying Stock Option Agreement, dated October 18, 2010, by and
between Liberty Silver Corp. and Geoff Browne (included as exhibit to Form 8-K filed with the
Securities and Exchange Commission on October 19, 2010).
10.4 Stock Option Agreement dated October 26, 2010 by and between Liberty Silver Corp. and Paul Haggis
(included as exhibit to Form 8-K filed with the Securities and Exchange Commission on October 27,
2010).
10.5 Stock Option Agreement dated October 26, 2010 by and between Liberty Silver Corp. and Timothy
Unwin (included as exhibit to Form 8-K filed with the Securities and Exchange Commission on October
27, 2010).
55
10.6 Stock Option Agreement dated October 26, 2010 by and between Liberty Silver Corp. and John
Barrington (included as exhibit to Form 8-K filed with the Securities and Exchange Commission on
October 27, 2010).
10.7 Stock Option Agreement dated October 26, 2010 by and between Liberty Silver Corp. and George Kent
(included as exhibit to Form 8-K filed with the Securities and Exchange Commission on October 27,
2010).
10.8 Stock Option Agreement dated December 6, 2010 by and between Liberty Silver Corp. and W. Thomas
Hodgson (included as exhibit to Form 8-K filed with the Securities and Exchange Commission on
December 6, 2010).
10.9 Liberty Silver Corp. Incentive Share Plan (included as exhibit to Form 8-K filed with the Securities and
Exchange Commission on May 3, 2011).
10.10 Liberty Silver Corp. Incentive Stock Option Agreement dated April 19, 2011 between Liberty Silver
Corp. and William Tafuri (included as exhibit to Form 8-K filed with the Securities and Exchange
Commission on May 5, 2011).
10.11 Liberty Silver Corp. Non-Qualified Stock Option Agreement dated April 19, 2011 between Liberty
Silver Corp. and John Barrington (included as exhibit to Form 8-K filed with the Securities and
Exchange Commission on May 5, 2011).
10.12 Subscription Agreement dated November 10, 2011 (included as exhibit to Form 8-K filed with the
Securities and Exchange Commission on November 10, 2011).
10.13 Subscription Receipt and Escrow Agreement dated November 10, 2011 (included as exhibit to Form 8-K
filed with the Securities and Exchange Commission on November 10, 2011).
10.14 Registration Rights Agreement dated November 10, 2011 (included as exhibit to Form 8-K filed with the
Securities and Exchange Commission on November 10, 2011).
10.15 Purchase Agreement Hi Ho Silver Mining Claims dated October 15, 2012 (included as exhibit to Form
8-K filed with the Securities and Exchange Commission on October 16, 2012).*
10.16 Registration Rights Agreement dated October 15, 2012 (included as exhibit to Form 8-K filed with the
Securities and Exchange Commission on October 16, 2012).
10.17 Memorandum of Exploration Earn-In Agreement, effective March 29, 2010*
10.18 Letter Agreement re Assignment of Exploration Earn-In Agreement, effective July 1, 2010*
23.1 Consent of Morrill & Associates, LLC*
23.2 Consent for Fox Rothschild LLP (Contained in Exhibit 5.1)*
23.3 Consent of Mine Development Associates*
101 SCH XBRL Schema Document *
101 INS XBRL Instance Document *
101 CAL XBRL Taxonomy Extension Calculation Linkbase Document*
101 LAB XBRL Taxonomy Extension Label Linkbase Document *
56
101 PRE XBRL Taxonomy Extension Presentation Linkbase Document *
101 DEF XBRL Taxonomy Extension Definition Linkbase Document*
* Filed Herewith
ITEM 17. UNDERTAKINGS
The undersigned Company hereby undertakes to:
(1) File, during any period in which offers or sales are being made, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities
Act");
(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in
the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of the securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective registration statement, and (iii) Include any
material information with respect to the plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of
the offering.
(4) For determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial
distribution of the securities, the undersigned undertakes that in a primary offering of securities of the undersigned
registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell
such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be
filed pursuant to;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or
used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about
the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) Any other
communication that is an offer in the offering made by the undersigned registrant to the purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable.
57
In the event that a claim for indemnification against such liabilities (other than the payment by the Company of
expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
For the purpose of determining liability under the Securities Act of 1933 to any purchaser:
If the registrant is relying on Rule 430B:
(i) Each prospectus filed by the registrant pursuant to 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was deemed part of and included in the registration
statement; and
(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the
purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be
part of and included in the registration statement as of the earlier of the date such form of prospectus is first used
after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such
date shall be deemed to be a new effective date of the registration statement relating to the securities in the
registration statement to which that prospectus relates, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that
was made in the registration statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such effective date; or
If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date
it is first used after effectiveness. Provided, however, that no statement made in a registration statement or
prospectus that is part of a registration statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration statement or made in any such document
immediately prior to such date of first use.
\
If the registrant is relying on Rule 430A:
(i) For purposes of determining any liability under the Securities Act of 1933, the information omitted from
the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof.
58
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and authorized this
registration statement to be signed on our behalf by the undersigned, on January 24, 2013.
LIBERTY SILVER CORP.
Date: January 24, 2013 By: /s/ Geoff Browne
Name: Geoff Browne
Chief Executive Officer, Principal Executive
Title:
Officer
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the
following persons in the capacities and on the dates indicated.
Date: January 24, 2013 By: /s/ Geoff Browne
Name: Geoff Browne
Chief Executive Officer, Principal Executive
Title:
Officer, Director
Date: January 24, 2013 By: /s/ Manish Z. Kshatriya
Name: Manish Z. Kshatriya
Chief Financial Officer, Principal Financial
Title:
Officer, Principal Accounting Officer
Date: January 24, 2013 By: /s/ W. Thomas Hodgson
Name: W. Thomas Hodgson
Title: Director
Date: January 24, 2013 By: /s/ Timothy Unwin
Name: Timothy Unwin
Title: Director
Date: January 24, 2013 By: /s/ George Kent
Name: George Kent
Title: Director
Date: January 24, 2013 By: /s/ John Pulos
Name: John Pulos
Title: Director
59
Exhibit 5.1
January 22, 2013
Liberty Silver Corp.
181 Bay Street, Suite 2330
Toronto, Ontario MSJ 3T3
Re:
Registration on Form S-1
Ladies and Gentlemen:
We have acted as special Nevada counsel to Liberty Silver Corp., a Nevada corporation (the
“Company”), in connection with the registration with the Securities and Exchange Commission
on Form S-1, Commission File No. 333-184962 (the “Registration Statement”) of 12,610,883
shares of the Company’s common stock, par value $0.001 per share (the “Shares”), 2,983,338
Shares (the “Issued Shares”) of which are currently issued and outstanding and held by the
selling stockholders identified in the Registration Statement and 9,627,500 Shares (the “Warrant
Shares”) which are issuable upon the exercise of certain outstanding common stock purchase
warrants (the “Warrants”).
In connection with this opinion, we have examined and relied upon the originals, or copies
certified or otherwise identified to our satisfaction, of such records, documents, certificates and
other instruments as in our judgment are necessary or appropriate to enable us to render the
opinion express below. As to certain factual matters, we have relied upon certificates of the
officers of the Company and have not sought to independently verify such matters.
EX1 1231438v3 01/22/13
In rendering this opinion, we have assumed the genuineness and authenticity of all signatures on
original documents; the legal capacity of all natural persons; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents submitted to us as
certified or photocopies; the authenticity of the originals of such latter documents; the accuracy
and completeness of all documents and records reviewed by us; the accuracy, completeness and
authenticity of certificates issued by any governmental official, office or agency and the absence
of change in the information contained therein from the effective date of any such certificate; and
the due authorization, execution and delivery of all documents where authorization, execution
and delivery are prerequisites to the effectiveness of such documents.
Our opinion herein is expressed solely with respect to the laws of the State of Nevada and is
based on these laws as in effect on the date hereof. We express no opinion as to whether the
laws of any jurisdiction are applicable to the subject matter hereof. We are not rendering any
opinion as to compliance with any federal or state law, rule or regulation relating to securities, or
to the sale or issuance thereof.
Based upon that review, it is our opinion that (i) the Issued Shares to be sold by the selling
shareholders have been legally issued, fully paid, and nonassessable and (ii) the Warrant Shares,
when issued and sold in accordance with and in the manner described in the Warrants, will be
duly authorized, legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to
the reference to our firm under the caption “Legal Matters” in the Prospectus which forms part of
the Registration Statement. In giving such consent, we do not admit that we are in the category
of persons whose consent is required under Section 7 of the Act or the rules and regulations of
the Securities and
EX1 1231438v3 01/22/13
Exchange Commission thereunder. This opinion is expressed as of the date hereof, and we
disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed
herein or of any subsequent changes in applicable law.
Very truly yours,
FOX ROTHSCHILD LLP
By: /s/ Fox Rothschild LLP
EX1 1231438v3 01/22/13
EXPLORATION EARN-IN AGREEMENT
THIS EXPLORATION EARN-IN AGREEMENT (the “Agreement”) is made and
entered into as of March 29, 2010 (the “Effective Date”), by and between AuEx, Inc. (“AuEx”), a
Nevada corporation, whose address is 940 Matley Lane, Suite 17, Reno, Nevada 89502, and
Liberty Silver Corp. (LBSV), a Nevada corporation, whose address for purposes hereof is 3960
Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89161.
RECITALS
A.
AuEx is the holder of a Lease and Sublease Agreement from Newmont Mining Corp. (the
“Newmont Lease”), covering the Trinity Silver Project (“TSP”) located in Pershing County,
Nevada, a copy of which is attached herewith as “Exhibit A-1”. The lands controlled by AuEx
forming the TSP are more particularly described on Exhibit “A-2” attached to this Agreement.
B.
AuEx desires to grant to LBSV and LBSV desires to acquire the exclusive right to explore,
evaluate and develop the TSP, and to earn a 70% undivided interest in the TSP, and all
easements, rights-of-way, water rights and other appurtenances associated therewith (collectively,
the “Property”), pursuant to the terms and conditions of this Agreement and the Newmont Lease.
AGREEMENT
NOW, THEREFORE, for and in consideration of the Initial Payment (as defined in
paragraph A. 1(a)), and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and confirmed, and the mutual promises, covenants and
conditions herein contained and recited, AuEx and LB SV agree as follows:
A.
GRANT OF EARN-IN RIGHTS
1.
AuEx hereby grants to LBSV the exclusive right and option to acquire a 70% undivided interest
in the Property for the following consideration:
(a)
LBSV agrees to pay to AuEx the amount of US$25,000 upon execution of this Agreement (the
“Initial Payment”)
(b)
In addition, in order to vest its 70% interest in the Property, LB SV is required to produce a
Bankable Feasibility Study by the seventh anniversary of the Effective Date and to expend a
minimum of US$5,000,000 (the “Aggregate Work Obligation”) in Exploration and Development
Expenses (as defined in Exhibit B) including claim maintenance fees and related filing and
recording expenses incurred by LBSV with respect to the TSP, (but excluding charges for
administration costs) as follows:
1 st agreement year US$500,000 (including the payment to AuEx)
2 nd agreement year US$1,000,000
3 rd agreement year US$1,000,000
4 th agreement year US$1,000,000
5 th agreement year US$1,000,000
6 th agreement year US$500,000
Any excess expenditure in any year shall be carried forward and applied to subsequent
years’ expenditure requirements, and the expenditures may be accelerated by LBSV in its sole
discretion. LBSV shall provide AuEx with a report of its Exploration and Development Expenses
incurred on or for the benefit of the Property, not later than 60 days after the end of each
Agreement year. If LSV elects not to meet the minimum work obligation during any Agreement
year but desires to keep this Agreement in fill force and effect, or if for any reason it is
subsequently determined that the minimum work obligation was not completed during any
Agreement year, then, in order to keep the Option in good standing LBSV shall pay the amount
of any agreed-upon deficiency to AuEx, within 30 days after the parties reach agreement as to the
amount of the deficiency, or as the parties may otherwise agree.
(c)
If LBSV elects to terminate its interest in the Option without vesting an interest by completing a
Bankable Feasibility Study by the seventh anniversary of the Effective Date, but has expended a
minimum of US$3 million (including all claims and claims maintenance fees), it shall be entitled
to a 4% net smelter returns royalty (“NSR”) capped at twice its expenditure (excluding overhead)
on the Property. For the purposes of this paragraph the definition of NSR is referred to on Exhibit
D attached hereto.
(d)
LBSV shall be the operator and shall have fill control over the content of work programs and
annual expenditure amounts during the earn-in period. LBSV’s rights shall also include all other
rights necessary or incident to or for the performance of its activities under this Agreement,
including, but not limited to, the authority to apply for all necessary permits, licenses and other
approvals from the United States of America, the State of Nevada or any other governmental or
other entity having regulatory authority over any part of the Property. Notwithstanding any other
provision of this Agreement to the contrary, the timing, manner, nature and extent of any
exploration, development, or any other activities or operations on the TSP under this Agreement
shall be in the sole discretion of LBSV, and there shall be no express or implied covenant under
this Agreement to begin or continue any such operations or activities (LBSV’s agreement to make
the payments to AuEx and to maintain the Claims being acknowledged by AuEx as sufficient
consideration for all of the rights granted to LBSV under this Agreement).
B.
TRANSFER OF INTEREST
I.
Upon LBSV having made the payments to AuEx in accordance with paragraph A.l(a) and having
timely completed the Bankable Feasibility Study, LBSV shall provide AuEx with written notice
of such completion together with a copy of the Bankable Feasibility Study. AuEx shall review the
document and notify LBSV within 30 days that they
2
have vested a 70% undivided interest in the Property without any further action being required of
it. AuEx shall deliver to LBSV a special warranty deed (in form and substance reasonably
acceptable to LMC) conveying to LBSV a 70% undivided interest in the Property, free and clear
of all liens, claims and encumbrances arising by, through or under AuEx other than the residual
rights held by Newmont. At the same lime as the special warranty deed is delivered, the parties
shall execute and deliver the joint venture agreement referred to in Section B.2.
2.
Upon LBSV having acquired a 70% undivided interest in the Property, LBSV and AuEx shall
enter into a formal joint venture agreement, generally in accordance with the Rocky Mountain
Mineral Law Foundation Exploration, Development and Mine Operating Agreement (Model
Form 5A), or as the parties otherwise agree, and including the concepts set forth in Section E
below, LBSV will be operator of the joint venture. The parties agree to begin good faith
negotiations of the joint venture agreement at any time during the period during which LBSV has
the right to exercise the Option (the “Earn-In Period”) when requested by LBSV.
C.
REPRESENTATIONS, WARRANTIES AND COVENANTS
1.
AuEx represents and warrants to LSV that:
(a)
The TSP is accurately described in Exhibit “A-1” and “A-2 attached hereto, AuEx is the lessee
thereof and is in exclusive possession thereof; and the Property is free and clear of all liens,
claims, and encumbrances,
(b)
As to each of the Claims, subject to the paramount tile of the United States of America: (i) the
Claims were properly located and monumented, free and clear of any conflicting claims of which
AuEx is aware, (ii) location notices and certificates and required maps were properly posted,
recorded and filed for each of the Claims; (iii) all filings and recordings required to maintain the
Claims in good standing through the Effective Date of this Agreement, including evidence of
timely payment of required claim maintenance fees, have been timely and properly made in the
appropriate governmental offices; and (iv) all required annual claim maintenance fees, BLM fees
and other payments necessary to maintain the Claims through the assessment year ending
September 1, 2010, have been timely and properly made.
(c)
All operations and activities conducted by or on behalf of AuEx on the Claims have been
conducted in compliance with applicable federal, state and local laws, rules and regulations,
including without limitation Environmental Laws.
(d)
AuEx is duly incorporated, validly existing and in good standing under the laws of the State of
Nevada, and is qualified to do business and in good standing under the laws of the State of
Nevada. AuEx has the requisite corporate power and capacity to carry on business as presently
conducted, to enter into this Agreement, and to perform all of its obligations hereunder.
(e)
There are no outstanding agreements, leases or options (whether oral or written) which
contemplate the acquisition of the Claims or any interest therein by any other person or entity.
(f)
AuEx is the sole lessee of a 100% interest in the TSP.
3
(g)
The entering into of this Agreement and the performance by AuEx of its obligations hereunder
will not violate or conflict with any applicable law or any order, decree or notice of any court or
other governmental agency, nor conflict with, or result in a breach of; or accelerate the
performance required by any contract or other commitment to which AuEx is a party or by which
it is bound.
(h)
All requisite corporate action on the part of AuEx, and on the part of its officers, directors, and
shareholders, necessary for the execution, delivery, and performance by it of this Agreement and
all other agreements contemplated hereby, have been taken. This Agreement and all agreements
and instruments contemplated hereby are, and when executed and delivered by it (assuming valid
execution and delivery by the other party), will be, legal, valid, and binding obligations of it
enforceable against it in accordance with their respective terms. Notwithstanding the foregoing,
no representation is made as to the availability of equitable remedies for the enforcement of this
Agreement or any other agreement contemplated hereby. Additionally, this representation is
limited by applicable bankruptcy, insolvency, moratorium, and other similar laws affecting
generally the rights and remedies of creditors and secured parties.
(i)
To the best of its knowledge, information and belief; there are no adverse environmental
conditions at the Property that could result in a violation of or liability under any federal, state or
local laws, rules or regulations concerning protection of the environment or human health and
safety (“Environmental Laws”). In conducting activities on the Property, AuEx has complied with
all applicable Environmental Laws as they relate to the Property and there have been no breaches
of or liabilities caused or permitted to arise by AuEx under any Environmental Laws. AuEx has
not received notification from any person, including without limitation, any govermnental
authority, of any potential breach or alleged breach of any applicable Enviromnental Laws
relating to the Property or of any inspection or possible inspection or investigation by any
governmental authority under any applicable Environmental Laws relating to the Property. AuEx
has not received any notification of and has no knowledge of the presence of any contaminants
(including hazardous substances or materials, dangerous goods, chemicals or toxic wastes) in the
soil or water in, on or under the Property and AuEx has not been the subject of any claims or
incurred any expenses in respect of the presence of any contaminants in the soil or water in, on or
under the Property.
(j)
To the best of knowledge of AuEx, there is no circumstance that would prevent any and all
governmental licenses and permits required to carry out exploration, development, mining,
processing and reclamation operations on the Property from being obtained, as and when
necessary.
(k)
AuEx has obtained all consents required under any agreements to which it is a party and all
required consents and approvals from governmental agencies and any stock exchange, as
necessary for it to execute, deliver and perform its obligations under this Agreement.
(l)
There are no actions, suits or proceedings pending or, to the knowledge of AuEx, threatened
against or affecting the Property, including any actions, suits, or proceedings being prosecuted by
any federal, state or local department, commission, board,
4
bureau, agency, or instrumentality. To the knowledge of AuEx, it is not subject to any order,
writ, injunction, judgment or decree of any court or any federal, state or local department,
commission, board, bureau, agency, or instrumentality which relates to the Property.
(m)
AuEx will assist LBSV in making applications for required exploration permits or other required
approvals from regulatory authorities required in order to conduct exploration on the Property.
2.
LBSV represents and warrants to AuEx that:
(a)
LBSV is duly incorporated under the laws of Nevada and is in good standing. LBSV has the
requisite corporate power and capacity to carry on business as presently conducted, to enter into
this Agreement, and to perform all of its obligations hereunder.
(b)
The entering into of this Agreement and the performance by LBSV of its obligations hereunder
will not violate or conflict with any applicable law or any order, decree or notice of any court or
other governmental agency, nor conflict with, or result in a breach of, or accelerate the
performance required by any contract or other commitment to which LBSV is a party or by which
it is bound.
(c)
All requisite corporate action on the part of LBSV, and on the part of its officers, directors and
shareholders, necessary for the execution, delivery and performance by it of this Agreement and
all other agreements contemplated hereby, have been taken. This Agreement and all agreements
and instruments contemplated hereby are, and when executed and delivered by it (assuming valid
execution and delivery by the other party), will be legal, valid and binding obligations of its
enforceable against it in accordance with their respective terms. Notwithstanding the foregoing,
no representation is made as to the availability of equitable remedies for the enforcement of this
Agreement. Additionally, this representation is limited by applicable bankruptcy, insolvency,
moratorium, and other similar laws affecting generally the rights and remedies of creditors and
secured parties.
(d)
LBSV has obtained all consents required under any agreement to which it is a party and all
required consents and approvals from governmental agencies and any stock exchange, as
necessary for it to execute, deliver and perform its obligations under this Agreement.
(e)
In the event that LBSV requests that AuEx assist in specified exploration and development
activities to be conducted on or for the benefit of the Property, the provisions contained in Exhibit
C shall apply.
D.
TERMINATION OF AGREEMENT
1.
LBSV may in its sole discretion terminate this Agreement at any time by giving not less than 30
days prior written notice to that effect to AuEx. Upon expiry of the 30 day notice period, or if the
Agreement is terminated pursuant to any other provision of this Agreement, the Agreement will
be of no further force and effect. Upon such termination, LSV shall have no further obligation to
incur Exploration and Development Expenses on or for the benefit of the Property and shall have
no further obligations or liabilities to AuEx under this
5
Agreement or with respect to the Property (including without limitation liability for lost profits or
consequential damages as a result of an election by LBSV to terminate this Agreement), other
than (a) as set forth in the remainder of this paragraph, and (b) to reclaim (in accordance with
applicable law) any disturbances of the Property made by LBSV. AuEx hereby agrees to grant
LBSV such access to the Property as is reasonably necessary to complete any required
reclamation. At any time LBSV may, at its option, terminate its interest in some but less than all
of the Claims by written notice to AuEx, provided that if such notice (or notice of termination of
this Agreement in its entirety) is received by AnEx after June 30th of any year, LBSV shall
remain obligated to pay the claim maintenance fees (and make all filings and recordings required
in connection therewith) for those Claims to which such termination applies for the upcoming
assessment year. To the extent LBSV terminates its interest in some but less than all of the
Claims, this Agreement shall remain in full force and effect with respect to the remaining Claims.
2.
In the event LBSV is in default in the observance or performance of any of LBSV’s covenants,
agreements or obligations under this Agreement, AuEx may give written notice of such alleged
default specifying the details of same. LBSV shall have 30 days following receipt of said notice
(or, in the event LBSV in good faith disputes the existence of such a default, 30 days after a final,
non-appealable order of a court of competent jurisdiction finding that such a default exists) within
which to remedy any such default described therein, or to diligently commence action in good
faith to remedy such default. If LBSV does not cure or diligently commence to cure such default
by the end of the applicable 30-day period, then AuEx shall have the right to terminate this
Agreement by providing 30 days advance written notice to LBSV. In the event of such
termination, the provisions of Section D.l shall apply with respect to the parties’ ongoing
obligations and liabilities.
E.
PARTICIPATION AT THE JOINT VENTURE STAGE
1.
During the Earn-In Period LBSV will fund all Exploration and Development Expenses on the
Property and will be the operator.
2.
At such time as LBSV earns a 70% undivided interest in the Property, the parties will thereafter
participate in expenditures on the Property in accordance with their respective interests therein, or
have their interest diluted in accordance with a straight-line dilution formula, as set forth in the
joint venture agreement.
3.
If through dilution the interest of a party is reduced to less than 10%, then that party’s
participating interest shall automatically be converted to a 3% NSR interest. Should third party
claims be acquired with royalties within the Area of Interest, the 3% royalty described above
would be reduced by the amount of such royalty but not below 1%. This reduction does not apply
to the royalty described in section A (c) above.
4.
Capitalized terms used in this Section E but not defined herein shall have the meaning ascribed to
them in Model Form 5A.
6
F.
RIGHTS DURING EARN-IN PERIOD
1.
During the Earn-In Period, LBSV and its employees, agents and independent contractors shall
have the exclusive right to enter upon the Property and to conduct such prospecting, exploration,
development or other mining work thereon and thereunder as they desire consistent with the
Newmont Lease and as is permitted by federal and Nevada laws. LBSV’s activities on the
Property may include any activities for which the costs would qualify as Exploration and
Development Expenses, as well as the removal of mineral samples for the purpose of, and in
amounts appropriate for, testing such mineral samples, including bulk sampling, and in addition
LBSV shall have the right to bring upon and erect upon the Property such buildings, plants,
machinery and equipment as LBSV may deem necessary or desirable to carry out such activities.
2.
LBSV in its sole discretion will decide any matter concerning the conduct of its prospecting,
exploration, development or other mining activities on the Property.
3.
In the conduct of its exploration, development and other activities on the Property, LBSV shall be
responsible for compliance with applicable laws and regulations, including laws and regulations
related to exploration, development, mining and reclamation.
4.
LBSV, so long as it has not terminated this Agreement in whole or in part, shall be responsible for
timely payment of required claim maintenance fees, property taxes, and any other payments
required to maintain the Property. LBSV shall also be responsible for timely filing and recording
of all documents required to evidence the payment of required claim maintenance fees. As long as
it complies with the obligations set forth in this Section F.4, LBSV shall have no liability
whatsoever to AuEx as a result of a loss of any of the Claims due to a challenge by any third
party or the U.S. government. (how much are annual property taxes?)
5.
Subject to AuEx’s prior written approval (which shall not be unreasonably withheld), LBSV shall
have the full, exclusive right, but not the obligation, to abandon (including abandonment and
relocation as millsites), relocate, amend, defend contests or adverse actions or suits and negotiate
settlement thereof with respect to any and all of the Claims, and AuEx shall cooperate with LBSV
and shall execute any and all documents necessary or desirable in the opinion of LBSV to further
such amendments, relocations, contests, adverse actions or suits, or settlement of such contests or
adverse actions or suits. LBSV shall not be liable to AuEx for the loss of any of the Claims as a
result of such abandonments, amendments, relocations, contests or adverse actions or suits, so
long as the same are undertaken in good faith.
6.
All exploration and related data generated by either party must be provided to both parties in as
close to near real time as reasonable. This includes having AuEx on the email list for copies of
preliminary and final assay results, draft and final reports and other time sensitive material. In
addition, AuEx may request copies of any other data or information pertaining to the TSP at any
time arid this must be provided by LBSV within a reasonable time frame.
7
G.
FORCE MAJEURE
If LBSV should be delayed in or prevented from performing any of the terms,
covenants or conditions of this Agreement by reason of a cause beyond the control of LSV,
whether or not foreseeable, including fires, floods, earthquakes, subsidence, ground collapse or
landslides, interruptions or delays in transportation or power supplies, strikes, lockouts, wars, acts
of God, native title claims, inability to obtain required governmental permits or approvals in a
timely manner, government regulation or interference (but excluding a lack of funds), then any
such failure on the part of LBSV to so perform shall not be deemed to be a breach of this
Agreement and the time within which LBSV is obliged to comply with any terms, covenants or
conditions of this Agreement shall be extended by the period of all such delays. LBSV shall give
notice in writing to AuEx forthwith and for each new cause of delay or prevention shall set out in
such notice particulars of the cause, and the date on which the same arose, and shall take all
reasonable steps to remove the cause of such delay or prevention, and shall also give notice
immediately following the date that such cause ceases to exist.
H.
AREA OF INTEREST
1.
My interest or rights to acquire (a) any interest in mining claims or in other real property interests
within the area described in Exhibit “A-2” (the Area of Interest”) or (b) contiguous claims that
may extend beyond the Area of Interest, acquired during the Earn-In Period by or on behalf of
either party or any affiliate or subsidiary of either party shall become subject to the terms and
provisions of this Agreement in accordance with the provisions of Section H.2.
2.
Within 30 days after the acquisition of such additional property, all or any portion of which lies
within the Area of Interest (or constitutes contiguous claims that may extend beyond the Area of
Interest), the acquiring party shall notify the other party of such acquisition. Such notice shall
describe in detail the acquisition, the lands, the nature of the interest therein, the mining claims or
other real property interest covered thereby, and the acquisition cost. In addition to such notice,
the acquiring party shall make any and all information concerning the additional property
available to the other party. The other party shall then have 30 days after receipt of such notice
and information to elect in its sole discretion to include such additional interest in the Property.
3.
All costs incurred by LBSV for acquiring additional property that becomes subject to this
Agreement shall accrue toward the LBSV Aggregate Work Obligation. Should AuEx be the
acquiring party and LBSV elect to accept the additional property into the Property, LBSV shall
reimburse AuEx for its acquisition costs, and the amount of such reimbursement shall accrue
toward the Aggregate Work Obligation.
4.
II a party elects not to include such an additional interest as part of the Property, then with respect
to that additional interest, either party shall be free to take actions with respect to and dispose of
such interest without any obligation to the other party.
8
5.
All real property interest and any new claims accepted to the Property must be acquired in the
name of AuEx, Inc until such time as LBSV has vested its 70% interest in the TSP.
I.
ASSIGNMENT
1.
This Agreement shall be binding upon and inure to the benefit of the parties and their permitted
successors and assigns. LBSV may, upon the prior written approval of AuEx, which approval
shall not be unreasonably withheld, assign this Agreement to other parties that are not affiliated
with LBSV at any time, provided that the assignee agrees in writing to assume all LSV’s
obligations under this Agreement. Upon such assignment, or an assignment to an affiliate (as
described below), LBSV shall have no further obligations or liabilities under this Agreement. At
any time, and without the consent of AuEx, LBSV may assign this Agreement (a) to one or more
of its affiliates upon the affiliate assuming all of LBSV’s obligations under this Agreement
(affiliate meaning any entity which directly or indirectly controls or is controlled by, or under
common control with, LBSV); (b) in connection with a pledge by LBSV for financing purposes,
(e) in connection with a corporate merger or reorganization involving LBSV, or (d) in connection
with a sale of all or substantially all of LBSV’s assets. Upon LBSV’s prior written approval,
which approval shall not be unreasonably withheld, AuEx may assign its interest in the Property
and this Agreement to a third party, provided that any such third party must agree in writing to be
bound by all of the terms and conditions of this Agreement,
2.
If at any time during the En-In Period (a) either party decides to sell or otherwise convey any
interest in the Property or this Agreement, or (b) either party’s owner decides to sell a controlling
interest in the ownership of that party, the other party shall have the right of first refusal to
acquire that party’s interest in the Property and this Agreement, on the same terms and conditions
as the conveying party (or its owner) would be willing to accept from (or as have been proposed
by) a third party. If either party desires to sell or otherwise convey any interest in the Property or
this Agreement, the conveying party shall provide a notice to the other party with the proposed
terms and conditions it would accept for such interest (and if that desire is based on an offer from
a third party, a copy of the proposed contract or terms). If either party’s owner is considering
selling a controlling interest in that party, such notice shall describe the monetary consideration
ascribed to that party’s interest in the Property and this Agreement or that the owner would be
willing to accept for that interest prior to such a sale. If the consideration for the proposed
transaction is partially or completely non-monetary, the conveying pasty (or its owner) shall also
supply information as the monetary equivalent of such consideration. The other party shall then
have 90 days to decide whether to exercise its right of first refusal. If the other party exercises its
right of first refusal, the parties shall promptly proceed to consummate the proposed transaction,
for the consideration (or its monetary equivalent) and on the terms and conditions set forth in the
notice from the conveying party (or its owner). If the other party elects not to exercise its right of
the first refusal, the conveying party (or its owner) shall then have a period of 90 days to
consummate the conveyance of its interest in the Property or this Agreement (or a controlling
interest in the ownership of that party) to a third party, on the same terms and
9
conditions as had been offered to the other party. If that conveyance to a third party is not
completed during the 90-day period, the other party’s right of first refusal shall be reinstated.
J.
INDEMNIFICATION
1.
LBSV agrees to indemnify, defend and hold harmless AuEx (and its officers, directors, successors
and assigns) from and against any and all debts, liens, claims, causes of action, administrative
orders and notices, costs (including, without limitation, response and/or remedial costs), personal
injuries, losses, damages, liabilities, demands, interest, fines, penalties and expenses, including
reasonable attorney’s fees and expenses, consultant’s fees and expenses, court costs and all other
out-of-pocket expenses, suffered or incurred by AuEx and its successors as a result of: (a) any
breach by LBSV of any of its representations, warranties and covenants set forth in this
Agreement, or (b) any operations or activities engaged in by LBSV on the Property, including
without limitation any matter, condition or state of fact involving Environmental Laws or
hazardous materials which may arise after the Effective Date of this Agreement and that is caused
by LBSV.
2.
AuEx agrees to indemnify, defend and hold harmless LBSV (and its officers, directors, successors
and assigns) from and against any and all debts, liens, claims, causes of action, administrative
orders and notices, costs (including, without limitation, response and/or remedial costs), personal
injuries, losses, damages, liabilities, demands, interest, fines, penalties and expenses, including
reasonable attorney’s fees and expenses, consultant’s fees and expenses, court costs and all other
out-of-pocket expenses, suffered or incurred by LBSV and its successors as a result of: (a) any
breach by AuEx of any of its representations, warranties and covenants set forth in this
Agreement, or (b) any operations or activities engaged in by AuEx on the Property, including
without limitation any matter, condition or state of fact involving Enviromnental Laws or
hazardous materials which may exist prior to the Effective Date of this Agreement or which may
arise after the Effective Date of this Agreement and that is caused by AuEx.
3.
The parties hereto, within 5 days after the service of process upon either of them in a lawsuit,
including any notices of any court action or administrative action (or any other type of action or
proceeding), or promptly after either of them, to its respective knowledge, shall become subject
to, or possess actual knowledge of, any damage, liability, loss, cost, expense, or claim to which
the indemnification provisions of this Section J relate, shall give written notice to the other party
setting forth the fact relating to the claim, damage, or loss, if available, and the estimated amount
of the same. “Promptly” for purposes of this paragraph shall mean giving notice within 5 days.
Failure to receive prompt notification shall not relieve either party of its indemnification
obligations hereunder unless such party is materially prejudiced thereby. Upon receipt of such
notice relating to a lawsuit, the indemnifying party shall be entitled to (i) participate at its own
expense in the defense or investigation of any claim or lawsuit or (ii) assume the defense thereof,
in which event the indemnifying party shall not be liable to the indemnified party for legal or
attorney fees thereafter incurred by such indemnified party in defense of such action or claim;
provided, that if the indemnified party may have any unindemnified liability out of such claim,
such party shall have the right to approve the counsel selected by the indemnifying party, which
approval shall not be withheld unreasonably. If the indemnifying party assumes the defense of
any claim or lawsuit, all costs of defense of such claim or lawsuit shall thereafter be borne by
such party and such party shall have the authority to compromise and settle such claim or lawsuit,
or to appeal any adverse judgment or ruling with the
10
cost of such appeal to be paid by such party; provided, however, if the indemnified party may
have any unindemnified liability arising out of such claim or lawsuit the indemnifying party shall
have the authority to compromise and settle each such claim or lawsuit only with the written
consent of the indemnified party, which shall not be withheld unreasonably. The indemnified
party may continue to participate in any litigation at its expense after the indemnifying party
assumes the defense of such action. In the event the indemnifying party does not elect to assume
the defense of a claim or lawsuit, the indemnified party shall have authority to compromise and
settle such claim or lawsuit only with the written consent of the indemnifying party, which
consent shall not be unreasonably withheld, or to appeal any adverse judgment or ruling, with all
costs, fees, and expenses indemnifiable under this Section J hereof to be paid by the indemnifying
party. Upon the indemnified party’s furnishing to the indemnifying party an estimate of any loss,
damage, liability, or expense to which the indemnification provisions of this Section J relate, the
indemnifying party shall pay to the indemnified party the amount of such estimate within 10 days
after receipt of such estimate.
K.
CONFIDENTIALITY
1.
All data and information coming into possession of AuEx or LBSV by virtue of this Agreement
with respect to the business or operations of the other party, or the Property generally, shall be
kept confidential and shall not be disclosed to any person not a party hereto without the prior
written consent of the other party, except:
(a)
as required by law, rule, regulation or policy of any stock exchange or securities commission
having jurisdiction over a party;
(b)
as may be required by a party in the prosecution or defense of a lawsuit or other legal or
administrative proceedings;
(c)
as required by a financial institution in connection with a request for financing relating to
development or mining activities; or
(d)
as may be required in connection with a proposed conveyance to a third party of an interest in the
Property or this Agreement, provided such third party agrees in writing in a manner enforceable
by the other party to abide by all of the provisions of this Section K with respect to such data and
information.
2.
To the extent either party intends to disclose data or information via press release or other similar
format as described in Section K. 1(a), the disclosing party shall provide the other party with not
less than five business days notice of the text of the proposed disclosure, and the other party shall
have the right to comment on the same.
L.
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties relating to the
Property.
11
M.
DISPUTE RESOLUTION
The parties hereby agree that any dispute arising under this Agreement shall be
subject to the informal dispute resolution procedure set forth in this Section M. For purposes of
this Section M, the party asserting the existence of a dispute as to the interpretation of any
provision of this Agreement or the performance by the other party of any of its obligations
hereunder shall notify the other party of the nature of the asserted dispute. Within seven business
days after receipt of such notice, the President of LBBSV and the President of AnEx shall arrange
for a personal or telephone conference in which they use good faith efforts to resolve such
dispute. If those individuals are unable to resolve the dispute, they shall each prepare and, within
seven business days after their conference, circulate to the President of LBSV and the President
of AuEx a memorandum outlining in reasonable detail the nature of the dispute. Within five
business days after receipt of the memoranda, the individuals to whom the memoranda were
addressed shall arrange for a personal or telephone conference in which they attempt to resolve
such dispute. If those individuals are unable to resolve the dispute, either party may proceed with
any legal remedy available to it; provided, however , that the parties agree that any statement
made as to the subject matter of the dispute in any of the conferences referred to in this Section M
shall not be used in any legal proceeding against the party that made such statement.
Notwithstanding the foregoing, if LBSV has earned its undivided 70% interest in the Property in
accordance with the provisions of Section B.l, and AuEx refuses to execute and deliver the deed
referred to therein, the parties agree that LBSV may seek an order from a court requiring specific
performance of that obligation, as an appropriate and necessary remedy under such
circumstances, in addition to any other legal or equitable remedies that may be available.
N.
JOINT VENTURE OPERATION
1.
LBSV shall be the operator upon submission and acceptance of the Bankable Feasibility Study.
The position of operator will thereafter be fulfilled by that party which has the greater interest in
the Property unless that party agrees that the other party may act as operator. The operator shall
be subject to possible replacement should he be negligent in his responsibilities, act fraudulently
or not conduct the obligations of operator in a manner satisfactory to all parties.
2.
Annual programs and budgets will be reviewed and approved by a management committee
comprised of members from LBSV and AuEx voting in proportion to their ownership interest. A
unanimous approval shall be required if an annual budget is proposed to be modified by more
than 25% or if a proposed annual budget exceeds a previous year annual budget by more than
50%.
3.
The Operator will be entitled to a 5% overhead fee for exploration and development related
activities and a 3% overhead fee for mine construction and mine operations. The overhead fee
will not apply to land lease payments or holding costs or to certain large invoice items as is
customary and as the parties shall agree.
12
4.
The management committee will be formed generally in accordance with the provisions of Model
Form 5A with committee members of each party holding collectively votes in proportion to the
interests held by the party they represent.
5.
The decision to commence production shall be made by a unanimous approval of the management
committee. If the minority party does not vote to commence production, the majority party may
elect to move forward by providing the minority partners share of capital on the basis of a loan as
defined in 7 below.
6.
All exploration and related data generated by either party must be provided to both parties in as
close to near real time as reasonable. This includes having AuEx on the email list for copies of
preliminary and final assay results, draft and final reports and other time sensitive material. In
addition, AuEx may request copies of any other data or information pertaining to the TSP at any
time and this must be provided by LBSV within a reasonable time frame.
7.
Project financing will be conducted by the operator on a 100% basis as one unified financing for
the project. Both partners will seek to work in unison for one financing solution and each party
will have consistent terms. Each party shall provide its proportionate shall of initial capital and
the majority partner agrees to extend a loan to the minority partner for its share of capital should
it so request. Said loan plus interest at Libor plus 4 % would be paid back to the majority owner
from 90% of the minority partner’s cash flow after deducting operating costs and project debt
payment.
O.
GENERAL
1.
Notice to LBSV or to AuEx shall be sufficiently given if delivered personally, or if sent by
prepaid mail or reputable overnight courier, or if transmitted by facsimile to such party:
(a)
in the case of a notice to LBSV at:
Liberty Silver Corp.
3960 Howard Hughes Parkway, Suite 500
Las Vegas, Nevada 89161
Attention:
Terry Fields, President or John Pubs, Director
Terry Fields, Phone: 310 600 8757
John Pubs, Fax: FAX: 424-247-9519
(b)
in the case of a notice to AuEx at:
AuEx, Inc.
940 Matley Lane, Suite 17
Reno, NV 89502
Attention:
Ronald L. Parratt/Richard L. Bedell, Jr.
13
FAX:
775-337-1542
or at such other address or addresses as the party to whom such notice or other writing is to be
given shall have last notified the party giving the same in the manner provided in this section.
Any notice or other writing delivered to the party to whom it is addressed as set forth above shall
be deemed to have been given and received on the day it is so delivered at such address, provided
that if such day is not a business day in the city where the notice is delivered, then such notice or
other writing shall be deemed to have been given and received on the next following business
day. Any notice or other writing submitted by facsimile or other form of recorded communication
shall be deemed to have been given and received on the first business day after its transmission.
2.
Each of LBSV and AuEx shall, with reasonable diligence, do all such things and provide all such
reasonable assurances and assistance as may be required to consummate the transactions
contemplated by this Agreement and each party shall provide such further documents or
instruments required by the other party as may reasonably be necessary or desirable in order to
give effect to the terms and conditions of this Agreement and carry out its provisions at, before or
after the Effective Date.
3.
This Agreement may be executed by each of LBSV and AuEx in counterparts and by facsimile,
each of which when so executed and delivered shall be an original, but both such counterparts,
whether executed and delivered in the original or by facsimile, shall together constitute one and
the same agreement. The parties agree to execute and deliver a short form of this Agreement to be
prepared by LBSV, which the parties agree LBSV may record in the official records of Pershing
County.
4.
All dollar references in this Agreement are to the United States dollars.
5.
This Agreement, including all documents annexed hereto and other agreements, documents and
other instruments delivered in connection herewith shall be governed by and construed in
accordance with the laws of the State of Nevada (other than its rules as to conflicts of law) and
the laws of the United States as applicable.
6.
The parties agree that this Agreement shall be construed to benefit the parties hereto and their
respective permitted successors and assigns only, and shall not be construed to create any third
party beneficiary rights in any other party or in any governmental organization or agency, except
as specifically set forth in Section 10.
7.
In the event that any one or more of the provisions contained in this Agreement or in any other
instrument or agreement contemplated hereby shall, for any reason, be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any
other provision of this Agreement or any such other instrument or agreement contemplated
hereby.
8.
No implied term, covenant, condition or provision of any kind whatsoever except for good faith
and fair dealing shall affect any of the parties’ respective rights and obligations hereunder,
including, without limitation, rights and obligations with respect to
14
exploration, development, mining, processing and marketing of minerals, and the only terms,
covenants, conditions or provisions which shall in any way affect any of their respective rights
and obligations shall be those expressly set forth in this Agreement.
9.
This Agreement may not be amended or modified, nor may any obligation hereunder be waived,
except by writing duly executed on behalf of all Parties, and unless otherwise specifically
provided in such writing, any amendment, modification, or waiver shall be effective only in the
specific instance and for the purpose it is given.
10.
This Agreement is, and the rights and obligations of the parties are, strictly limited to the matters
set forth herein. Subject to the provisions of Section H, each of the parties shall have the free and
unrestricted right to independently engage in and receive the lull benefits of any and all business
ventures of any sort whatever, whether or not competitive with the matters contemplated hereby,
without consulting the other or inviting or allowing the other to participate therein. The doctrines
of “corporate opportunity” or “business opportunity” shall not be applied to any other activity,
venture, or operation of either party, whether adjacent to, nearby, or removed from the Property,
arid neither party shall have any obligation to the other with respect to any opportunity to acquire
any interest in any property outside the Property at any time, or within the Property after
termination of this Agreement, regardless of whether the incentive or opportunity of a party to
acquire any such property interest may be based, in whole or in part, upon information learned
during the course of operations or activities hereunder.
IN WITNESS WHEREOF, the parties have executed this Exploration and Development
Agreement effective as of the date first set forth above.
AuEx, Inc.,
a Nevada corporation
By: /s/Ronald Parratt
Name: Ronald L. Parratt
Title: President and CEO
Liberty Silver Corp.
a Nevada corporation
By: /s/Terry R. Fields
Name: Terry R. Fields
Title: President
15
EXHIBIT A-1
244433 Book 397 Page 244
OFFICIAL RECORDS
PERSHING COUNTY
APN #003-051-34; #003-051-38; #003-051-40; NEVADA
#003-091-07; #003-091-09; #003-091-13; RECORDED BY
#003-091-15; #003-091-24; #003-091-26;
Edward N. Jackson
05-AUG-8 AM 11:48
Recording Requested by, To Be Returned to :
Newmont Mining Corporation Book 397 page 243
427 Ridge Street, Suite C DARLENE MOURA
Reno, Nevada 89501 COUNTY RECORDER
17-244433
INDEXED
MEMORANDUM OF AGREEMENT
Notice is hereby given that Newmont USA Limited, a Delaware corporation, d/b/a
Newmont Mining Corporation (“Newmont”), and AuEx, Inc., a Nevada corporation (“Grantee”),
have entered into a Minerals Lease and Sublease dated effective as of July 29, 2005, covering that
certain property situated in Pershing County, Nevada, described in Exhibit 1 attached hereto (the
“Property”), and the Area of Interest, as defined in Exhibit 2 hereto. Said Minerals Lease and
Sublease, in consideration of certain covenants and agreements set forth therein, including, but
not limited to work commitments, provides that Newmont has leased or subleased exclusively to
Grantee all of Newmont’s right, title and interest in and to the Property.
The Minerals Lease and Sublease grants to Newmont, a right of first offer on any transfer of
Grantee’s interests in the Property or Area of Interest. The Minerals Lease and Sublease also
gives Newmont a right to either enter into a joint venture agreement covering the Property and
any other real property intersts that Grantee holds or acquires within the Area of Interest, or
receive a royalty on all mineral production from such properties.
IN WITNESS WHEREOF, this Memorandum has been executed effective as of the date first
above written.
NEWMONT USA LIMITED
d/b/a NEWMONT MINING CORPORATION
By: /s/Donald G. Karras
Name: Donald G. Karras
Title: Vice President
AUEX, INC.
By: /s/Richard Bedell
Name: Richard Bedell
Title: Vice President
16
Book 397 Page 244
STATE OF COLORADO
)
)ss.
CITY AND COUNTY OF DENVER
)
This instrument was acknowledged before me on this 1 st day of August, 2005, by
Donald G. Karras as Vice President of NEWMONT USA LIMITED d/b/a NEWMONT MINING
CORPORATION.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Official Seal the
day and year first above written.
/s/ Eileen Green Lee
Notary Public
My commission expires November 2, 2008
STATE OF NEVADA
)
)ss.
COUNTY OF WASHOE
)
This instrument was acknowledged before me on this 29 th day of July, 2005, by R.
Bedell as Vice President of AUEX, INC.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Official Seal the
day and year first above written.
RHONDA SHOOLROY
Notary Public – State of Nevada
Appointment Recorded in Washoe County
/s/Rhonda Shoolroy No. 00-39919-2 Expires Feb28, 2008
Notary Public
My commission expires Feb 28, 2008
17
Book 397 Page 245
EXHIBIT 1
TO MEMORANDUM OF AGREEMENT
BETWEEN
NEWMONT USA LIMITED d/b/a NEWMONT MINING CORPORATION
AND AUEX, INC.
1.
Mining Claims .
The following 41 unpatented lode mining claims situated in Pershing County, Nevada
in Sections 4 and 10, Township 29 North, Range 30 East, MBD&M:
Claim Name BLM NMC
Seka 95-112 264542-264559
Seka 1-6, 8-16, 61-64, 73-76 243016-243030, 264508-264511,
264520-264523
2.
Leased Lands (Minerals Lease – 4,396.44 acres)
Newmont’s interest under that certain Minerals Lease (29-OSP-006) dated August 17, 1987,
between Nevada Land and Resource Company, LLC, successor in interest to Southern Pacific
Lane Company, and Newmont USA Limited, successor in interest to SFP Minerals
Corporation, insofar and only insofar as it pertains to the following property:
Township 30 North, Range 30 East, MDB&M:
Section 27; All (640 acres)
Section 33; All (640 acres)
Section 35; N1/2, SE1/4, N1/2SW1/4 (560 (acres)
Township 29 North, Range 30 East, MDB&M:
Section 3; Lots 1-4, S1/2N1/2, S1/2 (All, 639.12 acres)
Section 5; Lots 1-4, S1/2N1/2, S1/2 (All, 637.32 acres)
Section 11; All (640 acres)
Section 17; All (640 acres)
3.
Owned Lands – Surface & Minerals – (1,280 acres)
Newmont’s fee ownership interest insofar and only insofar as it pertains to the following
property:
Township 29 North, Range 30 East, MDB&M:
Section 9; All (640 acres)
Section 15; All (640 acres)
18
Book 397 Page 246
EXHIBIT 1
TO MEMORANDUM OF AGREEMENT
BETWEEN
NEWMONT USA LIMITED d/b/a NEWMONT MINING CORPORATION
AND AUEX, INC.
AREA OF INTEREST
Pershing County, Nevada
Township 30 North, Range 30 East, MDB&M; Sections 32-35
Township 29 North, Range 30 East, MDB&M; Sections 2-5, 8-11, 14-17
19
EXHIBIT A-2
To
Exploration Earn-in Agreement
Trinity Silver Project, Pershing County, Nevada
1.
Mining Claims
The following 59 unpatented lode mining claims situated in Pershing County, Nevada in
Sections 4, 10 and 16, Township 29 North, Range 30 East, MDB&M:
Claim Name
BLM NMC
Seka 95-112
264542-264559
Seka 1-6, 8-16, 61-64, 73-76
243016-243030, 264508-264511, 264520-264523
TS-1 to 18
930542-930559
2.
Leased Lands (Minerals Lease – 4,396.44 acres)
Newmont’s interest under that certain Minerals Lease (29-OSP-0006) dated August 17,
1987, between Nevada Land and Resource Company LLC, successor in interest to Southern
Pacific Land Company, and Newmont USA Limited, successor in interest to SFP Minerals
Corporation, insofar and only insofar as it pertains to the following property:
Township 30 North, Range 30 East, MDB&M:
Section 27;
All (640 acres)
Section 33;
All (640 acres)
Section 35;
N1/2, SE1/4, N1/2SW1/4 (560 acres)
Township 29 North, Range 30 East, MDB&M:
Section 3;
Lots 1-4, S½N½, S½ (All, 639.12 acres)
Section 5;
Lots 1-4, S½N½, S½ (All, 637.32 acres)
Section 11;
All (640 acres)
Section 17;
All (640 acres)
3.
Owned Lands –Surface & Minerals – (1,280 acres)
Newmont’s fee ownership interest insofar and only insofar as it pertains to the following
property:
Township 29 North, Range 30 East, MDB&M:
Section 9;
All (640 acres)
Section 15,
All (640 acres)
20
TO SUBSCRIBE, EACH SUBSCRIBER MUST RETURN THE FOLLOWING (as applicable to
the Subscriber):
a.
Duly completed and executed Subscription Agreement (complete cover page);
b.
Terms and Conditions of Subscription for Subscription Receipts of Liberty Silver Corp.;
c.
Duly completed and executed Schedule “B” – Exemption Form;
d.
Duly completed and executed Schedule “C” – Accredited Investor Certificate, if applicable;
e.
Duly completed and executed Schedule “D” – Certificate of U.S. Accredited Investor, if applicable;
f.
Duly completed and executed Schedule “E” – Additional, Representations, Warranties and Covenants
of Subscriber Resident Outside of Canada and the United States, if applicable; and
g.
Subscription Funds by certified cheque, bank draft, money order or wire transfer (see Schedule “F”
for instructions).
SUBSCRIPTION AGREEMENT
TO:
LIBERTY SILVER CORP. (the “Company”)
The undersigned (hereinafter referred to as the “ Subscriber ”) hereby irrevocably subscribes for and
agrees to purchase the number of subscription receipts of the Company (the “ Subscription Receipts ”)
set forth below, for the aggregate consideration set forth below (the “ Subscription Price ”), representing
a subscription price of US$0.50 per Subscription Receipt. The gross proceeds (less the BG Subscriber
Expense, as herein defined) shall be paid to the Escrow Agent (as herein defined) against issuance of the
certificates representing the Subscription Receipts. Upon satisfaction of the Escrow Release Condition (as
herein defined), each Subscription Receipt shall be automatically exchanged without any further action by
the holder and for no additional consideration for one unit of the Company (each, a “ Unit ”). Each Unit
shall consist of one common share in the capital of the Company (each, a “ Common Share ”), one
Common Share purchase warrant (each whole warrant, a “ Warrant ”), and one right to acquire Common
Shares in certain circumstances (each, a “ Right ”). Each Warrant shall entitle the holder thereof to
acquire one Common Share (a “ Warrant Share ”) at a price of U.S.$0.65 per Warrant Share at any time
until 5:00 p.m. (Toronto time) on the date which is the earlier of 24 months following the date the
Company’s Common Shares are listed on Toronto Stock Exchange (the “ Exchange ”) and 30 months
following the date of the closing of the Offering. Each Right shall entitle the holder thereof to acquire, for
no additional consideration, one-tenth (1/10) of a Common Share (each whole such Common Share, a “
Right Share ”) in the event that the Registration (as herein defined) of the Securities (as herein defined)
has not occurred in accordance with the terms of the Registration Rights Agreement (as herein defined).
The Subscriber agrees to be bound by the terms and conditions set forth in the attached “Terms and
Conditions of Subscription for Subscription Receipts of Liberty Silver Corp.” including without limitation
the terms, conditions, representations and warranties set forth thereunder or set out in any applicable
Schedules attached thereto (the “ Terms ”), which Terms and attachments thereto together with this page
form this subscription agreement (the “ Subscription Agreement ”).
THE SUBSCRIBER: SUBSCRIPTION RECEIPTS
SUBSCRIBED:
Print name of Subscriber:
Look Back Investments, Inc. Number of Subscription Receipts: 6,500,000
Signature of individual Subscriber: Aggregate consideration: $3,250,000
Signature of authorized signatory, if Subscriber not an DISCLOSED PRINCIPAL (if purchasing as
individual: agent or trustee for a disclosed principal):
/s/Robert Genovese
Print name of authorized signatory, if applicable: Name of disclosed principal:
Robert Genovese
Subscriber’s address: Address of disclosed principal:
Calle Eusebio A. Morales
Suite a-A #5
El Cangrejo, Panama City, Panama
Subscriber’s email address: Telephone number of disclosed principal:
Form A
Subscriber’s telephone number:
REGISTRATION INSTRUCTIONS (if other than CERTIFICATE DELIVERY
in name of Subscriber): INSTRUCTIONS (if other than to
Subscriber’s address):
Name: Name:
Account reference, if applicable: Account reference, if applicable:
Address: Address:
DELIVERY: This Subscription Agreement should be delivered to the Company at the following
address:
LIBERTY SILVER CORP.
c/o Peterson Law Professional Corporation
390 Bay Street, Suite 806
Toronto, ON M5H 2Y2
ACCEPTANCE: The Company hereby accepts the above subscription on the Terms contained in this
Subscription Agreement.
Liberty Silver Corp.
Dated: November 10, 2011
Per: /s/ Geoffrey Browne _
Authorized Signatory
TERMS AND CONDITIONS OF
SUBSCRIPTION FOR SUBSCRIPTION RECEIPTS OF
LIBERTY SILVER CORP.
1.
Definitions - In this Subscription Agreement:
(a)
“ Action ” has the meaning ascribed to such term in section 10(x) hereof;
(b)
“ Anti-Money Laundering Laws ” has the meaning ascribed to such term in
section 10(x) hereof;
(c)
“ BG Subscriber ” means BG Capital Group Ltd.;
(d)
“ BG Subscriber’s Expenses ” means the reasonable professional fees incurred by
BG Subscriber in connection with its subscription for Subscription Receipts which
shall not exceed CDN$25,000 plus applicable taxes and reasonable disbursements;
(e)
“ Closing Date ” means November 9, 2011 or such earlier or later date as the
Company shall determine;
(f)
“ Closing Time ” means 9:00 a.m. (Toronto time) or such earlier or later time on
the Closing Date as the Company shall determine;
(g)
“ Common Shares ” mean the shares of common stock in the capital of the
Company partially comprising each Unit;
(h)
“ Disclosed Beneficial Purchaser ” has the meaning ascribed to such term in
section 11(f) hereof;
(i)
“ Disclosure Documents ” means all reports, schedules, forms, statements and
other documents required to be filed by the Company with the Securities and
Exchange Commission under the Securities laws, including the exhibits thereto
and documents incorporated by reference therein, which are publicly available or
otherwise posted by the Company on EDGAR during the 24 months preceding the
date hereof;;
(j)
“ Environmental Laws ” has the meaning ascribed to such term in section 10(q)(i)
hereof;
(k)
“ Escrow Agent ” means Capital Transfer Agency Inc.;
(l)
“ Escrow Release Condition ” has the meaning ascribed to such term in section
9(a) hereof;
(m)
“ Escrowed Funds ” has the meaning ascribed to such term in section 9(a) hereof;
(n)
“ Escrowed Proceeds ” has the meaning ascribed to such term in section 9(a)
hereof;
(o)
“ Exchange ” has the meaning ascribed to such term on the face page hereof;
2
(p)
“ Exchange Confirmation ” has the meaning ascribed to such term in section 9(a)
hereof;
(q)
“ Licenses ” has the meaning ascribed to such term in section 10(r) hereof;
(r)
“ Listing ” has the meaning ascribed to such term in section 8 hereof;
(s)
“ Mining Rights ” has the meaning ascribed to such term in section 10(o) hereof;
(t)
“ NI 45-106 ” means National Instrument 45-106 - Prospectus and Registration
Exemptions, a Canadian securities regulatory policy applicable to the Company;
(u)
“ Offering ” means the offering of Subscription Receipts;
(v)
“ Registration ” means the registration of the Securities in accordance with the
U.S. Securities Act, as set out in the Registration Rights Agreement;
(w)
“ Registration Rights Agreement ” means the Registration Rights Agreement, in
the form set out in Schedule “G” hereto, to be entered into by the Company and
each Subscriber on or before the Closing Date;
(x)
“ Release Deadline ” has the meaning ascribed to such term in section 9(b) hereof;
(y)
“ Right ” means the right, partially comprising each Unit, for the holder to receive,
for no additional consideration, one-tenth (1/10) of a Right Share in the event that
the Registration has not occurred in accordance with the terms of the Registration
Rights Agreement;
(z)
“ Right Shares ” mean Common Shares issuable upon conversion of the Rights in
accordance with the terms of the Registration Rights Agreement;
(aa)
“ SEC ” means the United States Securities and Exchange Commission;
(bb)
“ Securities ” has the meaning ascribed to such term in section 11(a);
(cc)
“ Securities Laws ” has the meaning ascribed to such term in section 10(c) hereof;
(dd)
“ SRA Agreement ” has the meaning ascribed to such term in section 3 hereof;
(ee)
“ Subscribers ” means the subscribers of Subscription Receipts pursuant to their
executed and accepted Subscription Agreements;
(ff)
“ Subscription Receipt Certificate ” has the meaning ascribed to such term in
section 3 hereof;
(gg)
“ Taxes ” has the meaning ascribed to such term in section 10(ff) hereof;
(hh)
“ Terms ” has the meaning ascribed to such term on the face page hereof;
(ii)
“ U.S. Person ” has the meaning set out in Regulation S under the U.S. Securities
Act;
(jj)
“ U.S. Securities Act ” means the United States Securities Act of 1933, as
amended;
3
(kk)
“ U.S. Exchange Act ” means the United States Securities and Exchange Act of
1934, as amended;
(ll)
“ Units ” mean the unit of securities of the Company into which the Subscription
Receipts will be automatically exchanged in the event the Escrow Release
Condition is satisfied by the Release Deadline, each such unit to be comprised of
one (1) Common Share, one (1) Warrant, and one (1) Right;
(mm)
“ Warrant Shares ” has the meaning ascribed to such term on the face page
hereof; and
(nn)
“ Warrants ” has the meaning ascribed to such term on the face page hereof.
2.
Deliveries by Subscriber - In connection with its subscription under this Subscription
Agreement, the Subscriber agrees to deliver to the Company at the address shown on the face
page hereof:
(a)
this Subscription Agreement duly completed and executed;
(b)
a certified cheque, bank draft or money order payable to the Escrow Agent, in trust
, Attention: Lisa Cripps, for the Subscription Price set out on the face page hereof,
less the BG Subscriber’s Expense, if the Subscriber is the BG Subscriber, or to
wire transfer such Subscription Price, less the BG Subscriber’s Expense, if the
Subscriber is the BG Subscriber, to the Escrow Agent as set forth in the attached
Schedule “F”;
(c)
the attached Schedule “B” - Exemption Form, duly initialled and signed by or on
behalf of the Subscriber;
(d)
if applicable, the attached Schedule “C” - Accredited Investor Certificate, duly
initialled and signed by or on behalf of the Subscriber;
(e)
if applicable, the attached Schedule “D” - Certificate of U.S. Accredited Investor,
duly initialled and signed by or on behalf of the Subscriber;
(f)
if applicable, the attached Schedule “E” - Additional, Representations, Warranties
and Covenants of Subscriber Resident Outside of Canada and the United States;
and
(g)
such other documents as may be reasonably requested by the Company.
3.
Subscription for the Subscription Receipts – The Subscriber hereby confirms its irrevocable
subscription for and offer to purchase the Subscription Receipts from the Company, on and
subject to the Terms set out in this Subscription Agreement, for the Subscription Price which is
payable in the manner set out in section 2. The certificate representing the Subscription Receipts
will be registered in accordance with the registration instructions set forth on the face page of this
Subscription Agreement. The Subscription Receipts shall be duly and validly created and issued
pursuant to the terms of the certificate representing the Subscription Receipts (the “ Subscription
Receipt Certificate ”) and the terms of a subscription receipt and escrow agreement (the “ SRA
Agreement ”) to be entered into on or before the Closing Date. The Subscription Receipt
Certificate representing the Subscription Receipts will, among other things, include provisions for
the appropriate adjustment in number and price upon the occurrence of certain events, including
any subdivision, consolidation, or reclassification of the Company’s common shares.
4
4.
Acceptance and Rejection of Subscription by the Company – The Subscriber acknowledges
and agrees that the Company reserves the right, in its absolute discretion, to reject this
subscription for Subscription Receipts, in whole or in part, at any time prior to the Closing Time.
Upon the Company’s acceptance of this subscription, this Subscription Agreement will constitute
an agreement for the purchase by the Subscriber from the Company, and for the Company to
issue and sell to the Subscriber, the number of Subscription Receipts set forth on the first page
hereof at the Subscription Price and on the Terms set forth herein. The Company shall be entitled
to rely on delivery of a facsimile copy of completed and executed Subscription Agreements, and
acceptance by the Company of such facsimile subscriptions shall be legally effective to create a
valid and binding agreement between the Subscriber and the Company in accordance with the
terms hereof. If this subscription is rejected in whole, any cheques or other forms of payment
delivered to the Escrow Agent or the Company representing the Subscription Price will be
promptly returned to the Subscriber without interest or deduction. If this subscription is accepted
only in part, a cheque representing any refund of the Subscription Price for that portion of the
subscription for the Subscription Receipts which is not accepted will be promptly delivered to the
Subscriber or to the Subscriber’s legal counsel for delivery to the Subscribers without interest or
deduction.
5.
Closing – If the Subscriber’s subscription is accepted by the Company, the purchase and sale of
the Subscription Receipts shall be completed at the Closing Time on the Closing Date.
6.
Issuance of Subscription Receipt Certificates – Upon this subscription being accepted by the
Company, the Company shall, subject to the receipt of the deliveries to be made by the Subscriber
pursuant to section 2 hereof and Terms set out in this Subscription Agreement, issue to the
Subscriber certificates evidencing the Subscriber’s ownership of the Subscription Receipts
acquired by the Subscriber pursuant to the subscription for Subscription Receipts.
7.
Acknowledgment of Offering – The Subscriber acknowledges that the Subscription Receipts
subscribed for hereunder form part of a larger issuance and sale of 6,500,000 Subscription
Receipts for aggregate gross proceeds of up to $3,250,000. The Subscriber acknowledges it is
intended that the minimum dollar amount of Subscription Receipts will be $3,000,000.
8.
Acknowledgment of Transaction – The Subscriber acknowledges that the Company is
proceeding with a proposed listing of its Common Shares on the Exchange (the “ Listing ”). The
completion and approval of the Listing by the Exchange is subject to the satisfaction of a number
of conditions, including, but not limited to, the completion of the Offering and other customary
listing conditions.
9.
Escrow Conditions
(a)
Upon completion of the offer, issue and sale by the Company of the Subscription
Receipts, the gross proceeds from the Offering less the BG Subscriber’s Expense
(the “ Escrowed Proceeds ”) will be held by the Escrow Agent (or such other
escrow agent as may be acceptable to the Company and the BG Subscriber), in its
capacity as escrow agent thereunder and invested in an interest bearing account
(the Escrowed Proceeds, together with all interest and other income earned
thereon, are referred to herein as the “ Escrowed Funds ”) pursuant to the SRA
Agreement. The Escrowed Funds shall be released to the Company (or as it may
direct), upon the receipt of written confirmation from the Exchange (the “
Exchange Confirmation ”) that all conditions precedent to the Listing have been
satisfied (the “ Escrow Release Condition ”). As a condition precedent to the
release of the Escrowed Funds to the Company, the Chief Executive Officer and
Chief Financial Officer of the Company shall certify to the Escrow Agent that the
Escrow Release Condition has been satisfied, and a copy of such certification shall
be provided to the BG Subscriber together with a copy of the Exchange
Confirmation.
5
(b)
In the event that the Escrow Release Condition is not satisfied at or before 5:00
p.m. (EST) on December 31, 2011 (the “ Release Deadline ”), then the
Subscription Receipts shall expire automatically and be of no further force and
effect and the Escrowed Funds shall be returned to the Subscribers pro rata . To
the extent the Escrowed Proceeds are not sufficient to refund the Subscribers the
full amount paid for the Subscription Receipts, the Company shall be liable and
responsible to repay the deficiency to the Subscribers, pro rata .
(c)
The Subscription Receipts shall be created and issued pursuant to the SRA
Agreement and the specific attributes of the Subscription Receipts shall be as set
forth thereunder. The Company shall provide a copy of the SRA Agreement to the
Subscriber upon request by the Subscriber.
(d)
The Subscriber, on its own behalf and on behalf of each beneficial purchaser, if
any, for whom it is contracting under this Subscription Agreement, acknowledges
and agrees that the rights of the holders of the Subscription Receipts (including,
without limitation, the date of the Release Deadline) may be modified under the
SRA Agreement pursuant to an extraordinary resolution approved either: (i) by
holders of Subscription Receipts representing at least 66 ⅔ % of the outstanding
Subscription Receipts that attend or are represented by proxy at a duly convened
meeting of holders of Subscription Receipts; or (ii) by written consent of holders
of Subscription Receipts representing at least 66 ⅔ % of the outstanding
Subscription Receipts.
10.
Representations, Warranties and Covenants of the Company – The Company represents,
warrants and covenants to the Subscriber, and acknowledges that the Subscriber is relying upon
such representations, warranties and covenants in purchasing the Subscription Receipts, that:
(a)
the Company has been duly incorporated and is validly existing under the laws of
the State of Nevada, has all requisite corporate power and authority and is duly
qualified to carry on its business as now conducted and to own, lease or operate its
properties and assets and no steps or proceedings have been taken by the Company
or to the knowledge of the Company by any person, voluntary or otherwise,
requiring or authorizing its dissolution or winding-up and the Company has all
requisite corporate power and authority to enter into each of this Subscription
Agreement, the SRA Agreement and the Registration Rights Agreement and to
carry out its obligations hereunder and thereunder;
(b)
the Company has no subsidiaries;
(c)
the Company is a reporting issuer under the securities laws of the United States
and is not in default of any requirement of such securities laws (the “ Securities
Laws ”);
(d)
each of the execution and delivery of this Subscription Agreement, the SRA
Agreement and the Registration Rights Agreement and the performance by the
Company of its obligations hereunder or thereunder, including the issuance of the
Subscription Receipts and underlying Common Shares, Warrants, Rights and
Warrant Shares, do not and will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, (whether after
notice or lapse of time or both): (A) any statute, rule or regulation in effect at the
date hereof applicable to the Company including, without limitation, the Securities
Laws; (B) the constating documents, by-laws or resolutions of the Company which
are in effect at the date hereof; (C) any mortgage, note, indenture, contract,
agreement, instrument, lease or other document to which the Company is a party
or by which it is bound; or (D) any judgment, decree or order binding the
Company or the property or assets of the Company;
(e)
the Company is in compliance with the timely and continuous disclosure
obligations under the Securities Laws and, without limiting the generality of the
foregoing, there has not occurred any material adverse change, financial or
otherwise, in the assets, liabilities (contingent or
6
otherwise), business, financial condition, capital or prospects of the Company
since June 30, 2011, which has not been publicly disclosed on a non-confidential
basis and all the statements set forth in the Disclosure Documents are true, correct,
and complete in all material respects and do not contain any material
misrepresentation as of the date of such statements;
(f)
except as disclosed in the Disclosure Documents or as contemplated herein, the
Company has not approved, entered into any binding agreement in respect of, or
has any knowledge of:
(i)
the purchase of any material property or assets or any interest therein or the sale,
transfer or other disposition of any material property or assets or any interest
therein currently owned, directly or indirectly, by the Company whether by asset
sale, transfer of shares or otherwise;
(ii)
the change of control (by sale or transfer of shares or sale of all or substantially
all of the property and assets of the Company or otherwise) of the Company; or
(iii)
a proposed or planned disposition of shares by any shareholder who owns,
directly or indirectly, 10% or more of the outstanding shares of the Company;
(g)
the audited consolidated comparative financial statements of the Company as at
and for the years ended June 30, 2011 and 2010, respectively have been prepared
in accordance with United States generally accepted accounting principles, and
present fairly in all material respects the financial position and condition of the
Company, as at the dates thereof and for the periods indicated and reflect all
assets, liabilities or obligations (absolute, accrued, contingent or otherwise) of the
Company and the results of its operations and the changes in its financial position
for the periods then ended;
(h)
no holder of outstanding shares in the capital of the Company is entitled to any
pre-emptive or any similar rights to subscribe for any Common Shares or other
securities of the Company and other than as disclosed in section 10(aa) hereof, no
rights, warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares in the capital of the Company are outstanding;
(i)
no legal or governmental proceedings are pending to which the Company is a party
or to which its property is subject that would result in any material adverse change
in the operation, business, condition or prospects of the Company and, to the
knowledge of the Company, no such proceedings have been threatened against or
are contemplated with respect to the Company or with respect to its properties;
(j)
the Company is not violation in of its constating documents or in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any material contract, indenture, trust deed, mortgage, loan
agreement, note, option, lease or other agreement or instrument to which it is a
party or by which it or its property may be bound;
(k)
to the knowledge of the Company, no counterparty to any material obligation,
agreement, covenant or condition contained in any material contract or other
material instrument to which the Company is a party is in default in the
performance or observance thereof, except where such default in performance
would not have a material adverse effect on the Company;
(l)
any and all of the agreements and other documents and instruments pursuant to
which the Company holds its property and assets (including any interest in, or
right to earn an interest in, any property) are valid and subsisting agreements,
documents or instruments in full force and effect, enforceable against the
Company in accordance with the terms thereof, the Company is not in default of
any of the material provisions of any such agreements, documents or
7
instruments nor has any such default been alleged and such properties and assets
are in good standing, in all material respects, under the applicable statutes and
regulations of the jurisdictions in which they are situated, all leases, licences and
claims pursuant to which the Company derives its interests in such property and
assets are in good standing and there has been no material default under any such
lease, licence or claim. None of the properties (or any interest in, or right to earn
an interest in, any property) of the Company is subject to any right of first refusal
or purchase or acquisition right which is not disclosed in the Disclosure
Documents;
(m)
to the knowledge of the Company, there is no agreement in force or effect which in
any manner affects or will affect the voting or control of any of the securities of
the Company, and there are no shareholders agreements, voting agreements or
other similar agreements with respect to the Company’s capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any
of the Company’s shareholders;
(n)
the Company is the absolute legal and beneficial owner of, and has good and
marketable title to, all of its material properties or assets as described in the
Disclosure Documents, and except as disclosed in the Disclosure Documents, free
of all mortgages, liens, charges, pledges, security interests, encumbrances, claims
or demands whatsoever and no other property rights are necessary for the conduct
of the business of the Company, as currently conducted or contemplated to be
conducted by the Company, the Company does not know of any claim or the basis
for any claim that might or could adversely affect the right thereof to use, transfer
or otherwise exploit such property rights and, except as disclosed in the Disclosure
Documents, the Company has no responsibility or obligation to pay any
commission, royalty, licence fee or similar payment to any person with respect to
the property rights thereof;
(o)
the Company holds either freehold title, mining leases, mining concessions, mining
claims or participating interests or other conventional property or proprietary
interests or rights, recognized in the jurisdiction in which a particular property is
located (collectively, the “ Mining Rights ”), in respect of the ore bodies and
minerals located in material properties in which the Company has an interest as set
out in Schedule “H” hereto and as described in all material respects in the
Disclosure Documents, under valid, subsisting and enforceable documents or
recognized and enforceable agreements or instruments, sufficient to permit the
Company to explore the minerals relating thereto, and all material property,
options, leases or claims in which the Company has an interest or right have been
validly located and recorded in accordance with all applicable laws and are valid
and subsisting. The Company has all necessary surface rights, access rights and
other necessary rights and interests relating to material properties in which the
Company has an interest granting the Company, as applicable, the right and ability
to explore for minerals, ore and metals for development purposes as are
appropriate in view of the rights and interest therein of the Company, with only
such exceptions as do not materially interfere with the use made by the Company
of the rights or interest so held, and each of the proprietary interests or rights and
each of the documents, agreements and instruments and obligations relating
thereto referred to above is currently in good standing in the name of the
Company. The Mining Rights in respect of the Company’s material properties as
disclosed in Schedule “H” hereto and in the Disclosure Documents constitute a
description of all material Mining Rights held by the Company;
(p)
the Company has conducted and is conducting its business in material compliance
with all applicable laws and regulations of each jurisdiction in which it carries on
business (including, without limitation, all applicable federal, state, provincial,
municipal and local environmental anti-pollution and licensing laws, regulations
and other lawful requirements of any governmental or regulatory body) and has
not received a notice of non-compliance, or knows of, or has reasonable grounds
to know of, any facts that could give rise to a notice of non-compliance with any
such laws or regulations which would have a material adverse effect on the
Company;
8
(q)
except to the extent that any violation or other matter referred to in this subsection
does not have a material adverse effect on the Company:
(i)
the Company is not currently in violation of any applicable federal, state,
provincial, municipal or local laws, regulations, orders, governmental decrees or
ordinances with respect to environmental, health or safety matters (collectively,
the “ Environmental Laws ”);
(ii)
to the knowledge of the Company, the Company has operated its business at all
times and has received, handled, used, stored, treated, shipped and disposed of all
contaminants without violation of Environmental Laws;
(iii)
there have been no material spills, releases, deposits or discharges of hazardous or
toxic substances, contaminants or wastes into the earth, air or into any body of
water or any municipal or other sewer or drain water systems by the Company
that have not been remedied;
(iv)
as a result of its operations, no orders, rulings, directions or notices have been
issued and remain outstanding or to the knowledge of the Company are pending
or threatened against the Company under or pursuant to any Environmental
Laws;
(v)
the Company has no knowledge of, and has not received any notice of, any claim,
judicial or administrative proceeding, pending or threatened against it which may
materially adversely affect the Company as a whole relating to or alleging any
material violation of Environmental Laws by the Company and the Company is
not aware of any facts which could give rise to any such claim or judicial or
administrative proceeding and the Company, to the knowledge of the Company,
is not the subject of any investigation, evaluation, audit or review by any
governmental authority to determine whether any material violation of
Environmental Laws by it has occurred or is occurring or whether any remedial
action is needed;
(vi)
to the knowledge of the Company, the Company has not failed to report to the
proper governmental authority the occurrence of any event which is required to
be so reported by any Environmental Law; and
(vii)
the Company holds all licences, permits and approvals required under any
Environmental Laws in connection with the operation of its business as currently
conducted and the ownership and use of its assets, all such licences, permits and
approvals are in full force and effect, and the Company has not received any
notification pursuant to any Environmental Laws that any material work, repairs,
constructions or capital expenditures are required to be made by it as a condition
of continued compliance with any Environmental Laws, or any licence, permit or
approval issued pursuant thereto, or that any license, permit or approval referred
to above is about to be reviewed, made subject to material limitations or
conditions, revoked, withdrawn or terminated;
(r)
the Company holds all requisite licences, registrations, qualifications, permits,
consents and other approvals, including in respect of any Mining Rights
(collectively, the “ Licenses ”), necessary for carrying on its business as currently
carried on and proposed to be carried on and all such Licenses are valid and
subsisting and in good standing in all material respects except where the failure to
hold such licences would not have a material adverse effect on the Company, and
the Company has not received any notice of proceedings relating to the revocation,
adverse modification or cancellation of or any intention to revoke, adversely
modify or cancel any of the Licenses;
9
(s)
the Company is the holder in good standing of all of its material licences free and
clear of any encumbrances which would have a material adverse effect on the
Company, and the Company has no knowledge of any claim of adverse ownership
in respect thereof;
(t)
at the Closing Time, each of this Subscription Agreement, the SRA Agreement and
the Subscription Receipt Certificate, the Registration Rights Agreement, and, at
the applicable times, the certificates representing the Warrants and the Rights shall
have been duly authorized and executed and delivered by the Company and upon
such execution and delivery by the Company and the other parties thereto each
shall constitute a valid and binding obligation of the Company and each shall be
enforceable against the Company in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting the rights of creditors generally
and except as limited by the application of equitable principles when equitable
remedies are sought, and by the fact that rights to indemnity, contribution and
waiver, and the ability to sever unenforceable terms, may be limited by applicable
law;
(u)
Pacific Stock Transfer Company, at its principal office in the City of Las Vegas,
Nevada, has been duly appointed as registrar and transfer agent in respect of the
Common Shares;
(v)
Capital Transfer Agency Inc., at its principal office in the City of Toronto, Ontario,
has been duly appointed agent in respect of the Subscription Receipts;
(w)
no order, ruling or determination having the effect of suspending the sale or
ceasing the trading in any securities of the Company has been issued by any
regulatory authority and is continuing in effect and no proceedings for that purpose
have been instituted or, to the knowledge of the Company, are pending,
contemplated or threatened by any regulatory authority;
(x)
there are no material actions, suits, proceedings or inquiries pending or, to the
knowledge of the Company, threatened against or affecting the Company at law or
in equity or before or by any federal, provincial, municipal or other governmental
department, commission, board, bureau, agency or instrumentality (collectively, an
“ Action ”) which: i) would adversely impede or prevent the consummation of the
transactions contemplated by this Subscription Agreement or challenge the
legality, validity or enforceability of this Subscription Agreement; or ii) could, if
there were an unfavourable decision, have a material adverse effect. Neither the
Company, nor any director or officer thereof, is or has been the subject of any
Action involving a claim of violation of or liability under applicable Securities
Laws or a claim of breach of fiduciary duty. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by any securities commission or other regulatory authorities
involving the Company or any current or former director or officer of the
Company. No securities commission nor any other regulatory authority has issued
any order, ruling or determination having the effect of ceasing the trading or
suspending the sale of the Subscription Receipts, Common Shares or any other
securities of the Company and no Action has been instituted or is pending or, to
the knowledge of the Company, is threatened by any securities commission or
other regulatory authority;
(y)
there are no actions, suits, judgments, investigations, inquiries or proceedings of
any kind whatsoever outstanding (whether or not purportedly on behalf of the
Company), pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its directors or officers, at law or in equity or
before or by any commission, board, bureau or agency of any kind whatsoever
and, to the knowledge of the Company, there is no basis therefor and the Company
is not subject to any judgment, order, writ, injunction, decree, award, rule, policy
or regulation of any governmental authority which, either separately or in the
aggregate, may affect,
10
is material to or will materially affect the Company or would adversely affect the
ability of the Company to perform its obligations under this Subscription
Agreement;
(z)
the Company is not aware of any licensing or legislation, regulation, by-law or
other lawful requirement of any governmental authority having lawful jurisdiction
over the Company presently in force or, to its knowledge, proposed to be brought
into force that the Company anticipates it will be unable to comply with or which
could reasonably be expected to have a material adverse effect on the Company;
(aa)
as of October 31, 2011, the authorized capital of the Company consists of
200,000,000 Common Shares, of which 70,933,334 Common Shares are issued
and outstanding as fully paid and non-assessable. The Company also has
2,233,334 warrants to subscribe for an equal number of Common Shares and
6,500,000 stock options outstanding to subscribe for an equal number of Common
Shares as of October 31, 2011;
(bb)
the Company is subject to the reporting requirements of section 13(a) or 15(d) of
the U.S. Exchange Act, has filed with the SEC all reports required to be filed
pursuant to the U.S. Exchange Act, and such reports at the time they were filed
with the SEC materially complied as to form with the requirements of the U.S.
Exchange Act;
(cc)
the Company shall use commercially reasonable efforts to file with the SEC all
reports required to be filed pursuant to the U.S. Exchange Act on such date as each
such report is required to be filed, until such time as the Common Shares and
Warrant Shares may be resold pursuant to an effective registration statement filed
with the SEC or pursuant to Rule 144 under the U.S. Securities Act without regard
to Rule 144(i);
(dd)
upon request to do so, the Company shall use commercially reasonable efforts and
shall take all steps to qualify the Securities for electronic deposit;
(ee)
none of the directors, officers or employees of the Company or any associate or
affiliate of any of the foregoing had or has any material interest, direct or indirect,
in any material transaction or any proposed material transaction with the Company
which materially affects, is material to or will materially affect the Company;
(ff)
the Company owns or has the right to use under license, sub-license or otherwise
all material intellectual property used by the Company in its business, including
copyrights, industrial design, trademarks, trade secrets, knowhow and proprietary
rights, free and clear of all encumbrances;
(gg)
the Company is in compliance with all laws respecting employment and
employment practices, terms and conditions of employment, pay equity and
wages, except where non-compliance with such laws could not reasonably be
expected to have a material adverse effect on the Company and has not and is not
engaged in any unfair labour practice;
(hh)
there has not been in the last two years and there is not currently any labour
disruption or conflict which could reasonably be expected to have a material
adverse effect on the Company;
(ii)
all taxes (including income tax, capital tax, payroll taxes, employer health tax,
workers’ compensation payments, property taxes, customs and land transfer taxes),
duties, royalties, levies, imposts, assessments, deductions, charges or withholdings
and all liabilities with respect thereto including any penalty and interest payable
with respect thereto (collectively, “ Taxes ”) due and payable by the Company
have been paid except for where the failure to pay such taxes would not constitute
an adverse material fact of the Company or result in an adverse material change to
the Company. All tax returns, declarations, remittances and filings required to be
filed by the Company have been filed with all appropriate governmental
authorities and all such
11
returns, declarations, remittances and filings are complete and accurate and no
material fact or facts have been omitted therefrom which would make any of them
misleading except where the failure to file such documents would not constitute an
adverse material fact of the Company or result in an adverse material change to the
Company. To the knowledge of the Company, no examination of any tax return
of the Company is currently in progress and there are no issues or disputes
outstanding with any governmental authority respecting any Taxes that have been
paid, or may be payable, by the Company except where such examinations, issues
or disputes would not constitute an adverse material fact of the Company or result
in an adverse material change to the Company;
(jj)
the Company has established on its books and records reserves that are adequate
for the payment of all Taxes not yet due and payable and there are no liens for
Taxes on the assets of the Company and, to the knowledge of the Company, there
are no audits pending of the tax returns of the Company (whether federal, state,
provincial, local or foreign) and there are no claims which have been or may be
asserted relating to any such tax returns, which audits and claims, if determined
adversely, would result in the assertion by any governmental agency of any
deficiency that would result in a material adverse effect on the Company;
(kk)
except as disclosed in the Disclosure Documents, there are no material liabilities of
the Company whether direct, indirect, absolute, contingent or otherwise and the
Company has not made any loans to or guaranteed the obligations of any person;
(ll)
except as disclosed in the Disclosure Documents, the Company is not indebted to
any person in any material respect;
(mm)
there are no documents required to be filed under the Securities Laws in
connection with the Offering that will not have been filed as required, subject only
to satisfaction of all applicable post-closing filings and/or requirements;
(nn)
the minute books of the Company made available to counsel for the Underwriters
in connection with its due diligence investigation of the Company for the periods
from the date of incorporation to the date of examination thereof are all of the
minute books of the Company and contain the constating documents of the
Company from the date of incorporation and copies of all proceedings (or certified
copies thereof) of the shareholders, the boards of directors and all committees of
the boards of directors of the Company and there have been no other meetings,
resolutions or proceedings of the shareholders, board of directors or any
committees of the boards of directors of the Company not reflected in such minute
books and other records, other than those which are not material in the context of
the Company as of the date hereof;
(oo)
all information which has been prepared by the Company relating to the Company
and its business, property and liabilities and made available to the Underwriters,
including all financial and operational information provided to the Underwriters
was, as of the date of such information and is as of the date hereof, true and correct
in all material respects, taken as a whole, and no fact or facts have been omitted
therefrom which would make such information materially misleading;
(pp)
the operations of the Company are and have been conducted at all times in
compliance with the anti-money laundering statutes of all jurisdictions to which
they are subject, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “ Anti-Money Laundering Laws ”) and
no Action by or before any governmental authority or any arbitrator involving the
Company with respect to the Anti-Money Laundering Laws is pending or, to the
knowledge of the Company, threatened;
12
(qq)
the creation, sale and issuance of the Subscription Receipts, and the delivery of the
Subscription Receipt Certificates representing them, will have been approved by
all requisite corporate action on or before the Closing Date and, upon issue and
delivery at the Closing Time, the Subscription Receipts will be validly issued and
the Subscription Receipt Certificates will be validly delivered;
(rr)
upon the automatic exchange of the Subscription Receipts into Units in accordance
with the terms of the Subscription Receipt Certificate or the SRA Agreement, as
applicable, the issuance of the Common Shares, and the creation and issuance of
the Warrants and Rights, and the delivery of the certificates representing the
Common Shares, Warrants and Rights, will have been approved by all requisite
corporate action on or before such automatic exchange and, upon issue and
delivery, the Common Shares will be validly issued as fully paid and
non-assessable, the Warrant and the Rights will be validly issued, and the
certificates representing the Common Shares, Warrants and Rights will be validly
delivered;
(ss)
upon valid exercise of the Warrants in accordance with the terms thereof, and in
accordance with the terms of the Subscription Receipt Certificate or the SRA
Agreement, as applicable, the issuance of the Warrant Shares and the delivery of
the certificates representing the Warrant Shares will have been approved by all
requisite corporate action on or before the automatic exchange of the Subscription
Receipts and, upon issue and delivery, the Warrant Shares will be validly issued as
fully paid and non-assessable, and the certificates representing the Warrant Shares
will be validly delivered;
(tt)
upon valid exercise of the Rights in accordance with the terms of the Registration
Rights Agreement, the issuance of the Right Shares and the delivery of the
certificates representing the Right Shares will have been approved by all requisite
corporate action on or before the exercise of the Rights and, upon issue and
delivery, the Right Shares will be validly issued as fully paid and non-assessable,
and the certificates representing the Right Shares will be validly delivered;
(uu)
the representations and warranties of the Company stated or referred to in this
Subscription Agreement shall be true and correct both as of the execution of this
Subscription Agreement by the Subscriber and as of the Closing Time on the
Closing Date, as if repeated at such time, and shall survive the completion of the
issuance of the Subscription Receipts;
(vv)
upon satisfaction of the Escrow Release Condition, the net proceeds of the
Offering will be used by the Company to fund the exploration of the Mining
Rights with respect to the Trinity Silver Mine Property identified in Schedule “H”
and for general working capital purposes; and
(ww)
the Company will, and covenants and agrees to, use its best efforts to perform its
obligations under the Registration Rights Agreement and to effect the Registration
in accordance with the terms set out in the Registration Rights Agreement.
11.
Representations, Warranties and Covenants of the Subscriber – The Subscriber (on its own
behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting)
represents, warrants and covenants to the Company (and acknowledges that the Company and its
counsel are relying thereon) that both at the date hereof and at the Closing Time (as defined
below):
(a)
it has been independently advised as to restrictions with respect to trading in the
Subscription Receipts and the Common Shares, Warrants and Rights issuable upon
exchange of the Subscription Receipts (collectively, the “ Securities ”) imposed
by applicable securities laws, confirms that no representation (written or oral) has
been made to it by or on behalf of the Company with respect thereto other than as
set forth herein, acknowledges that it is aware of the
13
characteristics of the Securities, the risks relating to an investment therein and of
the fact that it may not be able to resell the Securities except in accordance with
limited exemptions under applicable securities laws and regulatory policy until
expiry of the applicable restricted period and compliance with the other
requirements of applicable law; and it agrees that:
(i)
any certificates representing the Securities are to bear the following legend:
“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [INSERT: THE
DATE THAT IS FOUR MONTHS AND A DAY AFTER THE CLOSING DATE]”;
and
(ii)
any certificates representing the Common Shares issuable upon conversion of the
Subscription Receipts are to also bear the following legend:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON
THE TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID
SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF TSX SINCE
THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY”
IN SETTLEMENT OF TRANSACTIONS ON TSX.”;
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “U.S. SECURITIES ACT”), OR UNDER THE SECURITIES LAWS
OF ANY STATE. THE HOLDER HEREOF, BY PURCHASING THE SECURITIES
REPRESENTED HEREBY, AGREES FOR THE BENEFIT OF LIBERTY SILVER
CORP. AND ITS SUCCESSORS (THE “CORPORATION”) THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED
STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
U.S. SECURITIES ACT AND IN COMPLIANCE WITH LOCAL LAWS AND
REGULATIONS, (C) WITHIN THE UNITED STATES, PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT
PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF APPLICABLE AND
IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D)
WITHIN THE UNITED STATES, IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY
APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER
AND SALE OF SECURITIES, AND IN THE CASE OF TRANSFERS PURSUANT TO
(C) OR (D) ABOVE, THE HOLDER HEREOF HAS, PRIOR TO SUCH TRANSFER,
FURNISHED TO THE CORPORATION AND THE CORPORATION’S TRANSFER
AGENT AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM
AND SUBSTANCE SATISFACTORY TO THE CORPORATION.”
and the Subscriber further acknowledges that: (i) it has been advised to consult its own legal
counsel in its jurisdiction of residence for full particulars of the resale restrictions applicable to it;
and (ii) in the event that the Company is required by applicable securities legislation to provide
written notice containing the legend set out at section 11(a)(i) to the beneficial purchaser of the
Subscription Receipts, notice shall be deemed to have been given and received on the date on
which it was delivered to the address of such beneficial purchaser provided on the face page
hereof; and
14
(b)
it has not received or been provided with, nor has it requested, nor does it have any
need to receive, any offering memorandum, any prospectus, sales or advertising
literature, or any other document (other than an annual report, annual information
form, interim report, information circular or any other continuous disclosure
document, the content of which is prescribed by statute or regulation) describing
or purporting to describe the present or proposed business and affairs of the
Company which has been prepared for delivery to, and review by, prospective
purchasers in order to assist them in making an investment decision in respect of
the Subscription Receipts; and
(c)
it has not become aware of any advertisement in printed media of general and
regular paid circulation (or other printed public media), radio, television or
telecommunications or other form of advertisement (including electronic display
and the internet) with respect to the distribution of the Securities; and
(d)
it understands that the Subscription Receipts are being offered for sale only on a
“private placement” basis and that the sale and delivery of the Subscription
Receipts is conditional upon such sale being exempt from the requirements as to
the filing of a prospectus or delivery of an offering memorandum or upon the
issuance of such orders, consents or approvals as may be required to permit such
sale without the requirement of filing a prospectus or delivering an offering
memorandum and, as a consequence (i) the Subscriber is restricted from using
most of the civil remedies available under securities legislation, (ii) the Subscriber
may not receive information that would otherwise be required to be provided to it
under applicable securities legislation, and (iii) the Company is relieved from
certain obligations that would otherwise apply under applicable securities
legislation; and
(e)
unless it is purchasing under section 11(f) or (g), it is purchasing the Subscription
Receipts as principal for its own account, not for the benefit of any other person,
for investment only and not with a view to the resale or distribution of all or any of
the Securities, it is resident in the jurisdiction set out as the “Subscriber’s
Residential Address” on the face page hereof; and
(f)
if it is not purchasing as principal or pursuant to section 11(g), it is duly authorized
to enter into this Subscription Agreement and to execute and deliver all
documentation in connection with the purchase on behalf of each beneficial
purchaser, each of whom is purchasing as principal for its own account, not for the
benefit of any other person, and not with a view to the resale or distribution of all
or any of the Securities, it acknowledges that the Company may be required by
law to disclose to certain regulatory authorities the identity of each beneficial
purchaser of Subscription Receipts (the “ Disclosed Beneficial Purchaser ”) for
whom it may be acting, and it and each beneficial purchaser is resident in the
jurisdiction set out as the “Subscriber’s Residential Address”; and
(g)
it, and each person on whose behalf the Subscriber is contracting, is a resident of a
jurisdiction outside of both Canada and the United States, it has concurrently
executed and delivered a Representation Letter in the form attached to this
Subscription Agreement as Schedule “E” and will provide such evidence of
compliance with all matters described in such Representation Letter as the
Company or its counsel may request; and
(h)
it acknowledges that:
(i)
no securities commission or similar regulatory authority has reviewed or passed
on the merits of the Securities; and
(ii)
there is no government or other insurance covering the Securities; and
(iii)
there are risks associated with the purchase of the Subscription Receipts; and
15
(iv)
there are restrictions on the Subscriber’s ability to resell the Securities and it is
the responsibility of the Subscriber to find out what those restrictions are and to
comply with them before selling the Securities; and
(v)
there is no market for the Securities and there is no assurance that a market will
develop in the future and that no verbal or written representation has been made
by or on behalf of the Company with respect thereto; and
(vi)
the Company has advised the Subscriber that the Company is relying on an
exemption from the requirements to provide the Subscriber with a prospectus and
to sell securities through a person or company registered to sell securities under
the Securities Act (Ontario) and other applicable securities laws and, as a
consequence of acquiring securities pursuant to this exemption, certain
protections, rights and remedies provided by the Securities Act (Ontario) and
other applicable securities laws, including statutory rights of rescission or
damages, will not be available to the Subscriber; and
(vii)
the certificates representing the Securities will be endorsed with a legend stating
that such securities will be subject to restrictions on resale in accordance with
applicable securities legislation; and
(i)
the Subscription Receipts have not been offered to the Subscriber (or any person
on whose behalf the Subscriber is contracting) in the United States, and any person
making the order to purchase the Subscription Receipts and executing and
delivering this Subscription Agreement was not in the United States when the
order was placed and this Subscription Agreement was executed and delivered,
unless such person is a dealer or other professional fiduciary organized,
incorporated, or (if an individual) resident in the United States signing on behalf of
a discretionary account or similar account (other than an estate or trust) held for
the benefit or account of a Disclosed Beneficial Purchaser which is a not in the
United States or a U.S. Person; and
(j)
it is not a U.S. Person (as defined in Regulation S under the U.S. Securities Act,
which definition includes, but is not limited to, an individual resident in the United
States, an estate or trust of which any executor or administrator or trustee,
respectively, is a U.S. Person and any partnership or corporation organized or
incorporated under the laws of the United States) and is not purchasing and will
not purchase the Subscription Receipts on behalf of, or for the account or benefit
of, a person in the United States or a U.S. Person or for resale in the United States;
and
(k)
it is aware that the Securities are not currently registered under the U.S. Securities
Act or the securities laws of any state and that these securities may not be offered
or sold in the United States without registration under the U.S. Securities Act or
compliance with requirements of an exemption from registration and the
applicable laws of all applicable states and acknowledges that while the Company
has covenanted and agreed to file a registration statement under the U.S. Securities
Act in respect of the Securities, there is no certainty as to timing or to whether the
registration status will become effective; and
(l)
it undertakes and agrees that it will not offer or sell any of the Securities in the
United States unless such securities are registered under the U.S. Securities Act
and the securities laws of all applicable states of the United States or an exemption
from such registration requirements is available, and further that it will not resell
the Securities, except in accordance with the provisions of applicable securities
legislation, regulations, rules, policies and orders and stock exchange rules; and
(m)
it has not purchased the Subscription Receipts as a result of any form of directed
selling efforts in the United States, as such term is defined in Regulation S under
the U.S. Securities Act; and
16
(n)
it understands and acknowledges that the Company (i) is under no obligation to be
or to remain a “foreign issuer”, as such term is defined in the U.S. Securities Act,
(ii) may not, at the time the Subscriber sells the Securities or at any other time, be
a foreign issuer and that it is not currently a foreign issuer, and (iii) may engage in
one or more transactions that could cause the Company not to be a foreign issuer;
and
(o)
if it is not an individual, it pre-existed the offering of the Subscription Receipts and
has a bona fide business purpose other than the investment in the Subscription
Receipts and was not created, formed or established solely or primarily to acquire
securities, or to permit purchases of securities without a prospectus, in reliance on
an exemption from the prospectus requirements of applicable securities legislation;
and
(p)
if it is a corporation, partnership, trust, unincorporated association or other entity, it
has the legal capacity to enter into and be bound by this Subscription Agreement
and further certifies that all necessary approvals of directors, trustees, fiduciaries,
shareholders, partners, stakeholders, holders of voting securities or otherwise have
been given and obtained; and
(q)
if it is an individual, it is of the full age of majority and is legally competent to
execute this Subscription Agreement and take all action pursuant hereto; and
(r)
the entering into of this Subscription Agreement and the transactions contemplated
hereby will not result in a violation of any of the terms or provisions of any law
applicable to the Subscriber (or any person on whose behalf the Subscriber is
contracting), or if the Subscriber (or any person on whose behalf the Subscriber is
contracting) is not a natural person, any of such person’s constating documents, or
any agreement to which such person is a party or by which it is bound; and
(s)
this Subscription Agreement has been duly and validly authorized, executed and
delivered by and constitutes a legal, valid, binding and enforceable obligation of
the Subscriber; and
(t)
in the case of a subscription by it for Subscription Receipts acting as agent for a
principal, it is duly authorized to execute and deliver this Subscription Agreement
and all other necessary documentation in connection with such subscription on
behalf of such principal and this Subscription Agreement has been duly
authorized, executed and delivered by or on behalf of, and constitutes a legal, valid
and binding agreement of, such principal; and
(u)
it has such knowledge and experience in financial and business affairs as to be
capable of evaluating the merits and risks of its investment in the Subscription
Receipts and is able to, and agrees to, bear the economic risk of loss of its
investment or, where it is not purchasing as principal, each beneficial purchaser is
able to, and agrees to, bear the economic risk of loss of its investment; and
(v)
it has relied solely upon publicly available information relating to the Company
and not upon any verbal or written representation as to fact or otherwise made by
or on behalf of the Company; and
(w)
it acknowledges that the Company’s counsel is acting as counsel to the Company
and not as counsel to the Subscriber (or any person on whose behalf the Subscriber
is contracting); and
(x)
if required by applicable securities legislation, regulations, rules, policies or orders
or by any securities commission, stock exchange or other regulatory authority, the
Subscriber will execute, deliver, file and otherwise assist the Company in filing,
such reports, undertakings and other documents with respect to the issue of the
Securities including, without limitation: (A) this Subscription Agreement; (B) if
the Subscriber, or if applicable, the Disclosed Beneficial
17
Purchaser, is an accredited investor, a Representation Letter in the form attached
as Exhibit 1 hereto; and (C) if the Subscriber, or if applicable, the Disclosed
Beneficial Purchaser, is resident outside of Canada, a Representation Letter in the
form attached as Exhibit 2 hereto; and
(y)
it acknowledges that the acquisition of the Common Shares issuable upon
conversion of the Subscription Receipts purchased hereunder by the Subscriber (or
any person on whose behalf the Subscriber is contracting) may result in the
Subscriber (or any such person) becoming a “control person” in respect of the
Company, as defined under applicable securities laws, and that it has been advised
to consult its own legal counsel, both in its jurisdiction of residence and in Canada,
for full particulars of the resale restrictions applicable to it; and
(z)
no person has made to the Subscriber (or any person on whose behalf the
Subscriber is contracting) any written or oral representations (i) that any person
will resell or repurchase the Securities (except in accordance with the articles of
the Company or the SRA Agreement), or (ii) that any person will refund the
purchase price of the Subscription Receipts, or (iii) as to the future price or value
of the Securities, or (iv) as to any of the Securities being listed on any stock
exchange; and
(aa)
the Subscription Price which will be advanced by the Subscriber to the Company
hereunder will not represent proceeds of crime for the purposes of the Proceeds of
Crime (Money Laundering) and Terrorist Financing Act (Canada) (the “ PCMLA
”) and the Subscriber acknowledges that the Company may in the future be
required by law to disclose the Subscriber’s name and other information relating to
this Subscription Agreement and the Subscriber’s subscription hereunder, on a
confidential basis, pursuant to the PCMLA; and to the best of its knowledge (i)
none of the subscription funds to be provided by the Subscriber (A) have been or
will be derived from or related to any activity that is deemed criminal under the
laws of Canada, the United States of America, or any other jurisdiction, or (B) are
being tendered on behalf of a person or entity who has not been identified to the
Subscriber, and (ii) it shall promptly notify the Company if the Subscriber
discovers that any of such representations ceases to be true, and to provide the
Company with appropriate information in connection therewith; and
(bb)
the Subscriber (including any person on whose behalf the Subscriber is
contracting) has been encouraged to obtain independent legal, income tax and
investment advice with respect to this subscription for the Subscription Receipts
and accordingly, has had the opportunity to acquire an understanding of the
meanings of all terms contained herein relevant to the Subscriber (and each person
on whose behalf the Subscriber is contracting) for purposes of giving
representations, warranties and covenants under this Subscription Agreement; and
(cc)
the Subscriber has such knowledge of financial and business affairs or has received
such advice as to be capable of evaluating the merits and risks of the Subscriber’s
investment in the Subscription Receipts and the Subscriber is able to bear the
economic risk of the loss of the Subscriber’s investment in the Subscription
Receipts; and
(dd)
the Subscriber will execute, deliver, file and otherwise assist the Company in filing
such reports, undertakings and other documents with respect to the issue of the
Common Shares, Warrants and/or Warrant Shares as may be required by
applicable securities legislation, regulations, rules, policies and orders of securities
commissions, stock exchanges or other regulatory authorities applicable to the
Company; and
(ee)
the Subscriber agrees to be bound by any escrow and pooling agreements that may
be required by any securities commission or stock exchange or other regulatory
authority having jurisdiction; and
18
(ff)
the representations and warranties of the Subscriber stated or referred to in this
Subscription Agreement shall be true and correct both as of the execution of this
Subscription Agreement by the Subscriber and as of the Closing Time on the
Closing Date, as if repeated at such time, and shall survive the completion of the
issuance of the Subscription Receipts.
12.
Collection of Personal Information - The Subscriber, on the Subscriber’s own behalf and, if
applicable, on behalf of each beneficial purchaser for whom the Subscriber is contracting
hereunder, acknowledges and consents to the fact that the Company is collecting the personal
information (as that term is defined under applicable private legislation, including, without
imitation, the Personal Information Protection and Electronic Documents Act (Canada) and any
other applicable similar, replacement or supplemental provincial or federal legislation or laws in
effect from time to time) of the Subscriber or that of each beneficial purchaser for whom the
Subscriber is contracting hereunder, for the purpose of completing this Subscription Agreement.
13.
Consent to Use and Disclosure - The Subscriber and, if applicable, on behalf of each beneficial
purchaser for whom the Subscriber is contracting hereunder, acknowledges and consents to the
company retaining such personal information for as long as permitted or required by law or
business practices. The Subscriber, on its own behalf and, if applicable, on behalf of each
beneficial purchaser for whom the Subscriber is contracting hereunder, further acknowledges and
consents to the fact that the Company may be required by applicable securities legislation or the
rules and policies of any stock exchange or the rules of the Investment Industry Regulatory
Organization of Canada to provide regulatory authorities with any personal information provided
by the Subscriber in this Subscription Agreement. The Subscriber represents and warrants that the
Subscriber has the authority to provide the consents and acknowledgements set out in this
paragraph on behalf of each beneficial purchaser for whom the Subscriber is contracting
hereunder. In addition to the foregoing, the Subscriber agrees and acknowledges that the
Company may use and disclose the personal information of the Subscriber or that of each
beneficial purchaser for whom the Subscriber is contracting hereunder, as follows:
(a)
for internal use with respect to managing the relationships between and contractual
obligations of the Company and the Subscriber or any beneficial purchaser for
whom the Subscriber is contracting hereunder;
(b)
for use and disclosure for income tax related purposes, including without
limitation, where required by law, disclosure to the Canada Revenue Agency;
(c)
disclosure to securities regulatory authorities with jurisdiction with respect to
reports of trade and similar regulatory filings;
(d)
disclosure to a governmental or other authority to which the disclosure is required
by court order or subpoena compelling such disclosure and where there is no
reasonable alternative to such disclosure;
(e)
disclosure to professional advisers of the company in connection with the
performance of their professional services; and
(f)
for use and disclosure as otherwise required or permitted by law.
14.
Ontario Authorization - The Subscriber and, if applicable, on behalf of each beneficial
purchaser for which the Subscriber is contracting hereunder, acknowledges that the Company
may be required to file with the Ontario Securities Commission information pertaining to the
Subscriber and each such beneficial purchaser relating to the purchase of the Subscription
Receipts, that this information is being collected indirectly by the Ontario Securities Commission
under the authority granted to it in applicable securities legislation, that this information is being
19
collected for the purposes of the administration and enforcement of the securities legislation of
Ontario, and that the title, business address and business telephone number of the public official
in Ontario who can answer questions about the Ontario Securities Commission’s indirect
collection of the information is as follows:
Ontario Securities Commission
Suite 1903, Box 5520 Queen Street West
Toronto, Ontario M5H 3S8
Telephone: (416) 593-3682
Facsimile: (416) 593-8252
Public official contact regarding indirect collection of information:
Administrative Assistant to the Director of Corporate Finance
Telephone (416) 593-8086
and the Subscriber hereby authorizes the indirect collection of such information by the Ontario
Securities Commission.
15.
Facsimiles and Counterparts - The Company shall be entitled to rely on a facsimile or other
electronically communicated copy of an executed Subscription Agreement and acceptance by the
Company of such agreement shall be legally effective to create a valid and binding agreement
between the Subscriber and the Company in accordance with the Terms hereof. In addition, this
Subscription Agreement may be executed in counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same document.
16.
b)
Reliance by Company and Indemnity - The representations, warranties and covenants
of the Subscriber herein (including all schedules and certificates attached hereto) are
made with the intent that they be relied upon in determining the suitability of a purchaser
of Subscription Receipts and the Subscriber agrees to indemnify and hold harmless the
Company and its directors, officers, employees, and advisers from and against any and all
loss, liability, claim, damage and expense whatsoever including, but not limited to, any
fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or
defending against any litigation, administrative proceeding or investigation commenced
or threatened or any claim whatsoever arising out of or based upon any representation or
warranty of the Subscriber contained herein or in any document furnished by the
Subscriber to the Company in connection herewith being untrue in any material respect or
any breach or failure by the Subscriber to comply with any covenant or agreement made
by the Subscriber herein or in any document furnished by the Subscriber to the Company
in connection herewith. The Subscriber undertakes to immediately notify the Company at
its registered and records office, 675 Sierra Rose Drive, Ste. 112, Reno, Nevada, 89511,
Attention: Geoffrey Browne, of any change in any statement or other information relating
to the Subscriber set forth herein which takes place prior to the Closing Time on the
Closing Date.
(b)
Reliance by Subscriber and Indemnity - The representations, warranties and
covenants of the Company herein (including all schedules and certificates attached
hereto) are made with the intent that they be relied upon in determining the
suitability of the investment of the Subscription Receipts by the Subscriber, and
the Company agrees to indemnify and hold harmless the Subscriber from and
against any and all loss, liability, claim, damage and expense whatsoever
including, but not limited to, any fees, costs and expenses whatsoever reasonably
incurred in investigating, preparing or defending against any litigation,
administrative proceeding or investigation commenced or threatened or any claim
whatsoever arising out of or based upon any representation or warranty of the
Company contained herein or in any document furnished by the Company to the
20
Subscriber in connection herewith being untrue in any material respect or any
breach or failure by the Subscriber to comply with any covenant or agreement
made by the Company herein or in any document furnished by the Company to the
Subscriber in connection herewith.
17.
Closing Conditions – The obligations of the Subscriber to purchase the Subscription Receipts, to
complete the transactions contemplated in this Subscription Agreement and to deliver executed
Subscription Agreement and the Subscription Proceeds to the Company is subject to the
following conditions for the benefit of the Subscriber, which must be fulfilled at or prior to the
Closing Time, unless waived in writing by the Subscriber:
(a)
the Company delivering to the Subscriber, at the Closing Time, a certificate dated
the Closing Date addressed to the Subscriber and signed by the chief executive
officer and chief financial officer of the Company certifying on behalf of the
Company, and not in their personal capacities, to the best of their knowledge,
information and belief, after due inquiry, that:
(i)
no order, ruling or determination having the effect of suspending the sale or
ceasing the trading in any securities of the Company (including the Common
Shares) has been issued by any regulatory authority and is continuing in effect
and no proceedings for that purposes have been instituted or are pending or, to
the knowledge of such officers, contemplated or threatened by any regulatory
authority;
(ii)
the Company has complied with all the covenants and satisfied all the terms and
conditions of this Subscription Agreement to be complied with and satisfied by
the Company at or prior to the Closing Time;
(iii)
the representations and warranties of the Company contained in this Subscription
Agreement are true and correct as at the Closing Time, with the same force and
effect as if made on and as at the Closing Time after giving effect to the
transactions contemplated by this Subscription Agreement; and
(iv)
the Company has made and/or obtained, on or prior to the Closing Time, all
necessary filings, approvals, consents and acceptances under applicable
Securities Laws, and under any applicable agreement or document to which the
Company is a party or by which it is bound, required for the execution and
delivery of this Subscription Agreement, the offering and sale of the Subscription
Receipts (subject to completion of filings with certain regulatory authorities
following the Closing Date);
(b)
the Company delivering to the Subscriber at the Closing Time a certificate dated
the Closing Date addressed to the Subscriber and signed by the Company
certifying:
(i)
the constating documents of the Company;
(ii)
the resolutions of the directors of the Company relevant to the Offering; and
(iii)
the incumbency and signatures of signing officers of the Company;
(c)
the Subscriber having received from the Company and/or its counsel a certificate
of status for the Company, dated the Closing Date or earlier if logistics so dictate;
21
(d)
the Subscriber having received a certificate of the Company’s registrar that
certifies the number of Common Shares issued and outstanding on the date
immediately prior to the Closing Date; and
(e)
the Subscriber shall have received prior to the Closing Date legal opinions from
solicitors for the Company dated the Closing Date in a form satisfactory to the
Subscriber and its counsel, acting reasonably, with respect to the following
matters:
(i)
as to the incorporation and existence of the Company;
(ii)
as to the power and capacity of the Company to own its property and carry on its
business as currently conducted and carry out the transactions contemplated by
this Subscription Agreement;
(iii)
that all necessary corporate action has been taken by the Company to authorize
the execution and delivery of this Subscription Agreement, the SRA Agreement
and the Registration Rights Agreement, and to issue the Common Shares,
Warrants and Rights issuable on the exchange of the Subscription Receipts;
(iv)
as to the authorized and issued capital of the Company;
(v)
that the Company is not a party to, bound or affected by or subject to any charter
or by-law provision which is or would be violated, contravened or breached by
the execution, delivery and performance by it of this Subscription Agreement or
the performance by it of any of the terms thereof;
(vi)
that this Subscription Agreement, the SRA Agreement and the Registration
Rights Agreement has been duly authorized, executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company
enforceable against it in accordance with its terms;
(vii)
that the Subscription Receipts, Warrants and Rights have been duly created;
(viii)
that the Common Shares, Warrants and Rights have been authorized and allotted
for issuance;
(ix)
that the Warrant Shares issuable on the due exercise of the Warrants and the
Rights Shares issuable on the deemed exercise of the Rights have been duly
allotted and reserved for issuance, and when issued in accordance with the terms
of the certificates representing the Warrants and the Rights, respectively, will be
issued as fully paid and non-assessable; and
(x)
matters with respect to title to the Mineral Rights described in Schedule “H”.
Each of the foregoing conditions is included for the benefit of the Subscriber and maybe waived
by the Subscriber by notice in writing to the Company.
18.
Governing Law - This Subscription Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada applicable therein
and the Subscriber and the Company both irrevocably attorn to the non-exclusive jurisdiction of
the Courts of the Province of Ontario.
19.
Time - Time shall be of the essence hereof.
22
20.
Entire Agreement - This Subscription Agreement represents the entire agreement of the parties
hereto relating to the subject matter hereof and there are no representations, warrants, covenants
or other agreements relating to the subject matter hereof except as stated or referred to herein.
21.
Subscriber’s Costs - The Subscriber acknowledges and agrees that all costs incurred by the
Subscriber (including any fees and disbursements of any counsel retained by the Subscriber)
relating to the purchase of the Subscription Receipts by the Subscriber shall be borne by the
Subscriber with the exception of the BG Subscriber’s Expenses.
22.
Assignment - No rights or obligations of the Subscriber hereunder may be assigned without the
prior written consent of the Company.
23.
Enurement - The terms and provisions of this Subscription Agreement shall be binding upon and
enure to the benefit of the Subscriber and the Company and their respective heirs, executors,
administrators, successors and permitted assigns.
24.
Offer Irrevocable - The Subscriber agrees that this offer is made for valuable consideration and
may not be withdrawn, cancelled, terminated or revoked by the Subscriber.
25.
Modifications - Neither this Subscription Agreement nor any provision hereof shall be modified,
changed, discharged or terminated except by an instrument in writing signed by the party against
whom any waiver, change, discharge or termination is sought.
26.
Survival - The covenants, representations and warranties contained herein shall survive the
closing of the transactions contemplated hereby.
27.
Currency - In this Subscription Agreement, references to “$” or “Cdn $” are to United States
dollars except where otherwise specified herein.
TO ASSIST THE COMPANY IN COMPLYING WITH APPLICABLE SECURITIES LAW AND
COMPLETING ANY REQUIRED REGULATORY FILINGS, THE SUBSCRIBER HAS
COMPLETED THE SUBSCRIPTION AGREEMENT AND THE ATTACHED SCHEDULE “B” -
EXEMPTION FORM AND IF APPLICABLE, THE ATTACHED SCHEDULE “C” –
ACCREDITED INVESTOR CERTIFICATE, THE ATTACHED SCHEDULE “D” –
CERTIFICATE OF U.S. INVESTOR, WHICH FORM PART OF THIS SUBSCRIPTION
AGREEMENT AND THE ATTACHED SCHEDULE “E” – ADDITIONAL
REPRESENTATIONS, WARRANTIES AND COVENANTS FOR SUBSCRIBERS OUTSIDE OF
CANADA AND THE UNITED STATES, WHICH FORM PART OF THIS SUBSCRIPTION
AGREEMENT .
23
SCHEDULE “A”
TERM SHEET
LIBERTY SILVER CORP.
PRIVATE PLACEMENT OF SUBSCRIPTION
RECEIPTS
Issuer: Liberty Silver Corp. (the “ Company ”)
Offering: Private placement (the “ Offering ”) of up to 6,500,000 subscription receipts (“
Subscription Receipts ”)
Offering Size: Up to US$3,250,000
Issue Price: $0.50 per Subscription Receipt
Subscription Receipts Each Subscription Receipt will be automatically exchanged without any further action by the
holder and for no additional consideration for one unit of the Company (a “ Unit ”) upon
satisfaction of the Escrow Release Condition on or before the Release Deadline (as defined
below).
Escrow Release Upon completion of the Offering, the gross proceeds from the Offering less certain expenses
Condition (the “ Escrowed Proceeds ”) will be held by the Capital Transfer Agency Inc. (the “
Escrow Agent ”), in an interest bearing account pursuant to a subscription receipt and
escrow agreement (the “SRA Agreement”) to be entered into on or before the Closing Date
(as defined below) between the Company and the Escrow Agent.
The Escrowed Proceeds plus any interest accrued thereon shall be released to the Company,
upon confirmation on or before 5:00 p.m. (Toronto time) on December 31, 2011 (the “
Release Deadline ”) that the common shares of the Company (“ Common Shares ”) have
been accepted for listing on the Toronto Stock Exchange (the “ Escrow Release Condition
”).
Units: Each Unit shall be comprised of one (1) Common Share, one Common Share purchase
warrant (a “ Warrant ”) and one right to acquire Common Shares (a “ Right ”).
Each whole Warrant will entitle the holder thereof to purchase one Common Share at
US$0.65 at any time until 5:00 on the date which is the earlier of (i) 24 months following the
date the Common Shares are listed on the Toronto Stock Exchange and (ii) 30 months
following the Closing Date.
Each Right shall entitle the holder thereof to receive, for no additional consideration,
one-tenth (1/10) of a Common Share in the event that the registration in accordance with the
U.S. Securities Act of the Subscription Receipts, and the Common Shares, Warrants and
Rights issuable upon exchange thereof, together with the Common Shares issuable on the
exercise of the Warrants or on the exercise of the Rights, has not occurred in accordance
with a Registration Rights Agreement to be entered into by the Company and the
subscribers.
Use of Proceeds: The net proceeds of the Subscription Receipts will be used for the exploration of the Trinity
Silver Mine and for general working capital purposes.
Hold Period: The Subscription Receipts, and the Common Shares, Warrants and Rights issuable upon
exchange of the Subscription Receipts, are subject to a hold period expiring on the later of
(i) six months after the Closing Date, and (ii) the date on which the Company becomes a
reporting issuer.
-2-
Offering Jurisdictions: The Subscription Receipts will be offered for sale by way of private placement exemptions
available in all provinces of Canada (except Quebec) and in those jurisdictions outside of
Canada that are agreed to by the Company and the Agent (including the United States).
The Subscription Receipts will be sold to U.S. buyers on a private placement basis pursuant
to an exemption from the registration requirements in Rule 144A or Regulation D of the
United States Securities Act of 1933, as amended.
Concurrent Offering Concurrent with the Offering, the Company is completing the sale of a minimum of
1,500,000 Units at US$0.50 per Unit for gross proceeds of US$750,000. The Units shall be
issued on the same basis as the Units issued pursuant to the Offering which, for greater
certainty, shall include for each Unit, one Common Share, one Warrant and one Right.
Closing Date: Closing of the Offering will occur on or about November 10, 2011 (the “ Closing Date ”).
Finders: This placement is non-brokered. Qualified finders will receive a commission to be
determined.
SCHEDULE “B”
EXEMPTION FORM
TO BE COMPLETED BY ALL INVESTORS
Please complete this Exemption Form by indicating the category of exempt investor to which the
Subscriber belongs and completing and signing page 3 of this Exemption Form. Initial or otherwise
mark the box or line to the left of each item. Mark only one of boxes 1, 2, 3 and 4. If box 3 or 4 is
marked, mark only one sub-item under box 3 or box 4.
The Subscriber represents, warrants and covenants to the Company and acknowledges that the Company is
relying thereon:
□ 1. that the Subscriber is purchasing the Subscription Receipts as principal and is an accredited
investor resident in Canada (if this category is initialled, please complete the attached
Schedule “ C ” - Accredited Investor Certificate) ;
□ 2. that the Subscriber is purchasing the Subscription Receipts as principal and is a U.S. Person
(if this category is initialled, please complete the attached Schedule “D” – Certificate of
U.S. Accredited Investor) ;
3. that the Subscriber is purchasing the Subscription Receipts as principal and is resident outside
of Canada and the United States (if this category is initialled, please complete the attached
Schedule “E” – Additional Representations, Warranties and Covenants for Subscribers
Outside of Canada and the United States) ;
□ 4. that the Subscriber is resident other than in Ontario or Saskatchewan, is purchasing the
Subscription Receipts as principal and is:
(a)
a director, executive officer or control person of the Company, or of an affiliate of the
Company;
(b)
a spouse, parent, grandparent, brother, sister or child of a director, executive officer or
control person of the Company, or of an affiliate of the Company;
(c)
a parent, grandparent, brother, sister or child of the spouse of a director, executive
officer or control person of the Company, or of an affiliate of the Company;
(d)
a close personal friend of a director, executive officer or control person of the
Company, or of an affiliate of the Company;
(e)
a close business associate of a director, executive officer or control person of the
Company, or of an affiliate of the Company;
-2-
(f)
a founder of the Company or a spouse, parent, grandparent, brother, sister, child, close
personal friend or close business associate of a founder of the Company;
(g)
a parent, grandparent, brother, sister or child of a spouse of a founder of the Company;
(h)
a person of which a majority of the voting securities are beneficially owned by, or a
majority of the directors are, persons described in paragraphs (a) to (g); or
(i)
a trust or estate of which all of the beneficiaries or a majority of the trustees or
executors are persons described in paragraphs (a) to (g);
□ 5. that the Subscriber is resident in Ontario, is purchasing the Subscription Receipts as principal
and is:
(a)
a founder of the Company;
(b)
an affiliate of a founder of the Company;
(c)
a spouse, parent, brother, sister, grandparent or child of an executive officer, director
or founder of the Company; or
(d)
a person that is a control person of the Company;
The following terms used in this Exemption Form have the following meanings:
“ close business associate ” means an individual who has had sufficient prior business dealings with a
director, executive officer, founder or control person of the Company to be in a position to assess their
capabilities and trustworthiness;
“ close personal friend ” of a director, executive officer, founder or control person of the Company is an
individual who knows the director, executive officer, founder or control person well enough and has
known them for a sufficient period of time to be in a position to assess their capabilities and
trustworthiness;
“ control person ” means:
(a)
a person who holds a sufficient number of the voting rights attached to all outstanding
voting securities of the Company to affect materially the control of the Company, or
(b)
each person in a combination of persons, acting in concert by virtue of an agreement,
arrangement, commitment or understanding, which holds in total a sufficient number of
the voting rights attached to all outstanding voting securities of the Company to affect
materially the control of the Company,
and, if a person or combination of persons holds more than 20% of the voting rights attached to all
outstanding voting securities of the Company, the person or combination of persons is deemed, in the
absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially
the control of the Company;
-3-
“executive officer” means an individual who is:
(a)
a chair, vice-chair or president;
(b)
a vice-president in charge of a principal business unit, division or function including
sales, finance or production;
(c)
an officer of the Company or any of its subsidiaries and who performs a policy-making
function in respect of the Company; or
(d)
performing a policy-making function in respect of the Company;
“ founder of the Company ” means a person who
(a)
acting alone, in conjunction, or in concert with one or more persons, directly or indirectly,
takes the initiative in founding, organizing or substantially reorganizing the business of
the Company; and
(b)
is actively involved in the business of the Company.
The undersigned has executed this Exemption Form as of the 10th day of November, 2011.
If a Corporation, Partnership or Other Entity: If an Individual:
Look Back Investments, Inc.
Signature
Nam
e of Entity
Name of Individual
Corporation
Type
of Entity
/s/Robert Genovese
Sign
ature of Person Signing
Title of Person Signing
SCHEDULE “C”
ACCREDITED INVESTOR CERTIFICATE
TO BE COMPLETED ONLY BY ACCREDITED INVESTORS
WHO ARE RESIDENTS OF CANADA
If you have marked the “accredited investor” category on the Schedule “B” - Exemption Form and
you are a resident of Canada, please complete this Schedule “C” - Accredited Investor Certificate by
initialling or otherwise marking the category of accredited investor to which the Subscriber belongs
and completing and signing page 3 of this Accredited Investor Certificate.
The Subscriber represents, warrants and covenants to the Company and acknowledges that the Company is
relying thereon, that the Subscriber is purchasing the Subscription Receipts as principal and is:
(a)
a Canadian financial institution, or a Schedule III bank;
(b)
the Business Development Bank of Canada incorporated under the Business
Development Bank of Canada Act (Canada);
(c)
a subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of
the voting securities of the subsidiary, except the voting securities required by law to be
owned by directors of that subsidiary;
(d)
a person registered under the securities legislation of a jurisdiction of Canada as an
adviser or dealer, other than a person registered solely as a limited market dealer under
one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and
Labrador);
(e)
an individual registered or formerly registered under the securities legislation of a
jurisdiction of Canada as a representative of a person referred to in paragraph (d);
(f)
the Government of Canada or a jurisdiction of Canada, or any crown Company, agency
or wholly owned entity of the Government of Canada or a jurisdiction of Canada;
(g)
a municipality, public board or commission in Canada and a metropolitan community,
school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an
intermunicipal management board in Québec;
(h)
any national, federal, state, provincial, territorial or municipal government of or in any
foreign jurisdiction, or any agency of that government;
(i)
a pension fund that is regulated by either the Office of the Superintendent of Financial
Institutions (Canada) or a pension commission or similar regulatory authority of a
jurisdiction of Canada;
-2-
(j)
an individual who, either alone or with a spouse, beneficially owns, directly or
indirectly, financial assets having an aggregate realizable value that before taxes, but
net of any related liabilities, exceeds $1,000,000 (exclusive of the value of the principal
residence);
(k)
an individual whose net income before taxes exceeded $200,000 in each of the 2 most
recent calendar years or whose net income before taxes combined with that of a spouse
exceeded $300,000 in each of the 2 most recent calendar years and who, in either case,
reasonably expects to exceed that net income level in the current calendar year;
(l)
an individual who, either alone or with a spouse, has net assets of at least $5,000,000;
(m)
a person, other than an individual or investment fund, that has net assets of at least
$5,000,000 as shown on its most recently prepared financial statements;
(n)
an investment fund that distributes or has distributed its securities only to:
(i)
a person that is or was an accredited investor at the time of the distribution;
(ii)
a person that acquires or acquired securities in the circumstances referred to in
sections 2.10 [ Minimum amount investment ], and 2.19 [ Additional investment
in investment funds ] of NI 45-106; or
(iii)
a person described in paragraph (i) or (ii) that acquires or acquired securities
under section 2.18 [ Investment fund reinvestment ] of NI 45-106;
(o)
an investment fund that distributes or has distributed securities under a prospectus in a
jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory
authority, has issued a receipt;
(p)
a trust company or trust Company registered or authorized to carry on business under
the Trust and Loan Companies Act (Canada) or under comparable legislation in a
jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed
account managed by the trust company or trust Company, as the case may be;
(q)
a person acting on behalf of a fully managed account managed by that person, if that
person:
(i)
is registered or authorized to carry on business as an adviser or the equivalent
under the securities legislation of a jurisdiction of Canada or a foreign
jurisdiction; and
(ii)
in Ontario, is purchasing a security that is not a security of an investment fund;
(r)
a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has
obtained advice from an eligibility adviser or an adviser registered under the securities
legislation of the jurisdiction of the registered charity to give advice on the securities
being traded;
-3-
(s)
an entity organized in a foreign jurisdiction that is analogous to any of the entities
referred to in paragraphs (a) to (d) or paragraph (i) in form and function;
(t)
a person in respect of which all of the owners of interests, direct, indirect or beneficial,
except the voting securities required by law to be owned by directors, are persons that
are accredited investors;
(u)
an investment fund that is advised by a person registered as an adviser or a person that is
exempt from registration as an advisor; or
(v)
a person that is recognized or designated by the securities regulatory authority or, except
in Ontario and Québec, the regulator as:
(i)
an accredited investor; or
(ii)
an exempt purchaser in Alberta or British Columbia after NI 45-106 comes into
force.
As used in this accredited Investor Certificate, the following terms have the following meanings:
“ eligibility adviser ” means a person that is registered as an investment dealer or in an equivalent
category of registration under the securities legislation of the Subscriber’s jurisdiction and authorized to
give advice with respect to the Subscription Receipts;
“ financial assets ” means cash or securities or a contract of insurance, a deposit or an evidence of a
deposit that is not a security for the purposes of securities legislation;
“ fully managed account ” means an account of a client for which a person makes the investment
decisions if that person has full discretion to trade in securities for the account without requiring the
client’s express consent to a transaction;
“investment fund” means an investment fund as such term is defined in National Instrument 81-106 –
Investment Fund Continuous Disclosure;
“ related liabilities ” means (a) liabilities incurred or assumed for the purpose of financing the
acquisition or ownership of financial assets, or (b) liabilities that are secured by financial assets; and
-4-
“ securities legislation ” means securities legislation as such term is defined in National Instrument
14-101 – Definitions.
The undersigned has executed this Accredited Investor Certificate as of the ________ day of
______________, 2011.
If a Corporation, Partnership or Other Entity: If an Individual:
Name of Entity Signature
Type of Entity Name of Individual
Signature of Person Signing
Title of Person Signing
SCHEDULE “D”
CERTIFICATE OF U.S. ACCREDITED INVESTOR
TO BE COMPLETED ONLY IF THE SUBSCRIBER IS A U.S. PERSON
If you have marked the “accredited investor” category on the Schedule “B” - Exemption Form and
you are not a resident of Canada, and you are a U.S. Person within the meaning set out in
Regulation S under the U.S. Securities Act of 1933 , please complete this Schedule “D” - Certificate of
U.S. Investor by initialling or otherwise marking the category of U.S. accredited investor to which
the Subscriber belongs and completing and signing page 2 of this Certificate of U.S. Accredited
Investor.
All prospective U.S. purchasers are advised that completion of this Certificate of U.S. Accredited
Investor is required in order to purchase the Subscription Receipts. In addition, supplemental
information may be required at the Company’s discretion in order to confirm the Subscriber’s
eligibility to invest in the Company as an “accredited investor” as defined in Rule 501(A) of
Regulation D promulgated under the U.S. Securities Act of 1933, as amended (the “U.S. Securities
Act”).
In making an investment decision, Subscribers must rely on their own examination of the Company
and the terms of the offering including the merits and risks involved. The securities offered have
not been recommended by any federal or state securities commission or regulatory authority, nor
has any such commission or authority confirmed the accuracy or determined the adequacy of the
offering. Any representation to the contrary is a criminal offence.
Subscribers should be aware that they will be required to bear the financial risks of this investment
for an indefinite period of time.
The undersigned hereby represents and warrants that it is an “accredited investor” as defined in Rule 501(a)
of Regulation D of the U.S. Securities Act, by reason of being:
_______ (a)
a natural person whose individual net worth, or joint net worth with his/her spouse, at
the time of purchase exceeds U.S.$1,000,000;
_______ (b)
a natural person who had an individual income in excess of U.S.$200,000 in 2007 and
2008 or joint income with his or her spouse in excess of U.S.$300,000 in each of those
years and has a reasonable expectation of reaching the same income level in 2011;
_______ (c)
a director or executive officer of the Company;
_______ (d)
a bank as defined in Section 3(a)(2) of the U.S. Securities Act;
_______ (e)
a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the
U.S. Securities Act, whether acting in its individual or fiduciary capacity;
_______ (f)
a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of
1934;
_______ (g)
an insurance company as defined in Section 2(13) of the U.S. Securities Act;
-2-
_______ (h)
an investment company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of that Act;
_______ (i)
a Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act of
1958;
_______ (j)
a plan established and maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of its employees,
which plan has total assets in excess of U.S.$5,000,000;
_______ (k)
an employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), if the investment decision is made by a
plan fiduciary, as defined in Section 3(21) of ERISA, which is a bank, savings and loan
association, insurance company or registered investment advisor;
_______ (l)
an employee benefit plan within the meaning of ERISA which has total assets in excess
of U.S.$5,000,000 or, if a self-directed plan, with investment decisions made solely by
persons that are accredited investors;
_______ (m)
a private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940;
_______ (n)
an organization described in Section 50l(c)(3) of the Internal Revenue Code of 1986, as
amended, a corporation, Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities offered, with total assets in
excess of $5,000,000;
_______ (o)
a trust, with total assets in excess of U.S.$5,000,000, not formed for the specific purpose
of acquiring the securities offered, whose purchase is directed by a sophisticated person
who has such knowledge and experience in financial and business matters that he or she
is capable of evaluating the merits and risks of an investment in the securities offered;
and
_______ (p)
an entity in which each of the equity owners meets the requirements of one of the above
sections.
The undersigned has executed this Certificate of U.S. Accredited Investor as of the ________ day of
______________, 2011.
If a Corporation, Partnership or Other Entity: If an Individual:
Name of Entity Signature
Type of Entity Name of Individual
Signature of Person Signing
Title of Person Signing
SCHEDULE “E”
ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
FOR SUBSCRIBERS OUTSIDE OF CANADA AND THE UNITED STATES
TO BE COMPLETED ONLY IF THE SUBSCRIBER IS RESIDENT
OUTSIDE OF CANADA AND THE UNITED STATES
If you have marked the “resident outside of Canada and the United States” category on the Schedule
“B” - Exemption Form, please complete this Schedule “E” – Additional Representations, Warranties
and Covenants for Subscribers Outside of Canada and the United States by completing and signing
page 2 of this certificate.
The Subscriber, on its own behalf and (if applicable) on behalf of others for whom it is contracting
hereunder, further represents, warrants and covenants to and with the Company (and acknowledges that
the Company is relying thereon) that it is, and (if applicable) any beneficial purchaser for whom it is
contracting hereunder is, a resident of, or otherwise subject to, the securities legislation of a jurisdiction
other than Canada or the United States, and:
(a)
the Subscriber is, and (if applicable) any other purchaser for whom it is contracting
hereunder, is:
(i)
a purchaser that is recognized by the securities regulatory authority in the
jurisdiction in which it is, and (if applicable) any other purchaser for whom it is
contracting hereunder is resident or otherwise subject to the securities laws of
such jurisdiction, as an exempt purchaser and is purchasing the Subscription
Receipts as principal for its, or (if applicable) each such other purchaser’s, own
account, and not for the benefit of any other person, for investment only and not
with a view to resale or distribution; or
(ii)
a purchaser which is purchasing Subscription Receipts pursuant to an exemption
from any prospectus or securities registration requirements (particulars of which
are enclosed herewith) available to the Company, the Subscriber and any such
other purchaser under applicable securities laws of their jurisdiction of residence
or to which the Subscriber and any such other purchaser are otherwise subject to,
and the Subscriber and any such other purchaser shall deliver to the Company
such further particulars of the exemption and their qualification thereunder as the
Company may reasonably request;
(b)
the purchase of Subscription Receipts by the Subscriber, and (if applicable) each such
other purchaser, does not contravene any of the applicable securities laws in such
jurisdiction and does not trigger: (i) any obligation to prepare and file a prospectus, an
offering memorandum or similar document, or any other ongoing reporting requirements
with respect to such purchase or otherwise; or (ii) any registration or other obligation on
the part of the Company; and
-2-
(c)
the Subscriber, and (if applicable) any other purchaser for whom it is contracting
hereunder, will not sell or otherwise dispose of any Common Shares, Warrants or
Warrant Shares, Rights or Right Shares except in accordance with applicable Canadian
securities laws, and if the Subscriber, or (if applicable) such beneficial purchaser, sells or
otherwise disposes of any Common Shares, Warrants or Warrant Shares, Rights or Right
Shares to a person other than a resident of Canada, the Subscriber, and (if applicable)
such beneficial purchaser, will obtain from such purchaser representations, warranties
and covenants in the same form as provided in this Schedule “E” and shall comply with
such other requirements as the Company may reasonably require.
Dated at Toronto this 10th day of November, 2011.
Look Bank Investments, Inc.
Name of Subscriber
By : /s/Robert Genovese
Signature
Title
SCHEDULE “F”
WIRE TRANSFER INSTRUCTIONS
Melissa Torrecampo
Business Adviser
Commerce Court Banking Center
Court Level, CCW
199 Bay St
Toronto, Ontario, M5L 1G9
Tel: (416) 304-2223
Fax: (416) 362-6518
Incoming Wire Instructions
(U.S. Funds)
Beneficiary Bank/Address : CIBC/CIBC MAIN BRANCH COMMERCE COURT
Beneficiary Name/Address : CAPITAL TRANSFER AGENCY INC.
Capital Transfer Agency Inc.
105 Adelaide St.W., Suite 1101
Toronto, ON M5H 1P9
Attention: Lisa Cripps
T: 416.350.5007
F: 416.350.5008
E: lcripps@capitaltransferagency.com
Beneficiary Account : 0511013
Swift Code : CIBC CATT
Bank Number : //CC001000002
Transit : 00002
-2-
SCHEDULE “F”
FORM OF REGISTRATION RIGHTS AGREEMENT
SCHEDULE “H”
LIST OF MATERIAL PROPERTIES
TRINITY SILVER MINE PROPERTY
Property location
The Trinity silver mine property is situated approximately 25 road miles north-northwest of Lovelock,
Nevada, in Pershing County, Nevada, on the northwest flank of the Trinity Range, in the Trinity mining
district. It is located about 25 mi northwest of the Rochester silver mine, one of the largest silver mines in
the United States. The latitude-longitude coordinates of the mine site are 40 o 23’ 47” N, 118 o 36’ 38” W;
it is situated in sections 2, 3, 4, 5, 9, 10, 11, 15, 16, and 17, Township 29 North, Range 30 East, MDB&M
and sections 27, 33, and 35, Township 30 North, Range 30 East, MDB&M.
Land; Land Status; Property Rights; Licensing
The Trinity silver mine property includes located public and leased/subleased fee land consisting of the
following:
(1)
240 unpatented lode mining claims, the Seka 1-6, 8-16, 61-64, 73-76, 95-112, TS 1-18, Elm 1-175 and
XXX 1-6 claims, totaling approximately 4900 acres, located in sections 2, 4, 10, and 16, Township 29
North, Range 30 East, and section 34 and 35, Township 30 North, Range 30 East. The claims are located
on public land open to mineral entry, currently valid, and subject to Bureau of Land Management
regulations.
(2)
4,396.44 acres of fee land leased by Newmont Mining Corp. from Southern Pacific Land Co., and its
successors, and from Santa Fe Pacific Minerals Corporation, and its successors located in sections 3, 5,
11, and 17, Township 29 North, Range 30 East, and sections 27, 33, and 35, Township 30 North, Range
30 East.
(3)
1280 acres of fee land owned by Newmont Mining Corp. located in sections 9 and 15, Township 29
North, Range 30 East.
The Corporation’s joint venture area of interest is currently sections 2-5, 8-11, 14-17, Township 29 North,
Range 30 East, MDB&M, and sections, 26-28, 32-35, Township 30 North, Range 30 East, MDB&M. The
Corporation’s rights, which apply to all of the above properties include exploration, development, and
production of valuable minerals except geothermal, hydrocarbons, and sand/gravel, and also include the
authority to apply for all necessary permits, licenses and other approvals from the United States of
America, the State of Nevada or any other governmental or other entity having regulatory authority over
any part of the Trinity silver mine property.
Purchase Agreement
Hi Ho Silver Mining Claims
This Purchase Agreement Hi Ho Silver Mining Claims ("Agreement") is made
d entered into by and among Primus Resources, L.C., a Wyoming limited liability company,
d James A. Freeman (collectively “Seller”), and Liberty Silver Corp., a Nevada corporation
uyer”).
Recitals
A.
ler owns certain unpatented mining claims situated in Pershing County, Nevada which are
scribed in Exhibit A attached to and by this reference incorporated in this Agreement
llectively the “Property”).
B.
yer desires to purchase from Seller and Seller desires to sell to Buyer the Property subject
his Agreement on the terms and conditions described below.
Now, therefore, in consideration of their mutual covenants and promises, and
er good and valuable consideration, the receipt and sufficiency of which are
knowledged, the parties agree as follows:
1.
initions.
1.1
reement" means this Purchase Agreement, including all amendments and modifications,
d all schedules and exhibits (each individually an "Exhibit" and collectively the "Exhibits")
ached to and by this reference incorporated in this Agreement.
1.2
yer” means Liberty Silver Corp., a Nevada corporation, and its successors and assigns.
1.3
osing" means the delivery of documents and other items to be delivered by the parties, the
change of consideration, and the consummation of the transactions contemplated under
s Agreement as described in Section 6.
1.4
osing Date" means the date on which the Closing shall occur.
1.5
ed” means the conveyance with reservation of mineral production royalty to be executed
d delivered by Seller on the Closing. The Deed shall be in the form of Exhibit B attached
and incorporated by reference in this Agreement. At Buyer’s request, the Deed shall
nvey title to the Property to Renaissance Exploration, Inc, a Nevada corporation, with
ch Buyer is party to the Exploration Earn-In Agreement dated March 29, 2010
1.6
operty" means the unpatented mining claims (collectively the “claims”) described in Exhibit
and all appurtenances and other rights and interests which appertain to the unpatented
ning claims, including copies of all geologic data concerning the Property which Seller
sently possesses. Seller makes no representations or warranties concerning the data
d Buyer agrees that it may rely on and use the data at its own risk.
1.7
gistration Rights Agreement” means the registration rights agreement to be executed and
ivered by the parties on the Closing which, amongst other matters,
1
74691.000 Purchase Agreement Hi Ho Silver Claims 101412
vides for the issuance of up to an additional 277,778 shares of common stock of Buyer to
lers which is part of the purchase price. The Registration Rights Agreement shall be in
form of Exhibit D attached to and incorporated by reference in this Agreement.
1.8
ller” means collectively Primus Resources, L.C., a Wyoming limited liability company, and
mes A. Freeman, and their successors and assigns.
2.
rchase and Sale.
2.1
e of Property . Subject to all the terms and conditions of this Agreement and for the
nsideration described in this Agreement, Seller agrees to sell to Buyer and Buyer agrees to
y the Property, subject to Seller’s reservation of a nonexecutive, nonparticipating and
nworking mineral production royalty (the “Royalty”) of two percent (2%) of the net smelter
urns from the production of minerals from the Property.
2.2
rchase Price . The total purchase price for the Property shall consist of (a) a cash
yment in the sum of Two Hundred Fifty Thousand Dollars ($250,000.00) United States
rency; (b) 2,583,333 duly issued, fully paid and nonassessable shares of the common
ck of Liberty Silver Corp. (collectively the “Shares); (c) the Royalty; (d) Buyer’s payment to
ler of the sum of Seven Hundred Dollars ($700.00) as reimbursement for Seller’s payment
he federal annual mining claim maintenance fees for the claims for the annual assessment
ar 2012 to 2013; (e) the Registration Rights Agreement including the cash payment and the
ditional shares of common stock of Buyer which may be paid to Seller pursuant to the
ms and conditions thereof; and (f) Buyer’s payment to Seller of Seller’s reasonable costs
d expenses associated with the transactions contemplated under this Agreement, such
ount to be approved by Buyer, acting reasonably, in advance of the Closing. The
chase price shall be delivered and paid on the Closing.
2.3
vance Payment. On the parties’ execution of this Agreement, Buyer shall pay to Primus
sources, L.C. an advance payment of Thirty Thousand Dollars ($30,000.00) (the “Deposit”)
ch shall be for the account of Primus Resources, L.C. alone and not for the account of
mes A. Freeman. On the Closing, the Deposit shall be credited to the account of Buyer
ainst the amount payable by Buyer to Primus Resources, L.C. If the Closing does not
cur for the reason that Seller is not able to satisfy all of the conditions for Closing, Primus
sources, L.C. shall repay the Deposit to Buyer. If the Closing does not occur for the
son that Buyer is not able to satisfy the conditions of Closing, the Deposit shall be
n-refundable and Seller shall own the Deposit free and clear of any claim, right or title of
yer.
2.4
Allocation of Purchase
Price.
e purchase price shall allocated seventy-five percent (75%) to Primus Resources, L.C. and
enty-five percent (25%) to James A. Freeman.
2.5
Shares.
e Shares shall be subject to the requirements of applicable Canadian, United States,
vincial and state laws and regulations and the rules of each exchange or trading
sociation on which the Shares are listed for trading or are traded. Seller acknowledges
t, in addition to the legends required under United States securities laws, the Shares will
ar legends restricting trading for a period of six (6) months from the dates of
uance. Seller confirms and Buyer acknowledges that Buyer is obligated to file with the
ited States Securities and Exchange Commission a registration statement in respect of
ale of the Shares in the United States in and accordance with the terms of the
2
74691.000 Purchase Agreement Hi Ho Silver Claims 101412
gistration Rights Agreement. Each Seller has completed and executed or will complete
d execute a Certification of U.S. Purchaser in form acceptable to Buyer.
3.
sing.
3.1
sing Date . The Closing shall be on the later of October 15, 2012, or acceptance by the
ronto Stock Exchange (the “Exchange”) of the transactions contemplated by this
reement, provided that the Closing shall not be later than October 15, 2012.
3.2
sing Costs . The expenses of the Closing shall be paid in the following manner:
3.2.1
yer shall pay all filing fees, recording fees and real property transfer taxes, if any, for the
ording of the instruments necessary to convey title to Buyer under this Agreement.
3.2.2
y other expenses or closing costs in connection with this transaction shall be paid by the
ty which incurs them, except the costs incurred by Seller which Buyer shall reimburse in
cordance with Section 2.2(e).
4.
ler's Covenants and Representations. Seller represents to Buyer as of the Effective
te and as of the Closing Date and covenants, as follows:
4.1
thority . Seller has full power, legal right and authority to enter into this Agreement and
instruments which Seller is obligated to execute and deliver in accordance with the terms
his Agreement and to do all such acts and things as are required to be done, observed or
formed by Seller in accordance with this Agreement.
4.2
id Authorization of this Agreement . Seller has taken all necessary action to authorize
execution, delivery and performance of this Agreement and the instruments which Seller
obligated to execute and deliver in accordance with this Agreement and to observe and
form the provisions of this Agreement and any such instrument to which Seller is a party in
cordance with its terms.
4.3
idity of Agreement and Non-Conflict . Except as described in this Section, none of the
horization, creation, execution, delivery of this Agreement or any of the instruments which
ler is obligated to execute and deliver in accordance with this Agreement requires Seller to
ain any approval or consent of any governmental agency or authority having jurisdiction of
ler, nor is Seller in conflict with or contravention of, as applicable, the provisions of any
terial indenture, instrument, agreement or undertaking to which Seller is a party or by
ch Seller or any of its respective properties or assets are bound, including, without
itation, the Property. This Agreement and each instrument executed and delivered by
ler constitutes a valid and legally binding obligation of Seller and, when executed and
ivered, of the instruments which Seller is obligated to execute and deliver in accordance
h this Agreement will constitute valid and legally binding obligations of Seller, enforceable
ainst Seller in accordance with their respective terms, except to the extent that the
orceability may be limited by applicable bankruptcy, insolvency, reorganization,
ratorium or other similar laws or events relating to or affecting creditors' rights generally.
3
74691.000 Purchase Agreement Hi Ho Silver Claims 101412
4.4
Title.
ncerning the unpatented mining claims which constitute the Property, Seller represents
t: (a) the claims were properly located in accordance with applicable federal and state
ws and regulations; (b) all federal annual mining claim maintenance and rental fees for the
ims have been paid properly; (c) the claims are in good standing in the mining claim
ords of the Bureau of Land Management and, subject to the paramount title of the United
ates, Seller has beneficial and record title to the claims and the right to convey the claims to
yer; and (d) the claims are free and clear of all liens, claims, encumbrances and royalties
ated by, through or under Seller, except under this Agreement.
e parties acknowledge the following regarding the Hi Ho Silver unpatented mining claims
llectively the “Hi Ho Silver Claims”) which comprise the property: (a) the Claims were
ated on November 7 and 8, 1998, on public lands of the United States which were open for
neral entry; (b) the Hi Ho Silver Claims are located on public lands portions of which were
hin the boundaries of the Black Boy 1 to Black Boy 5 unpatented mining claims (the “Black
y Claims”) which were located on September 1, 1975, and which the Bureau of Land
nagement declared forfeited and void on September 1, 1998; (c) the Black Boy Claims
re senior to the Seka unpatented mining claims (the “Seka Claims”) which were located in
ril and May 1982; (d) when the Black Boy Claims were forfeited on September 1, 1998, the
blic lands within their boundaries, including the portions of any overlaps of the Black Boy
ims and the Seka Claims, became open for the location of unpatented mining claims,
luding the Hi Ho Silver Claims; (e) portions of the southern ends of the Hi Ho Silver 9, 10
d 11 Claims may overlap onto portions of the Seka 9, 10, 11 and 12 Claims which are
side of the boundaries of the Black Boy Claims and which were not open for the location of
patented mining claims when the Black Boy Claims were forfeited on September 1, 1998
e “Overlap Area”); (f) Buyer located the Elm 19 – 26, 28, 30, 32, 34, 36 – 41 unpatented
ning claims (the “Elm Claims”) in September 2010 which Buyer represents and warrants do
overlap the Hi Ho Silver Claims; (g) Seller acknowledges that Buyer is not obligated to
y to Seller the Royalty for the production of minerals from the Overlap Area; (h) promptly
er signing of this Agreement, the parties jointly shall locate, identify and, if necessary,
erect the monuments of location and corner monuments for the Hi Ho Silver Claims and
Seka Claims using GPS equipment with an accuracy of one meter or less; and (i) before
commencement of mining on the Hi Ho Silver Claims Buyer will conduct a survey of the
Ho Silver Claims and the adjoining Seka Claims to determine the boundaries of the Hi Ho
ver Claims and the Seka Claims and the Overlap Area and any area which is open for
ation resulting from gaps in the locations of the unpatented mining claims. Buyer shall
ify Seller before conducting the survey in order that Seller’s representatives may observe
conduct of the survey. When the survey is completed, Seller and Buyer shall execute an
dendum to the Deed which includes the survey as part of the description of the Property.
4.5
ler Not a Foreign Person. Seller is not a "foreign person" as defined under Section
45(f) of the Internal Revenue Code of 1954, as amended.
4.6
curities Law Matters. Securities law matters regarding Seller are as stated in Exhibit C
ached to and by this reference incorporated in this Agreement.
4.7
ther Assurances. Seller shall execute and deliver all documents and instruments
sonably requested by Buyer to consummate the transactions contemplated under this
reement.
4
74691.000 Purchase Agreement Hi Ho Silver Claims 101412
4.7
rvival of Representations. Seller’s representations shall survive the Closing and
ording of the instruments which Seller is obligated to execute and deliver in accordance
h this Agreement.
5.
yer's Covenants and Representations. To induce Seller to enter this Agreement, Buyer
resents to Seller as of the Effective Date and as of the Closing Date, and covenants as
ows:
5.1
thority . Buyer has full power, legal right and authority to enter into this Agreement and
instruments which Buyer is obligated to execute and deliver in accordance with the terms
his Agreement and to do all such acts and things as are required to be done, observed or
formed by Buyer in accordance with this Agreement.
5.2
id Authorization of this Agreement . Buyer has taken all necessary action to authorize
execution, delivery and performance of this Agreement and the instruments which it is
igated to execute and deliver in accordance with this Agreement and to observe and
form the provisions of this Agreement and any such instrument to which it is a party in
cordance with its terms.
5.3
bility for Property. Buyer acknowledges that Buyer has had an opportunity to inspect
Property and that it accepts the condition of and title to the property “as is”, subject to
ler’s representations in Section 4.4. On and after the Closing, Buyer shall assume all
bility for the condition of the property and the reclamation of disturbances on the property
ch Buyer creates on the Property. Buyer shall conduct all activities on the Property and
laim all disturbances in accordance with the applicable laws and regulations. Buyer shall
end, indemnify and hold harmless Seller from and against any and all claims arising from
relating to Buyer’s activities on, possession and use of the Property before or after the
sing.
6.
sing Procedure. The Closing shall be conducted at Seller’s office in Reno, Nevada or
ch other place as the parties agree. On the Closing the parties shall complete the
owing actions:
6.1
ivery of Purchase Price. On the Closing, Buyer shall deliver to Primus Resources, L.C.
wire transfer to an account which Primus Resources, L.C. designates the sum of (a) One
ndred fifty-seven Thousand Five Hundred Dollars ($157,500.00) as part of the cash
yment; (b) Seven Hundred Dollars ($700.00) as reimbursement for the federal annual
ning claim maintenance fees; and (c) the amount of costs and expenses incurred by
mus Resources, L.C. as provided in Section 2.2(e). Buyer shall also deliver to James A.
eman certified funds drawn on a United States bank the amount of Sixty-two Thousand
e Hundred Dollars ($62,500.00). Seller shall deliver certificates in the name of Primus
sources, L.C. for the aggregate 1,937,500 Shares in increments to be designated by
mus Resources, L.C., but not more than six separate certificates and to James A Freeman
ertificate in the name of James A. Freeman for 645,833 Shares.
6.2
ivery of Conveyance and Data. Seller shall execute and deliver the Deed and an
ernal Revenue Code Section 1445 certificate simultaneously on Buyer’s delivery of Buyer’s
eck for the Purchase Price. Buyer shall execute the Deed.
6.3
claration of Value. The parties shall sign a declaration of value which shall be delivered
Buyer.
5
74691.000 Purchase Agreement Hi Ho Silver Claims 101412
6.4
cording. Promptly after the Closing, Buyer shall file and record the Deed with the
reau of Land Management and the Pershing County Recorder and shall deliver conformed
pies to Seller.
7.
mination.
7.1
mination by Seller . If Buyer is unable to comply with its obligations under this
reement on or before the Closing Date, Buyer shall do so as soon thereafter as it is able to
so, however, in no event shall the Closing occur more than ten (10) business days after
latest date described in Section 3.1. If Buyer does not perform Buyer’s obligations under
s Agreement, Seller may terminate this Agreement by delivering notice to Buyer of Seller's
ention to terminate this Agreement. The termination shall be effective five (5) days after
ler's delivery of notice of termination. On termination, Seller shall have no obligation
atever to perform any obligations under this Agreement or to sell or otherwise transfer title
he Property to Buyer.
7.2
mination by Buyer . If Seller is unable to comply with Seller’s obligations under this
reement on or before the Closing Date, Buyer shall do so as soon thereafter as Seller is
e to do so, however, in no event shall the Closing occur more than ten (10) business days
er the latest date described in Section 3.1. If Seller does not perform its obligations under
s Agreement, Buyer may terminate this Agreement by delivering notice to Seller of Buyer's
ention to terminate this Agreement. The termination shall be effective five (5) days after
yer's delivery of notice of termination. On termination, Buyer shall have no obligation
atever to perform any obligations under this Agreement or to purchase the Property.
8.
tices . Any notices required or authorized to be given by this Agreement shall be in
tten form. Any notices required or authorized to be given by this Agreement may be sent
commercial courier service or mailed by registered or certified delivery, postage prepaid
d return receipt requested, addressed to the proper party at the following address or such
dress as the party shall have designated to the other parties in accordance with this
agraph. Any notice required or authorized to be given by this Agreement shall be deemed
have been sufficiently given or served in written form if mailed as provided herein,
sonally delivered to the proper party, or sent by facsimile, telex, telegraph, telecopier or
er means of electronic transmission, and actually received by such party. Such notice
all be effective on the date of receipt by the addressee party. A party shall promptly notify
other parties of a change of address.
If to Primus: Primus Resources, L.C.
310 – 2120 Carey Avenue
Cheyenne, Wyoming 82001
Facsimile: 530-873-6823
If to James A. Freeman: James A. Freeman
653 Vassar Street
Reno, Nevada 89502
Facsimile: 530-873-6823
If to Buyer: Liberty Silver Corp.
Attention: Chief Executive Officer
Suite 2330 – 181 Bay Street
Toronto, Ontario M5J 2T3
6
74691.000 Purchase Agreement Hi Ho Silver Claims 101412
Facsimile: 888-749-6314
9.
Patriot Act.
ch party represents and warrants that it is not on the Specially Designated National &
cked Persons List of the Office of Foreign Assets Control of the United States Treasury
partment and is not otherwise blocked or banned by any foreign assets office rule or any
er law or regulation, including the USA Patriot Act or Executive Order 13224.
10.
ding Effect of Obligations . This Agreement shall be binding upon and inure to the
nefit of the respective parties, and their personal representatives, successors and
signs.
11.
knowledgement – Personal Information . Seller acknowledges and consents to:
11.1
e disclosure to the Exchange and all other regulatory authorities of all personal information
the undersigned obtained by Buyer, except that the tax identification numbers of Primus
sources, L.C. and James A. Freeman shall be disclosed only to the United States Internal
venue Service.
11.2
e collection, use and disclosure of such personal information by the Exchange and all other
ulatory authorities in accordance with their requirements.
12.
gulatory Approval . This Agreement and the transactions contemplated under this
reement are subject to receipt of all necessary regulatory approvals, including acceptance
he Exchange. Liberty Silver Corp. will diligently and promptly make all necessary filings
h the Exchange and all pertinent regulatory authorities in relation to this Agreement as
on as practicable following the Effective Date.
13.
ole Agreement . The parties agree that the whole agreement between them is written in
s Agreement and its exhibits. There are no terms or conditions, express or implied, other
n in this Agreement. This Agreement may be amended or modified only by an instrument
writing, signed by the parties with the same formality as this Agreement.
14.
verning Law . This Agreement shall be construed and enforced in accordance with the
ws of the State of Nevada.
15.
ltiple Counterparts . This Agreement may be executed in any number of counterparts
d delivered by facsimile or other electronic means, each of which shall be deemed to be an
ginal, but all of which shall constitute the same Agreement.
16.
verability . If any part, term or provision of this Agreement is held by the courts to be
gal or in conflict with any law of the United States or any state, the validity of the remaining
tions or provisions shall not be affected, and the rights and obligations of the parties shall
construed and enforced as if the Agreement did not contain the particular part, term or
vision held to be invalid.
17.
erpretation. A provision of this Agreement must not be construed to the disadvantage of
party merely because that party was responsible for the preparation of the Agreement or
inclusion of the provision in the Agreement.
7
74691.000 Purchase Agreement Hi Ho Silver Claims 101412
The parties have executed this Agreement effective October 15, 2012 (the “Effective
te”).
Primus Resources, L.C.
By /s/James A. Marin
James A. Marin, W.O.P. U.C.C. 1-207, Manager
/s/James A. Freeman
James A. Freeman
Liberty Silver Corp.
By /s/Geoff Browne
Name: Geoff Browne
Title: Chief Executive Officer
8
74691.000 Purchase Agreement Hi Ho Silver Claims 101412
STATE OF NEVADA )
ss.
COUNTY OF WASHOE )
This Purchase Agreement Hi Ho Silver Mining Claims was acknowledged before
me on October ___, 2012, by James N. Marin, W.O.P. U.C.C. 1-207 .
Notary Public
STATE OF NEVADA )
ss.
COUNTY OF WASHOE )
This Purchase Agreement Hi Ho Silver Mining Claims was acknowledged before
me on October 15, 2012, by James A. Freeman.
JOANNE L. BELL
Notary Public – State of Nevada
No. 05-57676-2
/s/Joanne L. Bell My Appt. Expires Jun 23 2013
Notary Public
)
ss.
)
This Purchase Agreement Hi Ho Silver Mining Claims was acknowledged before
me on October 15, 2012, by R. Geoffrey Browne as the Chief Executive Officer of
Liberty Silver Corp.
/s/Dennis H. Peterson
Notary Public
DENNIS H. PETERSON
Barrister & Solicitor
PETERSON LAW PROFESSIONAL CORPORATION
390 Bay Street, Suite 806
Toronto, ON M5H-2Y2
Telephone: (647) 529-1780
9
74691.000 Purchase Agreement Hi Ho Silver Claims 101412
EXHIBIT A
Description of Property
Pershing County, Nevada
Description of Unpatented Mining Claims
CLAIM NAME
NEVADA BLM SERIAL NO.
Hi Ho Silver No. 3
799907
Hi Ho Silver No. 5
799908
Hi Ho Silver No. 9
799909
Hi Ho Silver No.10
799910
Hi Ho Silver No.11
799911
10
74691.000 Purchase Agreement Hi Ho Silver Claims 101412
EXHIBIT B
Form of Deed
[see attached Deed With Reservation of Royalty]
11
74691.000 Purchase Agreement Hi Ho Silver Claims 101412
Assessor’s Parcel No. n/a unpatented mining claims
Recorded at the request of
and when recorded return to:
Primus Resources, L.C.
c/o Thomas P. Erwin
Erwin & Thompson LLP
One East Liberty Street, Suite 424
Reno, Nevada 89501
The undersigned affirms that this document does not
contain the personal information of any person.
Deed With Reservation of Royalty
Hi Ho Silver Claims
This Deed With Reservation of Royalty Hi Ho Silver Claims (“Deed”) is made by
Primus Resources, L.C., a Wyoming limited liability company, and James A. Freeman
(collectively “Owner”), as grantors, to Renaissance Exploration, Inc., a Nevada corporation
(“Renaissance”), as grantee.
Recitals
1.
Owner and Liberty Silver Corp., a Nevada corporation, are parties to the Mining Lease and
Option to Purchase Agreement Hi Ho Silver Claims dated October 15, 2012 (the
"Agreement"), concerning the Hi Ho Silver unpatented mining claims situated in Pershing
County, Nevada, more particularly described in Exhibit A attached to and by this reference
incorporated in this Deed (collectively the “Royalty Property”), in accordance with which
Owner agreed to sell to Liberty Silver Corp. all of Owner’s right, title and interest in and to
the Royalty Property, subject to Owner’s reservation of the production royalty (the “Royalty”)
and other obligations described in this Deed.
2.
Liberty Silver Corp. and Renaissance are parties to the Exploration Earn-In Agreement dated
March 29, 2010, in accordance with which acquisitions by Liberty Silver Corp. of properties
in the area of interest described in the Exploration Earn-In Agreement must, at the election of
Renaissance, be acquired in the name of Renaissance. Renaissance has elected to cause title
to the Royalty Property to be acquired in the name of Renaissance.
3.
Owner and Liberty Silver Corp. have closed the purchase and sale of the Royalty Property in
accordance with the Agreement.
In consideration of the parties’ rights and obligations under the Agreement, the parties
1
DO NOT MARK, PRINT, SIGN OR TYPE OUTSIDE THE LINED MARGIN
agree as follows:
3.1
Deed. Owner conveys and transfers to Renaissance, and its assigns and successors forever,
all of Owner’s right, title and interest in the Royalty Property, except and subject to Owner’s
reserved Royalty and the parties’ rights and obligations under this Deed.
3.2
Royalty. Owner grants, reserves and retains to itself, and Owner’s assigns and successors
forever, and Renaissance agrees and covenants to pay to Owner, and Owner’s assigns and
successors, a production royalty based on the Net Smelter Returns from the production or sale
of Minerals from any lands within the exterior boundaries of the Royalty Property. The
Royalty percentage rate shall be two percent (2%).
2.1
Burden on Royalty Property. Renaissance’s agreement and covenant to pay the Royalty
and the minimum payments are covenants coupled with an interest in the Royalty Property
and shall burden and run with the Royalty Property, including any and all amendments,
conversions to a lease or other form of tenure, relocations or patent of all or any of the
unpatented mining claims which comprise all or part of the Royalty Property. On the
amendment, conversion to a lease or other form of tenure, relocation or patenting of any of
the unpatented mining claims which comprise all or part of the Royalty Property, the parties
agree and covenant to execute, deliver and record in the office of the recorder in which all or
any part of the Royalty Property is situated an instrument by which Renaissance grants to
Owner the Royalty and subjects the newly located unpatented mining claims and any
amended, converted or relocated unpatented mining claims and the patented claims, as
applicable, to all of the burdens, conditions, obligations and terms of this Deed.
2.2
Payment of Royalty. Renaissance shall calculate, pay and report the Royalty in accordance
with the provisions of Exhibit 1.
2.3
Production Records. Renaissance shall keep true and accurate accounts, books and records
of all of its activities, operations and production of minerals on the Royalty Property.
2.4
Delivery of Payments. Renaissance shall deliver the payments under this Deed as to an
undivided seventy-five percent (75%) to Primus Resources, L.C. by wire transfer to an
account designated by Primus Resources, L.C. and as to an undivided twenty-five percent
(25%) to James A. Freeman by check, certified funds, drawn on a United States bank.
3.3
Compliance with Laws, Reclamation, Environmental Obligations and Indemnities .
3.1
Compliance with Laws. Renaissance shall at all times comply with all
2
DO NOT MARK, PRINT, SIGN OR TYPE OUTSIDE THE LINED MARGIN
applicable federal, state and local laws, regulations and ordinances relating to Renaissance’s
activities and operations on or relating to the Royalty Property.
3.2
Reclamation, Environmental Obligations and Indemnities . Renaissance shall perform all
reclamation required under federal, state and local laws, regulations and ordinances relating to
Renaissance’s activities or operations on or relating to the Royalty Property. Renaissance
shall defend, indemnify and hold harmless Owner from and against any and all actions,
claims, costs, damages, expenses (including attorney’s fees and legal costs), liabilities and
responsibilities arising from or relating to Renaissance’s activities or operations on or relating
to the Royalty Property, including those under laws, regulations and ordinances intended to
protect or preserve the environment or to reclaim the Royalty Property. Renaissance’s
obligations under this Section shall survive the abandonment, surrender or transfer of the
Royalty Property.
3.4
Tailings and Residues. All tailings, residues, waste rock, spoiled leach materials and other
materials (collectively "Materials") resulting from Renaissance's operations and activities on
the Royalty Property shall be Renaissance’s sole property, but shall remain subject to the
Royalty if they are processed or reprocessed and Renaissance receives revenues from such
processing or reprocessing. If Materials are processed or reprocessed, the Royalty payable
shall be determined by using the best engineering, metallurgical and technical practices and
standards then available.
3.5
Title Maintenance.
5.1
Title Maintenance and Taxes. Renaissance shall maintain title to the Royalty Property,
including without limitation, paying when due all taxes on or with respect to the Royalty
Property and doing all things and making all payments necessary or appropriate to maintain
the right, title and interest of Renaissance and Owner, respectively, in the Royalty Property
and under this Deed. Renaissance shall deliver to Owner proof of Renaissance’s compliance
with this Section not less than thirty (30) days before the applicable deadline.
5.2
Property Maintenance. Renaissance shall perform all required assessment work on, pay all
mining claim maintenance fees and make such filings and recordings as are necessary to
maintain title to the Royalty Property in accordance with applicable federal and state laws and
regulations. Renaissance shall deliver to Owner proof of Renaissance’s compliance with
this Section not less than thirty (30) days before the applicable deadline.
5.3
Abandonment . If Renaissance intends to abandon or surrender any of the unpatented
mining claims which are part of the Royalty Property (the "Abandonment Property"),
Renaissance shall first give notice of such intention to Owner at least ninety (90)
3
DO NOT MARK, PRINT, SIGN OR TYPE OUTSIDE THE LINED MARGIN
days in advance of the proposed date of abandonment or surrender. At any time before the
date of Renaissance’s proposed abandonment or surrender of the Royalty Property Owner
may deliver notice to Renaissance that Owner desires Renaissance to convey the
Abandonment Property to Owner. In such case, within thirty (30) business days after
Renaissance’s receipt of Owner’s notice, Renaissance shall convey the Abandonment
Property to Owner free and clear of any claims, encumbrances or liens created by, through or
under Renaissance. If Owner does not timely request reconveyance of the Abandonment
Property, Owner’s right to do so shall be irrevocably terminated.
3.6
General Provisions .
6.1
Conflict. If a conflict arises between the provisions of this Deed and the provisions of the
Agreement, the provisions of the Agreement shall prevail.
6.2
Entire Agreement . This Deed and the Agreement constitute the entire agreement between
the parties.
6.3
Additional Documents. The parties shall from time to time execute all such further
instruments and documents and do all such further actions as may be necessary to effectuate
the purposes of this Deed.
6.4
Binding Effect. All of the covenants, conditions, and terms of this Deed shall bind and inure
to the benefit of the parties and their successors and assigns.
6.5
No Partnership. Nothing in this Deed shall be construed to create, expressly or by
implication, a joint venture, mining partnership or other partnership relationship between the
parties.
6.6
Governing Law . This Deed is to be governed by and construed under the laws of the State
of Nevada.
6.7
Time of Essence . Time is of the essence in this Deed.
6.8
Notices. Any notices required or authorized to be given by this Deed shall be in writing and
shall be sent either by commercial courier, facsimile, or by certified U.S. mail, postage
prepaid and return receipt requested, addressed to the proper party at the address stated below
or such address as the party shall have designated to the other parties in accordance with this
Section. Such notice shall be effective on the date of receipt by the addressee party, except
that any facsimiles received after 5:00 p.m. of the addressee’s local time shall be deemed
delivered the next day. A party shall promptly notify the other parties of a change of address.
4
DO NOT MARK, PRINT, SIGN OR TYPE OUTSIDE THE LINED MARGIN
If to Primus: Primus Resources, L.C.
310 – 2120 Carey Avenue
Cheyenne, Wyoming 82001
Facsimile: 530-873-6823
If to James A. Freeman: James A. Freeman
653 Vassar Street
Reno, Nevada 89502
If to Renaissance: Renaissance Exploration, Inc.
4750 Longley Lane
Reno, Nevada 89502
Facsimile: (775) 337-1542
This Deed is effective October ___, 2012.
Primus Resources, L.C.
By: /s/James N. Marin
James N. Marin, W.O.C. U.C.C. 1-207, Manager
/s/James A. Freeman
James A. Freeman
Renaissance Exploration, Inc.
By: /s/Richard L. Bedell
Richard L. Bedell, Jr., President
5
DO NOT MARK, PRINT, SIGN OR TYPE OUTSIDE THE LINED MARGIN
STATE OF NEVADA,
)
ss.
COUNTY OF WASHOE.
)
This Deed With Reservation of Royalty Hi Ho Silver Claims was acknowledged
before me on October ___, 2012, by James N. Marin, W.O.C. U.C.C. 1-207, as Manager of Primus
Resources, L.C.
Notary Public
STATE OF NEVADA,
)
: ss.
COUNTY OF WASHOE.
)
This Deed With Reservation of Royalty Hi Ho Silver Claims was acknowledged
before me on October ___, 2012, by James A. Freeman.
Notary Public
STATE OF NEVADA,
)
: ss.
COUNTY OF WASHOE.
)
This Deed With Reservation of Royalty Hi Ho Silver Claims was acknowledged before me on
October ___, 2012, by Richard L. Bedell, Jr. as President of Renaissance Exploration, Inc.
Notary Public
6
DO NOT MARK, PRINT, SIGN OR TYPE OUTSIDE THE LINED MARGIN
Exhibit 1
Net Smelter Returns
Payor: Renaissance Exploration, Inc.
Recipient: Primus Resources, L.C. as to an undivided seventy-five percent (75%) and
James A. Freeman as to an undivided twenty-five percent (25%).
1.
Definitions. The terms defined in the instrument to which this Exhibit is attached and made part
of shall have the same meanings in this Exhibit. The following definitions shall apply to this
Exhibit.
1.1
"Gold Production" means the quantity of refined gold outturned to Payor's account by an
independent third party refinery for gold produced from the Property during the month on either
a provisional or final settlement basis.
1.2
"Gross Value" shall be determined on a month basis and have the following meanings with
respect to the following Minerals:
1.2.1
Gold
(a)
If Payor sells gold concentrates, dore or ore, then Gross Value shall be the value of the gold
contained in the gold concentrates, dore and ore determined by utilizing: (1) the mine weights
and assays for such gold concentrates, dore and ore; (2) a reasonable recovery rate for the refined
gold recoverable from such gold concentrates, dore and ore (which shall be adjusted annually to
reflect the actual recovery rate of refined metal from such gold concentrates, dore and ore); and
(3) the Monthly Average Gold Price for the month in which the gold concentrates, dore and ore
were sold.
(b)
If Payor produces refined gold (meeting the specifications of the London Bullion Market
Association, and if the London Bullion Market Association no longer prescribes specifications,
the specifications of such other association generally accepted and recognized in the mining
industry) from Minerals, and if Section 1.2.1(a) above is not applicable, then for purposes of
determining Gross Value, the refined gold shall be deemed to have been sold at the Monthly
Average Gold Price for the month in which it was refined. The Gross Value shall be determined
by multiplying Gold Production during the month by the Monthly Average Gold Price.
1.2.2
Silver.
(a)
If Payor sells silver concentrates, dore or ore, then Gross Value shall be the value of the silver
contained in the silver concentrates, dore and ore determined by utilizing: (1) the mine weights
and assays for such silver concentrates, dore and ore; (2) a reasonable recovery rate for the
refined silver recoverable from such silver concentrates, dore and ore (which shall be adjusted
annually to reflect the actual recovery rate of refined metal from such silver concentrates, dore
and ore); and (3) the Monthly Average Silver Price for the month in which the silver
concentrates, dore and ore were sold.
(b)
If Payor produces refined silver (meeting the specifications for refined silver subject to the New
York Silver Price published by Handy & Harmon, and if Handy
1
& Harmon no longer publishes such specifications, the specifications of such other association or
entity generally accepted and recognized in the mining industry) from Minerals, and if Section
1.2.2(a) above is not applicable, the refined silver shall be deemed to have been sold at the
Monthly Average Silver Price for the month in which it was refined. The Gross Value shall be
determined by multiplying Silver Production during the month by the Monthly Average Silver
Price.
1.2.3
All Other Minerals.
(a)
If Payor sells any concentrates, dore or ore of Minerals other than gold or silver, then Gross
Value shall be the value of such Minerals determined by utilizing: (1) the mine weights and
assays for such Minerals; (2) a reasonable recovery rate for the Minerals (which shall be adjusted
annually to reflect the actual recovery rate of recovered or refined metal or product from such
Minerals); and (3) the monthly average price for the Minerals or product of the Minerals for the
month in which the concentrates, dore or ore was sold. The monthly average price shall be
determined by reference to the market for such Minerals or product which is recognized in the
mining industry as authoritative and reflective of the market for such Minerals or product.
(b)
If Payor produces refined or processed metals from Minerals other than refined gold or refined
silver, and if Section 1.2.3(a) above is not applicable, then Gross Value shall be equal to the
amount of the proceeds received by Payor during the month from the sale of such refined or
processed metals. Payor shall have the right to sell such refined or processed metals to an
affiliated party, provided that such sales shall be considered, solely for purposes of determining
Gross Value, to have been sold at prices and on terms no less favorable than those that would be
obtained from an unaffiliated third party in similar quantities and under similar circumstances.
1.3
"Minerals" means gold, silver, platinum, antimony, mercury, copper, lead, zinc, and all other
mineral elements and mineral compounds, but not geothermal resources, which are contemplated
to exist on the Property or which are after the Effective Date discovered on the Property and
which can be extracted, mined or processed by any method presently known or developed or
invented after the Effective Date.
1.4
"Monthly Average Gold Price" means the average London Bullion Market Association
Afternoon Gold Fix, calculated by dividing the sum of all such prices reported for the month by
the number of days for which such prices were reported during that month. If the London
Bullion Market Association Afternoon Gold Fix ceases to be published, all such references shall
be replaced with references to prices of gold for immediate sale in another established marked
selected by Payor, as such prices are published in Metals Week magazine, and if Metals Week
magazine no longer publishes such prices, the prices of such other association or entity generally
accepted and recognized in the mining industry.
1.5
"Monthly Average Silver Price" means the average New York Silver Price as published daily by
Handy & Harmon, calculated by dividing the sum of all such prices reported for the month by
the number of days in such month for which such prices were reported. If the Handy & Harmon
quotations cease to be published, all such references shall be replaced with references to prices of
silver for immediate sale in another established market selected by Payor as published in Metals
Week magazine, and if Metals Week magazine no longer publishes such
2
prices, the prices of such other association or entity generally accepted and recognized in the
mining industry.
1.6
"Net Smelter Returns" means the Gross Value of all Minerals, less the following costs, charges
and expenses paid or incurred by Payor with respect to the refining and smelting of such
Minerals:
1.6.1
Charges for smelting and refining (including sampling, assaying and penalty charges), but not
any charges or costs of agglomeration, beneficiation, crushing, extraction, milling, mining or
other processing; and
1.6.2
Actual costs of transportation (including freight, insurance, security, transaction taxes, handling,
port, demurrage, delay and forwarding expenses incurred by reason of or in the course of such
transportation) of concentrates or dore metal from the Property to the smelter or refinery, but not
any charges or costs of transportation of Minerals or ores from any mine on the Property to an
autoclave, concentrator, crusher, heap or other leach process, mill or plant.
1.7
"Property" means the real property described in the instrument to which these Net Smelter
Returns provisions are attached and made a part.
1.8
"Silver Production" means the quantity of refined silver outturned to Payor's account by an
independent third-party refinery for silver produced from the Property during the month on either
a provisional or final settlement basis.
2.
Payment Procedures.
2.1
Accrual of Obligation. Payor's obligation to pay the Royalty shall accrue and become due and
payable upon the sale or shipment from the Property of unrefined metals, dore metal,
concentrates, ores or other Minerals or Minerals products or, if refined metals are produced, upon
the outturn of refined metals meeting the requirements of the specified published price to Payor's
account.
2.2
Futures or Forward Sales, Etc. Except as provided in Sections 1.2.1(a), 1.2.2(a) and 1.2.3 (a)
(regarding sales of unprocessed gold and silver and sales of Minerals other than gold and silver),
Gross Value shall be determined irrespective of any actual arrangements for the sale or other
disposition of Minerals by Payor, specifically including but not limited to forward sales, futures
trading or commodities options trading, and any other price hedging, price protection, and
speculative arrangements that may involve the possible delivery of gold, silver or other metals
produced from Minerals.
2.3
Monthly Calculations and Payments. Net Smelter Returns royalties shall be determined on a
monthly basis. Payor shall pay Recipient each monthly royalty payment on or before the last
business day of the month immediately following the month in which the royalty payment
obligation accrued. Payor acknowledges that late payment by Payor to Recipient of royalty
payments will cause Recipient to incur costs, the exact amount of which will be difficult to
ascertain. Accordingly, if any amount due and payable by Payor is not received by Recipient
within ten (10) days after such amount is due, then Payor shall pay to Recipient a late charge
equal to five percent (5%) of such overdue amount. Recipient’s acceptance of such late charge
shall not constitute a waiver of Payor’ default with respect to such overdue amount, nor prevent
3
Recipient from exercising any of Recipient’s other rights and remedies. If any amount payable
by Payor remains delinquent for a period in excess of thirty (30) days, Payor shall pay to
Recipient, in addition to the late payment, interest from and after the due date at the statutory
interest rate.
2.4
Statements. At the time of payment of the royalty, Payor shall accompany such payment with a
statement which shows in detail the quantities and grades of refined gold, silver or other metals
or dore, concentrates or ores produced and sold or deemed sold by Payor in the preceding month;
the Monthly Average Gold Price and Monthly Average Silver Price, as applicable; costs and
other deductions, and other pertinent information in detail to explain the calculation of the
payment with respect to such month. Payment shall be made to the address provided in the
agreement or instrument to which this Exhibit is attached for purposes of notices or to such other
address as Recipient provides to Payor or by wire transfer to an account which Recipient
designates.
2.5
Inventories and Stockpiles. Payor shall include in all monthly statements a description of the
quantity and quality of any gold or silver dore that has been retained as inventory for more than
ninety (90) days. Recipient shall have thirty (30) days after receipt of the statement to
either: (a) elect that the dore be deemed sold, with Gross Value to be determined as provided in
Sections 1.2.1 (a), with respect to gold, and 1.2.2(a), with respect to silver, as of such thirtieth
(30th) day utilizing the mine weights and assays for such dore and utilizing a reasonable
recovery rate for refined metal and reasonable deemed charges for all deductions which Payor is
authorized to take, or (b) elect to wait until such time as the royalty payment otherwise would
become payable pursuant to Sections 1.2.1(b) and 1.2.2(b). Recipient’s failure to respond within
such time shall be deemed to be an election to use the methods described in Sections 1.2.1(b) and
1.2.2(b).
2.6
Audit. Upon reasonable notice and at a reasonable time, Recipient shall have the right to audit
and examine the Payor’s accounts and records relating to the calculation of the Net Smelter
Returns royalty payments for a period of up to one year after delivery of the monthly statement
in question. If such audit determines that there has been a deficiency or an excess in the
payment made to Recipient, such deficiency or excess shall be resolved by adjusting the next
monthly royalty payment due Recipient. Recipient shall pay all costs of such audit unless a
deficiency of five percent (5%) or more of the royalty payment due for the calendar month in
question is determined to exist in which case Payor shall reimburse Recipient for the cost of the
audit. All books and records used by Payor to calculate the royalty payments shall be kept in
accordance with generally accepted accounting principles applicable to the mining industry.
3.
Sampling and Commingling. Payor shall have the right to commingle Minerals and ores from
the Property and materials from other properties, provided, that Payor first informs Recipient, in
writing, of Payor’s intention to commingle and delivers to Recipient a detailed written
description of Payor’s commingling plan. Recipient shall have ninety (90) days during which to
review and comment on Payor’s proposed commingling plan. In any and all events, all Minerals
and ores shall be measured and sampled by Payor in accordance with sound mining and
metallurgical practices for metal and mineral content before commingling of any such Minerals
or ores with materials from any other property. Representative samples of materials from the
Property intended to be commingled shall be retained by Payor, and assays of these samples shall
be made before commingling to determine the metal content of each ore. Detailed records shall
4
be kept by Recipient showing measurements, assays of metal content and gross metal content of
the materials from the Property are commingled.
5
Exhibit A
Description of Royalty Property
Pershing County, Nevada
Description of Unpatented Mining Claims
CLAIM NAME
NEVADA BLM SERIAL NO.
Hi Ho Silver No. 3
799907
Hi Ho Silver No. 5
799908
Hi Ho Silver No. 9
799909
Hi Ho Silver No. 10
799910
Hi Ho Silver No. 11
799911
6
EXHIBIT C
Securities Law Representations & Warrants Made by Seller
ccredited Investor . Seller is an accredited investor as defined in Rule 501(a) of Regulation
promulgated under the Securities Act of 1933, as amended (the “ Securities Act ”).
o Government Review . Seller understands that neither the United States Securities and
xchange Commission (“ SEC ”) nor any securities commission or other governmental
uthority of any state, country or other jurisdiction has approved the issuance of the Shares
r passed upon or endorsed the merits of the Shares or this Agreement, or confirmed the
ccuracy of, determined the adequacy of, or reviewed this Agreement or the Shares.
vestment Intent . The Shares are being acquired for Seller’s own account for investment
urposes only, not as a nominee or agent and not with a view to the resale or distribution of
ny part thereof, and Seller has no present intention of selling, granting any participation in or
herwise distributing the same. By executing this Agreement, Seller further represents that
eller does not presently have any contract, undertaking, agreement or arrangement with any
erson to sell, transfer or grant participation to such person or any third person with respect
any of the Shares.
estrictions on Transfer . Seller understands that the Shares have not been registered
nder the Securities Act or registered or qualified under any state securities law, and may not
e, directly or indirectly, sold, transferred, offered for sale, pledged, hypothecated or
herwise disposed of without registration under the Securities Act and registration or
ualification under applicable state securities laws or the availability of an exemption
erefrom. Seller acknowledges that it is able to bear the economic risks of an investment in
e Shares for an indefinite period of time.
vestment Experience . Seller has such knowledge, sophistication and experience in
nancial, tax and business matters in general, and investments in securities in particular, that
is capable of evaluating the merits and risks of this investment in the Shares, and Seller has
ade such investigations in connection herewith as it deemed necessary or desirable so as
make an informed investment decision without relying upon Buyer for legal or tax advice
elated to this investment.
ccess to Information . Seller acknowledges that it has had an opportunity to discuss
uyer’s business, management, financial affairs and the terms and conditions of the offering
the Shares with Buyer’s management and has had an opportunity to review Buyer’s
cilities.
lacement and Finder’s Fees . No agent, broker, investment banker, finder, financial advisor
r other person acting on behalf of Seller or under its authority is or will be entitled to any
roker’s or finder’s fee or any other commission or similar fee, directly or indirectly, in
onnection with the purchase of the Shares, and no person is entitled to any fee or
ommission or like payment in respect thereof based in any way on agreements,
rrangements or understanding made by or on behalf of Seller.
1
egends . Seller understands that the Shares will bear the following legend (and appropriate
otations thereof will be made in Buyer’s stock transfer books), and stop transfer instructions
eflecting these restrictions on transfer will be placed with the transfer agent of the Shares:
HE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
HE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
TATE. THE SECURITIES REPRESENTED HEREBY HAVE BEEN TAKEN BY THE
EGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR
ISTRIBUTION THEREOF, AND MAY NOT BE SOLD, TRANSFERRED OR DISPOSED OF
WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH
RANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AS
MENDED, THE RULES AND REGULATIONS THEREUNDER OR OTHER APPLICABLE
ECURITIES LAWS.
2
EXHIBIT D
Form of Registration Rights Agreement
[see attached]
14
475594 Book 473 Page 909
Assessor ’ s Parcel No.: N/A – sublease and OFFICIAL RECORDS
unpatented mining claims PERSHING COUNTY
NEVADA
Recorded at the request of RECORDED BY
And when recorded return to : Thomas P. Irwin
Liberty Silver Corp. 11-Nov-9 PM 2:24
3960 Howard Hughes Parkway, Suite 500 Book 473 Page 909
Las Vegas, Nevada 89161 RENE CHILDS
COUNTY RECORDER
The undersigned affirm that this document does not contain 22-475594
the personal information of any person. INDEXED
Memorandum of Exploration Earn-In Agreement
Renaissance Exploration, Inc., a Nevada corporation formerly names AuEx, Inc.
( “ Renaissance ” ), and Liberty Silver Corp., a Nevada corporation ( “ Liberty ” ), have
entered into the Exploration Earn-In Agreement dated as March 29, 2010, in accordance
with Renaissance has granted to Liberty the right to earn an undivided interest in the
Minerals Lease and Sublease between Newmont USA Limited, a Delaware corporation,
doing business as Newmont Mining Corporation, and AuEx, Inc. dated effective July 29,
2005, concerning the unpatented mining claims, leased fee lands and owned lands
described in Exhibit A attached to and by this reference incorporated in this Agreement,
and in certain unpatented mining claims owned by Renaissance, also described in Exhibit
A.
For purposes of the Exploration Earn-In Agreement and this Memorandum, the
addresses of the parties are:
Renaissance Exploration, Inc.
4750 Langley Lane, Suite 106
Reno Nevada 89502
Liberty Silver Corp.
3960 Howard Hughes Parkway, Suite 500
Las Vegas, Nevada 89161
Dated effective March 29, 2010.
Renaissance Exploration, Inc.
By: /s/Richard Bedell
Richard L. Bedell, President
DO NOT MARK, PRINT, SIGN, OR TYPE OUTSIDE THE LINED MARGIN
1
Book 473 Page 910
Liberty Silver Corp.
By: /s/William Tafuri
William Tafuri, President and Chief Operating Officer
DO NOT MARK, PRINT, SIGN, OR TYPE OUTSIDE THE LINED MARGIN
2
Book 473 Page 911
STATE OF NEVADA
)
)ss.
COUNTY OF WASHOE
)
This Memorandum of Exploration Earn-In Agreement was acknowledged before
me on November 4, 2011, by Richard L. Bedell as President of Renaissance Exploration,
Inc.
JOANN NEWBURY
Notary Public – State of Nevada
Appointment Recorded in Washoe County
/s/Joann Newbury No. 04-90312-2 Expires March 26, 2012
Notary Public
STATE OF _________
)
)ss.
COUNTY OF _______
)
This Memorandum of Exploration Earn-In Agreement was acknowledged before
me on November ____, 2011, by Geoff Browne, as President of Liberty Silver Corp.
Notary Public
DO NOT MARK, PRINT, SIGN, OR TYPE OUTSIDE THE LINED MARGIN
3
Book 473 Page 912
STATE OF NEVADA
)
)ss.
COUNTY OF WASHOE
)
This Memorandum of Exploration Earn-In Agreement was acknowledged before
me on November 4, 2011, by Richard L. Bedell as President of Renaissance Exploration,
Inc.
JOANN NEWBURY
Notary Public – State of Nevada
Appointment Recorded in Washoe County
/s/Joann Newbury No. 04-90312-2 Expires March 26, 2012
Notary Public
STATE OF UTAH
)
)ss.
COUNTY OF SUMMIT
)
This Memorandum of Exploration Earn-In Agreement was acknowledged before
me on November 7, 2011, by William Tafuri as Chief Operating Officer of Liberty Silver
Corp.
TIMOTHY NIELSEN
Notary Public
State of Utah
Comm. No. 611929
/s/Timothy Nielsen My Comm. Expires Aug 22, 2015
Notary Public
DO NOT MARK, PRINT, SIGN, OR TYPE OUTSIDE THE LINED MARGIN
3
Book 473 Page 913
Memorandum of Exploration Earn-In Agreement
Exhibit A
1.
Newmont Property. Minerals Lease and Sublease dated effective July 29, 2005,
between Newmont USA Limited, a Delaware Corporation, doing business as
Newmont Mining Corporation, Memorandum recorded in the Office of the
Pershing County Recorder on August 8, 2005, Document 244433, concerning the
property described on the following page.
2.
Renaissance Exploration, Inc. Property. The unpatented mining claims by
Renaissance Exploration, Inc. described as follows:
Elm 1 – Elm 18 1027569 – 1027586
Elm 19 – Elm 103 1030226 – 1030310
Elm 104 – Elm 175 1040840 – 1040911
TS 1 – TS 18 930542 – 930559
XXX 1 – XXX 6 1047549 - 1047554
3.
Area of Interest. The area of interest under the Minerals Lease and Sublease
described as follows:
Township 30 North, Range 30 East, MDB&M, Sections 32-35.
Township 29 North, Range 30 East, MDB&M, Sections 2-5, 8-11, and 14-17.
DO NOT MARK, PRINT, SIGN, OR TYPE OUTSIDE THE LINED MARGIN
4
Book 473 Page 914
Exhibit A
NEWMONT PROPERTY
Pershing County, Nevada
1.
Mining Claims
The following 41 unpatented lode mining claims situated in Pershing County,
Nevada in Sections 4 and 10, Township 29 North, Range 30 East, MDB&M:
Claim Name BLM NMC
Seka 95-112 264542-264559
Seka 1-6, 8-16, 61-64, 73-76 243016-243030, 264508-264511, 264520-264523
2.
Leased Lands (Minerals Lease – 4,396.44 acres)
Newmont ’ s interest under that certain Minerals Lease (29-OSP-0006) dated
August 17, 1987, between Nevada Land and Resource Company LLC, successor in
interest to Southern Pacific Land Company, and Newmont USA Limited, successor in
interest to SFP Minerals Corporation, insofar and only insofar as it permits to the
following property:
Township 30 North, Range 30 East, MDB&M:
Section 27; All (640 acres)
Section 33; All (640 acres)
Section 35; N1/2, SE1/4, N1/2SW1/4 (560 acres)
Township 29 North, Range 30 East, MDB&M:
Section 3; Lots 1-4, S1/2N1/2, S1/2 (All 639.12 acres)
Section 5; Lots 1-4, S1/2N1/2, S1/2 (All 637.32 acres)
Section 11; All (640 acres)
Section 17; All (640 acres)
3.
Owned Lands – Surface & Minerals – (1,280 acres)
Newmont ’ s fee ownership interest insofar and only insofar as it pertains to the
following property:
Township 29 North, Range 30 East, MDB&M:
Section 9; All (640 acres)
Section 15; All (640 acres)
AuEx, Inc.
940 Matley Lane, Suite 17,
Reno, Nevada 89502
July 1, 2010
Liberty Silver Corp.
675 Sierra Rose Dr., Suite 112
Reno NV 89511
Re:
Assignment of Exploration Earn-In Agreement dated March 29, 2010 and Transfer of
Trinity Silver project
This letter will serve to provide notice and request your consent and waiver of the right of first refusal ( “
Waiver ” ), in accordance with article I, section 1 and section 2, respectively, of the Exploration Earn-In
Agreement (the “ Option Agreement ” ) between Liberty Silver Corp. ( “ Liberty ” ) and AuEx, Inc. ( “
AuEx ” ) made effective March 29, 2010, for AuEx to transfer and assign all of its interest in the Trinity
Silver project, being the subject of the Option Agreement, and the Option Agreement to Renaissance
Exploration, Inc. (the “ Transfer ” ) with the Transfer to be effective on July 1, 2010.
Renaissance Exploration, Inc. and AuEx are beneficially owned by AuEx Ventures, Inc. and there will be
no change in beneficial ownership as a result of the Transfer. Please acknowledge your consent to the
Transfer and the granting of the Waiver by signing the acknowledgement below.
AUEX, INC.
Per: /s/Richard Bedell
Authorized Signatory
LIBERTY SILVER CORP.
Per: /s/William Tafuri
Authorized Signatory
Liberty hereby acknowledges and agrees to the Transfer and grants the Waiver and hereby acknowledges
that following the Transfer the Option Agreement remains and will remain in full force and effect.
RENAISSANCE EXPLORATION, INC.
Per: /s/Richard Bedell
Authorized Signatory
Renaissance hereby acknowledges that the above referenced Option Agreement remains in full force and
effect and hereby acknowledges and agrees to the assignment.
Morrill & Associates, LLC
Certified Public Accountants
1448 North 2000 West, Suite 3
Clinton, Utah 84015
801-820-6233 Phone; 801-820-6628 Fax
January 18, 2013
Office of the Chief Accountant
Securities and Exchange Commission
450 West Fifth Street N.W.
Washington DC 20549
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use of our report dated September 25, 2012, with respect to the financial
statements as of June 30, 2012 and 2011 and the related statements of operations, stockholders ’
equity (deficit) and cash flows for the years ended June 30, 2012 and 2011, and from inception on
February 20, 2007 through June 30, 2012 to be included in the filing of the Form S-1/A of Liberty Silver
Corp. (an exploration stage company).
Sincerely,
/s/ Morrill & Associates
Morrill & Associates
We hereby consent to the reference to our firm under the caption “ Trinity Project Technical Report ”
dated December 1, 2011 with an effective date of August 9, 2011 contained in the Section Properties
in the Prospectus which forms part of the Registration Statement.
Very truly yours,
/s/Michael M. Gustin
Michael M. Gustin, Senior Geologist
Mine Development Associates
By: /s/ Michael M. Gustin
775-856-5700
210 South Rock Blvd.
Reno, Nevada 89502
FAX: 775-856-6053
