SECURITIES AND EXCHANGE COMMISSION
Washington, DC
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: June 30, 1999
GOLDEN EAGLE INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Colorado 0-23726 84-1116515
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State of other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
4949 South Syracuse Street, Suite 300, Denver, Colorado 80237
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 694-6101
Item 5. Other Events
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Golden Eagle International, Inc. ("Golden Eagle" or the "Company") has
received a report on its Cangalli gold deposit from the
internationally-recognized minerals industry consulting firm of Behre Dolbear &
Company, Inc. ("Behre Dolbear"). Behre Dolbear's report entitled: "Report on
Results of Gold Sampling Program: Cangalli Area, Bolivia" is the result of a
field sampling program and literature search performed by Behre Dolbear
geologists beginning with site work in October 1998, and culminating with a site
visit in February 1999.
Behre Dolbear's report, a geological analysis of the Cangalli deposit and
an in-depth historical survey of gold production in Cangalli and the Tipuani
Mining District, "confirms that alluvial gold is present in the Cangalli
conglomerate. Gold occurrence is erratic, but extends over significant vertical
and horizontal sections." Behre Dolbear further stated: "The extent of the
deposition of Cangalli conglomerates is impressive."
The Company retained Behre Dolbear in October, 1998, to conduct the fourth
geological study commissioned on Golden Eagle's Cangalli gold deposit since
January 1996 (Trites, January 1996; Paravicini, April 1997; Paravicini, May
1998; Behre Dolbear, May 1999). In addition, Golden Eagle had received reports
on site visits from Donald M. Hausen, Ph.D., former chief mineralogist for
Newmont Mining (September 1997); Max Staheli, former controller of South
American operations for Barrick Gold Corporation (September 1997); and Ronald L
Atwood, Ph.D., former chief metallurgist for Newmont Mining (March 1997), all
members of Golden Eagle's Technical Advisory Board. These previous reports had
all indicated that the Cangalli gold deposit was a large, widely-mineralized
deposit with a good potential for supporting one or more open-pit and
underground mining operations. Golden Eagle's management sought a consulting
firm with the stature and expertise of Behre Dolbear to confirm this concept
from these prior reports.
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In its summary, Behre Dolbear's report states:
"Based on specific observations within Golden Eagle's Cangalli
landholding and the sample results, Behre Dolbear noted that:
"visible alluvial gold was recovered from 68 of 73 samples
[93%] of Cangalli conglomerate taken from six widely separated
areas, indicating that the Cangalli conglomerate is
mineralized over an extensive vertical and horizontal section,
albeit in the erratic, non-predictive manner typical of most
alluvial deposits;
"gold recovered from the samples indicates grades ranging
from zero to 5.64 g Au/m3. The mineralization is very erratic,
sometimes changing from [less than] 0.01 g Au/m3 to [greater
than]1.0g Au/m3 in a vertical distance of 1-meter;
"using 0.8 g Au/m3 as a threshold grade of gold sufficient to
warrant further consideration, 17 of 73 samples of the
Cangalli conglomerate were in excess of this exploration
target grade from four areas: Chaco [0.91, 0.96, 1.09, 1.14,
1.31, 1.80, and 4.56 g Au/m3], Isuhuaya [0.92, 1.01, 1.14,
1.40, 1.53, and 3.64 g Au/m3], Flor de Mayo [1.10, 2.41 and
2.79 g Au/m3], and Cangalli (within the town limits) [5.64 g
Au/m3];
"the four surface areas, Chaco, Isuhuaya, Flor de Mayo and
Cangalli, are considered potential targets for further
exploration to determine the extent of the higher grade
material;
"while no samples were taken from the Cangalli underground
mine, the operation was visited and based on the observations
of the Behre Dolbear personnel [two unsupervised mine runs
which averaged 4.28 g Au/m3 and 21.55 g Au/ton], further
consideration is recommended to confirm the existence of high
grade material; and
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"the Paleozoic bedrock in the Camino Maderero area sampled is
not a potential source of primary gold mineralization.
"Behre Dolbear took a limited number of samples during the
investigation. The program was not designed as a representative sample
analysis for various reasons, including the areal extent of the
property (approximately 40 square kilometers [24 square miles]), the
thickness of the conglomerate (500 m [1,600 feet] to 2,500 m [8,000
feet] in thickness), and access to various sites (steep hills and
valleys, many with +75(0) slopes)."
Behre Dolbear also reported on the unique nature of Golden Eagle's
conglomerate gold deposits:
"Although normal stream processes deposited the gold within the
Cangalli conglomerate, the gold deposits are unique in the following
ways:
"based on Behre Dolbear's sample results and observation of
present and abandoned mining operations, gold appears to
have been deposited throughout the entire +500-meter [1,600
feet] thickness, rather than at or near the bedrock/gravel
contact as in "typical" alluvial gold deposits;
"the conglomerate is indurated, not loose gravel;
"'paystreaks', which are typically thin, occur in a random
manner. They usually contain a higher percentage of large
boulders than the normal conglomerate, and locally may have
high gold values ([greater than] 31 g/m3 [greater than 1 oz
Au/m3]). Some have been mined by underground methods; and
"the gravels between paystreaks may also contain gold. Behre
Dolbear collected samples from these gravels, which
predominately contain less than 0.1 g Au/m3, although 17
samples contained at least 0.8 g Au/m3. These higher grade
samples may actually reflect the presence of other
unrecognized paystreaks which occur in the unit."
4
Behre Dolbear confirmed Golden Eagle's previous disclosures that
exploration in the Cangalli concessions will be, and has been to date, difficult
and expensive since:
"the rugged topography makes correlation of geological
horizons and paleochannels difficult; and
"the widespread, but erratic nature of gold occurrences
containing reasonably large "nuggets" and the presence of
large boulders in the conglomerate makes collection of
representative samples difficult. Thus the calculation of a
resource, which is essential for determining economic
viability, is problematic."
Regarding historical mining in the Cangalli conglomerate deposits such as
Golden Eagle's, Behre Dolbear performed a historical literature search at Golden
Eagle's request and reported the following:
"Information taken from Aramayo company annual reports indicates that
from 1939 to 1949, 6,161 meters were driven underground at the
Tujujahuira adit [in Cangalli conglomerates], resulting in an
extraction of 49,151 m3 of gravels bearing 1,604,800 grams of gold
(=51,000 ounces) with an average grade of 32.6 g Au/m3 [1.05 oz Au/m3]
(United Nations 1968). In 1944, one rich pocket yielded 112,352 grams
of gold (=3,610 ounces) from 12.1 m3 (United Nations 1968). It was
reported by another source that the Tujujahuira adit had a 60-degree
decline connecting from the main operation through the mountain to an
additional drainage, two ventilation shafts, and three galleries
located on the 30, 50 and 60 meter levels. Nineteen gold-bearing pay
zones were exploited, with grades reaching 150 g Au/m3 [4.82 oz Au/m3]
(Revilla 1988). During this period Aramayo had between 300 and 600
laborers working for the company (United Nations 1968). The Tujujahuira
adit is located nine kilometers [5.4 miles] up-river from the Golden
Eagle concessions."
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[Behre Dolbear included the preceding historical information
in the Historical section of its report, but did not independently
confirm that information. Golden Eagle believes that this historical
information applies to the same conglomerate formation in the
Paleo-Tipuani system as is found on Golden Eagle's property; however,
Golden Eagle cannot assure that its gold deposition or mine performance
will be the same as or similar to the historical information given.]
On the issue of fine gold, Behre Dolbear indicated that its geologists did
not consider the presence of "microfine" or "ultrafine" gold within the scope of
its work on the Cangalli deposit. Instead, the Behre Dolbear study focused on
visually-verifiable gold conventionally recoverable using gravity concentration
techniques.
Regarding the presence of fine gold in the deposit, Behre Dolbear stated:
"While visiting the Chaco site, the size fraction of the gold was
discussed. Golden Eagle stated that the size fraction included a
reasonable volume of flour gold and dust; however due to the processing
methods, the gold was generally lost during the sluice box operations.
This statement is supported by the previous work of Zambrana and
Trites. Additionally, since the gold was extremely flat, the smaller
particles tended to float on the surface. To confirm this, Dr. Sandri
[Henry Sandri, Ph.D., project manager for Behre Dolbear] placed a small
amount of grease on his hand and let the post sluice box water flow
spill over his hand for about five minutes, after which his hand showed
very minute particles of gold trapped in the grease.
"It was proposed to Golden Eagle [by Dr. Sandri] that they could
further "test" gold losses in their tails by rerunning a number of
tonnes through the process again. Accordingly, four tonnes of tailings
fines from the existing tailings area were reprocessed through the
gravity plant, recognizing that any very fine gold would probably again
be lost from the circuit for the same reasons that it was lost in the
initial processing.
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"The final concentrates from these reprocessed tailings were collected
by Dr. Sandri and brought to the U.S. for final cleaning and weighing.
They were processed in the U.S. and resulted in over 500 particles of
gold weighing 1.69 g. Au, averaging 0.42 g. Au per ton of tails
reprocessed. Most of the gold was very small and it confirmed Golden
Eagle's belief that fine particles were being washed through this
processing plant."
Terry C. Turner , Golden Eagle's president, stated: "Behre Dolbear's
findings are very encouraging, are consistent with previous studies on the
deposit, and underscore the size and unique nature of the Company's gold deposit
at Cangalli. Behre Dolbear's work also serves to further focus the Company's
efforts and commitment of its limited resources for the future. We knew from
previous reports that the gold deposition in the Cangalli deposit was sporadic;
seldom are gold deposits evenly distributed. However, Behre Dolbear's report,
and others that we have received, emphasize that the "nugget effect" can be
eliminated through bulk sampling as far as further testing, and can be averaged
out in a bulk mining scenario. The most important point in the Behre Dolbear
report for Golden Eagle is the statement that the Cangalli gold deposit is
"unique" in that the gold is deposited throughout the entire +500 meter (1,600
feet) thickness of the deposit."
In addition, Ronald L Atwood, Ph.D., former chief metallurgist for Newmont
Mining and a member of the Company's Technical Advisory Board, after reviewing
the Behre Dolbear report, stated: "I recently spent three weeks on Golden
Eagle's Cangalli gold deposit in April 1999. Behre Dolbear's work confirms my
field observations. The Cangalli deposit is enormous and appears to be highly
anomalous in gold values over its entire extension. What is even more important,
high gold grades can come at any point in the vertical or horizontal sections.
While Behre Dolbear's sampling recovered gold in 93% of its samples in the
Cangalli conglomerate, by using a Knelson Concentrator I was able to recover
extremely fine gold in 100% of the samples that I took. Some of those assays
were very low, but the important aspect was that the fine gold present in the
Cangalli deposit, which has traditionally been lost, can be recovered."
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Donald M. Hausen, Ph.D., former chief mineralogist for Newmont Mining and a
member of the Company's Technical Advisory Board, also reviewed Behre Dolbear's
report, and stated: "Their results of gold sampling at Cangalli indicate that
over 90% of samples contained significant amounts of visible gold from six
widely separated areas. The erratic mineralization is typical due to "nugget"
effects from sample to sample, but confirms that coarse gold occurs widely
throughout the deposit. I was quite pleased that Behre Dolbear recommended that
a bulk mining sampling operation be initiated to confirm the economic grades
throughout large tonnages. They suggested that this bulk sampling be located at
Chaco "plataforma", followed by other favorable locations. Large mineable
samples would then provide more representative grades of gold that would guide
the development of large open-pits in the near future."
Mr. Turner further noted: "Although the Behre Dolbear report confirmed
Golden Eagle's previously-held concept of the Cangalli gold deposit, the report
also emphasized the cost and complexity of further exploration and possible
mining operations on the Company's Cangalli prospect. Our vision for the future
is an optimistic one. Golden Eagle will now focus its limited capital and other
resources on its strategic plan." This plan includes the following objectives:
a) Maintenance of current operations, contractual payments, and land
patent (claim) payments;
b) Acquisition of surrounding or adjacent landholdings within the
Paleo-Tipuani Trend;
c) Acquisition of the Coop ownership interest in the Cangalli properties,
thereby eliminating any royalty from the gold deposit;
d) Implementation of recommendations from the geological and
metallurgical reports, including, but not limited to:
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i. constructing a metallurgical recovery plant at Chaco Playa, Chaco
Platform and Chaco Face, to begin production and further
verification on a large scale;
ii. entering second-stage resource confirmation work with Golden
Eagle's geological consulting firm;
iii. entering into negotiations, including site visits and initial
field studies, with interested joint venture partners in the
industry.
Turner added: "We will continue pursuing this optimistic vision despite the
many obstacles that always appear in the road as far as bringing any mining
prospect into production."
The Company has also been advised that its former president, Ronald A.
Knittle, who resigned in May 1996, and its current corporate secretary, Mary A.
Erickson, have entered into a consent agreement with the Central Office (Denver,
Colorado) of the Securities and Exchange Commission to settle a pending civil
action. That civil action, SEC v. Golden Eagle International, Inc., et al, No.
98-Z-1020 [D. Colo.], had previously been settled in March 1999 as to the
Company. Mr. Knittle and Ms. Erickson neither admitted nor denied any of the
allegations in the SEC's complaint, but to resolve the situation they consented
to the issuance of an injunction against future violations of certain securities
laws and an order for disgorgement. The consent agreement is not binding on the
SEC until approved by the full Commission and the Federal District Court.
The only defendant remaining in the SEC's civil action is Golden Eagle's
president, with the only issues remaining being those bearing on the Company's
May 22, 1998, press release regarding its receipt of a geological report on its
Cangalli gold deposit. Negotiations are currently underway for the settlement of
these last allegations, and the Company's president strenuously denies any
wrongdoing which may be actionable under federal securities laws.
Golden Eagle International, Inc. is a Denver-based gold mining and
exploration company. The Company is currently focusing its efforts on developing
its mining rights in Cangalli, Bolivia. For more information about the Company,
call Sabrina Martinez at (303) 694-6101 or Guy Murrel at (303) 581-7760. Media
inquires should be directed to Richard Pinto at (212) 688-8599. Golden Eagle can
also be found at its new website: www.geii.com, where management recommends that
all shareholders and prospective shareholders review its Annual Reports on Form
10-KSB, Quarterly Reports on Form 10-QSB and Periodic Reports on Form 8-K.
The future conduct of Golden Eagle's business and its response to issues
raised by third parties are dependent upon a number of factors, and there can be
no assurance that Golden Eagle will be able to conduct its operations as
contemplated. Certain statements contained in this report using the terms "may",
"expects to," and other terms denoting future possibilities, are forward-looking
statements. The accuracy of these statements cannot be guaranteed as they are
subject to a variety of risks which are beyond Golden Eagle's ability to predict
or control and which may cause actual results to differ materially from the
projections or estimates contained herein. These risks include, but are not
limited to, the risks described in the above press release; those risks set out
in Golden Eagle's disclosure documents and its annual, quarterly and periodic
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reports; and the other risks associated with start-up mineral exploration
operations with insufficient liquidity, negative working capital, and no
historical profitability. Golden Eagle disclaims any obligation to update any
forward-looking statement made herein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 30, 1999 Golden Eagle International, Inc.
By: /s/ Terry C. Turner
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Terry C. Turner, President
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