SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-12
Bay Resources Ltd
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined)
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5. Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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Bay Resources Ltd
A Delaware Corporation
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Level 8, 580 St Kilda Road Melbourne
Victoria 3004, Australia
PO Box 6315, St Kilda Road Central
Melbourne, Victoria 8008, Australia
Telephone: +61 3 8532 2860
Facsimile: +61 3 8532 2805
Email: bay@axisc.com.au
TO OUR STOCKHOLDERS:
You are cordially invited to attend our 2005 Annual Stockholders' Meeting to be
held at Level 8, 580 St Kilda Road Melbourne Victoria 3004 Australia on March 8,
2006, at 3.00pm.
We have attached a Notice of Annual Meeting of Stockholders and Proxy Statement
that discuss the matters to be presented at the meeting.
At this year's meeting, we will be asking our stockholders to elect Joseph Isaac
Gutnick, David Stuart Tyrwhitt, Peter James Lee and Mordechai Zev Gutnick as
directors and to change the name of the Company to Golden River Resources
Corporation.
We hope that you will come to the Annual Meeting in person. Even if you plan to
come, we strongly encourage you to vote now. Instructions on voting by facsimile
or mail are shown on your proxy and in the Proxy Statement. If for any reason
you desire to revoke your proxy, you can do so at any time before it is voted.
Your vote is important and will be greatly appreciated.
If you have any questions about the matters to be voted on at the Annual Meeting
or you need help voting your shares, please either Mr. Pini Althaus at (718) 953
6340 (email pini@bayresourcesltd.com) or me at (613) 8532 2860 or
peter@bayresourcesltd.com
/s/ Peter Lee
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Peter Lee
Secretary
BAY RESOURCES LTD
NOTICE OF 2005 ANNUAL MEETING OF STOCKHOLDERS
Time
3.00pm. on March 8, 2006.
Place
Level 8, 580 St Kilda Road Melbourne Victoria 3004 Australia
Purposes
To elect four members of the Board of Directors to serve a one year term.
To change the name of the Company to Golden River Resources Corporation.
To transact any other business that properly comes before the Meeting or any
adjournment of the Meeting.
Record Date
You can vote if you were a stockholder of record at the close of business on
January 30, 2006.
By order of the Board of Directors
/s/ Peter Lee
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Peter Lee
Secretary
January 4, 2006
Melbourne, Victoria, Australia
HOW TO VOTE
Your vote is important. You may vote by using a traditional proxy card and
returning it to us by facsimile on (613) 8532 2805 or by mail to PO Box 6315 St
Kilda Road Central, Melbourne, Victoria, 8008 Australia
BAY RESOURCES LTD
Proxy Statement
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Table Of Contents Page
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General Information about the Solicitation 1
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Election of Directors 3
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Executive Compensation 10
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Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters 16
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Change of name to Golden River Resources Corporation 21
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Requirements, Including Deadlines, for Submission of
Stockholder Proposals and Nominations of Directors 22
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Other Matters 23
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Audit Committee Charter Annex A
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PROXY STATEMENT
GENERAL INFORMATION ABOUT THE SOLICITATION
We are sending you these proxy materials in connection with the solicitation by
the Board of Directors of Bay Resources Ltd (OTCBB: BYRE) of proxies to be used
at Bay Resources Annual Meeting of Stockholders to be held on March 8, 2006, and
at any adjournment or postponement of the Meeting. "We", "our", "us" and the
"Company" all refer to Bay Resources. The proxy materials are first being mailed
on or about February 6, 2006.
Who may vote
You will only be entitled to vote at the Annual Meeting if our records show that
you held your shares on January 30, 2006. At the close of business on January 3,
2006, a total of 16,714,130 shares of our common stock were outstanding and
entitled to vote. Each share of common stock has one vote.
How to vote
If your shares are held by a broker, bank or other nominee, it will send you
instructions that you must follow to have your shares voted at the Annual
Meeting. If you hold your shares in your own name as a record holder, you may
instruct the proxy agents how to vote your shares as described below.
Vote by mail
If you choose to vote by facsimile or mail, simply mark your proxy, date and
sign it, and return it to us in the envelope provided. If the envelope is
missing, please mail your completed proxy card to Bay Resources, PO Box 6315 St
Kilda Road Central Melbourne Victoria 8008 Australia.
Voting at the Annual Meeting
The method by which you vote will not limit your right to vote at the Annual
Meeting if you decide to attend in person. If your shares are held in the name
of a bank, broker or other holder of record, you must obtain a proxy, executed
in your favor, from the holder of record to be able to vote at the Meeting.
All shares that have been properly voted and not revoked will be voted at the
Annual Meeting. If you sign and return your proxy card but do not give voting
instructions, the shares represented by that proxy will be voted as recommended
by the Board of Directors.
How to revoke your proxy
You may revoke your proxy at any time before it is voted. If you are a record
stockholder, you may revoke your proxy in any of the following ways:
o by giving notice of revocation at the Annual Meeting.
o by timely delivery of written instruction revoking your proxy to the
Secretary of Bay Resources , PO Box 6315 St Kilda Road Central Melbourne
Victoria 8008 Australia.
o by voting in person at the Annual Meeting.
-1-
How votes will be counted
The Annual Meeting will be held if a quorum, consisting of a majority of the
outstanding shares of common stock entitled to vote, is represented at the
Meeting. If you have returned a valid proxy or are a record holder and attend
the Meeting in person, your shares will be counted for the purpose of
determining whether there is a quorum, even if you wish to abstain from voting
on some or all matters introduced. Abstentions and broker "non-votes" are also
counted in determining whether a quorum is present. A "broker non vote" occurs
when a broker, bank or nominee that holds shares for a beneficial owner does not
vote on a particular proposal because it does not have discretionary voting
power for that proposal and has not received voting instructions from the
beneficial owner.
If a quorum is not present at the Annual Meeting, a majority of the shares
present, in person or by proxy, has the power to adjourn the Meeting from time
to time until a quorum is present. Other than announcing at the Annual Meeting
the time and place of the adjourned Meeting, no notice of the adjournment will
be given to stockholders unless required because of the length of the
adjournment.
Directors will be elected by a plurality of the votes cast.
The approval of the change of the Company's name requires the affirmative vote
of a majority of the issued and outstanding shares of common stock.
Abstentions and broker "non-votes" are not counted in the election of directors
or the approval of any other matter.
Votes that are withheld or shares that are not voted will have the effect of a
no vote on the proposal to approve a change of the Company's name.
List of stockholders
The names of stockholders of record entitled to vote at the Annual Meeting will
be available at the Annual Meeting and for ten days prior to the Meeting for any
purpose germane to the Meeting, between the hours of 9.00 a.m. and 5.00 p.m., at
our principal executive offices at Level 8, 580 St Kilda Road Melbourne Victoria
3004 Australia.
Cost of this proxy solicitation
We will pay the cost of preparing, assembling and mailing the notice of meeting,
proxy statement and enclosed proxy card. In addition to the use of mail, our
employees may solicit proxies personally and by telephone. Our employees will
receive no compensation for soliciting proxies other than their regular
salaries. We may request banks, brokers and other custodians, nominees and
fiduciaries to forward copies of the proxy materials to their principals and to
request authority for the execution of proxies. We may reimburse such persons
for their expenses incurred in connection with these activities.
-2-
PROPOSAL 1
ELECTION OF DIRECTORS
General
Our By-laws provide that the number of Directors of the Company initially shall
be six and that the number of directors which shall thereafter constitute the
whole Board shall be determined by the Board of Directors. The Board has
determined that the number of Directors constituting the whole Board shall be
four.
Directors need not be stockholders of the Company or residents of the State of
Delaware. Directors are elected for an annual term and generally hold office
until the next Directors have been duly elected and qualified. Directors may
receive compensation for their services as determined by the Board of Directors.
A vacancy on the Board may be filled by the remaining Directors even though less
than a quorum remains. A Director appointed to fill a vacancy remains a Director
until his successor is elected by the Stockholders at the next annual meeting of
Shareholder or until a special meeting is called to elect Directors.
Our Board of Directors currently has four members who hold office for a period
of one year.
Your proxy will be voted FOR the election of the four nominees named below,
unless you withhold authority to vote for any or all of the nominees. Management
has no reason to believe that a nominee will be unwilling or unable to serve as
a director. However, if a nominee is unwilling or unable to serve, your proxy
will be voted for another nominee designated by our Board of Directors.
Director nominees
The following are management's director nominees
Name Director Since
Joseph Isaac Gutnick March 1988
David Stuart Tyrwhitt November 1996
Peter James Lee February 1996
Mordechai Zev Gutnick September 2005
Directors and executive officers
The following table lists our directors and executive officers.
Name Age Position(s) Currently Held with the Company
Joseph Gutnick 53 Chairman of the Board, President,
Chief Executive Officer and Director
David Tyrwhitt 65 Vice President and Director
Peter Lee 48 Director, Secretary and Chief Financial Officer
Mordechai Gutnick 27 Director
Pinchas Althaus 31 Chief Operating Officer
Craig Alford 43 Vice President Exploration
-3-
Biographical information provided to us by our directors and executive officers
is as follows.
Joseph Gutnick
Mr Gutnick has been Chairman of the Board, President and Chief Executive Officer
since March, 1988. He has been a Director of numerous public listed companies in
Australia specialising in the mining sector since 1980, is currently a Director
of Astro Mining N.L., Great Gold Mines N.L., and Quantum Resources Limited and
is Chairman of the Board, President and Chief Executive Officer of Legend
International Holdings Inc, a company listed on the over the counter market in
the USA. Mr. Gutnick was previously Executive Chairman of Tahera Corporation, a
company that is listed on Toronto Stock Exchange from May 2000 to October 2003
and has previously been a Director of the World Gold Council. He is a Fellow of
the Australasian Institute of Mining & Metallurgy and the Australian Institute
of Management and a Member of the Australian Institute of Company Directors.
Employment History
March 1988 - Present: Chairman, President and Chief Executive Officer of Bay
Resources Ltd.; March 1988 - Present: Chairman and Managing Director of Great
Gold Mines N.L.; October 1988 - Present: Chairman and Managing Director of Astro
Diamond Mines N.L.; March 1987 - December 2002: Chairman and Managing Director
of Australian Gold Resources Limited; March 1984 - June 2002: Chairman and
Managing Director of Autogen Limited;; December 1980 - August 2001: Chairman and
Managing Director of Centaur Mining and Exploration Limited; February 1987 -
August 2004: Chairman and Managing Director of Regis Resources N.L.; July 1987 -
Present: Chairman and Managing Director of Quantum Resources Limited; May 2000 -
October 2003: Executive Chairman of Tahera Corporation; December 2004 - Present:
President, Chief Executive Officer and Chairman of the Board of Legend
International Holdings Inc. All companies are in the mining and exploration
industry other than Autogen Limited which was in the biotechnology industry.
David Tyrwhitt
Dr Tyrwhitt was appointed a Director in November 1996. He is a geologist,
holding a Bachelor of Science and PhD degrees and has 40 years experience in
mineral exploration and management development and operation of gold mines in
Australia. Dr Tyrwhitt has been a Director of numerous public listed companies
in Australia in the mining industry, is currently a Director of Astro Mining
N.L., Great Gold Mines N.L., and Quantum Resources Limited and is a Director of
Legend International Holdings Inc, a company listed on the over the counter
market in the USA.
Employment History
Non--Executive Director and Independent Director of Bay Resources Ltd.; January
1999 - Present: June 2002 - Present: Director of David S. Tyrwhitt & Associates
Pty Ltd.; 1996 - June 2002: Consulting Geologist through wholly-owned company,
Auminex Sdn Bhd.; November 1996 - Present: Non-Executive and Independent
Director of Astro Diamond Mines N.L.; March 2005 - Present: Non-Executive and
Independent Director of Legend International Holdings Inc.; November 1996 -
August 2004: Non-Executive and Independent Director of Regis Resources N.L.;
November 1996 - Present: Non-Executive and Independent Director of Quantum
Resources Limited; November 1996 - June 2002: Non-Executive and Independent
Director of Autogen Limited; November 1996 - April 2000- August 1999:
Non-Executive and Independent Director of Centaur Mining & Exploration Limited;
November 1996 - December 2002: Non-Executive and Independent Director of
Australian Gold Resources Limited; November 2002 - September 2003: Non-Executive
and Independent Director of Tahera Corporation;. All companies are in the mining
and exploration industry other than Autogen Limited which was in the
biotechnology industry.
-4-
Peter Lee
Mr Lee has been Chief Financial Officer and Principal Accounting Officer since
August 1989 was appointed a Director in February 1996 and Secretary in 1996. Mr
Lee is a Member of the Institute of Chartered Accountants in Australia, a Fellow
of Chartered Secretaries Australia Ltd., a Member of the Australian Institute of
Company Directors and holds a Bachelor of Business (Accounting) from Royal
Melbourne Institute of Technology. He has over 20 years commercial experience
and is currently General Manager Corporate and Company Secretary of several
listed public companies in Australia.
Employment History
August 1989 - Present: Chief Financial Officer and Principal Accounting Officer
of Bay Resources Ltd, Director and Secretary of Bay Resources Limited since
April 1996 to present; June 1997 - Present: General Manager Corporate and
Company Secretary of AXIS Consultants Pty Ltd.; April 1998 - Present: General
Manager Corporate and Company Secretary of Astro Diamond Mines N.L., Regis
Resources N.L. and Quantum Resources Limited: General Manager Corporate and
Company Secretary of Australian Gold Resources Limited; April 1998 - June 2002:
General Manager Corporate and Company Secretary of Autogen Limited; April 1998 -
August 2001: General Manager Corporate and Company Secretary of Centaur Mining &
Exploration Limited; November 2004 - Present: Secretary of Legend International
Holdings Inc.; March 2005 - Present: Chief Financial Officer of Legend
International Holdings Inc. All companies are in the mining and exploration
industry other than Autogen Limited which was in the biotechnology industry.
Mordechai Gutnick
On September 14, 2005, Mr Modechai Zev Gutnick was elected a non-executive
Director. Mr Mordechai Gutnick is a businessman and long-term investor in the
mining industry. He is also a Director of Astro Diamond Mines N.L. (May 2003 to
current), Great Gold Mines N.L. (May 2003 to current) and Quantum Resources
Limited (May 2003 to current). Mr M Z Gutnick has been appointed to the Audit
and Remuneration Committee's, effective September 14, 2005. Mr Mordechai Gutnick
is the son of Mr Joseph Gutnick.
Employment History
April 2001 - June 2002: Project Advisor of AXIS Consultants Pty Ltd.; July 2002
to April 2003: Professional Investor; May 2003 - Current: Non-Executive Director
of Astro Diamond Mines N.L. and Quantum Resources Limited; May 2003 - August
2004: Non-Executive Director of Regis Resources N.L. All companies are in the
mining and exploration industry.
Pinchas (Pini) Althaus
Mr. Althaus has 9 years business experience in insurance, sales, business
development and investor relations. More recently Mr. Althaus was Director of
Business Development for Ambient Corporation (February 2000 to February 2003), a
company providing power line communications technology. He joined Tahera
Corporation, a diamond exploration company, in February 2003 as Director of
Investor Relations & Business Development. Since October 2003, Pini has provided
consulting services to Bay Resources and its subsidiary company covering
investor relations and public relations activities, including fund raising,
press releases, media interviews, and shareholder inquiries. On October 15,
2004, he was appointed Chief Operating Officer of Bay Resources Ltd.
-5-
Employment History
October 2004 - Present: Chief Operating Officer Bay Resources Limited; November
2003 to October 2004: Vice President Investor Relations and Business Development
Bay Resources Limited; February 2003 - October 2003: Director of Investor
Relations & Business Development for Tahera Corporation; February 2000 -
February 2003: Director of Business Development for Ambient Corporation. All
companies are in the mining and exploration industry other than Ambiant
Corporation which was in power line communications technology industry.
Craig Alford
Mr. Alford has over 20 years of experience in the exploration business including
5 years as Senior Geologist to District Manager for Teck Cominco's exploration
programs in Kyrgyzstan, Argentina and Chile. Most recently Mr. Alford
participated in various successful exploration programs within Canada and the
former Soviet Union, including as a Geologic Consultant for Placer Dome, one of
the world's largest gold mining companies. Mr. Alford has worked in exploration
for several major and junior mining companies including Falconbridge, Golden
Star Resources, Granges, and Homestake Minerals. In addition, he has worked with
the Geologic Survey of Canada. Mr. Alford holds a Masters degree with
Commendation in Geology from Lakehead University. He has extensive exploration
experience in many commodities, including gold, silver, copper, lead, zinc, oil,
and diamonds. Mr. Alford's exploration experience is throughout Canada and
several other countries including Venezuela, Guyana, Chile, Argentina, Suriname,
and Kyrgyzstan.
Employment History
February 1996 - February 2002: Senior Project Geologist for Teck Cominco;
February 2002 - January 2003: Manager of All-Tech Services; January 2003 - April
2004: Geologist for Cabra Consulting; March 2004 - Present: Vice President
Exploration Bay Resources Limited group. All companies are in the mining and
exploration industry.
Executive officers of Bay Resources are appointed by the Board of Directors and
serve at the discretion of the Board, subject to the terms of applicable
employment agreements. Except as set forth above, there are no family
relationships among any of the directors or executive officers of Bay Resources.
Mr. Gutnick was formerly the Chairman of the Board, Dr. Tyrwhitt was formerly an
independent Director and Mr. Lee was formerly Company Secretary of Centaur
Mining & Exploration Ltd., an Australian corporation, which commenced an
insolvency proceeding in Australia in March 2001.
Board, Audit Committee and Remuneration Committee Meetings
Our Board of Directors consists of four members, of whom two have been, and
continue to be, independent under applicable regulations. During fiscal 2005,
our Board of Directors met three times. The Board of Directors also uses
resolutions in writing to deal with certain matters and during fiscal 2005, five
resolutions in writing were signed by all Directors.
-6-
We do not have a nominating committee. Historically our entire Board has
selected nominees for election as directors. The Board believes this process has
worked well thus far particularly since it has been the Board's practice to
require unanimity of Board members with respect to the selection of director
nominees. In determining whether to elect a director or to nominate any person
for election by our stockholders, the Board assesses the appropriate size of the
Board of Directors, consistent with our bylaws, and whether any vacancies on the
Board are expected due to retirement or otherwise. If vacancies are anticipated,
or otherwise arise, the Board will consider various potential candidates to fill
each vacancy. Candidates may come to the attention of the Board through a
variety of sources, including from current members of the Board, stockholders,
or other persons. The Board of Directors has not yet had the occasion to, but
will, consider properly submitted proposed nominations by stockholders who are
not directors, officers, or employees of Bay Resources on the same basis as
candidates proposed by any other person. Stockholders can make proposals as
provided below under the caption "Requirements, Including Deadlines, for
Submission of Stockholder Proposals and Nominations of Directors."
Audit Committee:
Dr David Tyrwhitt and Mr. Mordechai Gutnick constitute our Audit Committee. It
is the opinion of the Board of Directors that each of them is an independent
director as defined in Rule 10A-3 of the Securities Exchange Act of 1934. In
addition, the Board believes that Mr Tyrwhitt would meet the director
independence requirements of the Nasdaq Stock Market if we were listed on such
Market, but that Mr.Mordechai Gutnick would not meet such Nasdaq independence
requirements in light of his family relationship with Mr. Joseph Gutnick who
isour Chief Executive Officer. Our Audit Committee does not include a "financial
expert" as defined in Item 401 (e) of Regulation S-B. The Company only has two
independent Directors and neither of these independent Directors has a finance
background. The Audit Committee met once during fiscal 2005 and the Chair of the
Audit Committee met with the external auditors on three occasions during fiscal
2005 in respect to quarterly reports prior to the reports being filed..
The Board's current written charter for its Audit Committee is a statement
attached as Annex A to this proxy statement.
Code of Ethics
We have adopted a Code of Conduct and Ethics and it applies to all Directors,
Officers and employees. A copy of the Code of Conduct and Ethics is posted on
our website and we will provide a copy to any person without charge. If you
require a copy, you can download it from our website or alternatively, contact
us by facsimile or email and we will send you a copy.
Report of the Audit Committee
Management is responsible for Bay Resources' financial reporting process,
including its system of internal control, and for the preparation of
consolidated financial statements in accordance with generally accepted
accounting principles. Bay Resources' independent auditors are responsible for
auditing those financial statements.
In performing our oversight duties we rely on management's representation that
the financial statements have been prepared with integrity and objectivity and
in conformity with accounting principles generally accepted in the United
States. We also rely on the representations of the independent auditors included
in their report on Bay Resources' financial statements.
-7-
Our oversight does not provide us with an independent basis to determine that
management has maintained appropriate accounting and financial reporting
principles or policies, or appropriate internal controls and procedures.
Furthermore, our contacts with management and the independent auditors do not
assure that:
o Bay Resources' financial statements are presented in accordance with
generally accepted accounting principles,
o the audit of Bay Resources' financial statements has been carried out in
accordance with generally accepted auditing standards or
o Bay Resources' independent accountants are in fact "independent."
In connection with the inclusion of the audited financial statements in Bay
Resources' 2005 annual report on Form 10-KSB, the Audit Committee:
o reviewed and discussed the audited financial statements with management,
o discussed with our independent auditors the materials required to be
discussed by SAS 61,
o reviewed the written disclosures and the letter from our independent
auditors required by Independent Standards Board Standard No. 1 and
discussed with our independent auditors their independence, and
o based on the foregoing review and discussion, recommended to the Board of
Directors that the audited financial statements be included in Bay
Resources' 2005 annual report on form 10-KSB.
David S Tyrwhitt, Audit Committee Chairman
Mordechai Gutnick, Audit Committee Member
Remuneration Committee
The Board has a Remuneration Committee comprised of two independent directors.
During fiscal 2005, the Remuneration Committee met once. During the year, the
Remuneration Committee reviewed employment agreements and salary levels of our
executive officers were considered.
Stockholder Communications with the Board
Stockholders who wish to communicate with the Board of Directors should send
their communications to the Chairman of the Board at the address listed below.
The Chairman of the Board is responsible for forwarding communications to the
appropriate Board members.
Mr. Peter Lee Bay Resources Ltd.
PO Box 6315
St Kilda Road Central
Melbourne, Victoria 8008
Australia
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Annual Meeting Attendance
The Company encourages all Directors to attend the Annual Meeting of
Stockholders either in person or by telephone.
-9-
EXECUTIVE COMPENSATION
The following table sets forth the annual salary, bonuses and all other
compensation awards and pay outs on account of our Chief Executive Officer for
services rendered to us during the fiscal year ended June 30, 2005, 2004 and
2003. No other executive officer received more than US$100,000 per annum during
this period. The amounts listed are in Australian dollars(A$), U.S. dollars
(US$) or Canadian dollars (CDN$).
Summary Compensation Table
Long Term
Annual Compensation Compensation Awards
---------------------------------------- --------------------------
Securities
Other Annual Restricted Underlying
Name and Principal Position Year Salary Compensation Stock Awards Options
--------------------------- ---- ------ ------------ ------------ ----------
Joseph Gutnick, Chairman
of the Board and CEO 2005 A$91,667(1)(2) A$18,935(3) -- 500,000(4)
2004 A$76,000(1)(2) A$16,484(3) -- --
2003 $-(1)(2) A$28,553(3) -- --
Pini Althaus, Chief Operating
Officer 2005 US$110,000(5) -- -- 250,000(6)
Craig Alford, Vice President
Exploration 2005 CDN$120,000 CDN$3,722 -- 150,000(7)
-----------------------------------
1. The amounts listed were paid by us to AXIS, which provides the services of
Mr. J I Gutnick and Mr. Lee as well as certain other officers and employees
to the Company.
2. Excludes options granted to Edensor of which Mr. JI Gutnick is a Director
and Shareholder (see Item 13 - Certain Relationships and Related Party
Transactions)
3. Includes amounts paid by AXIS to an accumulation superannuation plan on
behalf of Joseph Gutnick.
4. Includes 166,667 options that are vested 166,667 options that will vest on
January 27, 2005 and 166,667 options that will vest on July 27, 2006.
5. Mr. Althaus was a consultant for the period to October 2004 and at that
time was appointed as an employee. The salary disclosed includes the
consulting fees for the period July to October 2004 and the salary for the
period November 2004 to June 2005.
6. Includes 250,000 options that are vested. In addition, subject to
availability of options under the 2004 Stock Option Plan, Mr. Althaus will
be issued a further 250,000 options which will vest on August 31, 2005 and
250,000 that will vest on December 31, 2006.
7. Includes 150,000 options that are vested.
We have a policy that we will not enter into any transaction with an officer,
Director or affiliate of the Company or any member of their families unless the
transaction is approved by the Audit Committee and the Audit Committee
determines that the terms of the transaction are no less favourable to us than
the terms available from non-affiliated third parties or are otherwise deemed to
be fair to the Company at the time authorised.
-10-
Option Grants in Last Fiscal Year
Number of Shares Percent of Total Market
of Common Stock Options Granted to Price on
Underlying Employees in Fiscal Exercise Date of Expiration
Name Options Granted Year Price Grant Date
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Joseph Gutnick 500,000 35.7% US$1.00 US$1.01 10/15/2014
Pini Althaus* 250,000 17.9% US$1.00 US$1.01 10/15/2014
Craig Alford 150,000 10.7% US$1.00 US$1.01 10/15/2014
*Subject to availability of options under the 2004 Stock Option Plan, Mr.
Althaus will be issued a further 250,000 options which will vest on August 31,
2005 and 250,000 options which will vest on December 31, 2006.
Aggregated Option Exercises in Fiscal 2005 and Fiscal 2005 Year-End
Option Values
The person listed in the following table did not exercise any options in 2005.
Number of Shares of Common Value of Unexercised
Stock Underlying Unexercised In-The-Money
Options at June 30, 2005 Options at June 30, 2005(1)
Name Exercisable Unexercisable Exercisable Unexercisable
-----------------------------------------------------------------------------------------------------
Joseph Gutnick 166,667 333,333 US$208,334 US$416,666
Pini Althaus 250,000 -- US$312,500 --
Craig Alford 150,000 -- US$187,500 --
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(1) Based on U.S.$1.25 per share, the June 30, 2005 closing price reported on
the OTC Bulletin Board.
2004 Stock Option Plan
The 2004 Plan provides for the granting of options. The maximum number of shares
available for awards is 10% of the issued and outstanding shares of common stock
on issue at any time. If an option expires or is cancelled without having been
fully exercised or vested, the remaining shares will generally be available for
grants of other awards.
The 2004 Plan is administered by the Remuneration Committee of the Board
comprised solely of directors who are not employees or consultants to Bay
Resources or any of its affiliated entities.
Any employee, director, officer, consultant of or to Bay Resources or an
affiliated entity (including a company that becomes an affiliated entity after
the adoption of the 2004 Plan) is eligible to participate in the 2004 Plan if
the Committee, in its sole discretion, determines that such person has
contributed significantly or can be expected to contribute significantly to the
success of Bay Resources or an affiliated entity. During any one year period, no
participant is eligible to be granted options to purchase more than 5% shares of
our issued and outstanding common stock or if they provide investor relations
activities, or are a consultant to the Company, 2% of the issued and outstanding
shares of common stock in any 12 month period.
Options granted under the 2004 Plan are to purchase Bay Resources common stock.
The term of each option will be fixed by the Remuneration Committee, but no
option will be exercisable more than 10 years after the date of grant. The
option exercise price is fixed by the Remuneration Committee at the time the
option is granted. The exercise price must be paid in cash. Options granted to
participants vest and have a term of 10 years.
-11-
No award is transferable, or assignable by the participant except upon his or
her death.
The Board may amend the 2004 Plan, except that no amendment may adversely affect
the rights of a participant without the participant's consent or be made without
stockholder approval if such approval is necessary to qualify for or comply with
any applicable law, rule or regulation the Board deems necessary or desirable to
qualify for or comply with.
Subject to earlier termination by the Board, the 2004 Plan has an indefinite
term except that no ISO may be granted following the tenth anniversary of the
date the 2004 Plan is approved by stockholders.
Options to purchase the following shares of common stock have been issued (or
agreed to be issued) as follows:-
Name Quantity Exercise Price
J. I. Gutnick 500,000 US$1.00
P.J. Lee 250,000 US$1.00
D S Tyrwhitt 50,000 US$1.00
P L Ehrlich * 50,000 US$1.00
P. Althaus ** 750,000 US$1.00
C. Alford 150,000 US$1.00
E Flood 150,000 US$1.00
* as a result of Mr. Ehrlich's resignation in September 2005, the options
are relinguished.
** tranche 1 of 250,000 options issued. Tranches 2 and 3 are subject to
availability of options under plan.
None of the proposed recipients have received any stock options or other equity
based forms of compensation from us for at least the last three years.
Other than the issue of these Options, there are no other current plans or
arrangements to grant any options under the 2004 Plan.
Compensation Pursuant to Plans.
The Company does not have any pension or profit sharing plans. The Company's
Vice President Exploration and temporary staff employed in the exploration
programme in Canada are subject to Canadian requirements for contributions to
pension plans. At June 30, 2005, the Company has an obligation to pay A$13,570.
Contributions to employee benefit or health plans during the year ended June 30,
2005 were A$7,196.
Compensation to Directors
It is our policy to reimburse Directors for reasonable travel and lodging
expenses incurred in attending Board of Directors meetings. Independent
Directors are paid Directors fees of A$20,000 per annum.
-12-
Securities authorized for issuance under equity compensation plans
The following table sets forth, as of June 30, 2005, information regarding
options under our 2004 stock option plan, our only active plan. The 2004 stock
option plan has been approved by our stockholders. Outstanding options under
this plan that are forfeited or cancelled will be available for future grants.
All of the options are for the purchase of our common stock.
Number of securities
remaining available for
future issuances under equity
Number of securities to Weighted average compensation plans (excluding
be issued upon exercise Exercise price of securities reflected in
of outstanding options outstanding options column (a)
Plan Category (a) (b) (c)
---------------------------- --------------------------- ------------------------- -------------------------------
Equity compensation
plans approved by
security holders 1,400,000(1) US$1.00 271,163(2)
Equity compensation
plans not approved
by security holders - - -
--------------------------- ------------------------- -------------------------------
Total 1,400,000(1) US$1.00 271,163(2)
---------------------------- =========================== ===============================
(1) Does not include 500,000 options that have been granted subject to future
availability under our 2004 stock option plan.
(2) The maximum number of shares available for issuance under the 2004 stock
option plan is equal to 10% of the issued and outstanding shares of common
stock, at any time.
Principal Officers Contracts
Pini Althaus
On October 15, 2004, the Company appointed Mr. Pinchas (Pini) Althaus as Chief
Operating Officer.
Mr. Althaus has 9 years business experience in insurance, sales, business
development and investor relations. More recently Mr. Althaus was Director of
Business Development for Ambient Corporation (February 2000 to February 2003), a
company providing power line communications technology. In this role, Pini
initiated and maintained relationships with U.S. & International electrical
utilities and power companies, and managed and initiated relationships with
strategic and business development partners. He played a major role in Ambient
completing two successful rounds of funding, acted as liaison between Ambient
and its investors/financial community, managed public relations and corporate
communications duties, including press releases and media interviews, and
created and delivered presentations for Ambient. He joined Tahera Corporation, a
diamond exploration company, in February 2003 as Director of Investor Relations
& Business Development where he managed public relations and investor relations
activities, including press releases, conducting media interviews, responding to
shareholder inquiries and representing Tahera at conferences.
-13-
In October 2003, Pini left Tahera and since that time, has provided consulting
services to Bay Resources and its subsidiary company covering investor relations
and public relations activities, including fund raising, press releases, media
interviews, and shareholder inquiries. In addition to this, he has coordinated
road-shows and delivered presentations on the Company's behalf. On October 15,
2004, he was appointed Chief Operating Officer of Bay Resources Ltd.
The employment agreement was effective May 1, 2004 and expires on December 31,
2006. Mr. Althaus shall be paid a salary of US$110,000 exclusive of bonus
benefits and other compensation. The Company has agreed to provide Mr. Althaus
with executive benefits comparable to those provided by the Company to other
executives of the Company generally and shall permit Mr. Althaus to participate
in any bonus place, share purchase plan, retirement plan or similar plan offered
by the Company to its executives generally in the manner and the extent
authorized by the Remuneration Committee of the Company. In addition, Mr.
Althaus will be able to participate in such extended health, medical, disability
insurance and other benefit plans established by the Company and made available
to other executives of the Company.
The Company has agreed to grant Mr. Althaus options to purchase 750,000 shares
of common stock of the Company at an exercise price of US$1.00 per option which
will vest as follows:-
o 250,000 shall vest immediately;
o a further 250,000 will vest at the mid term date of the contract; and
o the remaining 250,000 will vest on December 31, 2006.
The options will be issued subject to applicable securities laws, the
availability of options within the Company stock option plan and may be subject
to whole periods.
In the case of the change of control, all options then outstanding will
immediately vest for the purpose of such transaction.
The Company may terminate the employment of Mr. Althaus without notice or any
payment in law of notice for cause. The agreement may also be terminated by the
Company upon 30 days written notice to Mr. Althaus if Mr. Althaus becomes
permanently disabled and the agreement shall terminate without notice upon the
death of Mr. Althaus. If Mr. Althaus' employment is terminated during the term
for cause or by voluntarily termination by Mr. Althaus, Mr. Althaus shall not be
entitled to any severance payment other than pro rata entitlements up to the
date of termination.
Mr. Althaus may terminate his employment with the Company at any time upon the
occurrence of any one of the following:-
(i) A reduction of diminution in Mr. Althaus' authority, duties or
responsibilities (including without limitation, with respect to office
or title) hereunder,
(ii) Any reduction in the then applicable base salary or Mr. Althaus'
eligibility to participate in any executive benefits program,
retirement plan or executive incentive bonus programs,
(iii) Unless without his prior consent, his place of work is relocated to
more than 30 miles from New York,
(iv) Any other material failure on the part of the Company to comply with
any other provision of this agreement or any stock option agreement
executed by the parties as contemplated herein.
If Mr. Althaus' employment is terminated for other than cause, Mr. Althaus will
be entitled to receive the lesser of the total of three months salary at the
applicable base salary rate and the present value of the salary of Mr. Althaus
during the next 24 months.
-14-
If Mr. Althaus' employment is terminated as a result of permanent disability or
death, a payment will be made to Mr. Althaus or his estate of the balance of the
base salary that would otherwise have been paid to Mr. Althaus during the
remainder of the term of the agreement.
Craig Alford
In April 2004 the Company appointed Mr. Craig Alford as Vice President
Exploration. Mr. Alford has over 20 years of experience in the exploration
business including 5 years as Senior Geologist to District Manager for Teck
Cominco's exploration programs in Kyrgyzstan, Argentina and Chile. Most recently
Mr. Alford participated in various successful exploration programs within Canada
and the former Soviet Union, including as a Geologic Consultant for Placer Dome,
one of the world's largest gold mining companies. Mr. Alford has worked in
exploration for several major and junior mining companies including
Falconbridge, Golden Star Resources, Granges, and Homestake Minerals. In
addition, he has worked with the Geologic Survey of Canada.
Mr. Alford holds a Masters degree with Commendation in Geology from Lakehead
University. He has extensive exploration experience in many commodities,
including gold, silver, copper, lead, zinc, oil, and diamonds. Mr. Alford's
exploration experience is throughout Canada and several other countries
including Venezuela, Guyana, Chile, Argentina, Suriname, and Kyrgyzstan.
Mr. Alford is responsible for overseeing Bay Resources' gold exploration on the
Committee Bay Greenstone Belt and in the Slave Craton in Nunavut, Canada. He
will also be actively involved in continuing Bay Resources' strategy of
acquiring high potential, early-stage gold properties worldwide.
Mr Alford's contract is for one year until March 31, 2005 and since that time
has been operating on a month to month basis. Discussions are being held between
the parties with a view to renewing the contract. The contract sets out a salary
of CDN$120,000 per annum and the issue of 150,000 stock options pursuant to a
Stock Option Plan. If the Company terminates the contract without cause the
Company is required to pay Mr Alford a payment equivalent to two weeks salary.
Section 16(a) beneficial ownership reporting compliance
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, our Directors,
executive officers and beneficial owners of more than 10% of the outstanding
Common Stock are required to file reports with the Securities and Exchange
Commission concerning their ownership of and transactions in our Common Stock
and are also required to provide to us copies of such reports. Based solely on
such reports and related information furnished to us, we believe that in fiscal
2005 all such filing requirements were complied with in a timely manner by all
Directors and executive officers except (i) Mr Alford filed a Form 3 after the
due date; (ii) Mr Althaus filed a Form 3 and nine Form 4's after the due dates
for such forms and has not yet filed a Form 4 with respect to the grant of
options to him; (iii) Mr Lee filed a Form 4 with respect to the grant of options
to him after the due date for such form due to technical difficulties with
electronic lodgement; and (iv) Dr Tyrwhitt filed a Form 4 with respect to the
grant of options to him after the due date for such form due to technical
difficulties with electronic lodgement.
-15-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets out, to the best of our knowledge, the numbers of
shares in us beneficially owned as at December 31, 2005 by:
(i) each of our present Executive Officers and Directors,
(ii) each person (including any "group" as that term is defined in Section
13(d)(3) of the Securities Exchange Act) who beneficially owns more than 5%
of our Common Stock, and
(iii) all of our present Directors and officers as a group.
Name Number of Shares Owned Percentage of
Shares (1)
Edensor Nominees Pty Ltd 5,394,590 32.3
Pini Althaus 255,550 (8) 1.5
Kerisridge Pty Ltd 3,507,968 19.0
Surfer Holdings Pty Ltd 1,500,000 8.9
Kalycorp Pty Ltd 2,000,000 12.0
Joseph Gutnick 12,954,208 (2)(3) 68.3
(4)(5)(6)(7)
Stera Gutnick 12,428,558 (4)(5)(6)(7) 67.3
David Tyrwhitt 50,000 (2)(8) 0.2
Peter Lee 250,000 (2)(8) 1.5
RAB Special Situations (Master)
Fund Limited 1,670,000 (9) 9.99
-------------------------------------------------------
All officers and Directors
As a group 13,509,758 (4)(10) 75.8
-------------------------------------------------------
Notes relating to Item 11:
(1) Based on 16,711,630 shares outstanding
(2) Does not include:
(i) 8,949 shares of Common Stock beneficially owned Great Gold Mines NL or
(ii) 1,918 shares of Common Stock beneficially owned by Quantum Resources
Limited or
(iii) 229,489 shares of Common Stock beneficially owned by AXIS,
-16-
of which companies Messrs Gutnick, Lee, and Dr. Tyrwhitt are officers
and/or Directors, as they disclaim beneficial ownership of those shares.
(3) Does not include 2,500 shares of Common Stock beneficially owned by us.
(4) Includes 5,394,590 shares of Common Stock owned by Edensor Nominees,
3,507,968 shares of Common Stock owned by Kerisridge (including 1,753,984
shares issuable upon exercise of warrants), 1,500,000 shares of Common
Stock owned by Surfer Holdings Pty Ltd, 2,000,000 shares of Common Stock
held by Kalycorp Pty Ltd and 26,000 shares of Common Stock owned by
Pearlway Investments Proprietary Limited, of which Mr Joseph Gutnick, Stera
M. Gutnick and members of their family are officers, Directors and
principal stockholders.
(5) Includes 500,000 shares issuable upon exercise of stock options of which
166,667 are vested.
(6) Joseph Gutnick is the beneficial owner of 25,650 shares of Common Stock.
(7) Joseph Gutnick and Stera Gutnick are husband and wife.
(8) Issuable upon exercise of stock options of which 33.3% are vested 33.3%
vest on January 27, 2006 and the remaining 33.4% will vest on July 27,
2006.
(9) RAB owns 1,670,000 shares of common stock and warrants exercisable to
acquire an additional 1,670,000 shares of common stock. Under the terms of
the warrants, in no event shall such securities be converted into common
shares if, after giving effect to such conversion, the holder would, in
aggregate, beneficially own common shares of the Company in excess of 9.99%
of the issued and outstanding common shares, within the meaning of Rule
13d-1 of the Securities Exchange Act of 1934, as amended.
(10) Includes 1.1 million shares that are issuable upon exercise of stock
options, of which 533,333 are vested, 283,333 vest on January 27, 2006 and
the remaining 283,333 will vest on July 27, 2006.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We are one of five affiliated companies of which four are Australian public
companies listed on Australian Stock Exchange. Each of the companies have some
common Directors, officers and shareholders. In addition, each of the companies
owns equity in and is substantially dependent upon AXIS for its senior
management and certain mining and exploration staff. The Company owns 9.09% of
the outstanding shares of AXIS. A number of arrangements and transactions have
been entered into from time to time between such companies. It has been the
intention of the affiliated companies and respective Boards of Directors that
each of such arrangements or transactions should accommodate the respective
interest of the relevant affiliated companies in a manner which is fair to all
parties and equitable to the shareholders of each. Currently, there are no
material arrangements or planned transactions between the Company and any of the
other affiliated companies other than AXIS.
-17-
AXIS is paid by each company for the costs incurred by it in carrying out the
administration function for each such company. Pursuant to the Service
Agreement, AXIS performs such functions as payroll, maintaining employee records
required by law and by usual accounting procedures, providing insurance, legal,
human resources, company secretarial, land management, certain exploration and
mining support, financial, accounting advice and services. AXIS procures items
of equipment necessary in the conduct of the business of the Company. AXIS also
provides for the Company various services, including but not limited to the
making available of office supplies, office facilities and any other services as
may be required from time to time by the Company as and when requested by the
Company.
We are required to reimburse AXIS for any direct costs incurred by AXIS for the
Company. In addition, we are required to pay a proportion of AXIS's overhead
cost based on AXIS's management estimate of our utilisation of the facilities
and activities of AXIS plus a service fee of not more than 15% of the direct and
overhead costs. AXIS has not charged the 15% service fee to us. Amounts invoiced
by AXIS are required to be paid by us. We are also not permitted to obtain from
sources other than AXIS, and we are not permitted to perform or provide
ourselves, the services contemplated by the Service Agreement, unless we first
requests AXIS to provide the service and AXIS fails to provide the service
within one month.
The Service Agreement may be terminated by AXIS or ourselves upon 60 days prior
notice. If the Service Agreement is terminated by AXIS, we would be required to
independently provide, or to seek an alternative source of providing, the
services currently provided by AXIS. There can be no assurance that we could
independently provide or find a third party to provide these services on a
cost-effective basis or that any transition from receiving services under the
Service Agreement will not have a material adverse effect on us. Our inability
to provide such services or to find a third party to provide such services may
have a material adverse effect on our operations.
In accordance with the Service Agreement AXIS provides the Company with the
services of our Chief Executive Officer, Chief Financial Officer and clerical
employees, as well as office facilities, equipment, administrative and clerical
services. We pay AXIS for the actual costs of such facilities plus a maximum
service fee of 15%. The Company paid AXIS A$487,535 (being A$383,535 in respect
to the current year and A$104,000 being the amount owing at June 30, 2004) in
respect of the Service Agreement for the fiscal year ended June 30, 2005 and
A$759,410 (being A$335,987 in respect to the current year and A$486,000 in
respect to prior years) in respect of the Service Agreement for the fiscal year
ended June 30, 2004 and A$201,688 for the fiscal year ended June 30, 2003.
During 2005, AXIS loaned the Company A$249,500.At June 30, 2003, 2004 and 2005,
the Company owed AXIS A$486,000, A$104,000 and A$296,764 respectively for
services provided in accordance with the Service Agreement. During fiscal 2003,
2004 and 2005, AXIS Consultants charged interest of A$46,642, A$42,742 and
A$13,879 respectively on outstanding balances. AXIS charged interest at rates
between 9.60% and 10.10% for fiscal 2003 and 10.10% and 10.60% for fiscal 2004
and 10.60% and 10.85% for fiscal 2005.
Chevas, a company associated with our President, Joseph Gutnick, has provided
loan funds to enable us to meet our liabilities and has paid certain expenses on
our behalf. At June 30, 2002 we had a liability to Chevas of A$783,743. During
the 2003 fiscal year, Chevas loaned a further A$369,155 and charged A$86,417 in
interest to us on the loan account. At June 30 2003, we owed Chevas A$1,239,315.
During the 2004 fiscal year, Chevas loaned a further A$187,122 and charged
A$82,776 in interest to us on the loan account. During fiscal 2004, we repaid
the loan in full. Chevas charged interest to us on outstanding balances of the
loan account at the ANZ Banking Group Limited reference rate for overdrafts over
A$100,000 plus 1%. In accordance with this formula, the actual interest rate
charged during the 2003 fiscal year was 8.60% and during the 2004 fiscal year
was 8.60% to 9.10%.
-18-
Edensor Gold Pty Ltd , a company associated with our President, Joseph Gutnick,
provided loan funds during fiscal 2004 to enable us to meet our liabilities.
During the 2004 fiscal year, Edensor Gold loaned A$69,000 and charged A$670 in
interest to us on the loan account. During fiscal 2004, we repaid the loan in
full. Edensor Gold charged interest to us on outstanding balances of the loan
account at the ANZ Banking Group Limited reference rate for overdrafts over
A$100,000 plus 1%. In accordance with this formula, the actual interest rate
charged during the 2004 fiscal year was 8.85% to 9.10%.
Wilzed Pty Ltd, a company associated with the President of the Company, Joseph
Gutnick, has provided loan funds to enable the Company to meet its liabilities.
During the 2005 fiscal year, Wilzed loaned A$644,633 and charged A$31,235 in
interest. We repaid $396. At June 30, 2005, the Company owed Wilzed A$675,472.
Wilzed charged interest during fiscal 2005 at rates between 9.10% and 9.35%.
On January 20, 2000, we issued 8,000,000 options over fully paid shares in our
capital at an issue price of US$0.01 per option and an exercise price of US$1.00
per option to Edensor. The options had a term of 5 years with a non-exercise
period of 2 years subject to a further board approval for Edensor, either
directly of indirectly, to exercise options in the case we required to raise
further working capital. On March 22, 2001, the Directors agreed to extend the
term of the options from 5 years to 10 years. Edensor advised us in June 2003
that it had sold 2,000,000 options to Delkern Investments Ltd. In March 2004, we
received notification from Edensor that it was exercising all of the options it
held utilising the cashless exercise feature of the terms and conditions of the
options. As a result of the exercise of the options, we issued 5,142,857 shares
to Edensor.
As described in the section headed "Canadian Exploration Properties" we entered
into an agreement to explore for gold on properties owed by Tahera. Mr Gutnick,
our President, was Executive Chairman of Tahera and his family company, Edensor
Nominees, who are our controlling stockholder, was a shareholder of Tahera.
During fiscal 2002, Tahera incurred certain exploration and administration costs
in Canada on our behalf amounting to A$36,365 and this amount was owing to
Tahera at June 30, 2002. During fiscal 2003, Tahera incurred further exploration
and administration costs in Canada on our behalf amounting to A$65,314. During
fiscal 2003, Mr. J.I. Gutnick and Chevas paid Tahera A$47,368 and A$53,350
respectively on our behalf. During fiscal 2002 and 2003, Tahera did not charge
us interest on amounts outstanding. At June 30, 2003, we owed Tahera A$1,361
(US$900) and Mr. J.I. Gutnick A$47,368 (US$31,594). During fiscal 2004 we paid
Mr J I Gutnick the amount in full and Tahera advised the Company in writing that
there was no monies owing to it by the Company.
Quantum Resources Limited incurred certain costs on our behalf amounting to
A$43,941 (US$29,308) in respect to our activities in Tibet China (See Item 1 -
Business - General) as a result of Quantum's contacts in China. This amount was
outstanding at June 30, 2003. During fiscal 2004, we repaid the principal in
full.
Kerisridge Pty Ltd, a company associated with our President, Mr J I Gutnick,
loaned us A$2,273,186 in March 2004 for the purpose of repaying our long term
debt. On March 31, 2004, Kerisridge agreed to convert all of the debt we owed to
it into common stock and warrants in us. We issued 1,753,984 shares of common
stock and 1,753,984 warrants exercisable at US$1.30 and at any time up to March
31, 2006 in full repayment of the amount owing to Kerisridge.
-19-
Transactions with Management.
We have a policy that we will not enter into any transaction with an Officer,
Director or affiliate of us or any member of their families unless the
transaction is approved by a majority of our disinterested non-employee
Directors and the disinterested majority determines that the terms of the
transaction are no less favourable to us than the terms available from
non-affiliated third parties or are otherwise deemed to be fair to us at the
time authorised.
-20-
PROPOSAL 2
CHANGE OF NAME
The Company proposes to change its name to Golden River Resources Corporation as
this name better identifies the Company with the geographical region of Canada
where the Company's main landholdings are located. The change of name has no
effect on the activities of the Company.
The Board of Directors recommend that stockholders vote FOR the proposal to
change the Company's name.
-21-
REQUIREMENTS, INCLUDING DEADLINES, FOR SUBMISSION OF STOCKHOLDER
PROPOSALS AND NOMINATIONS OF DIRECTORS
Stockholder proposals that are intended to be included in our proxy statement
for our 2006 Annual Meeting pursuant to Proxy Rule 14a-8 must be received by us
no later than September 28, 2006, and must otherwise comply with that rule.
-22-
OTHER MATTERS
We know no other matters to be submitted to the Annual Meeting. If any other
matters properly come before the Annual Meeting, it is the intention of the
persons named in the enclosed form of proxy to vote the shares they represent as
the Board of Directors recommends.
By order of the Board of Directors,
/s/ Peter J Lee
---------------
Peter J Lee
Secretary
January 4, 2006
-23-
ANNEX A
BAY RESOURCES LTD
Audit Committee Charter
Terms of Reference
1. Objective:
To assist the Board of Directors in (i) fulfilling its responsibilities
relating to accounting and reporting practices of Bay Resources Ltd; (ii)
improving the quality of internal reporting; and (iii) monitoring,
examining and where appropriate recommending action in relation to the
Company's risk management including such areas as insurance and the use of
derivatives.
2. Representation
To ensure compliance with the proposed Bulletin Board Exchange corporate
governance rules, at least one of the Directors on the Committee must be
independent.
3. Quorum
The quorum for a meeting of the Audit Committee shall be two Directors, one
of which must be an independent Director.
4. Frequency And Conduct Of Meetings
The Committee will hold at least two regular meetings per year, and such
additional meetings as the Chairman shall decide in order to fulfill its
duties. The Secretary or other appropriate executive will act as Secretary
of the Committee and shall be responsible, in conjunction with the
Chairman, for drawing up the agenda and circulating it, supported by
explanatory documentation to Committee members prior to each meeting.
The Committee shall conduct its proceedings in the manner set out for the
Board in the By-Laws except as provided in these Terms of Reference.
The Secretary will also be responsible for keeping the minutes of meeting
of the Committee, and circulating them to Committee members and to the
other members of the Board of Directors.
5. Access:
The Committee shall have unlimited access to the external auditors and to
senior management of the Company. The Committee shall also have the ability
to consult independent experts where they consider it necessary to carry
out their duties.
-24-
6. Duties and Responsibilities
The duties and responsibilities of the Audit Committee should be read in
conjunction with the objective set out in 1 above and are as follows:
o Discuss the audit plan of the external auditors and evaluate the
effectiveness of the annual audit.
o Decide and implement any internal investigations thought appropriate,
including internal audit.
o Monitor the adequacy and effectiveness of the Company's
administrative, operating and accounting policies.
o Monitor the adequacy of the Company's internal control system.
o Review the Form 10-K and 10-Q financial statements where applicable
and recommend acceptance to the Board of Directors.
o Recommend to the Board of Directors the appointment of the external
auditors.
o Review proposed audit fees and make recommendations to the Board of
Directors.
o Determine that no management restrictions are being placed upon the
external auditors.
o Review any regulatory reports submitted to the Company and monitor
management's response to them.
o Require reports from management and external auditors on any
significant proposed regulatory, accounting or reporting issue and to
assess the potential impact upon the Company's financial reporting
process.
o Review and approve all significant accounting policy changes.
o Receive and consider the external auditor's management letter(s) in
relation to their audit of the Company's accounts.
o Assessing the performance of financial management.
o Review of risk management practices including use of derivatives,
insurance coverage and environmental matters that may have a material
impact on financial results.
o Review all related party transactions to ensure they are at arms
length and in the best interests of the Company.
-25-
BAY RESOURCES LTD
To Vote Your Proxy by Mail
--------------------------
Mark, sign and date your proxy card above, detach it and return it in the
postage-paid envelope provided.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
--------------------------------------------------------------------------------
PROXY
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED "FOR" THE PROPOSALS. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.
Please mark
your votes
like this
|X|
FOR AGAINST ABSTAIN
1. To elect four directors:
Joseph Isaac Gutnick [ ] [ ] [ ]
David Stuart Tyrwhitt [ ] [ ] [ ]
Peter James Lee [ ] [ ] [ ]
Mordechai Zev Gutnick [ ] [ ] [ ]
2. To change the name of the Company
to Golden River Resources Corporation. [ ] [ ] [ ]
3. To Transact Such Other Business
As May Properly Come Before The Meeting [ ] [ ] [ ]
Or Any Adjournment.
Company Id:
Proxy Number:
Account Number:
Signature ______________________________ Signature _____________________________
Date_____________
-26-
NOTE: Please sign exactly as name appears hereon. When shares are held by joint
owners, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If a partnership,
please sign in partnership
Bay Resources Ltd
2005 ANNUAL MEETING OF STOCKHOLDERS
(Wednesday March 8, 2006 at 3:00 p.m.)
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
BAY RESOURCES LTD
The undersigned appoints Joseph I. Gutnick and Peter Lee, and each of them, as
proxies, each with the power to appoint his substitute, and authorizes each of
them to represent and to vote, as designated on the reverse hereof, all of the
shares of common stock of Bay Resources Ltd held of record by the undersigned at
the close of business on January 30, 2006 at the 2005 Annual Meeting of
Stockholders of Bay Resources Ltd to be held on March 8, 2006 or at any
adjournment thereof.
The Board unanimously recommends that stockholders vote FOR each of the
proposals.
-27-