Exhibit A
Business Plan
History:
The following history is not intended to be a detailed description of all of the activities of National Gold. It is merely a summary of the major mining operations the company has been involved with.
In 1970, Modular Concepts, Inc., completed an interstate public offering, under the provisions of Rule S-1 of the United States Securities and Exchange Commission. The company sold 250,000 shares of stock for $12.50 each for a gross amount of $3,125,000. In compliance with the Rules of the Securities and Exchange Commission Modular Concepts filed its 12-G report in 1971 and the Company was current on its 10-K and 8-K reports through 1984.
Modular Concepts, Modular Dimensions, and MDI Industries were all involved in the production of manufactured homes.
When the present management acquired operational control of the company in 1972 the house manufacturing plants were closed because of a potential safety hazard in the wall sections. The company was making a "sandwich" wall section that was filled with foam. Should there be a fire the foam would give off toxic fumes. Therefore the plant operations were suspended.
In November of 1972, the Company acquired the "Alpine Chalet Restaurant" at Brighton, Utah and the owners of the restaurant assumed the management of the Company. The Company operated the restaurant until 1983 when the U. S. Forest Service lease expired and, in spite of the objections of the Company, was not renewed.
In addition to owning and operating the restaurant the new owners were involved in the mining business and were anxious to move their mining operations into the Company, however, Corporate Counsel advised waiting so as to verify there were no lawsuits filed against the Company as a result of their wall sections.
After an eight year wait, the name of the Company was changed to National Gold, Inc. and management moved the mining properties into the Company.
The principal mines owned and operated by the Company were -
| French Corral, California placer gold mine | Green River, Utah Uranium Mine |
| Klamath River, California placer gold mine | Goldfield, Nevada Tailings Piles |
| Rich Hill, Arizona placer gold mine | Pyramid Peak, Nevada Tungsten Mine |
| Ruby Creek Placer, Montana | Mary Ann placer gold mine by Ely, Nevada |
Mine at French Corral, California
The Company acquired the French Corral Mine through the acquisition of Hexagon Ventures, Inc., a Utah corporation. Hexagon's Purchase Agreement allowed the Company to operate the gold mine and pay the owner 10% of the net income from the mine. The owner was paid in gold. Each payment was a credit toward the ultimate purchase price. The French Corral mine was capable of processing 300 cubic yards of material each hour. National Gold sold its interest in the French Corral Mine in 1982.
Dredging on the Klamath River, California
The National Gold Mining Operation was just downstream from the mouth of Humbug Creek, on the Klamath River, near Yreka, California. The company had a 14 inch suction dredge that could move about 1,000 cubic yards of material each hour.
Extreme flooding conditions, and the theft of company funds by one of its officers, caused major problems that eventually forced the closure of mining operations. The company had a 14 inch suction dredge that could move about 1,000 cubic yards of material each hour. The company shut down its dredging operations in the fall of 1983.
Rich Hill Mine, Arizona
The Company acquired the Rich Hill, Arizona Mine through a stock purchase from a private party. This mine was set up basically the same as the French Corral Mine in California and was capable of processing 300 cubic yards per hour. The company determined there was not a sufficient amount of gold to make the mine profitable, closed operations in 1984.
Ruby Creek in the Big Hole Basin
The company then opened a placer mining operation on Ruby Creek in the Big Hole Basin of Montana. This mine was in a beautiful scenic location, but the fact that we could not operate year around coupled with the low spot price of gold made the mine unprofitable. If we could have worked all year long, or if we had the current price of gold, then the operation would have been very profitable.
Mary Ann Placer, Nevada
At this time the Company acquired the Mary Ann Placer Mine in the Osceola Mining District, east of Ely, Nevada. Mr. Christensen, the Secretary/Treasurer of the Company decided he wanted to move onto the mine and operate it for himself. The Company sold him the mine in exchange for most of his shares of the Company and he resigned as an Officer and Director.
In order to fully understand the lure and attraction of gold, it's necessary to look at the bright, and the dark, side of the history of gold ownership.
The Constitution for the United States grants Congress the power "to coin money and to regulate the value thereof, and of foreign Coin, and fix the Standard of Weights and Measures." - 1787 - The Constitution for the United States - Article 1, Section 8, Paragraph 5.
That is precisely what Congress did.
In 1792, the Dollar was fixed by law at 24.75 grains or 0.05156 troy oz. of Gold. In 1837, the coinage was reworked and the Dollar was defined at 25.8 grains of Gold "nine-tenths fine." That gives 20.67 Dollars to one troy oz. of Gold. That was the Dollar's "fixed value" for 96 years from 1837 to 1933.
On April 5, 1933, President Roosevelt, acting under the sweeping authority given him by Congress on March 9, signed Presidential Executive Order 6102 which invoked his authority to make it unlawful to own or hold gold coins, gold bullion, or gold certificates. The export of Gold for purposes of payment was also outlawed, except under license from the Treasury. This action was a blatant violation of the Constitutional Powers granted by the People. The People granted Congress "the power to coin money and to regulate the value thereof," not to take gold and silver coins away from the People. It should also be noted that the People gave Congress the sole power to enact laws. They did not give Congress the authority to delegate that power to anyone else, including the President. That would be a clear violation of the Separation of Powers established by our Constitution. The President has no power, or authority, to create Executive Orders that act as laws governing the People. We did not give him that power, and Congress cannot delegate their authority.
Then, just 2 months later, on June 5, 1933, a joint resolution signed by the President was introduced into Congress. This resolution abrogated the gold clause on all existing government and private contracts. Needless to say, the resolution passed. Here again, Congress violated their oath of office contract with the People. Resolutions are not laws, and do not grant any power over the People. Congress, and the President, were able to perpetrate this fraud on the People of the United States because the People were asleep. They had never had such blantant violations of their Liberty pushed at them, and they never dreamed their public servants would set out to cheat them.
The ban against the People owning gold was so wide spread that it shut down the gold mines.
To further their unlawful activities, on January 30, 1934, the "Gold Reserve Act" became law. It had passed through Congress in five days, with minimal debate. Under this act, the Federal Government took away title to all "Gold Certificates" and gold held by the independent Federal Reserve Bank and vested sole title with the U.S. Treasury. The Federal banks were to be provided with "Gold Certificates" in return for their Gold, but these certificates had no specific value in Gold assigned to them, only the good faith and trust of the Federal Government, which, based on the foregoing was worthless.
The next day, January 31, 1934, the day after the passage of the Act, President Roosevelt, who did not have the authority under the Constitution, fixed the weight of the Dollar at 15.715 grains of Gold "nine-tenths fine". The Dollar was thereby devalued from $20.67 to one troy ounce of Gold to $35.00 to one troy ounce of Gold - or 40.94%. The Treasury, which had become the possessors of all the nation's Gold on the previous day, saw the value of their Gold holdings increase by $US 2.81 Billion. The Treasury now "owned" the Gold, and no one else inside the U.S. was allowed to own any Gold except by the express permission of the Treasury.
The new ratio of $US 35 was adopted at Bretton Woods in July 1944. The U.S. Dollar was made the world's Reserve Currency when the IMF and World Bank were established in 1947. The then international ratio of 35 U.S. Dollars to one troy ounce of Gold lasted until August 15, 1971.
By the beginning of the 1960s, the $35 US = 1 oz. Gold ratio was becoming more and more difficult to sustain. Gold demand was rising and U.S. Gold reserves were falling, both as a result of the ever increasing trade deficits which the U.S. continued to run with the rest of the world. Shortly after President Kennedy was Inaugurated in January 1961, and to combat this situation, newly-appointed Undersecretary of the Treasury Robert Roosa suggested that the U.S. and Europe should pool their Gold resources to prevent the private market price of Gold from exceeding the mandated rate of $35 US per ounce. Acting on this suggestion, the Central Banks of the U.S., Britain, West Germany, France, Switzerland, Italy, Belgium, the Netherlands, and Luxembourg set up the "London Gold Pool" in early 1961.
The Pool came unstuck when the French, under Charles de Gaulle, reneged and began to send the Dollars earned by exporting to the U.S. back and demanding Gold rather than Treasury debt paper in return. Under the terms of the Bretton Woods Agreement signed in 1944, France was legally entitled to do this. The drain on U.S. Gold became acute, and the London Gold Pool folded in April 1968. But the demand for U.S. Gold did not abate.
By the end of the 1960s, the U.S. faced the stark choice of eliminating their trade deficits or revaluing the Dollar downwards against Gold to reflect the actual situation. President Nixon decided to do neither. Instead, he repudiated the international obligation of the U.S. to redeem its Dollar in Gold just as President Roosevelt has repudiated the domestic obligation in 1933. On August 15, 1971, Mr Nixon closed the "Gold Window". The last link between Gold and the Dollar was gone. The result was inevitable. In February 1973, the world's currencies "floated". By the end of 1974, Gold had soared from $35 to $195 an ounce.
On January 1, 1975, after 42 years, it again became "legal" for individual Americans to own Gold. Anticipating the demand, the U.S. Treasury in particular and many other Central Banks sold large quantities of Gold, taking large paper profits in the process. This had two results. It depressed the price of Gold, which fell to $US 103 in eighteen months. More important by far, it "burned" large numbers of small individual investors.
But this "pre-emptive strike" against the Gold price did not solve the imbalances inherent in the floating currency regime. As the Gold price began to recover from its August 1976 low, the (US-controlled) IMF along with the Treasury itself, began a series of Gold auctions in an attempt to hold down the price through official means. But the problem of yet another free fall in the international value of the Dollar got in the way. Between January and October of 1978, the Dollar lost fully 25% of its value against a basket of the currencies of its major trading partners. By early 1979, due to this precipitous fall, the demand for Gold was overwhelming the amount that the IMF/Treasury dared supply, and the Gold auctions came to an end.
Gold regained its ($195) December 1974 level by July 1978. It then pressed on to new highs, hitting $250 in February 1979 and $300 in July. Also in July, Paul Volcker was appointed as Fed Chairman by a desperate Jimmy Carter. Gold continued to surge, hitting $400 in October. While this was happening, Mr Volcker was attending a conference in Belgrade. There the assessment was made that the global financial system was on the verge of collapse. When Mr Volcker returned to the U.S. from Belgrade, he took a momentous step. He announced that the Fed was swiching its policy from controlling interest rates to controlling the money supply.
The Federal Government's meddling in gold and silver caused almost all mining to cease. By the time President Nixon finally, and openly, announced it was now legal for the American People to once more own gold most of those who were trained in gold mining had either died, or had become to old to work in the mines again. That meant that most of the mines continued to lay fallow. National Gold deems itself to be very fortunate to have a CEO who, because of his experience with the U. S. Bureau of Mines, and then years of "hands-on" field experience, is trained in all aspects of mining, milling, and refining of precious metals.
Such is the case with our mines in the Warren Mining District of Idaho and the Vanderbilt mill and mines in California. They closed when President Roosevelt ordered the shut down of the mines.
Based on the above history of gold manipulation and the problems it has caused with major world currencies the Company officers feel that the time is at hand to open our mining operations and once again make gold available to the private investors.
In addition to the properties we have recently purchased in Idaho, we are also looking at additional mining opportunities in Arizona, Nevada, Utah and California.