Tuesday, May 25, 2004 11:34:06 AM
VitroTech Corporation Due Diligence page
COMPANY WEBSITE
http://www.vitroco.com/discovery/
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COMPANY OVERVIEW
VitroTech Corporation, a Nevada corporation, effective February 2004, owns the former operating assets of Hi-Tech, as it relates to the Vitrolite® business, in a separate wholly owned subsidiary, VitroCo Incorporated. Owners of Hi-Tech are for the most part also owners of the separate other LLCs that control the mine resources in addition to owning shares of VitroTech.
Hi-Tech Environmental Products, LLC ("Hi-Tech") was established in 1997 as a Nevada limited liability company. Hi-Tech was primarily an R&D operation that under long term contracts had the exclusive right to extract material out of three mines (raw material/mineral product) that Hi-Tech had researched and sought to utilize in further commercial applications. These functions have now been assumed and will be performed by VitroCo. The extraction of the raw material from each of the three mining LLCs will continue to be performed on a contract basis by VitroCo. Each mining LLC has a long term (from 13 to 32 years) supply contract with VitroCo that allows for a royalty back to each LLC as well as to Hi-Tech. The royalties cover the cost of the raw material from the mines.
Enviro Investment Group, LLC (“EIG”) owns in excess of two billion pounds of material and has approximately 13 years to remove the material from the site. VitroCo has contracted for the purchase of all material extracted from the mine through March 2017 at a pre-fixed price and minimum amount. VitroCo is responsible for all costs associated with mining the material, processing and shipping.
Red Rock Canyon Mineral, LLC (“Red Rock”) owns the 288 acre mine site, in which only 20 acres have been explored. Reserves are estimated to be in excess of 6 billion pounds. VitroCo has contracted for the purchase of all material extracted from the mine through March 2036 at a pre-fixed price and minimum amount. VitroCo is responsible for all costs associated with mining the material, processing and shipping.
Valley Springs Mineral, LLC (“Valley Springs”) purchase agreement and terms with VitroCo are similar to EIG (the contract in this case runs for 34 years with extension rights). Reserves are estimated to exceed 27 billion pounds. VitroCo is processing the Valley Springs mine site for mining entitlements that should be completed by the end of 2004.
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WHO WE ARE
VitroTech Corporation, through its wholly owned subsidiary VitroCo Incorporated, is a materials technology and research company, headquartered in Santa Ana, California, with rights to over 35 billion pounds of rare amorphous aluminosilicate deposits. The products produced from this material enhance both the physical qualities and production of plastics, purge, paint/coatings and a variety of other market segments (companies principle products include Vitrolite®, Vitrocote®, Vitropurge®). Renowned research authorities believe that Vitrolite® may be one of the greatest breakthroughs in polymer technology in the past 30 years.
In order to expedite the capture of global market dominance, as well as to establish further liquidity to support both internal growth as well as that through acquisitions, Hi-Tech's operations have become a subsidiary of a public company that has been renamed VitroTech Corporation, (“VitroTech”). VitroTech acquired the assets of Hi-Tech related to the plastics and paint/coatings industries. Hi-Tech has contributed all management and operating infrastructure, as well as ownership of all intellectual property created by Hi-Tech to the new subsidiary, VitroCo Incorporated (“VitroCo”). VitroTech will serve as a holding company for the subsidiary.
The newly formed VitroCo will maintain control of the 35 billion pounds of the material subject to royalty payments through contractual agreements.
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CORPORATE EXECUTIVES
Excecutive Bios
Jess Rae Booth - Chairman & CEO
Mr. Booth founded Hi-Tech in 1997, and was its acting Chairman and CEO, and remains one of its largest owners. While at Hi-Tech he, in a short period, orchestrated all stages of development of Hi-Tech, from a proverbial start-up through to full commercialization. In its current stage, VitroTech is poised for dramatic growth. It is Mr. Booth’s vision that makes the addition of VitroTech so important in establishing a platform to support VitroTech and fulfill market expectations. As such, recognizing the strategic importance of VitroTech, and need to establish a corporate culture consistent with that which he established at Hi-Tech, Mr. Booth has resigned from Hi-Tech in order to lead VitroTech. In addition to his proven results at Hi-Tech, Mr. Booth brings over thirty years of operations, finance, and senior management experience to VitroTech. Prior to founding Hi-Tech, Mr. Booth built several companies that developed over 7000 single family residences, 10,000 apartment units and numerous commercial projects.
Mr. Booth’s prior extensive experience in real estate construction and land development with excavation and earthmoving has and will be of continued benefit. Most importantly, Mr. Booth’s exemplary ability to lead and further business development through rational foresight drives VitroTech into the future.
Alex Kabatoff - COO
Mr. Kabatoff brings extensive of experience in controlling and accounting to VitroTech. His experience in financial management of chemicals, mining, and petroleum companies is proving to be invaluable. His career started off as a financial analyst and later a Senior Auditor at AMOCO Canada. After several years with AMOCO, he accepted the position of Manager of Inter Audit for Alberta Gas Trunkline. This company soon became NOVA Corporation. At NOVA, Mr. Kabatoff held the positions of Corporate Vice President in charge of the manufacturing division, Vice President of Internal Audit and Compliance Manager, and Contract Administrator for the NOVA Chemical Joffre 2000 project (a $2 billion Olefins Petrochemical expansion). Immediately prior to joining VitroTech, Mr. Kabatoff was on loan by Talisman Energy Company to their Sudan joint venture. His position was that of cost controller for their $250 million dollar oilfield expansion.
Mr. Kabatoff joins the VitroTech as Chief Operations Officer responsible for acquisition integration and day-to-day operations of VitroTech. Mr. Kabatoff’s many years of experience in this specific field are a great asset to VitroTech.
Tom Costales - CFO
Mr. Costales has served as our Chief Financial Officer since March 2004. From 2001 until joining the Company, Mr. Costales was a financial consultant to both privately-held and publicly-traded companies. In 2000, until its sale to Motorola in November 2000, Mr. Costales served as Chief Financial Officer, Treasurer and Secretary of Printrak International, Inc., a Nasdaq listed enterprise software company. From 1995 to 1999, Mr. Costales served as Chief Financial Officer and Treasurer and, from July 1999 to May 2000, as a financial consultant and advisor of Impco Technologies, Inc., a Nasdaq listed manufacturer of engine systems components. Mr. Costales is a CPA and holds a MBA in Corporate Finance from the University of Southern California.
Ed Johnson - VP Sales & Marketing
Mr. Johnson is an International Business Development Executive experienced in identifying opportunities and developing solutions in complex, multi-cultural environments. He has been retained by numerous multi-nationals including Hewlett Packard, Dow Elanco, Heineken Breweries, Stryker Medical, Honeywell and PriceWaterhouse Coopers. Mr. Johnson has brought leading Remote Sensing Technology through development to commercial markets world wide, built and managed successful mass marketing projects and launched numerous small IT companies on the International market. A graduate in International Economics from the University of Western Ontario, Canada, Mr. Johnson has delivered MBA courses at 8 Universities in the United States and Europe including The University of California, Berkeley, Boston University, Brussels and The University of Southern Europe, Monaco.
As Vice President, Sales and Marketing, Mr. Johnson is responsible for the ongoing development of VitroTech’s Sales worldwide. In this capacity, he has sharpened the company’s strategic focus and opened new markets in Europe, Australasia and Japan since Fall of 2002.
Board of Directors Bios
Jess Rae Booth - Chairman of the Board
Mr. Booth has served as Chairman of the Board, Chief Executive Officer and President since February 2004. Mr. Booth was a founding member of Hi-Tech Environmental Products, LLC, and served as the company's Chairman-Manager from 1997 until February 2004, when Hi-Tech was merged into a subsidiary of a public company and renamed VitroTech Corporation. Prior to founding Hi-Tech, for over twenty years Mr. Booth owned and operated various entities engaged in the real estate construction and land development business, developing over 7,000 single family residences, 10,000 apartment units and numerous commercial projects.
John Boddie - Director
Mr. Boddie has served as a Director of the Company since April 2004. Since 2000, Mr. Boddie has served as Director and Business Management Consultant for Paula Boddie & Associates, Ltd., a business consulting firm specializing in litigation support, with an emphasis on securities industry litigation and regulatory proceedings, corporate finance, corporate governance and human resources. Mr. Boddie has served as an officer, director and/or consultant to numerous Canadian publicly held companies, including service since 2000 as a Director of Copacabana Capital Investments; consultant to the boards of Highwire Entertainment Group and Enwave Technologies Ltd; and Chief Executive Officer of Vision2Hire Solutions. From 2000 to 2004, Mr. Boddie served as President and a Director of Creation Capital VCC Ltd. From 1988 to 2000, Mr. Boddie served in various management positions with the Canadian Venture Exchange (previously known as the Vancouver Stock Exchange).
Larry Poland - Director
Mr. Poland has served as a Director of the Company since April 2004. Mr. Poland served as President, Treasurer and a Director of Star Computing Limited from inception in July 2001 until February 2004. From 2000 to 2002, Mr. Poland served as Vice President of Sales of AAIM, an independent sales department for large electronics manufactures selling to large retailers, where he designed, developed, and initiated the sales department and program. From 1995 to 2000, Mr. Poland was Vice President of Sales of Packard Bell, a global computer company. From 1985 to 1992, Mr. Poland was the National Sales Manager of the computer products division of Fuji Photo Film, USA.
James Roth - Director
Mr. Roth has served as a Director of the Company since April 2004. Mr. Roth is retired from GRC International, Inc., a provider of advanced engineering and scientific technologies, where he held key executive management positions from July 1974 to June 1996, retiring as President and Chief Executive Officer, and serving on the board of directors from January 1992 to November 1998. Mr. Roth is also a Director of Titan Corporation, EDO Corporation and Digimarc Corporation.
John P. Sutherland, Ph.D. - Director
Mr. Sutherland has served as a Director of the Company since April 2004. Since 1985, Mr. Sutherland has been Senior Partner of J.P. Sutherland and Associates, a business-consulting firm located in Calgary, Alberta, Canada, serving the chemical and energy sectors with a focus on strategic planning, project and venture analysis, market assessments and organization studies. Previously, from 1974 to 1985, Mr. Sutherland served in various executive capacities with the predecessor of Nova Chemicals, including service as Executive Vice President and a Director from 1981 to 1984, and as Vice Chairman in 1985. Mr. Sutherland received a bachelor degree and a PhD in chemical engineering.
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CEO Cast Interview, March 30, 2004
Jess Rae Booth, Chairman and CEO
http://www.vitroco.com/companyinfo/speechesevents.html
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SEC FILINGS
http://www.sec.gov/cgi-bin/browse-edgar?company=vitrotech&CIK=&filenum=&State=&SIC=&...
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INDUSTRY OVERVIEW
We believe that the development and sale of performance enhancing products for industrial and manufacturing applications is a multi-billion annual industry. A vast array of specialty powders and chemicals are sold to virtually every manufacturing segment worldwide to enhance product performance and manufacturing economics. Our initial target markets -- the plastics industry and the paint and coatings industry -- incorporate a wide variety of specialty chemicals and powders designed to improve flow and dispersion properties, reduce raw material usage, improve appearance and durability and reduce overall manufacturing costs, among other applications.
According to published sources, worldwide plastics production exceeds 375 billion pounds annually. The North American market accounts for approximately 27% of worldwide plastics consumption with the U.S. plastics industry accounting for annual sales of approximately $400 billion. Principal products include polypropylene (PP), polyvinyl chloride (PVC), high density polyethylene (HDPE), low density polyethylene (LDPE), polycarbonate (PC) and polystyrene (PS). Principal consumers of plastics products are the packaging, agricultural, automotive and electronics industries.
According to published sources, the paint industry is comprised of manufacturers, raw materials suppliers and distributors whose annual sales in North America were approximately 1.3 billion gallons or $16.5 billion in 1999.
The paint industry is generally classified in three segments -- the architectural segment, or house paint; the OEM segment, also known as industrial coatings; and the special purpose coatings segment.
Architectural coatings are paints and coatings applied on-site to new and existing residential, commercial, institutional and industrial buildings and include exterior paint, interior paint, lacquers and other finishes. Architectural coatings are sold to consumers, painters, builders, contractors, and the government through both retail and wholesale channels.
Principal users of OEM, or industrial, coatings include the automotive, machinery and equipment, metal container, and metal furniture and fixtures industries, among others. Industrial coatings are coatings that are factory-applied to manufactured goods as part of the production process.
Industrial coatings decorate and protect virtually all manufactured goods. Illustrative of uses of industrial coatings is the automotive industry, a $300
billion annual industry, in which the cost of paint represents approximately one percent of the selling price of an average automobile. Paints and coatings are the primary inhibitor of rust on automobiles.
Special purpose coatings are primarily used where durability is the key objective. Applications of special purpose coatings include: high performance maintenance coatings used to combat corrosion of exposed steel in structures, tanks, pipes, industrial equipment and tank linings; marine coatings used to protect ships, pleasure craft, oil rigs and equipment exposed to water; automotive refinishing applications; and highway and traffic signs, among other applications.
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PRODUCTS
We are developing a family of proprietary products incorporating the Mineral as a performance additive in a variety of industrial applications.
Our initial product offerings are targeted to the plastics industry and to the paint and coatings industry. Additional product offerings are being considered for the cementitious, textile, rubber, electronics, ceramics and refractory industries.
Plastics Applications
We presently market to the plastics industry high performance powder and compounds under the trade name Vitrolite(R). Vitrolite(R) is a white translucent, odorless powder comprised of non-toxic amorphous aluminosilicate.
Vitrolite(R) is offered in a variety of grades suited to different end use applications. Vitrolite XP and CL are used to reduce costs and increase productivity in plastic processing and manufacturing operations. Use of small
amounts of Vitrolite(R) (up to 1% by weight) in polymers changes the polymer viscosity in all plastics manufacturing processes, thus offering a variety of benefits that may include:
o reduced cycle time
o decreased raw material usage
o reduced cost of additives because of improved dispersion
o reduced mechanical stress and parts rejection
o reduced polymer costs, if lower cost resins can be used or re-processed material can be incorporated
o improved product finish
o improved overall process economics
Vitrolite(R) is chemically non-reactive, non-migratory and is compatible with all known polymers.
Paint and Coatings Applications
We presently market to the paints, polymer coatings and fabrics industries an optical enhancer, rheology modifer and physical performance aid for polymer coatings and fabrics under the tradename Vitrocote(R). Vitrocote(R) is a white, transparent to translucent (depending on particle size) odorless powder comprised of non-toxic amorphous aluminosilicate. Vitrocote(R) is offered in
grades F and FC. These products have a particle size cut off of 10 microns and the FC product is of higher purity and has less coloration contamination.
Used as an optical enhancer in high performance paint coatings, Vitrocote(R) acts as a spacer between particles of mica, aluminum or micro-fine glass in pigmented coatings dramatically improving desired optical effects at a wide
range of viewing angles. Blended as a replacement for equivalent weights of inert or, in some cases, active pigment at 1% to 5% by pigment weight (or, in the case of highly pigmented systems, >10%), Vitrocote(R):
o increases optical depth, clarity and brilliance in metallic coatings
o improves distinctiveness of image in solid color coatings
o reduces active pigment loading while achieving desired color saturation, brilliance and other film esthetics
o improves control of interfering pigments
o reduces mottling and orange peel, providing a uniform, reduced blemish surface
As an optical enhancer, Vitrocote(R) is chemically non-reactive and is compatible with metallic and solid color basecoats, clear topcoats and specialty coatings, both in solvent and water based systems.
Used as a rheology modifer, Vitrocote(R) enhances the flow properties of materials under specific delivery conditions, including spraying, rolling and extruding. Based on the enhanced dispersion and distribution of companion
additives in formulas, Vitrocote(R):
o provides vastly improved and faster dispersion of pigments, extenders and other coating raw materials
o improves the performance of other additives in formulations, minimizing the loading of expensive materials
When tested as a high performance processing aid for thermal barrier coatings, Vitrocote(R) decreased thermal conductivity properties of coatings. Use of small
amounts of Vitrocote(R) (1% to 4% by weight) aids in the performance of thermal barrier coatings by:
o dramatically decreasing the thermal conductivity of coatings/films
o improving the efficiency of dispersing metallic fillers, binders and other raw materials
o improving the suspension of coatings materials
As a processing aid for thermal barrier coatings, Vitrocote(R) is chemically non-reactive and compatible with most coatings materials.
Potential Rubber Applications
We anticipate developing a product line incorporating the Mineral for use in the rubber industry to be marketed under the name Vitrosil(R). Based on research and testing to date, we believe that Vitrosil(R) will offer improved strength, durability and overall performance for both standard and custom molded rubber parts. Product testing and market research are continuing and no firm schedule
has, as yet, been set for the introduction of Vitrosil(R).
Potential Cementitious Applications
We have conducted research with California State University, Fullerton regarding uses of the Mineral in the cement industry to improve strength, reduce weight,
improve finish and improve resistance to moisture, weathering and temperature extremes. Based on this effort, we believe that significant opportunities for sales of our Mineral will result from these discoveries.
Potential Ceramics and Refractory Applications
We anticipate developing a product line incorporating the Mineral for use in the ceramics and refractories industries to be marketed under the name Vitrotherm(TM). Based on research and testing to date, we believe that Vitrotherm(TM) will offer improved flow properties for self-leveling and pumpable castable refractories, reduced shrinkage in the casting process, and increased strength, reduced thermal conductivity and increased resistance to thermal shock in ceramic products. Product testing and market research are continuing and no firm schedule has, as yet, been set for the introduction of Vitrotherm(TM).
Other Potential Products and Applications
We are conducting ongoing research and product development to deliver additional products to our current and anticipated markets and to develop products for other industrial applications.
We are presently developing a product line incorporating the Mineral for use in both the plastics and the paint and coatings industries to be marketed under the name Vitropurge(R). Based on extensive research and testing to date, we believe that Vitropurge(R) will offer improved purging or cleaning of machinery and equipment used in both paint and coatings applications, processing and manufacturing and plastics molding and processing. Product testing and market
research are continuing and no firm schedule has, as yet, been set for the introduction of Vitropurge(R).
We have also identified potential uses of the Mineral in the electronics industry to improve electrical, thermal, structural, rheological and flame suppression properties and, the hazardous waste industry as an impermeable water
barrier to eliminate migration of hazardous materials in landfills and nuclear waste sites. Product research and development will be conducted to develop products for each of these and other industrial applications. No schedule has,
as yet, been set for the introduction of any other products.
MINING OPERATIONS
Mining Properties and Mineral Interests
We hold rights to mine all of the Mineral located on an eighteen (18) acre site in Calaveras County, California (the "EIG Property") and a 288 acre site in Kern
County, California (the "Red Rock Canyon Property") and, subject to closing on the acquisition of underlying property or Mineral interests by Valley Springs
LLC an eighty (80) acre site in Calaveras County, California (the "Valley Springs Property").
EIG Property. Pursuant to the terms of the EIG Mining Agreement, we have the right to mine Minerals from the EIG Property through March 31, 2017. Our rights to mine the EIG Property are subject to satisfaction of EIG's ongoing
obligations under a September 1997 Purchase and Sale Agreement pursuant to which EIG originally acquired the rights to mine the property through March 31, 2017
in exchange for certain payments from EIG to the property owner, which payment obligations include a required annual payment in an amount equal to the greater of $50,000 or $1.39 per cubic yard of Mineral mined during the year.
Under the EIG Mining Agreement, we are obligated to pay to EIG the following amounts per pound of Mineral excavated from the EIG Property and sold and collected by us:
Year Price Per Pound
2004 $0.875
2005 $1.00 plus Cost of Living Adjustment
Beginning in January 2005, and annually thereafter, the price per pound is subject to annual increase based on the annual increase in the Bureau of Labor Statistics Paint Raw Material Index (comparing the month of October of the
immediately preceding year to the month of October in the prior year).
Under the EIG Mining Agreement, we are also obligated to purchase from EIG (in aggregate with purchases from Red Rock LLC and Valley Springs LLC), after February 3, 2004 and by the following dates, the following aggregate minimum
amounts of Mineral:
Purchase Date Amount in Pounds
December 1, 2005 7,500,000
December 1, 2006 10,000,000
December 1, 2007 12,500,000
December 1, 2008 15,000,000
Each December 1 thereafter 10% in excess of the prior year's minimum
requirement
Based on drill borings on the site, Golder Associates, Inc., an independent geotechnical engineering consultant, estimated reserves of amorphous aluminosilicate in place on the EIG Property of approximately 1.6 billion pounds. Mining of the EIG Property is of an open-pit nature. No estimate has been made with respect to the potential loss of material that may result from mining or preparation operations. As of December 31, 2003, from the commencement
of mining operations by Hi-Tech at the site, approximately 35 million pounds of Mineral had been mined from the EIG Property. Mining of the property will be conducted on an as needed basis to meet our anticipated product delivery
requirements.
The EIG Property is readily accessible from state and county roadways. Because of the nature of mining operations conducted, there is no physical plant or equipment located on the EIG Property.
Prior to commencement of Hi-Tech's mining operations on the EIG Property, mining operations were conducted on the property from the mid-1800s to present by various property owners.
Pursuant to the terms of the EIG Mining Agreement, we may not sell or distribute products that are competitive with the Mineral, other than Mineral from the Red Rock Canyon Property, the Valley Springs Property or a property under common ownership with EIG or those properties, until such time as we have purchased and paid for at least 75% of the Mineral located on the EIG Property. Additionally,
pursuant to the EIG Mining Agreement, we granted EIG a non-terminable worldwide,non-exclusive royalty free and paid up perpetual license to utilize all of our technologies relating to the Minerals from and after a default by us under the EIG Mining Agreement or the termination, for any reason, of the EIG Mining Agreement.
Red Rock Canyon Property. Pursuant to the terms of the Red Rock Canyon Mining Agreement, we have the right to mine Minerals from the Red Rock Canyon Property through April 2036. Our rights to mine the Red Rock Canyon Property are subject to satisfaction of Red Rock LLC's ongoing obligations under a July 2002 agreement pursuant to which Red Rock LLC originally acquired the rights to mine the property through July 2036 in exchange for certain payments from Red Rock LLC to the property owner. Red Rock LLC is obligated to pay to the property owner a total of $1.5 million, $300,000 of which was paid at closing with the
balance of $1.2 million being payable over seven years based on Mineral production subject to minimum annual payments of $150,000 plus interest at 7% on the unpaid balance. The sellers of the Red Rock Canyon Property reserved the right to mine up to 1,000 tons of calcium bentonite from the Red Rock Canyon Property.
Under the Red Rock Canyon Mining Agreement, we are obligated to pay to Red Rock LLC amounts per pound of Mineral excavated from the Red Rock Canyon Property and
sold by us and we are subject to cumulative minimum purchase requirements. Both the per pound payment and the minimum purchase requirements with respect to the Red Rock Canyon Property are identical to the requirements established for the EIG Property. The Red Rock Canyon Mining Agreement includes non-compete and license provisions identical to those pertaining to the EIG Property. We are also obligated to advance to Red Rock LLC all amounts necessary to secure the rights relative to the Red Rock Property (including the payments to the land
owners), all of which amounts will be treated as advances against per pound payment obligations.
Prior to the sale of the Red Rock Canyon Property to Red Rock LLC, the owner, Joseph Mathewson, conducted mining operations for more than twenty years. The Red Rock Canyon Property is zoned for mining, all entitlements are in place to continue mining activities on the property and no royalties are payable to the prior owners. The Red Rock Canyon Property is estimated to contain approximately
6.0 billion pounds of material. Mining of the Red Rock Canyon Property is of an open-pit nature. No estimate has been made with respect to the potential loss of material that may result from mining or preparation operations. Hi-Tech commenced mining of the Red Rock Canyon Property in 2003 and, as of March 31, 2004, had mined approximately 2 million pounds of Mineral.
The Red Rock Canyon Property is readily accessible from state and county roadways pursuant to a Bureau of Land Management right of way. The right of way expires in five years, at which time the right of way is subject to renewal.
Because of the nature of mining operations conducted, there is no physical plant or equipment located on the Red Rock Canyon Property.
Valley Springs Property. Pursuant to the terms of the Valley Springs Mining Agreement, we have the right to mine Minerals from the Valley Springs Property through April 2036. Our rights to mine the Valley Springs Property are subject to satisfaction of Valley Springs LLC's ongoing obligations under a July 2002 agreement pursuant to which Valley Springs LLC has entered into an agreement to
acquire the rights to mine the property through July 2036 in exchange for certain payments from Valley Springs LLC to the property owner. Valley Springs LLC will be obligated to pay to the property owners (1) to one owner, a total of
$1.75 million, $250,000 of which is to paid at closing with the balance of $1.5 million being payable in quarterly installments of $100,000 and, (2) to a second owner, a royalty based on Mineral excavated and sold in the amount of $0.50 per pound in 2004, $0.59 per pound in 2005 and thereafter $0.67 per pound subject to an annual cost of living adjustment. Our rights to mine the Valley Springs
Property are subject to the right of one property owner to require us to mine for, and sell to, it up to fifty percent (50%) of the Mineral on the property for cost (including certain overhead related costs) plus a five percent (5%)
markup. Closing on the acquisition of mining rights to the Valley Springs Property from the present landowner has not, as of March 31, 2004, occurred.
Under the Valley Springs Mining Agreement, we are obligated to pay to Valley Springs LLC amounts per pound of Mineral excavated from the Springs Property and sold by us and we are subject to cumulative minimum purchase requirements. Both the per pound payment and the minimum purchase requirements with respect to the Valley Springs Property are identical to the requirements established for the EIG Property. The Valley Springs Mining Agreement includes non-compete and license provisions identical to those pertaining to the EIG Property. We are also obligated to advance to Valley Springs LLC all amounts necessary to secure the rights relative to the Valley Springs Property (including the payments to the land owners), all of which amounts will be treated as advances against per pound payment obligations.
The Valley Springs Property has not previously been mined but is zoned for mining. We are processing the Valley Springs property for the owners to obtain mining permits and entitlement approval is expected by December 31, 2004. There is no guaranty that we will be successful in obtaining mining entitlements.
The Valley Springs Property is estimated to contain approximately 27 billion pounds of material. Mining of the Valley Springs Property will be of an open-pit nature. No estimate has been made with respect to the potential loss of material that may result from mining or preparation operations. Assuming we secure the mining entitlements for the Valley Springs Property, mining of the Valley Springs Property will be conducted on an as needed basis to meet our anticipated product delivery requirements.
The Valley Springs Property is readily accessible from state and county roadways. Because of the nature of mining operations expected to be conducted, there is no, and is expected to be no, physical plant or equipment located on
the Valley Springs Property.
Mine Operations
All mining operations are contracted to independent excavation operators. Mining operations are conducted in deposits in an open pit fashion using large bulldozers and bucket loaders to remove topsoil and vegetation from the Mineral deposit and dislodge the Mineral from the deposit using a ripper. The Mineral is crushed as needed to permit loading in rock trucks for hauling to milling
facilities.
We have no long-term contracts with excavation operators or trucking companies but retain services on an as needed basis. Excavation operators are typically paid on a per cubic yard basis for all Mineral excavated. Trucking companies are typically paid on a per mile basis for transporting Mineral to milling facilities.
Excavation and trucking capacity are readily scalable by the use of additional heavy equipment and trucks by the operators and/or the retention of additional operators. Mining and trucking capacity are not expected to be a constraint on our ability to deliver product.
We have certain mine site restoration requirements following the completion of mining operations pursuant to our mining entitlements. Calaveras County has required a surety bond in the amount of $14,206 to be posted to guarantee our completion of future reclamation of the site. Kern County has required a surety bond in the amount of $40,260 to be posted to guarantee our completion of future
reclamation of the site.
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MOST RECENT NEWS
VitroTech's Revolutionary Performance Additive Vitrolite(R) Adopted byPlastics Industry Leader Ropak Packaging
SANTA ANA, Calif., May 19, 2004 /PRNewswire-FirstCall via COMTEX/ -- VitroTech Corporation (OTC Bulletin Board: VROT) announced today that Ropak Packaging has adopted Vitrolite(R) technology and products in their North American facilities. Vitrolite(R) performance additives enhance both the physical properties and production of plastics, paints and coatings as well as a variety of other products.
Ropak is a member of the LINPAC group of companies. LINPAC, headquartered in Birmingham, UK, is a diversified supplier of paper and plastics-based packaging, returnable packaging systems and plastic automotive components. It manufactures in five continents and sells in nearly every country in the world. For the year ended December 2002, LINPAC reported revenues of pounds Sterling 1.2 billion (approximately US$2.1 billion).
Ropak serves the packaging needs for a wide range of industries from food (dairy and bakery) to industrial (petroleum products, coatings and adhesives) and hazardous materials (chemicals). Consumer products include pet food, cat litter, detergents, seeds, paint, and fasteners. Other products are specially designed for the fishing and agricultural markets.
"Ropak is widely acknowledged as a leading adopter of new technologies in the plastics manufacturing industry," said Jess Rae Booth, Chairman and CEO of VitroTech Corp. Mr. Booth added: "This deal will have a significant material impact on Vitrolite(R)'s growth over the next fiscal year."
Headquartered in Fullerton, Calif., Ropak Packaging is one of North America's leading manufacturers of innovative plastic packaging used in a wide range of applications. The company has eight manufacturing facilities throughout the United States and Canada. For more information, please visit the Web site at www.ropakcorp.com.
Headquartered in Santa Ana, California, VitroTech Corporation is a materials technology and research company with rights to purchase, process and sell approximately 35 billion pounds of rare amorphous aluminosilicate deposits, which are used to produce its primary products, Vitrolite (R) and Vitrocote(R). These products enhance both the physical qualities and production of plastics, paint/coatings, and a variety of other market segments. For more information, please visit VitroTech on the web at: www.vitroco.com.
SOURCE VitroTech Corporation
CONTACT: Jess Rae Booth, Chairman & CEO of VitroTech Corporation,
+1-714-708 4700
URL: www.ropakcorp.com
www.vitroco.com
www.prnewswire.com
COMPANY WEBSITE
http://www.vitroco.com/discovery/
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COMPANY OVERVIEW
VitroTech Corporation, a Nevada corporation, effective February 2004, owns the former operating assets of Hi-Tech, as it relates to the Vitrolite® business, in a separate wholly owned subsidiary, VitroCo Incorporated. Owners of Hi-Tech are for the most part also owners of the separate other LLCs that control the mine resources in addition to owning shares of VitroTech.
Hi-Tech Environmental Products, LLC ("Hi-Tech") was established in 1997 as a Nevada limited liability company. Hi-Tech was primarily an R&D operation that under long term contracts had the exclusive right to extract material out of three mines (raw material/mineral product) that Hi-Tech had researched and sought to utilize in further commercial applications. These functions have now been assumed and will be performed by VitroCo. The extraction of the raw material from each of the three mining LLCs will continue to be performed on a contract basis by VitroCo. Each mining LLC has a long term (from 13 to 32 years) supply contract with VitroCo that allows for a royalty back to each LLC as well as to Hi-Tech. The royalties cover the cost of the raw material from the mines.
Enviro Investment Group, LLC (“EIG”) owns in excess of two billion pounds of material and has approximately 13 years to remove the material from the site. VitroCo has contracted for the purchase of all material extracted from the mine through March 2017 at a pre-fixed price and minimum amount. VitroCo is responsible for all costs associated with mining the material, processing and shipping.
Red Rock Canyon Mineral, LLC (“Red Rock”) owns the 288 acre mine site, in which only 20 acres have been explored. Reserves are estimated to be in excess of 6 billion pounds. VitroCo has contracted for the purchase of all material extracted from the mine through March 2036 at a pre-fixed price and minimum amount. VitroCo is responsible for all costs associated with mining the material, processing and shipping.
Valley Springs Mineral, LLC (“Valley Springs”) purchase agreement and terms with VitroCo are similar to EIG (the contract in this case runs for 34 years with extension rights). Reserves are estimated to exceed 27 billion pounds. VitroCo is processing the Valley Springs mine site for mining entitlements that should be completed by the end of 2004.
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WHO WE ARE
VitroTech Corporation, through its wholly owned subsidiary VitroCo Incorporated, is a materials technology and research company, headquartered in Santa Ana, California, with rights to over 35 billion pounds of rare amorphous aluminosilicate deposits. The products produced from this material enhance both the physical qualities and production of plastics, purge, paint/coatings and a variety of other market segments (companies principle products include Vitrolite®, Vitrocote®, Vitropurge®). Renowned research authorities believe that Vitrolite® may be one of the greatest breakthroughs in polymer technology in the past 30 years.
In order to expedite the capture of global market dominance, as well as to establish further liquidity to support both internal growth as well as that through acquisitions, Hi-Tech's operations have become a subsidiary of a public company that has been renamed VitroTech Corporation, (“VitroTech”). VitroTech acquired the assets of Hi-Tech related to the plastics and paint/coatings industries. Hi-Tech has contributed all management and operating infrastructure, as well as ownership of all intellectual property created by Hi-Tech to the new subsidiary, VitroCo Incorporated (“VitroCo”). VitroTech will serve as a holding company for the subsidiary.
The newly formed VitroCo will maintain control of the 35 billion pounds of the material subject to royalty payments through contractual agreements.
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CORPORATE EXECUTIVES
Excecutive Bios
Jess Rae Booth - Chairman & CEO
Mr. Booth founded Hi-Tech in 1997, and was its acting Chairman and CEO, and remains one of its largest owners. While at Hi-Tech he, in a short period, orchestrated all stages of development of Hi-Tech, from a proverbial start-up through to full commercialization. In its current stage, VitroTech is poised for dramatic growth. It is Mr. Booth’s vision that makes the addition of VitroTech so important in establishing a platform to support VitroTech and fulfill market expectations. As such, recognizing the strategic importance of VitroTech, and need to establish a corporate culture consistent with that which he established at Hi-Tech, Mr. Booth has resigned from Hi-Tech in order to lead VitroTech. In addition to his proven results at Hi-Tech, Mr. Booth brings over thirty years of operations, finance, and senior management experience to VitroTech. Prior to founding Hi-Tech, Mr. Booth built several companies that developed over 7000 single family residences, 10,000 apartment units and numerous commercial projects.
Mr. Booth’s prior extensive experience in real estate construction and land development with excavation and earthmoving has and will be of continued benefit. Most importantly, Mr. Booth’s exemplary ability to lead and further business development through rational foresight drives VitroTech into the future.
Alex Kabatoff - COO
Mr. Kabatoff brings extensive of experience in controlling and accounting to VitroTech. His experience in financial management of chemicals, mining, and petroleum companies is proving to be invaluable. His career started off as a financial analyst and later a Senior Auditor at AMOCO Canada. After several years with AMOCO, he accepted the position of Manager of Inter Audit for Alberta Gas Trunkline. This company soon became NOVA Corporation. At NOVA, Mr. Kabatoff held the positions of Corporate Vice President in charge of the manufacturing division, Vice President of Internal Audit and Compliance Manager, and Contract Administrator for the NOVA Chemical Joffre 2000 project (a $2 billion Olefins Petrochemical expansion). Immediately prior to joining VitroTech, Mr. Kabatoff was on loan by Talisman Energy Company to their Sudan joint venture. His position was that of cost controller for their $250 million dollar oilfield expansion.
Mr. Kabatoff joins the VitroTech as Chief Operations Officer responsible for acquisition integration and day-to-day operations of VitroTech. Mr. Kabatoff’s many years of experience in this specific field are a great asset to VitroTech.
Tom Costales - CFO
Mr. Costales has served as our Chief Financial Officer since March 2004. From 2001 until joining the Company, Mr. Costales was a financial consultant to both privately-held and publicly-traded companies. In 2000, until its sale to Motorola in November 2000, Mr. Costales served as Chief Financial Officer, Treasurer and Secretary of Printrak International, Inc., a Nasdaq listed enterprise software company. From 1995 to 1999, Mr. Costales served as Chief Financial Officer and Treasurer and, from July 1999 to May 2000, as a financial consultant and advisor of Impco Technologies, Inc., a Nasdaq listed manufacturer of engine systems components. Mr. Costales is a CPA and holds a MBA in Corporate Finance from the University of Southern California.
Ed Johnson - VP Sales & Marketing
Mr. Johnson is an International Business Development Executive experienced in identifying opportunities and developing solutions in complex, multi-cultural environments. He has been retained by numerous multi-nationals including Hewlett Packard, Dow Elanco, Heineken Breweries, Stryker Medical, Honeywell and PriceWaterhouse Coopers. Mr. Johnson has brought leading Remote Sensing Technology through development to commercial markets world wide, built and managed successful mass marketing projects and launched numerous small IT companies on the International market. A graduate in International Economics from the University of Western Ontario, Canada, Mr. Johnson has delivered MBA courses at 8 Universities in the United States and Europe including The University of California, Berkeley, Boston University, Brussels and The University of Southern Europe, Monaco.
As Vice President, Sales and Marketing, Mr. Johnson is responsible for the ongoing development of VitroTech’s Sales worldwide. In this capacity, he has sharpened the company’s strategic focus and opened new markets in Europe, Australasia and Japan since Fall of 2002.
Board of Directors Bios
Jess Rae Booth - Chairman of the Board
Mr. Booth has served as Chairman of the Board, Chief Executive Officer and President since February 2004. Mr. Booth was a founding member of Hi-Tech Environmental Products, LLC, and served as the company's Chairman-Manager from 1997 until February 2004, when Hi-Tech was merged into a subsidiary of a public company and renamed VitroTech Corporation. Prior to founding Hi-Tech, for over twenty years Mr. Booth owned and operated various entities engaged in the real estate construction and land development business, developing over 7,000 single family residences, 10,000 apartment units and numerous commercial projects.
John Boddie - Director
Mr. Boddie has served as a Director of the Company since April 2004. Since 2000, Mr. Boddie has served as Director and Business Management Consultant for Paula Boddie & Associates, Ltd., a business consulting firm specializing in litigation support, with an emphasis on securities industry litigation and regulatory proceedings, corporate finance, corporate governance and human resources. Mr. Boddie has served as an officer, director and/or consultant to numerous Canadian publicly held companies, including service since 2000 as a Director of Copacabana Capital Investments; consultant to the boards of Highwire Entertainment Group and Enwave Technologies Ltd; and Chief Executive Officer of Vision2Hire Solutions. From 2000 to 2004, Mr. Boddie served as President and a Director of Creation Capital VCC Ltd. From 1988 to 2000, Mr. Boddie served in various management positions with the Canadian Venture Exchange (previously known as the Vancouver Stock Exchange).
Larry Poland - Director
Mr. Poland has served as a Director of the Company since April 2004. Mr. Poland served as President, Treasurer and a Director of Star Computing Limited from inception in July 2001 until February 2004. From 2000 to 2002, Mr. Poland served as Vice President of Sales of AAIM, an independent sales department for large electronics manufactures selling to large retailers, where he designed, developed, and initiated the sales department and program. From 1995 to 2000, Mr. Poland was Vice President of Sales of Packard Bell, a global computer company. From 1985 to 1992, Mr. Poland was the National Sales Manager of the computer products division of Fuji Photo Film, USA.
James Roth - Director
Mr. Roth has served as a Director of the Company since April 2004. Mr. Roth is retired from GRC International, Inc., a provider of advanced engineering and scientific technologies, where he held key executive management positions from July 1974 to June 1996, retiring as President and Chief Executive Officer, and serving on the board of directors from January 1992 to November 1998. Mr. Roth is also a Director of Titan Corporation, EDO Corporation and Digimarc Corporation.
John P. Sutherland, Ph.D. - Director
Mr. Sutherland has served as a Director of the Company since April 2004. Since 1985, Mr. Sutherland has been Senior Partner of J.P. Sutherland and Associates, a business-consulting firm located in Calgary, Alberta, Canada, serving the chemical and energy sectors with a focus on strategic planning, project and venture analysis, market assessments and organization studies. Previously, from 1974 to 1985, Mr. Sutherland served in various executive capacities with the predecessor of Nova Chemicals, including service as Executive Vice President and a Director from 1981 to 1984, and as Vice Chairman in 1985. Mr. Sutherland received a bachelor degree and a PhD in chemical engineering.
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CEO Cast Interview, March 30, 2004
Jess Rae Booth, Chairman and CEO
http://www.vitroco.com/companyinfo/speechesevents.html
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SEC FILINGS
http://www.sec.gov/cgi-bin/browse-edgar?company=vitrotech&CIK=&filenum=&State=&SIC=&...
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INDUSTRY OVERVIEW
We believe that the development and sale of performance enhancing products for industrial and manufacturing applications is a multi-billion annual industry. A vast array of specialty powders and chemicals are sold to virtually every manufacturing segment worldwide to enhance product performance and manufacturing economics. Our initial target markets -- the plastics industry and the paint and coatings industry -- incorporate a wide variety of specialty chemicals and powders designed to improve flow and dispersion properties, reduce raw material usage, improve appearance and durability and reduce overall manufacturing costs, among other applications.
According to published sources, worldwide plastics production exceeds 375 billion pounds annually. The North American market accounts for approximately 27% of worldwide plastics consumption with the U.S. plastics industry accounting for annual sales of approximately $400 billion. Principal products include polypropylene (PP), polyvinyl chloride (PVC), high density polyethylene (HDPE), low density polyethylene (LDPE), polycarbonate (PC) and polystyrene (PS). Principal consumers of plastics products are the packaging, agricultural, automotive and electronics industries.
According to published sources, the paint industry is comprised of manufacturers, raw materials suppliers and distributors whose annual sales in North America were approximately 1.3 billion gallons or $16.5 billion in 1999.
The paint industry is generally classified in three segments -- the architectural segment, or house paint; the OEM segment, also known as industrial coatings; and the special purpose coatings segment.
Architectural coatings are paints and coatings applied on-site to new and existing residential, commercial, institutional and industrial buildings and include exterior paint, interior paint, lacquers and other finishes. Architectural coatings are sold to consumers, painters, builders, contractors, and the government through both retail and wholesale channels.
Principal users of OEM, or industrial, coatings include the automotive, machinery and equipment, metal container, and metal furniture and fixtures industries, among others. Industrial coatings are coatings that are factory-applied to manufactured goods as part of the production process.
Industrial coatings decorate and protect virtually all manufactured goods. Illustrative of uses of industrial coatings is the automotive industry, a $300
billion annual industry, in which the cost of paint represents approximately one percent of the selling price of an average automobile. Paints and coatings are the primary inhibitor of rust on automobiles.
Special purpose coatings are primarily used where durability is the key objective. Applications of special purpose coatings include: high performance maintenance coatings used to combat corrosion of exposed steel in structures, tanks, pipes, industrial equipment and tank linings; marine coatings used to protect ships, pleasure craft, oil rigs and equipment exposed to water; automotive refinishing applications; and highway and traffic signs, among other applications.
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PRODUCTS
We are developing a family of proprietary products incorporating the Mineral as a performance additive in a variety of industrial applications.
Our initial product offerings are targeted to the plastics industry and to the paint and coatings industry. Additional product offerings are being considered for the cementitious, textile, rubber, electronics, ceramics and refractory industries.
Plastics Applications
We presently market to the plastics industry high performance powder and compounds under the trade name Vitrolite(R). Vitrolite(R) is a white translucent, odorless powder comprised of non-toxic amorphous aluminosilicate.
Vitrolite(R) is offered in a variety of grades suited to different end use applications. Vitrolite XP and CL are used to reduce costs and increase productivity in plastic processing and manufacturing operations. Use of small
amounts of Vitrolite(R) (up to 1% by weight) in polymers changes the polymer viscosity in all plastics manufacturing processes, thus offering a variety of benefits that may include:
o reduced cycle time
o decreased raw material usage
o reduced cost of additives because of improved dispersion
o reduced mechanical stress and parts rejection
o reduced polymer costs, if lower cost resins can be used or re-processed material can be incorporated
o improved product finish
o improved overall process economics
Vitrolite(R) is chemically non-reactive, non-migratory and is compatible with all known polymers.
Paint and Coatings Applications
We presently market to the paints, polymer coatings and fabrics industries an optical enhancer, rheology modifer and physical performance aid for polymer coatings and fabrics under the tradename Vitrocote(R). Vitrocote(R) is a white, transparent to translucent (depending on particle size) odorless powder comprised of non-toxic amorphous aluminosilicate. Vitrocote(R) is offered in
grades F and FC. These products have a particle size cut off of 10 microns and the FC product is of higher purity and has less coloration contamination.
Used as an optical enhancer in high performance paint coatings, Vitrocote(R) acts as a spacer between particles of mica, aluminum or micro-fine glass in pigmented coatings dramatically improving desired optical effects at a wide
range of viewing angles. Blended as a replacement for equivalent weights of inert or, in some cases, active pigment at 1% to 5% by pigment weight (or, in the case of highly pigmented systems, >10%), Vitrocote(R):
o increases optical depth, clarity and brilliance in metallic coatings
o improves distinctiveness of image in solid color coatings
o reduces active pigment loading while achieving desired color saturation, brilliance and other film esthetics
o improves control of interfering pigments
o reduces mottling and orange peel, providing a uniform, reduced blemish surface
As an optical enhancer, Vitrocote(R) is chemically non-reactive and is compatible with metallic and solid color basecoats, clear topcoats and specialty coatings, both in solvent and water based systems.
Used as a rheology modifer, Vitrocote(R) enhances the flow properties of materials under specific delivery conditions, including spraying, rolling and extruding. Based on the enhanced dispersion and distribution of companion
additives in formulas, Vitrocote(R):
o provides vastly improved and faster dispersion of pigments, extenders and other coating raw materials
o improves the performance of other additives in formulations, minimizing the loading of expensive materials
When tested as a high performance processing aid for thermal barrier coatings, Vitrocote(R) decreased thermal conductivity properties of coatings. Use of small
amounts of Vitrocote(R) (1% to 4% by weight) aids in the performance of thermal barrier coatings by:
o dramatically decreasing the thermal conductivity of coatings/films
o improving the efficiency of dispersing metallic fillers, binders and other raw materials
o improving the suspension of coatings materials
As a processing aid for thermal barrier coatings, Vitrocote(R) is chemically non-reactive and compatible with most coatings materials.
Potential Rubber Applications
We anticipate developing a product line incorporating the Mineral for use in the rubber industry to be marketed under the name Vitrosil(R). Based on research and testing to date, we believe that Vitrosil(R) will offer improved strength, durability and overall performance for both standard and custom molded rubber parts. Product testing and market research are continuing and no firm schedule
has, as yet, been set for the introduction of Vitrosil(R).
Potential Cementitious Applications
We have conducted research with California State University, Fullerton regarding uses of the Mineral in the cement industry to improve strength, reduce weight,
improve finish and improve resistance to moisture, weathering and temperature extremes. Based on this effort, we believe that significant opportunities for sales of our Mineral will result from these discoveries.
Potential Ceramics and Refractory Applications
We anticipate developing a product line incorporating the Mineral for use in the ceramics and refractories industries to be marketed under the name Vitrotherm(TM). Based on research and testing to date, we believe that Vitrotherm(TM) will offer improved flow properties for self-leveling and pumpable castable refractories, reduced shrinkage in the casting process, and increased strength, reduced thermal conductivity and increased resistance to thermal shock in ceramic products. Product testing and market research are continuing and no firm schedule has, as yet, been set for the introduction of Vitrotherm(TM).
Other Potential Products and Applications
We are conducting ongoing research and product development to deliver additional products to our current and anticipated markets and to develop products for other industrial applications.
We are presently developing a product line incorporating the Mineral for use in both the plastics and the paint and coatings industries to be marketed under the name Vitropurge(R). Based on extensive research and testing to date, we believe that Vitropurge(R) will offer improved purging or cleaning of machinery and equipment used in both paint and coatings applications, processing and manufacturing and plastics molding and processing. Product testing and market
research are continuing and no firm schedule has, as yet, been set for the introduction of Vitropurge(R).
We have also identified potential uses of the Mineral in the electronics industry to improve electrical, thermal, structural, rheological and flame suppression properties and, the hazardous waste industry as an impermeable water
barrier to eliminate migration of hazardous materials in landfills and nuclear waste sites. Product research and development will be conducted to develop products for each of these and other industrial applications. No schedule has,
as yet, been set for the introduction of any other products.
MINING OPERATIONS
Mining Properties and Mineral Interests
We hold rights to mine all of the Mineral located on an eighteen (18) acre site in Calaveras County, California (the "EIG Property") and a 288 acre site in Kern
County, California (the "Red Rock Canyon Property") and, subject to closing on the acquisition of underlying property or Mineral interests by Valley Springs
LLC an eighty (80) acre site in Calaveras County, California (the "Valley Springs Property").
EIG Property. Pursuant to the terms of the EIG Mining Agreement, we have the right to mine Minerals from the EIG Property through March 31, 2017. Our rights to mine the EIG Property are subject to satisfaction of EIG's ongoing
obligations under a September 1997 Purchase and Sale Agreement pursuant to which EIG originally acquired the rights to mine the property through March 31, 2017
in exchange for certain payments from EIG to the property owner, which payment obligations include a required annual payment in an amount equal to the greater of $50,000 or $1.39 per cubic yard of Mineral mined during the year.
Under the EIG Mining Agreement, we are obligated to pay to EIG the following amounts per pound of Mineral excavated from the EIG Property and sold and collected by us:
Year Price Per Pound
2004 $0.875
2005 $1.00 plus Cost of Living Adjustment
Beginning in January 2005, and annually thereafter, the price per pound is subject to annual increase based on the annual increase in the Bureau of Labor Statistics Paint Raw Material Index (comparing the month of October of the
immediately preceding year to the month of October in the prior year).
Under the EIG Mining Agreement, we are also obligated to purchase from EIG (in aggregate with purchases from Red Rock LLC and Valley Springs LLC), after February 3, 2004 and by the following dates, the following aggregate minimum
amounts of Mineral:
Purchase Date Amount in Pounds
December 1, 2005 7,500,000
December 1, 2006 10,000,000
December 1, 2007 12,500,000
December 1, 2008 15,000,000
Each December 1 thereafter 10% in excess of the prior year's minimum
requirement
Based on drill borings on the site, Golder Associates, Inc., an independent geotechnical engineering consultant, estimated reserves of amorphous aluminosilicate in place on the EIG Property of approximately 1.6 billion pounds. Mining of the EIG Property is of an open-pit nature. No estimate has been made with respect to the potential loss of material that may result from mining or preparation operations. As of December 31, 2003, from the commencement
of mining operations by Hi-Tech at the site, approximately 35 million pounds of Mineral had been mined from the EIG Property. Mining of the property will be conducted on an as needed basis to meet our anticipated product delivery
requirements.
The EIG Property is readily accessible from state and county roadways. Because of the nature of mining operations conducted, there is no physical plant or equipment located on the EIG Property.
Prior to commencement of Hi-Tech's mining operations on the EIG Property, mining operations were conducted on the property from the mid-1800s to present by various property owners.
Pursuant to the terms of the EIG Mining Agreement, we may not sell or distribute products that are competitive with the Mineral, other than Mineral from the Red Rock Canyon Property, the Valley Springs Property or a property under common ownership with EIG or those properties, until such time as we have purchased and paid for at least 75% of the Mineral located on the EIG Property. Additionally,
pursuant to the EIG Mining Agreement, we granted EIG a non-terminable worldwide,non-exclusive royalty free and paid up perpetual license to utilize all of our technologies relating to the Minerals from and after a default by us under the EIG Mining Agreement or the termination, for any reason, of the EIG Mining Agreement.
Red Rock Canyon Property. Pursuant to the terms of the Red Rock Canyon Mining Agreement, we have the right to mine Minerals from the Red Rock Canyon Property through April 2036. Our rights to mine the Red Rock Canyon Property are subject to satisfaction of Red Rock LLC's ongoing obligations under a July 2002 agreement pursuant to which Red Rock LLC originally acquired the rights to mine the property through July 2036 in exchange for certain payments from Red Rock LLC to the property owner. Red Rock LLC is obligated to pay to the property owner a total of $1.5 million, $300,000 of which was paid at closing with the
balance of $1.2 million being payable over seven years based on Mineral production subject to minimum annual payments of $150,000 plus interest at 7% on the unpaid balance. The sellers of the Red Rock Canyon Property reserved the right to mine up to 1,000 tons of calcium bentonite from the Red Rock Canyon Property.
Under the Red Rock Canyon Mining Agreement, we are obligated to pay to Red Rock LLC amounts per pound of Mineral excavated from the Red Rock Canyon Property and
sold by us and we are subject to cumulative minimum purchase requirements. Both the per pound payment and the minimum purchase requirements with respect to the Red Rock Canyon Property are identical to the requirements established for the EIG Property. The Red Rock Canyon Mining Agreement includes non-compete and license provisions identical to those pertaining to the EIG Property. We are also obligated to advance to Red Rock LLC all amounts necessary to secure the rights relative to the Red Rock Property (including the payments to the land
owners), all of which amounts will be treated as advances against per pound payment obligations.
Prior to the sale of the Red Rock Canyon Property to Red Rock LLC, the owner, Joseph Mathewson, conducted mining operations for more than twenty years. The Red Rock Canyon Property is zoned for mining, all entitlements are in place to continue mining activities on the property and no royalties are payable to the prior owners. The Red Rock Canyon Property is estimated to contain approximately
6.0 billion pounds of material. Mining of the Red Rock Canyon Property is of an open-pit nature. No estimate has been made with respect to the potential loss of material that may result from mining or preparation operations. Hi-Tech commenced mining of the Red Rock Canyon Property in 2003 and, as of March 31, 2004, had mined approximately 2 million pounds of Mineral.
The Red Rock Canyon Property is readily accessible from state and county roadways pursuant to a Bureau of Land Management right of way. The right of way expires in five years, at which time the right of way is subject to renewal.
Because of the nature of mining operations conducted, there is no physical plant or equipment located on the Red Rock Canyon Property.
Valley Springs Property. Pursuant to the terms of the Valley Springs Mining Agreement, we have the right to mine Minerals from the Valley Springs Property through April 2036. Our rights to mine the Valley Springs Property are subject to satisfaction of Valley Springs LLC's ongoing obligations under a July 2002 agreement pursuant to which Valley Springs LLC has entered into an agreement to
acquire the rights to mine the property through July 2036 in exchange for certain payments from Valley Springs LLC to the property owner. Valley Springs LLC will be obligated to pay to the property owners (1) to one owner, a total of
$1.75 million, $250,000 of which is to paid at closing with the balance of $1.5 million being payable in quarterly installments of $100,000 and, (2) to a second owner, a royalty based on Mineral excavated and sold in the amount of $0.50 per pound in 2004, $0.59 per pound in 2005 and thereafter $0.67 per pound subject to an annual cost of living adjustment. Our rights to mine the Valley Springs
Property are subject to the right of one property owner to require us to mine for, and sell to, it up to fifty percent (50%) of the Mineral on the property for cost (including certain overhead related costs) plus a five percent (5%)
markup. Closing on the acquisition of mining rights to the Valley Springs Property from the present landowner has not, as of March 31, 2004, occurred.
Under the Valley Springs Mining Agreement, we are obligated to pay to Valley Springs LLC amounts per pound of Mineral excavated from the Springs Property and sold by us and we are subject to cumulative minimum purchase requirements. Both the per pound payment and the minimum purchase requirements with respect to the Valley Springs Property are identical to the requirements established for the EIG Property. The Valley Springs Mining Agreement includes non-compete and license provisions identical to those pertaining to the EIG Property. We are also obligated to advance to Valley Springs LLC all amounts necessary to secure the rights relative to the Valley Springs Property (including the payments to the land owners), all of which amounts will be treated as advances against per pound payment obligations.
The Valley Springs Property has not previously been mined but is zoned for mining. We are processing the Valley Springs property for the owners to obtain mining permits and entitlement approval is expected by December 31, 2004. There is no guaranty that we will be successful in obtaining mining entitlements.
The Valley Springs Property is estimated to contain approximately 27 billion pounds of material. Mining of the Valley Springs Property will be of an open-pit nature. No estimate has been made with respect to the potential loss of material that may result from mining or preparation operations. Assuming we secure the mining entitlements for the Valley Springs Property, mining of the Valley Springs Property will be conducted on an as needed basis to meet our anticipated product delivery requirements.
The Valley Springs Property is readily accessible from state and county roadways. Because of the nature of mining operations expected to be conducted, there is no, and is expected to be no, physical plant or equipment located on
the Valley Springs Property.
Mine Operations
All mining operations are contracted to independent excavation operators. Mining operations are conducted in deposits in an open pit fashion using large bulldozers and bucket loaders to remove topsoil and vegetation from the Mineral deposit and dislodge the Mineral from the deposit using a ripper. The Mineral is crushed as needed to permit loading in rock trucks for hauling to milling
facilities.
We have no long-term contracts with excavation operators or trucking companies but retain services on an as needed basis. Excavation operators are typically paid on a per cubic yard basis for all Mineral excavated. Trucking companies are typically paid on a per mile basis for transporting Mineral to milling facilities.
Excavation and trucking capacity are readily scalable by the use of additional heavy equipment and trucks by the operators and/or the retention of additional operators. Mining and trucking capacity are not expected to be a constraint on our ability to deliver product.
We have certain mine site restoration requirements following the completion of mining operations pursuant to our mining entitlements. Calaveras County has required a surety bond in the amount of $14,206 to be posted to guarantee our completion of future reclamation of the site. Kern County has required a surety bond in the amount of $40,260 to be posted to guarantee our completion of future
reclamation of the site.
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MOST RECENT NEWS
VitroTech's Revolutionary Performance Additive Vitrolite(R) Adopted byPlastics Industry Leader Ropak Packaging
SANTA ANA, Calif., May 19, 2004 /PRNewswire-FirstCall via COMTEX/ -- VitroTech Corporation (OTC Bulletin Board: VROT) announced today that Ropak Packaging has adopted Vitrolite(R) technology and products in their North American facilities. Vitrolite(R) performance additives enhance both the physical properties and production of plastics, paints and coatings as well as a variety of other products.
Ropak is a member of the LINPAC group of companies. LINPAC, headquartered in Birmingham, UK, is a diversified supplier of paper and plastics-based packaging, returnable packaging systems and plastic automotive components. It manufactures in five continents and sells in nearly every country in the world. For the year ended December 2002, LINPAC reported revenues of pounds Sterling 1.2 billion (approximately US$2.1 billion).
Ropak serves the packaging needs for a wide range of industries from food (dairy and bakery) to industrial (petroleum products, coatings and adhesives) and hazardous materials (chemicals). Consumer products include pet food, cat litter, detergents, seeds, paint, and fasteners. Other products are specially designed for the fishing and agricultural markets.
"Ropak is widely acknowledged as a leading adopter of new technologies in the plastics manufacturing industry," said Jess Rae Booth, Chairman and CEO of VitroTech Corp. Mr. Booth added: "This deal will have a significant material impact on Vitrolite(R)'s growth over the next fiscal year."
Headquartered in Fullerton, Calif., Ropak Packaging is one of North America's leading manufacturers of innovative plastic packaging used in a wide range of applications. The company has eight manufacturing facilities throughout the United States and Canada. For more information, please visit the Web site at www.ropakcorp.com.
Headquartered in Santa Ana, California, VitroTech Corporation is a materials technology and research company with rights to purchase, process and sell approximately 35 billion pounds of rare amorphous aluminosilicate deposits, which are used to produce its primary products, Vitrolite (R) and Vitrocote(R). These products enhance both the physical qualities and production of plastics, paint/coatings, and a variety of other market segments. For more information, please visit VitroTech on the web at: www.vitroco.com.
SOURCE VitroTech Corporation
CONTACT: Jess Rae Booth, Chairman & CEO of VitroTech Corporation,
+1-714-708 4700
URL: www.ropakcorp.com
www.vitroco.com
www.prnewswire.com
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