LMX Resources Ltd -
Management changes; head office moved; exploration activities
LMX Resources Ltd LMXShares issued 69951261998-01-22 close $0.5Thursday Feb 5 1998Dr John Harper reports The newly appointed board of directors wishes to bring all shareholders up-to-date regarding the status of the company as a result of the events leading to the halt in trading on January 23 1998. The halt occurred when the VSE determined there were irregularities in the granting of non-arm's length loans by GMD Resource to LMX and by GMD to Farrell Financial Ltd. The total amount of the loans to LMX was $2,057,441 as at December 31 1997 and is unchanged. As a result of the loan and the halt in trade management of the company has changed. New management has taken control and decisions have been made to institute a reorganization of the company as well as co-operating with the exchange. CHANGE OF MANAGEMENT Don Farrell, Garvin McMinn, Visco Jutronich and Paul Brownlee have resigned as directors and officers of the company, Jean Bortolin as corporate secretary and John Scholtz as CFO on January 27 and January 28 1998. On February 4 1998 Dr William Scott of St John's, Newfoundland was appointed to the board of directors. The board of directors is now composed of Dr John Harper - director since July 30 1997; David Raftery - director since June 17, 1987; Dr William Scott - director since February 4 1998. Dr Harper has consented to act as president of the company. Lenora Chin of Vancouver has consented to act as corporate secretary on an interim basis. William Peter Rollason of Canmore, Alberta has been appointed as CFO of the company on an interim basis. Dr William Scott is president of Geoscott Geophysical out of St John's, Newfoundland. He has been active in the oil and gas industry, in the minerals industry, in research with CORE of Memorial University of Newfoundland, and is presently an adjunct professor of geophysics at that same university. The new CFO is Mr Peter Rollason of the PR Group of Canmore, Alberta. Mr Rollason brings extensive experience in financial matters. Dr Harper and the directors will assemble a committee to seek experienced persons in the financial sector and in the resource industry and in particular in the oil and gas industry as new directors and senior management. Management is currently conducting an intense review of the company's financial statue and properties. Management intends to issue a news release approximately every two weeks in an attempt to keep shareholders informed during this crisis. FINANCIAL STATUS Management has determined to the best of its ability, in the absence of an audit and relying on the November 30 1997 quarterly report and the preliminary accounting work for the months of December and January, that LMX liabilities, including the monies due to GMD, are approximately $2,817,797. Approximate working capital deficiency is $283,202. The company has requested its auditor to conduct an audit for the period from September 1 1997 to January 31 1998. Upon completion of the audit, a further news release will be issued. The company has issued a written acknowledgement to GMD dated February 4 1998 which states: LMX acknowledges its obligation to pay the principal amount with interest and will use its best efforts to: Repay the principal amount with interest; Enter into negotiations with GMD to enter into a formal agreement to contain, inter alia, the following terms: a.A final repayment date for the principal amount; b.Commencement of monthly payments in a specified amount to repay the principal amount; c.Establishment of an interest rate and commencement of monthly interest payments; d.Issuance of fixed and floating debenture to attach to the total assets of LMX as at December 31 1997. LMX, may, after consultation with GMD and upon the acceptance of GMD, also apply to the exchange to obtain exchange acceptance to shares for debt application to issue shares in settlement of all or part of the principal amount due to GMD. CHANGE OF HEAD OFFICE AND ADMINISTRATION The new management of the company has decided to sever all connections with the former head office of the Company in Vancouver. In September 1997 LMX established an office in Calgary from which it managed its oil and gas operations under the supervision of Dr Harper. All of the substantive operations of the company have been transferred to the corporate office in Calgary, effective immediately. It is expected that a transition period of about one month will be required to complete the transfer. PRIVATE PLACEMENT CANCELLED A private placement reported in Stockwatch January 19 1998 of 400,000 units at $0.46 per share is not proceeding. A private placement of 500,000 shares at $0.57 per share reported in Stockwatch December 3 1997 has been financed. The 500,000 shares have not yet been issued. STATUS OF PROPERTIES Mining Claims The company owns a mining claim in BC and a Mexican subsidiary company, which owns or has interests in mining concessions in Mexico. The BC mining claim is a gross roots claim. The mining concessions in Mexico except for the Vianey mine are grass roots claims. The Vianey mine is in a potential start-up position for limited commercial production. The company is conducting a review of the mining properties to determine their fair market value to establish a sell price and sell the properties. Shareholders will be asked at a special meeting to approve a resolution to approve the sale of the mining properties and a change of name for the company. No date has yet been set for the meeting. The mandate of the company will be to pursue oil and gas explorations and production opportunities with its main emphasis being the Western Canada Sedimentary Basin (Alberta, Saskatchewan and BC). Leases held in Western Newfoundland continue to be explored, with the drilling of the offshore St Georges Bay exploration licence EL 1008 by the onshore Man O'War 1-42 well. Further drilling of the company's Inglewood Man O'War 1-42 well St Georges offshore licence, Port Au Port Peninsula, Western Newfoundland and renegotiations of farm-in agreement. LMX's original interest with respect to exploration licence EL 1008, the St Georges Bay licence covering 178,460 hectares was a 10% working interest convertible to a 11% gross overriding royalty in block A covering 62,430 hectares and a 45% working interest in block B covering 116,030 hectares. Within block A there occurs a very large structural prospect which is the eastern extension of the same structure dominating exploration licence 1021 held by Newfoundland Hunt Oil immediately adjacent to the west of EL 1008. The discovery well, Port au Port No. 1, by Newfoundland Hunt Oil in 1995 was on Hunt onshore lands which cross the northwest corner of EL 1008, encountered 51 gravity oil with flow rates as high as 1700 + bopd and produced 5012 barrels of oil in 9.25 days. The representative company for block A is Talisman Energy and for block B is Vinland Petroleum. The terms of the licence for EL 1008 required Talisman and Vinland to relinquish by January 15 1998 any offshore hectares not of interest and to pay rentals on any hectares retained; 15,928 of the original hectares in block A were retained and transferred to LMX and Vinland, each acquiring a 50% working interest. LMX and Vinland have assumed the rental payments. St Georges Bay Exploration Company retained a 3% gross overriding royalty. LMX now has a major role in future negotiations for the drilling of the St Georges Bay structure. The company's news release of December 18 1997 (Stockwatch December 19) reported that regulatory approval had been received to begin the second phase of drilling of the Man O'War 1-42 well on EL 1008 using slim-hole drilling technology. This well was originally required for LMX to earn its position in EL 1008. With the new contract the obligation to earn in block A was cancelled. The company has successfully concluded negotiations with the regulatory bodies to have the regulations revised to better fit the rig type and land location including recognition of slim-hole technology. All regulatory obstacles have now been removed for LMX to continue drilling and to deviate into the offshore lease according to the drilling program. The Man O'War 1-42 is at 553m and is reaming (being widened), intending to deviate into the offshore licence once casing has been set. Total well depth is currently planned to be 2438 metres. Onshore licence, Deer Lake Basin, Newfoundland The company can earn a 25% working interest in 93-103 permit (Sandy Lake West) by drilling a well to 3,500 feet. The spud date for the well has been delayed several times due to poor ground conditions; 93-104 permit (Cormack) and 93-114 permit (Lornond) by drilling a well to a depth of 6,000 feet. The spud date for drilling has been delayed until ground conditions are acceptable; 10.5 kilometres of seismic have been completed to date. The seismic program resumed in January l998. The data will permit finalization of choice of the two locations intended to be drilled. (c) Copyright 1997 Canjex Publishing Ltd. canada-stockwatch.com
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