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Gold/Mining/Energy : GMD RESOURCE -- Ignore unavailable to you. Want to Upgrade?

To: Surething who wrote (584)	2/5/1998 6:14:00 PM
From: Mr Metals	Read Replies (1) \| Respond to of 1030

Here you go GUM NEWS RELEASE GMD Resource Corp - Clarification of affairs GMD Resource Corp GMDShares issued 141375671998-01-22 close $1.93Thursday Feb 5 1998Dr David Webb reports This news release is intended 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 was advised by the company that there were irregularities in the granting of non-arms length loans by GMD to LMX Resources and by GMD to Farrell Financial Ltd, a private company owned by Don Farrell. The amount of the loans to LMX was $2,057,441 (the principal amount) as at December 31 1997 and is unchanged. The amount of the loans to Farrell was $903,588 as at December 31 1997 and is now $883,588. CHANGE OF MANAGEMENT Further to the news release in Stockwatch dated January 30 1998, the company confirms the resignations of Don Farrell, Garvin McMinn, Visco Jutronich and Paul Brownlee as officers and directors of the company effective January 27 1998. John Scholtz resigned as chief financial officer and Jean Bortolin resigned as corporate secretary. The board of directors is now composed of: Dr David Webb-director since Aug 18 1995 Gilbert Dalton-director since Nov 16 1996 Gerry Hess-director since Aug 21 1996. Dr Webb has been appointed president on an interim basis. Brian Weir of Yellowknife has been appointed corporate secretary on an interim basis. A new chief financial officer has not yet been appointed. Further to the news release in Stockwatch dated January 30 1998, the company has established an advisory committee to assist the board in seeking qualified individuals to the board or management. Currently the advisory committee consists of Dr Webb, Gilbert Dalton, Gerry Hess, Brian Weir, Michael Ballantyne, and Gordon Wray. 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 GMD current liabilities are approximately $794,208. The outstanding loans to LMX and Farrell total $2,940,999. The approximate working capital deficiency excluding the loans to LMX and Farrell is $577,361. The company has requested its auditor to conduct an audit of the company for the period September 1 1997 to January 31 1998. Upon completion of the audit, a further news release will be issued. The company has received a written acknowledgement from LMX dated February 4 1998 which states the following: LMX acknowledges its obligation to pay the principal amount with interest and will use its best efforts to: 1.Repay the principal amount with interest. 2.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 specified payments 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. 3.LMX, may, after consultation with GMD and upon the acceptance of GMD, apply to the exchange to obtain acceptance to the issuance of shares in settlement of all or part of the principal amount due to GMD. Regarding the monies due from Farrell, the company, Farrell Financial Ltd, Variety Investments Ltd (both companies controlled by Don Farrell) and Don Farrell have signed a repayment agreement, the substantive terms of which are as follows: Farrell shall: 1.Pay $25,000 plus interest on February 15 to June 1998 inclusive; 2.Pay interest at the rate of the Bank of Montreal's prime rate plus 2%; 3.Repay the balance of the principal amount of $883,588 by June 30 1998 with interest to that date; 4.As security Farrell has agreed to provide as collateral all shares owned directly and indirectly by Don Farrell, in Air Packaging Technologies, GMD, LMX and Sanfred Resources. Shares not on deposit in brokerage accounts are being delivered to GMD and will be held by an escrow agent. In addition Farrell has agreed that the proceeds of any sales of the shares of these four companies, which are held in brokerage accounts, will be paid to GMD as to 90% and to Farrell as to 10%. This arrangement also applies to shares of other companies held in the same accounts and other brokerage accounts controlled by Farrell; 5.In the event of default by Farrell, GMD obtains trading control of Farrell's accounts in order to direct the sale of shares and repayment of the principal amount and interest in which case, all of the proceeds of sale will be paid to GMD. Major investors presenting financing options have approached the company. Discussions have been of a general nature and no terms have been set. CHANGE OF HEAD OFFICE The new management of the company has decided to sever all connections with the former head office of the company. All of the substantive operations of the company have been transferred to Dr Webb's office in Vancouver for an interim period while new office space is located and additional management is appointed. It is expected that a transition period of about one month will be required to complete the transfer. PRIVATE PLACEMENTS CANCELLED A private placement announced in Stockwatch November 19 1997 of 200,000 units at $1.91 per share is not proceeding. A private placement announced in Stockwatch January 19 1998 of 200,000 units at $1.52 per share is not proceeding. STATUS OF PROPERTIES All new exploration programs on the company's properties have been suspended pending evaluation of the financial status of the company. All suppliers have been advised. Some of the suppliers have elected to continue providing services. The company is expecting a preliminary independent reserve report for the Discovery mine property in the next few days. A news release on this matter will be issued, possibly in the next five business days, after receipt of the report. The company has signed a confidentiality agreement this week with several major companies which are reviewing the Discovery mine and Royce group of claims with a view to entering into an option agreement or joint venture. No terms have been discussed. (c) Copyright 1997 Canjex Publishing Ltd. canada-stockwatch.com Mr Metals