ALTAIR INTERNATIONAL INC - 10-K Annual Report

Back to GetFilings.com

================================================================================
- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO
_______________

ALTAIR INTERNATIONAL INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)

Province of
Ontario,
Canada 1-12497 None
- ---------------------------- --------------------- -------------------
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)

1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
------------------------------------------------------------
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (307) 587-8245

|_| Securities registered pursuant to Section 12(b) of the Act: None

|X| Securities registered pursuant to Section 12(g) of the Act:

Common Shares, no par value Nasdaq National Market
- --------------------------- -------------------------------------------
(Title of Class) (Name of each exchange on which registered)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES |X| NO |_|

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|

The aggregate market value of the Common Shares held by non-affiliates
of the Registrant on March 15, 1999, based upon the closing sale price of the
Common Shares on the NASDAQ Stock Market of $7.125 per share on March 15, 1999,
was approximately $89,739,254. Common Shares held by each officer and director
and by each other person who may be deemed to be an affiliate of the Registrant
have been excluded. As of March 15, 1999 the Registrant had 15,174,915 Common
Shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held on June 10, 1999 are
incorporated by reference in Part III of this Report.
- ------------------------------------------------------------------------------
================================================================================

INDEX TO FORM 10-K
------------------

PART I .......................................................................................................1
Exchange Rate Information..............................................................................1

Item 1. Business...............................................................................................1
--------
General................................................................................................1
The Jig................................................................................................2
Target Markets for the Jig.............................................................................3
Heavy Minerals Recovery.........................................................................3
Coal Washing....................................................................................4
Environmental Remediation.......................................................................5
Other Testing...................................................................................5
Tennessee Mineral Property.............................................................................5
California Mineral Property............................................................................6
Technology and Proprietary Rights......................................................................7
Competition--the Jig...................................................................................7
Alternative Technologies........................................................................7
Spirals and Cones...............................................................................8
Froth Flotation Devices.........................................................................8
Heavy Media Separation..........................................................................8
Competing Products..............................................................................8
Competition--the Mineral Properties....................................................................8
Plan of Operation......................................................................................9
Business Development-the Jig....................................................................9
Business Development-the Mineral Properties............................................................9
Research, Testing and Development of the Jig...................................................10
Research, Testing and Development of the Mineral Properties....................................11
Subsidiaries..........................................................................................12
Government Regulation and Environmental Concerns......................................................12
Government Regulation..........................................................................12
Environmental Regulation and Liability.........................................................13
Employees.............................................................................................13
Glossary of Terms.....................................................................................13
Forward-looking Statements............................................................................14
Factors that May Affect Future Results................................................................14
Absence of Operating Revenues or Profits.......................................................15
Possibility of Continuing Operating Losses.....................................................15
Risks Associated With Sufficiency and Price of Capital.........................................15
Government Regulation..........................................................................15
Enforceability of Civil Liabilities Against Foreign Persons....................................16
Dependence on Key Personnel....................................................................16
Acquisition Risks..............................................................................16
Possible Issuance of Substantial Amounts of Additional Shares Without Stockholder Approval
.....................................................................................16
Volatility of Stock Price......................................................................16
Shares Eligible for Future Sales...............................................................17
Absence of Dividends...........................................................................17
Capacity Limitations of the Series 12 Jig......................................................17
Testing Status of the Series 30 Jig--Mineral Sands Processing..................................17
Testing Status of the Series 30 Jig--Coal Washing..............................................18
Risks Upon Completion of Testing...............................................................18
Competition From Alternative Technologies......................................................18
Competition From Other Jig-like Products.......................................................18
Dependence on Commodities Markets..............................................................19
Dependence on Third Party Manufacturers........................................................19
Patents for the Centrifugal Jig................................................................19
Exploratory Stage of Development--Tennessee Mineral Property...................................19
Uncertainty of Obtaining Environmental Permits for the Tennessee Mineral Property..............20
Exploratory Stage of Development--California Mineral Property..................................20
Absence of Detailed Plans for the California Mineral Property..................................21
Uncertainty of Obtaining Environmental Permits for the California Mineral Property.............21
Environmental Liability on Mineral Properties..................................................21

Item 2. Properties............................................................................................21
----------

Item 3. Legal Proceedings.....................................................................................22
-----------------

i

Item 4. Submission of Matters to a Vote of Security Holders...................................................22
---------------------------------------------------

PART II ......................................................................................................23

Item 5. Market for the Registrant's Common Stock and Related Shareholder Matters..............................23
------------------------------------------------------------------------
Market Price..........................................................................................23
Outstanding Shares and Number of Shareholders.........................................................24
Dividends.............................................................................................24
Transfer Agent and Registrar..........................................................................24
Canadian Taxation Considerations......................................................................24

Item 6. Selected Financial Data...............................................................................24
-----------------------
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.................25
-------------------------------------------------------------------------------------
Overview..............................................................................................25
Results of Operations.................................................................................26
Liquidity and Capital Resources.......................................................................27
Year 2000 Issues......................................................................................27

Item 7A. Quantitative and Qualitative Disclosures About Market Risk............................................28
----------------------------------------------------------
Item 8. Financial Statements and Supplementary Data...........................................................28
-------------------------------------------
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..................28
------------------------------------------------------------------------------------

PART III ......................................................................................................28

Item 10. Directors and Executive Officers of the Registrant....................................................28
--------------------------------------------------
Item 11. Executive Compensation................................................................................28
----------------------
Item 12. Security Ownership of Certain Beneficial Owners and Management........................................28
--------------------------------------------------------------

Item 13. Certain Relationships and Related Transactions........................................................28
----------------------------------------------
PART IV ......................................................................................................29

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................................29
---------------------------------------------------------------
Documents Filed.......................................................................................29
1. Financial Statements..................................................................29
2. Financial Statement Schedule..........................................................29
3. Exhibit List..........................................................................29
Reports on Form 8-K...................................................................................30
Exhibits..............................................................................................30
Financial Statement Schedule..........................................................................31

SIGNATURES ......................................................................................................32

ii

PART I

This Annual Report on Form 10-K for the year ended December 31, 1998 (this "Form
10-K") contains "forward- looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act"), and Section
21E of the Exchange Act of 1934, as amended (the "Exchange Act"), that involve
risks and uncertainties. Purchasers of any of the common shares, no par value
(the "Common Stock") of Altair International Inc. ("Altair" or the "Company")
are cautioned that the Company's actual results will differ (and may differ
significantly) from the results discussed in the forward-looking statements.
Factors that could cause or contribute to such differences include those factors
discussed herein under "Factors That May Affect Future Results" and elsewhere in
this Form 10-K generally. The reader is also encouraged to review other filings
made by the Company with the Securities and Exchange Commission (the
"Commission") describing other factors that may affect future results of the
Company.

Exchange Rate Information.

The following exchange rates represent the noon buying rate in New York
City for cable transfers in Canadian dollars, as certified for customs purposes
by the Federal Reserve Bank of New York. The following table sets forth, for
each of the years indicated, the period end exchange rate, the average exchange
rate (i.e., the average of the exchange rates on the last day of each month
during the period), and the high and low exchange rates of the U.S. dollar in
exchange for the Canadian dollar for the years indicated below, based on the
noon buying rates.

Year Ended December 31,
----------------------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ----------
(Canadian dollar per US dollar)

High............................... 1.5770 1.4398 1.3822 1.4238 1.4078

Low................................ 1.4075 1.3392 1.3310 1.3285 1.3103

Average............................ 1.4894 1.3849 1.3638 1.3725 1.3664

Year End........................... 1.5375 1.4288 1.3697 1.3655 1.4030

Item 1. Business.
--------
General.

A glossary of technical terms used in the following description of the
Company's business is set forth at the conclusion of this Item 1.

Altair International Inc. was incorporated under the laws of the
Province of Ontario, Canada in April 1973 for the purpose of acquiring and
developing mineral properties. Unless the context requires otherwise, all
references to "Altair," "Altair International Inc.," or the "Company" in this
Prospectus refer to Altair International Inc. and each of its subsidiaries.

Since 1994, the Company has increasingly shifted its emphasis from the
acquisition and development of mineral properties to the development and testing
of mineral processing equipment for use in the recovery of fine, heavy mineral
particles, including titanium, zircon, gold and environmental contaminants. The
Company has also leased, and seeks to lease or acquire, lease mineral deposits
suitable for the use of its mineral processing equipment.

During 1996, Altair acquired the rights to the Campbell Centrifugal
Jig, since modified and renamed the Altair Centrifugal Jig (the "Jig"), through
a merger involving the Company, Fine Gold Recovery Systems, Inc., a wholly owned
subsidiary of the Company ("Fine Gold"), and Trans Mar, Inc., a Washington
corporation ("TMI"). The Jig is a machine that uses a rotating circular screen

1

and pulsating water to separate valueless mineral particles from more valuable
mineral particles based on the differences in their specific gravity. In tests,
the Jig has proven capable of segregating and recovering extremely fine mineral
particles which are not economically recoverable using existing conventional
techniques. Altair is presently testing and customizing the Jig for use in the
recovery of heavy minerals such as titanium and zircon and for use in the
washing of coal. Management believes that the Jig could also be used to recover
other minerals such as gold and for environmental remediation. See "--Technology
and Proprietary Rights."

Altair has also leased, and is exploring, an approximately 13,600 acre
parcel of land near Camden, Tennessee (the "Tennessee Mineral Property") to
determine whether it would be amenable to large-scale mining for titanium and
zircon using the Jig or other equipment. Preliminary reports suggest that the
Tennessee Mineral Property contains significant amounts of valuable heavy
minerals, including titanium and zircon, and is suitable for a large-scale sand
mining operation with a multi-decade life. See "--Tennessee Mineral Property."

In October 1998, Altair acquired an option to enter into a mineral
processing lease on a heavy mineral sand stockpile located near Ione, California
(the "California Mineral Property"; collectively with the Tennessee Mineral
Property, the "Mineral Properties"). Although the limited size of the California
Mineral Property suggests that any mineral processing operation conducted on the
property would be small scale and short-term, existing data suggests that the
stockpiled materials grade between 14% and 31% heavy minerals (compared to 2%
heavy minerals content in some primary mine locations). Of the heavy mineral
content, approximately 50-65% is ilmenite, which is used as a feed stock in the
manufacture of titanium dioxide pigment--a common ingredient in plastics,
paints, and paper. Altair has commenced initial drilling to verify the content
of the stockpile, and, if such tests reveal consistent, adequate mineral grade
of ilmenite, Altair plans to commence gravity separation tests and feasibility
analysis sometime in 1999.

From a financial and accounting standpoint, the Company is a
development stage firm and has been since its inception. To date, the Company
has derived no revenues from product sales or otherwise and has experienced an
operating loss in every year of operation. In the fiscal year ended December 31,
1998, the Company experienced operating losses of $1,762,088.

Throughout this Form 10-K, the Company is sometimes referred to or
defined as a "development stage" company or firm. Such references are for
financial and accounting purposes only and are intended to signify that the
Company is devoting substantially all of its efforts to establishing a new
business, and planned principal operations have commenced, but there has been no
significant revenue therefrom. References to the Company as a development stage
company are not intended to imply that exploration activities with respect to
the Tennessee Mineral Property, the California Mineral Property, or any other
mineral deposits have disclosed a commercially viable reserve. For purposes of
Regulation S-K, Item 802, Guide 7 promulgated under the Exchange Act of 1934,
the Company should be considered an "exploration stage" company.

The Jig.

The Jig segregates particles based on differences in their specific
gravity. Such technology may be categorized as a "gravity separation" process.
Gravity separators are widely used in minerals beneficiation because of their
relative simplicity, low cost of operation and ability to continuously treat
large tonnage throughput. Management believes the Jig will prove able to
economically recover smaller particles than can presently be economically
recovered by competing gravity technologies. While not yet confirmed through
actual operations, the cost to manufacture and operate the Jig is expected to be
similar to the cost to manufacture and operate competing gravity separators,
which can efficiently process only particles larger than 150 mesh. In contrast,
the Company's tests suggest that the Jig will be able to maintain relative
efficiency when processing feeds as small as 400 mesh. See "--Competition." In
tests conducted to date using the Jig to process relatively small particles, the
Jig has yielded product quality (grade and contaminates) equivalent to that
yielded by alternative technologies processing larger particles. See "--Target
Markets" and "--Competition."

Several prototype and demonstration Jigs have been built and tested by
the Company and TMI. Continued field testing of the Jig is being undertaken to
increase the volume capacity, identify any design problems that may reside in
the Jig technology, evaluate the Jig's ability to perform sustained operations,
determine the potential for downtime during such operations and estimate the
anticipated maintenance costs associated with continued operations.

2

In addition, field testing is being carried out to improve operating design for
specific applications. There can be no assurance that the testing program will
be successful for all applications or that testing will demonstrate the Jig to
be economically attractive to end users. See "--Factors That May Affect Future
Results."

During 1998, the Company conducted preliminary testing of the Series 30
Jig at a mineral recovery plant operated by a large heavy mineral sand producer
located in northern Florida. Results of the testing indicate that the Series 30
Jig is capable of producing separation results comparable in efficiency to those
of the Series 12 Jig for zircon concentrates. The Series 30 Jig, however, is
designed to be capable of processing 500 tons of solids per day, or more than
four times the throughput capacity of the Series 12 Jig. The volumes of solids
per day that the Series 30 and Series 12 Jigs are actually capable of processing
have not been established through testing; however, the Company expects that
continued testing over the next six to twelve months will confirm that the two
models can process the volumes they have been designed to process. The Company
has also begun design work for a larger Jig that would have over twice the
processing capacity of the Series 30 Jig. See "--Research, Testing and
Development." Such increased capacity would enhance the Jig's commercial
potential for high volume applications such as coal washing and recovery of iron
ore fines. Also, multiple units might be used in series or parallel
configurations to process high volume operations.

Preliminary demonstration tests conducted by the Company and TMI
suggest that the Jig may be commercially viable in a number of applications,
including:

o Recovery of ultra fine gold from waste streams or former tailings;
o Recovery of zircon, rutile, ilmenite, leucoxene, and other
valuable fractions from heavy mineral sand operations,
especially from finely sized waste piles;
o Sulfur and ash removal from fine coal;
o Recovery of tin and iron ore fines from fine tailings;
o Concentration of heavy minerals, such as anatase, aparite,
barite, cassiterite, chromite, columbite, industrial diamonds,
fluorite, various garnets, monazite, tantalite and wolframite;
o Remediation of nuclear waste.

Target Markets for the Jig.

The Company's present focus is on developing markets for the Jig that
have the greatest near-term profit potential. Although management of the Company
believes that, in the long run, the Jig may potentially be useful for a number
of applications, management believes that the most promising markets for the Jig
in the short run are for use in (i) processing of heavy mineral sands in order
to recover heavy minerals, particularly zircon and titanium, (ii) washing of
coal fines in order to remove fine pyrite particles and ash, and (iii) to a
lesser extent, environmental remediation.

Heavy Minerals Recovery. In the minerals arena, the Company is seeking
to enter into royalty or limited licensing agreements under which the Jig can
add value to the beneficiation process, especially the processing of heavy
mineral sands. Verification testing with the Series 12 Jig suggests the Jig's
potential for recovering zircon from heavy minerals sand dry mill tails in
Florida. In Phase 1 and 2 trials conducted by the Company involving separation
of commercial grade zircon products from mineral sands, the Series 12 Jig
withdrew a larger portion of zircon from the feed ore than other mineral sands
processing equipment in use today. In tests on zircon/contaminate feeds
conducted by the Company, the Series 12 Jig has yielded greater than 90% zircon
concentrates and recovered up to 75% of the zircon fed to the unit. Initial
testing of the Series 30 Jig on zircon/contaminate feeds produced results which
were generally equivalent to the Series 12 Jig. The Company plans more extensive
testing of the Series 30 Jig during 1999.
See "--Plan of Operation."

The primary valuable minerals produced from heavy mineral sands are
titanium and zircon. Titanium is used primarily as a basic component of titanium
dioxide, a pigment used principally as a whitener and opacifier for paper,
plastics and paint. Zircon is used primarily for foundry molds and in the
manufacture of certain types of glass and ceramics. The Company believes the
domestic and international markets for both of these products are significant
and well established. Both are commodities traded in bulk, usually under long
term contracts, and are also sold in 50-100 lbs. bags, usually traded as a

3

spot-priced product. The U.S. Geological Survey has reported that production of
titanium dioxide in the United States during 1998 was approximately 1,360,000
metric tons, representing a market value of approximately $3 billion. The U.S.
Geological Survey does not report zirconium production for the United States;
however, according to the 1993 Mineral Commodities Summaries prepared by the
U.S. Department of the Interior, Bureau of Mines, consumption of zirconium in
the United States during 1992 was approximately 75,000 metric tons, representing
a market value of approximately $16.1 million. There can be no assurance that
testing will demonstrate that the Jig can economically extract heavy minerals
from heavy minerals sands or that the Jig will prove attractive to end users.

Coal Washing. During 1997, the Company tested the Series 12 Jig to
evaluate its ability to remove fine pyrite particles and ash from coal fines, in
an attempt to create a saleable product from material currently discharged as
mine waste. The tests were carried out at Southern Illinois University in
conjunction with a major coal producer. Tests were conducted on a crushed coal
middlings material with difficult cleaning characteristics. The following
conclusions, have been provided to the Company by the Southern Illinois
University Department of Mining Engineering:

1. For the 28 x 325 mesh particle size fraction of a Pittsburgh
No. 8 seam coal, the Altair Centrifugal Jig was found to
provide a reduction in ash content from an average of 30% to
10% while recovering 86% of the combustible material. The
corresponding reduction in total sulfur content was from 2.50%
to 1.40%. This separation performance resulted in a 78%
rejection of ash-bearing material and 62.5% rejection of total
sulfur. Considering that the feed material contained a
significant amount of near-gravity material due to its
origination from the middlings stream of a jig, the high
separation efficiency value of around 55% is a remarkable
achievement for the Altair Jig.

2. Partition curves derived from Altair Jig washability data
indicate the ability to achieve a relatively low specific
gravity cut point (D50) of nearly 1.50 at a probable error
value (Ep) of 0.10. These performance values rank among the
best of those reported for other enhanced gravity
concentrators.

3. The separation performance achieved on the 28 x 325 mesh
particle size fraction by the Altair Jig was found to be
superior to the results obtained from advanced washability
(release) analysis, which represents the ultimate performance
achievable by any flotation technology.

4. The separation performance results obtained as a function of
particle size indicates that the optimum separation was
achieved on the 100 x 200 mesh particle size fraction. This
fact was confirmed by both the metallurgical and process
efficiency results. For the coarsest particle size fractions,
the ash-forming material was found to have difficulty in
passing through the screen. Thus, ash recovery to the product
is sufficiently higher than the finer material. However, the
excellent separation performances achieved on the particle
size fractions below 100 mesh are superior to other
commercially available enhanced gravity technologies. This
finding is especially unique due to the use of a relatively
low centrifugal force of 45 g's.

5. A circuit utilizing the Altair Jig to clean the 28 x 325 mesh
particle size fraction and a flotation column to treat the
-325 mesh fraction was predicted to provide a 10% product ash
content while recovering 78% of the combustible material. In
comparison, the use of a flotation column to treat the entire
-28 mesh coal would only recover 60% of the combustible
material while achieving the same product ash content. Thus,
the use of the Altair Jig to treat the high middlings content
coal used in this study would result in an overall increase in
recovery of 18% weight units.

6. A complete parametric study was conducted based on a
statistically designed test program and response evaluation
software. Empirical equations describing the effects of
operating parameters value on important response variables,
i.e., combustible recovery, ash rejection, and sulfur
rejection, have been developed and utilized to identify the
optimum test conditions."

4

Based on these test results, and others, the Company believes utilities
in the eastern United States may be able to use the Jig to remove pyrite from
high sulphur eastern coals, potentially reducing the need to incur the expense
of transporting low-sulphur western coals. For example, the cost of transporting
coal from Wyoming, a large coal mining area, to the midwestern United States
typically comprises 75% of the cost of the delivered coal product. In addition,
the Company believes the Jig may be used to remove ash from coal, which would
benefit utilities because ash reduces the thermal value of coal and causes
undesirable environmental impacts. The Company established a coal wash test
program with Kerr-McGee Coal Corp. and the University of Southern Illinois to
utilize a Series 12 Jig in processing coal feeds in an on-line coal wash plant
production environment. The test program was completed in late- 1998 and the
Company expects the results to be published by the University of Southern
Illinois in the second quarter of 1999. See "--Plan of Operation." There can be
no assurance that testing will demonstrate that the Jig can economically remove
pyrite, ash or other substances or that the Jig will be attractive to coal
purchasers.

Environmental Remediation. Testing of the Series 12 Jig conducted under
a grant from the U. S. Environmental Protection Agency at Montana College of
Mineral Science and Technology during 1994 indicated that the Jig may be
effective in removing heavy minerals from old mine and mill tailing sites. The
1994 tests indicated that the Jig removed approximately 64% of the fine pyrite
contained in mill tailings in a single pass through the machine. Nearly 80% of
the fine pyrite content of such tailings was removed in two passes through the
machine. In 1995, the U.S. Department of Energy (the "D.O.E.") sponsored tests
suggesting that the Jig may be capable of removing dense nuclear particles from
radioactive waste. The tests conducted by the D.O.E. reported that the Jig was
able to remove up to 54% of the contained nuclear contaminate in a single pass.
Company management is currently exploring these potential environmental
remediation applications.

Other Testing. The Company has licensed a Series 12 Jig to BHP Minerals
International Inc. ("BHP") for installation at BHP's worldwide testing
laboratory in Reno, Nevada. Under the terms of the license, in exchange for
nominal consideration, the Company has granted BHP a non-exclusive license for
use of the Series 12 Jig until September 1, 1999. BHP is not restricted in its
choice of ores or minerals for testing. The Series 12 Jig has been installed and
the Company has committed to train BHP personnel to operate and conduct routine
maintenance, and to provide limited consulting to BHP on an on-going basis. See
"---Plan of Operation."

Tennessee Mineral Property.

The Tennessee Mineral Property consists of approximately 13,600 acres of land
that the Company has leased (or has binding commitments to lease) in or near
Camden, Tennessee, containing fine, heavy minerals. From 1996, when the Company
began acquiring leases, through 1998, exploration activities on the Tennessee
Mineral Property have included geologic mapping, sample collection, drilling of
123 auger holes and preparation of geologic and deposit models. The deposit
model also incorporates 40 drill holes completed by an earlier exploration
company. Deposit model estimates are consistent with deposit estimates
previously determined by other resource companies. The mineralized deposit on
the Tennessee Mineral Property has not yet been proven to be a reserve (as
defined in Regulation S-K, Item 802, Guide 7 promulgated under the Exchange
Act), and the Company's limited operations and proposed plan with respect to it
are exploratory in nature.

The production of saleable heavy minerals from heavy mineral sand ore
is a two-stage process. At the mine site, heavy mineral ore is treated in a "wet
mill" where a 90% total heavy mineral concentrate is prepared typically
utilizing gravity separation equipment. This concentrate is then taken to a "dry
mill" where individual mineral constituents are extracted using magnetic and
high tension electrical separators.

5

In order to assess the amenability of the Tennessee Mineral Property
ore to processing with the Jig, two bulk samples were collected by the Company
from the Tennessee Mineral Property. Test work completed by the Company on the
first sample during the spring of 1997 suggested the sands can be processed with
the Jig. Tests performed by the Company which emphasized recovery have yielded
up to 94% heavy mineral recovery with a six-to-one concentration ratio. (Stated
differently, after a single pass through the Jig, 94% of the ore's value was
concentrated in about one-sixth of its original volume, and five-sixths of the
sand rendered a non-valuable discard.) As is typical of gravity separation
processing, several passes through the Jig will be necessary to produce a 90%
total heavy mineral concentrate. Further, in the event the Tennessee Mineral
Property is proven to contain significant heavy mineral reserves the Jig would
likely be used in conjunction with traditional gravity separators, primarily
spirals, to most efficiently process the sand ore in the "wet mill". A second
bulk sample was collected during late 1997. Approximately 5,000 pounds of
representative mineralized material was collected from an exposed sand horizon.
This sample was processed by an independent Florida heavy sands producer and the
Company utilizing both "wet mill" and "dry mill" processes to produce
representative samples of saleable products. The sample results were reviewed by
an independent consultant hired by the Company to prepare a pre-feasibility
study of the Tennessee Mineral Property. See "--Plan of Operation."

In July 1998, an independent consulting group hired by the Company
completed a technical pre-feasibility study of approximately 4,700 acres of the
Tennessee Mineral Property known as the "Camden Deposit." The study states that
the Camden Deposit contains an indicated resource of 12 million tons of total
heavy minerals consisting of 65% titanium-bearing minerals, 5% zircon and 20%
non-valuable heavy minerals. It indicated that saleable ilmenite, rutile and
zircon products can be produced, and that established markets currently exist
for such products. The study then modeled mining and production costs and
concluded that the Camden Deposit has the potential to be economically mined via
a large-scale sand mining operation with an approximate 20-year life.

Based on the positive results of the consultant's report, the Company
initiated a final feasibility study in August 1998. The Company anticipates that
such study will involve additional drilling to further define resource
characteristics, detailed analysis of mineralogical characteristics and mine
processing methods, larger scale testing of the Series 30 Jig, analysis of
product markets, and evaluation of possible strategic alliances. The Company
expects that completion of a feasibility study will take 12-18 months. If the
feasibility study suggests that cost-effective mining of the Tennessee Mineral
Property is feasible, mining could begin within 24-36 months after completion of
the study, subject to, among other things, the price of, and demand for
extractable heavy minerals and the Company's ability to obtain necessary
financing, permits, and government approvals. See "--Plan of Operation" and
"--Government Regulation and Environmental Concerns."

Subsequent to the completion of the pre-feasibility study, further
exploration of the Tennessee Mineral Property by the Company suggested the
existence of an additional heavy mineral sands resource of approximately 10
million tons in an area northwest of the Camden Deposit known as the "Little
Benton Deposit." Preliminary results indicate that the Little Benton Deposit
contains a high-grade titanium mineralization similar to the Camden Deposit. The
Company has approximately 7,900 acres under lease in the Little Benton area and
intends to conduct further testing of the Little Benton Deposit. If such testing
affirms the existence of the indicated resource, and the feasibility study
suggests that cost-effective mining of the Tennessee Mineral Property is
feasible, the production capacity and/or life of the mining operation could be
significantly increased.

California Mineral Property.

In October 1998, the Company entered into an exploration license with
respect to a heavy mineral sand stockpile near Ione, California. The license,
which allows the Company to explore and test for heavy minerals, has a one-year
term and includes an option to enter into a production agreement with the
licensee to extract heavy minerals from the sand stockpile.

The stockpile was accumulated over a 40-year period as an impoundment
of material removed from sand ores used by a glass sand mining operation in the
area. The Company has drilled 23 auger holes in the property; preliminary
testing of the resulting samples indicates that the sands grade from 14% to 31%
total heavy minerals with approximately 250,000 tons of ilmenite present. The
very high concentration of heavy minerals in a small area suggests that a
small-scale, low-cost mining operation may be effective in mining the property.
During 1999, the Company intends to drill additional holes to define the heavy

6

mineral resource area, assess potential environmental implications of mining the
stockpile, and conduct gravity separation tests to determine product
marketability. If the exploratory work on the property indicates that it can be
economically developed, the Company intends to exercise its option with respect
to the production agreement and commence mining in late 1999 or early 2000,
subject to, among other things, the price of and demand for extractable heavy
minerals and the Company's ability to obtain necessary financing, permits and
governmental approvals. See "--Plan of Operation" and "--Government Regulation
and Environmental Concerns."

Technology and Proprietary Rights.

In operation, the Jig utilizes a combination of standard mechanical jig and
centrifugal technologies. Without having tested the Jig in sustained, commercial
operations, management believes production models of the Jig, if completed, will
be capable of sustaining high reliability and low maintenance costs in a
production environment. See "--Plan of Operation." Use of the Jig requires no
chemical additives. The Series 12 Jig stands about six feet tall, requires floor
space of about 25 square feet and weighs approximately 2,000 pounds, while the
Series 30 Jig stands about 10 feet tall, requires floor space of about 54 square
feet and weighs approximately 7,000 pounds. Recently constructed jigs have been
mounted on metal frames along with jig auxiliary equipment--pulse water pump and
tank and control panel--for transport by truck and rapid on-site installation.

A conventional jig separates a slurry of mineral particles as it flows
across the top of a screen. Water is periodically pulsed up through the screen
to eliminate interparticle friction and allow differential settling according to
the variations in the net specific gravities of the ore. Heavier minerals are
allowed to pass downward through the screen while lighter materials flow across
the screen to a discharge point. The Jig operates according to conventional jig
principles except that the screen surface is cylindrical and is rotated to
subject the particles to centrifugal forces. As currently designed, materials to
be processed by the Jig are introduced into the top of the Jig in a slurry mix
with water. The slurry is diffused across the top of the interior of a vertical
cylindrical screen which is rotating. Water is pulsed through the screen
allowing differential separation in the slurry material. Heavy particles pass
through the screen, are collected, and exit the machine in a "concentrate"
stream. Lighter particles flow down the screen interior, are collected and exit
out the bottom of the machine in a separate "tails" stream.

The Company does not intend to establish its own manufacturing
facility. Management is considering options for manufacture of the Jig,
including manufacturing under contract, exclusive licensing, or a joint venture.
The arrangement could eventually include an exclusive license for manufacture,
warehousing and distribution of spare parts, as well as maintenance and leasing
of the Jig. Currently, the Company has entered into an agreement with a machine
shop located in central Tennessee to manufacture three Series 30 Jigs.

Initial patents related to the concept of the Jig as a whole have been
issued in the United States, South Africa, United Kingdom, Australia and Canada.
These patents expire on various dates between May 1999 and December 2000. A
series of second patents with respect to the process by which water is pulsed
through the cylindrical screen on the Jig, a critical component differentiating
the Jig from competing products, have been issued in the United States, South
Africa, Japan, Europe, Australia, Canada, United Kingdom, Germany and France.
These patents expire on various dates between January 2010 and January 2011. On
May 15, 1997, the Company filed an application in the United States seeking a
third patent for an efficiency enhancing component of the Jig. Patents on the
same component have been issued in Europe, Australia, Japan, South Africa,
Canada and Brazil with expiration dates between April and November 2018.

In separate transactions in 1996, 1997, and 1998, the Company purchased
an aggregate of approximately 99% of the capital stock of Intercontinental
Development Corporation ("Indeco") for total consideration of $424,605. Indeco
has as its sole assets a royalty agreement entitling it to 10% of profits from
use of the Jig worldwide.

Competition--the Jig.

Alternative Technologies. Various mineral processing technologies
perform many functions similar or identical to those for which the Jig is
designed. See "Factors That May Affect Future Results--Competing Products and
Alternative Technologies." Minerals processing technologies are generally
predicated on the physical and chemical characteristics of the materials being
processed. A minerals processor may exploit contrasts in size, specific gravity,
hardness, magnetic susceptibility, electrical conductivity, and similar

7

characteristics to selectively extract and concentrate mineral constituents.
Minerals processors also exploit variations in chemical reactivity and molecular
affinity to selectively separate minerals.

The Jig competes in an arena in which particle specific
gravity is the primary criteria for particle segregation and capture. Competing
technologies in this arena include the following:

Spirals and Cones. To separate out valuable particles with a spiral or
cone, a mineral processor runs a sand- size feed slurried in water
through a tilted trough (spiral) or over a convex surface (cone). In
this process, fine-sized particles tend to "float" and not settle as
quickly as larger particles. The difference in settling speed permits
the mineral processor to separate out and extract the more valuable
heavy particles. Spirals and cones are most effective in feed sizes
larger than 150 mesh.

Froth Flotation Devices. To separate minerals using a froth floatation
device, a processor introduces chemical agents into a pool of mixed
particles, which agents attach to certain sulfides. Once attached to
the chemical agents, the sulfides float to the surface. The froth
flotation method can be effective on particles 200 mesh or smaller in
size.

Heavy Media Separation. Heavy media separation is a process in which a
feed containing both dense and light particles is fed into a solution
whose specific gravity is midway between the particles to be separated.
The light particles float to the surface of the solution, while the
heavy particles sink. Heavy media separation is effective primarily in
the removal of ash from coal and in small scale analytic laboratory
applications.

The Company believes that, in certain applications, the Jig
may prove more efficient, cost effective, or adaptable than spirals and cones,
froth flotation devices, or heavy media separation devices. Nevertheless,
results from further tests or actual operations may reveal that these
alternative technologies are better adapted to any or all of the uses for which
the Jig is intended. Moreover, regardless of test results, consumers may view
any or all of such alternative technologies as technically superior to, or more
cost effective than, the Jig.

Competing Products. The Company believes that the Jig currently faces
several forms of competition in the commercial segregation of dense particles
contained in feeds between 150 and 400 mesh, including the Kelsey Jig, Falcon
concentrators and the Knelsen batch concentrator unit, which are currently being
used worldwide. See "Factors That May Affect Future Results--Competing Products
and Alternative Technologies." Another centrifugal jig device, the Kelsey jig,
has been developed in Australia subsequent to the invention of the Jig. The
Kelsey jig is more complicated in design than the Jig, which the Company
believes makes it more expensive to manufacture, operate and maintain in a
production environment. According to the Kelsey jig's manufacturer, Geo Logics
Pty. Ltd., Kelsey jigs are in service at 20 plants worldwide. In addition,
Falcon, a Canadian company, produces a concentrator which is used mainly for
pre-concentration and scavenging. Their principal applications to date have been
in the gold and tantalum industries. There also exists a batch concentrator
known as the Knelsen Bowl, which management believes is best suited to small
volumes. (A batch concentrator differs from the Jig in that it process a finite
"batch" of material, is completely emptied, and then processes a completely new
finite batch, while the Jig processes a continuous flow of materials). Knelsen
Bowls have been installed in various mining applications, primarily gold,
throughout the world. Both the Falcon and Knelsen concentrators utilize
different technologies than the technologies employer by the Jig.

The Company is a small player in an industry comprised of major mining
companies possessing tremendous capital resources. The Company is an
insignificant competitive factor in the industry. There is no assurance that
competitors, many of whom may have significant capital and resources, will not
develop or are not now in the process of developing competitive equipment that
may be functionally or economically superior to the Company's equipment.

Competition--the Mineral Properties.

Based on the exploratory work done to date, the Company anticipates
that the saleable products which may be produced from the Mineral Properties are
ilmenite, rutile and zircon. Ilmenite, which may contain 40% to 70% titanium
dioxide, is used in the production of titanium dioxide pigment, a specialty
chemical used principally as a whitener and opacifier for paper, plastics and
paint. Ilmenite is the most abundant naturally occurring, commercially produced
titanium mineral and supplies approximately 90% of the world demand for

8

titaniferous material. Such demand is projected to increase at an annual rate of
2%-3% for the foreseeable future. The United States imports approximately 60% of
total ilmenite consumed. There are presently three entities in the United States
which produce ilmenite concentrate from heavy mineral sands and virtually all
production is used by five titanium pigment producers whose plants are primarily
located in the southeastern U.S. Pigment producers use various methods to
process ilmenite concentrate into titanium dioxide pigment and require that the
concentrate feedstock meet certain chemical and size criteria applicable to the
process being used. The Company believes that, if it can economically mine the
Mineral Properties and produce satisfactory products for sale to pigment
producers, it may have a competitive advantage in being a domestic producer
operating in close proximity to its primary markets.

Rutile, which generally contains greater than 95% titanium dioxide, is
also used in the production of titanium dioxide pigment. Its processing costs
are significantly less than ilmenite due to the higher concentration of titanium
dioxide. Although this greatly enhances its market value, rutile is much less
abundant than ilmenite, representing approximately 5% of the total heavy
minerals contained in the Mineral Properties.

Zircon is used in ceramic, refractory and foundry applications. Zircon
sand is currently being produced at three mines in the southeastern U.S. and in
several countries around the world. The U.S. Geological Survey believes that
long-term supply shortages may occur unless new production sources of zircon
concentrates are developed.

Plan of Operation.

Business Development-the Jig. Testing conducted to date by the Company
indicates the Jig may have economic potential in a wide variety of industries,
and management believes the Jig can be used for finely sized heavy minerals
recovery, coal cleaning and environmental remediation. See "--Target Markets".
During 1999, the Company plans to continue developing these target markets,
which may have near-term profit potential, through implementation of the
following critical steps:

(1) Continued field testing and demonstration of the Series 12 Jig
and experimentation with design manipulations to improve
effectiveness for certain specific applications. In addition,
sustained operational testing is critical in determining if
any material design problems reside in the Jig technology, if
the Jig is capable of sustained operation with little
downtime, and if its maintenance costs are satisfactory. See
"--Research, Testing and Development."

(2) Continued field testing, including sustained operational
testing, of the larger volume, more marketable Series 30 Jig.
See "--Research, Testing and Development."

(3) Initial engineering and design work for a Jig that will be
larger than the Series 30 Jig. See "--Research, Testing and
Development."

(4) Separation testing on potential new ore applications such as
tin and iron ore fines.

(5) Development of royalty, rental, or limited licensing
agreements with prospective industrial users and introduction
of the Jigs into targeted markets.

Business Development-the Mineral Properties.
--------------------------------------------

The Company believes that, with the discovery of the Little Benton
Deposit, the value of the Tennessee Mineral Property has been significantly
enhanced. Accordingly, the Company is seeking to identify strategic options and
potential sources of capital for development of the property. The Company has
initiated a feasibility study with respect to developing the Tennessee Mineral
Property; completion is expected by mid-2000.

The Company intends to continue its exploration of the California
Mineral Property. If the results of this work are positive, the Company expects
to commence mining on the property as soon as it obtains the necessary
financing, permits and governmental approvals.

9

General. The Company's marketing efforts in the near future will
continue to be directed to opportunities within North America, with future
expansion into foreign markets developing over time. Because the Company does
not intend to engage in the actual manufacture of its own products, the Company
does not expect to purchase a manufacturing facility or any significant
manufacturing equipment. Management does not anticipate that the number of
Company employees will significantly increase until the Company has sufficient
sales and business activity to warrant additional employees. Management expects
to hire two to four additional employees during the next 12-month period;
however, the actual number of new employees hired will depend on the Company's
operating results. If hired, such new employees would be primarily engineering
and technical staff to support testing, development and commercialization
programs.

Research, Testing and Development of the Jig. Field testing to date
suggests that the Jig possesses the ability to process continuous tonnage
throughput in several applications. The Jig has multiple operating parameters --
primarily rotational speed, pulsing pressure, and screen characteristics --
which must be adjusted to fit the processing requirements of the particular feed
stream being treated. Management believes that more extensive testing is needed
to identify the most efficient operating parameters for specifically identified
applications. Further, demonstration of sustained operation is critical to
marketing efforts. To this end, the Company has installed or is in the process
of installing the Jig in several test sites. Specifically designed research,
testing and development efforts planned for the upcoming twelve months include
the following:

(1) The Company has installed and commenced testing of a Series 30
Jig at a mineral recovery plant located in Northern Florida.
Tests conducted by the Company indicate that the Jig is
capable of yielding greater than 90% zircon concentrates and
recovering up to 75% of the zircon fed to the unit. The Series
30 Jig is designed to process 500 tons per day and is
considered to be commercial- sized for this application.
Testing scheduled during the first half of 1999 is intended to
verify Jig processing capacity and improve other operating
design parameters. Also, sustained operational testing is
intended to determine the Jig's capability for sustained
operations with limited downtime. To this end, the high-volume
testing will be done on a stream in the normal plant operating
environment. Jig concentrate and tailings products will be
commingled with other plant outputs. Access to the Florida
test site is controlled by a large heavy minerals sand
producer that supplies test materials for processing. On-site
testing is being conducted by two Company employees.
Additional Company employees provide periodic testing analysis
and engineering services at the site. A Series 12 Jig unit has
also been installed at the sand processing facility in
Northern Florida. This unit is being used to test various
other plant titanium and zircon feedstreams and to test heavy
mineral sand feeds from other Florida locations. Testing
utilizing the Series 12 Jig is being performed by Company
personnel.

(2) A joint coal wash test program with Southern Illinois
University and Kerr-McGee Coal Corp. was established during
late 1997 at Kerr-McGee's Galatia Coal Preparation Plant near
Harrisburg, Illinois. During 1998, Kerr-McGee sold its Galatia
coal operations to American Coal Company, who assumed
Kerr-McGee's role in the test program. A Series 12 Jig was
installed in the Galatia Plant and testing was conducted with
the Jig treating feeds from the plant's coal processing
streams to remove fine particles of ash and pyrite. Testing
was performed by two Southern Illinois University test
facility employees with periodic reviews conducted by Company
employees. The testing has been completed and the Company
expects the results to be published by the University of
Southern Illinois in the second quarter of 1999. The Company
will evaluate these results, together with the results of
operational and field testing, to determine a course of action
for future coal wash programs.

(3) The Company has established a Jig testing facility near Reno,
Nevada to test samples supplied by mineral companies and other
potential users of the Jig. The facility is used for
demonstrations of the Jig technology, provides amenability

10

testing for a variety of mineral ores, and serves as a test
site for on-going equipment design. The test facility is
equipped with a Series 12 Jig, placed in a "closed loop"
circuit designed to take an initial charge of solids (0.5 to
2.0 tons) which can be continuously fed in slurry form to the
Jig. Concentrate and tails streams produced by the Jig may be
accessed for sampling prior to recombination and return to the
feed circuit. Amenability testing performed at the test
facility during 1998 included heavy mineral sand feeds from
the Mineral Properties and ores which may have near term
commercial potential for recovery using the Jig. Operation of
the Jig test facility is performed exclusively by Company
personnel.

(4) Engineering and design work will continue on a Jig having
approximately twice the processing capacity of the Series 30
Jig. The Company anticipates that it will be able to complete
construction of the first unit by the end of 1999.

Provided that the planned testing of the Jig over the next twelve
months as described above is successful, the Company believes the Series 30 Jig
would be ready at that time for commercial use in applications involving the
recovery of titanium, zircon and gold. While such capabilities of the Jig could
then be marketed, the Company expects that the Jig's multiple operating
parameters would need to be adjusted to fit the requirements of each particular
customer and application. In the event any of the foregoing tests are not
successful, the Company expects that it would conduct additional testing, the
nature of which would depend upon the results obtained in the above-described
tests.

Research, Testing and Development of the Mineral Properties. As
discussed in "--Tennessee Mineral Property" above, in July 1998, an independent
consulting group completed a technical pre-feasibility study of approximately
4,700 acres of the Tennessee Mineral Property known as the "Camden Deposit."
Based on the positive results of the consultant's report, the Company initiated
a final feasibility study in August 1998 which it anticipates will involve
additional drilling to further define resource characteristics, detailed
analysis of mineralogical characteristics and mine processing methods, larger
scale testing of the Series 30 Jig, analysis of product markets, and evaluation
of possible strategic alliances. The Company expects that a feasibility study
will be completed by mid-2000. If the feasibility study suggests that
cost-effective mining of the Tennessee Mineral Property is feasible, mining
could begin within 24-36 months after completion of the study, subject to, among
other things, the price of, and demand for extractable heavy minerals and the
Company's ability to obtain necessary financing, permits, and government
approvals

During 1998, the Company incurred $724,907 in deferred exploration
expenditures on the Tennessee Mineral Property. Expenditures were incurred on
leasehold minimum advance royalty payments, auger hole drilling, sampling,
sample analysis and assay, geological and mineralized deposit characterization
studies and other related exploration activities.

As discussed in "--California Mineral Propertys" above, in October
1998, the Company entered into an exploration license with respect to a heavy
mineral sand stockpile near Ione, California. The license, which allows the
Company to explore and test for heavy minerals, has a one-year term and includes
an option to enter into a production agreement with the licensee to extract
heavy minerals from the sand stockpile. See "Item 2 Properties." The Company has
drilled 23 auger holes in the property; preliminary testing of the resulting
samples indicates that the sands grade from 14% to 31% total heavy minerals with
approximately 250,000 tons of ilmenite present. During 1999, the Company intends
to drill additional holes to define the heavy mineral stockpile area, assess
potential environmental implications of processing the stockpile, and conduct
mineral processing tests to determine product marketability. If the exploratory
work on the property indicates that it can be economically developed, the
Company intends to exercise its option with respect to the production agreement
and commence processing in late 1999 or early 2000, subject to, among other
things, the price of and demand for extractable heavy minerals and the Company's
ability to obtain necessary financing, permits and governmental approvals.

During 1998, the Company incurred $68,344 in deferred exploration
expenditures on the California Mineral Property. Expenditures were incurred for
the exploration license, auger hole drilling, sampling, sample analysis and
assay, and related exploration activities.

11

Subsidiaries.

Altair International Inc.1 was incorporated under the laws of the
province of Ontario, Canada in April 1973. The Company currently has two
wholly-owned subsidiaries, Fine Gold Recovery Systems, Inc., a Nevada
corporation ("Fine Gold"), and Mineral Recovery Systems, Inc., a Nevada
corporation ("MRS"), and four indirect wholly owned subsidiaries, California
Recovery Systems, Inc., a Nevada corporation, Altair Technologies, Inc., a
Nevada corporation, Tennessee Valley Titanium, Inc., a Nevada corporation, and
660250 Ontario Limited, and Ontario Corporation. The Company also owns
approximately 99% of the capital stock of Intercontinental Development
Corporation. "-Technology and Proprietary Rights"

Fine Gold was acquired by the Company in April 1994. Fine Gold is, for
accounting purposes, a development stage company with no operating revenues
earned to date. The Company's acquisition of TMI in February 1996 was effected
by merging TMI with and into Fine Gold (the "TMI Merger"). Fine Gold also now
includes the operations of a wholly-owned subsidiary of the Company formerly
known as Mineral Recovery Systems, Inc., which was merged with and into Fine
Gold in June 1996. As discussed below, another wholly-owned subsidiary of the
Company, formerly known as Carlin Gold Company, is now operated under the name
Mineral Recovery Systems, Inc. The Company intends that Fine Gold will hold and
maintain Jig technology rights, including patents, and will enter into a royalty
arrangements to allow MRS to develop and commercially utilize the Jig.

MRS was incorporated by the Company in April, 19872. MRS previously has
been involved in the exploration for minerals and development of unpatented
mining claims in Nevada, Oregon and California. All mining claims have now been
abandoned. The Company currently intends that MRS will arrange for the
manufacture of the Jig for commercial sales, rental or royalty arrangements with
end users. In addition, MRS currently holds, directly or indirectly, all of the
Company's interest in the Mineral Properties, and the Company intends that MRS
will continue to lease or acquire and develop mineral properties in the future,
particularly properties that contain mineral resources that may be processed
with the Jig.

California Recovery Systems, Inc. holds the company's exploratory
rights with respect to the California Mineral Property. The remaining indirect
100% owned subsidiaries do not presently have any assets or operations.

Government Regulation and Environmental Concerns.

Government Regulation. The Company's exploration of the Mineral
Properties and testing of the Jig are, and any future testing, construction or
mining activities of the Company will be, subject to a number of federal, state,
and local laws and regulations concerning mine and machine safety and
environmental protection. Such laws include, without limitation, the Clean Air
Act, the Clean Water Act, the Resource Conservation and Recovery Act, and the
Comprehensive Environmental Response Compensation Liability Act. Such laws
require that the Company take steps to, among other things, maintain air and
water quality standards, protect threatened endangered and other species of
wildlife and vegetation, preserve certain cultural resources, and reclaim
exploration, mining and processing sites. These laws are continually changing
and, as a general matter, are becoming more restrictive.

Compliance with federal, state, or local laws or regulations represents
a small part of the Company's present budget; nevertheless, continued compliance
may be extremely costly, especially if the Company actually commences extraction
operations on the Tennessee Mineral Property or the California Mineral Property.
If the Company fails to comply with any such laws or regulations, a government
entity may levy a fine on the Company or require the Company to take costly
measures to ensure compliance. Any such fine or expenditure may adversely affect
the Company's development.

The Company is committed to complying with and, to its knowledge, is in
compliance with all governmental regulations. The Company's primary product, the
Jig, does not require the addition of chemicals in its processing of minerals.
The Company cannot, however, predict the extent to which future legislation and
regulation could cause

- --------------------------

1 The Company was incorporated in April 1973 under the name Diversified
Mines Limited, which was subsequently changed to Tex-U.S. Oil & Gas Inc. in
February 1981, then to Orex Resources Ltd. in November 1986, then to Carlin Gold
Company Inc. in July 1988, to Altair International Gold Inc. in March 1994, and
to Altair International Inc. in November 1996.

2 MRS was formerly known as Carlin Gold Company. The name change was
effective in June 1996.

12

the Company to incur additional operating expenses, capital expenditures, and/or
restrictions and delays in the development of the Company's products and
properties.

Environmental Regulation and Liability. Any proposed mining or
processing operation on the Mineral Properties or any other property acquired by
the Company will be subject to federal, state, and local environmental laws.
Under such laws, the Company may be jointly and severally liable with prior
property owners for the treatment, cleanup, remediation, and/or removal of
substances discovered on either of the Mineral Properties or any other property
used by the Company, which are deemed by the federal and/or state government to
be toxic or hazardous ("Hazardous Substances"). Courts or government agencies
may impose liability for, among other things, the improper release, discharge,
storage, use, disposal, or transportation of Hazardous Substances. The Company
might use Hazardous Substances and, although the Company intends to employ all
reasonably practicable safeguards to prevent any liability under applicable laws
relating to Hazardous Substances, Companies engaged in mineral exploration and
processing are inherently subject to substantial risk that environmental
remediation will be required.

Employees.

The business of the Company is currently managed by Dr. William P.
Long, President and Chief Executive Officer of the Company and Mr. C. Patrick
Costin, Vice President of the Company and President of MRS and Fine Gold. In
addition, Altair employs a Vice President of Marketing, and MRS employs a
Director of Finance, a senior process engineer, a process engineer, a
metallurgist, a geologist, a controller and a part-time employee in an office
management and administrative assistance capacity. There are no other employees
of the Company or its subsidiaries.

Other than the employment agreements of Dr. Long and Mr. Costin
described below, and the employment agreement with the Vice President of
Marketing and the Director of Finance, there are no written employment
agreements between the Company or its subsidiaries and their respective
personnel. See "Item 11. Executive Compensation -- Employment Agreements." The
future success of the Company will depend, in part, on its ability to attract
and retain highly qualified technical, marketing and management personnel. There
is no assurance the Company will be successful in retaining or attracting highly
qualified individuals in key positions. See "Factors That May Affect Future
Results--Dependence on Key Personnel."

Glossary of Terms.

Amenability means responsiveness of an ore deposit to processing.

Ash means inorganic residue remaining after coal combustion. Ash is an
undesirable component of coal because it reduces thermal value and produces a
waste product after combustion.

Assay means to analyze an ore or other substance to determine the
presence, absence, and quantity of one or more components.

Beneficiate means to improve the grade of ore by processing.

Centrifugal force means the component of force on a body in curvilinear
motion that is directed away from the axis of rotation.

Coal fines means finely pulverized coal particles which will pass
through a 28 mesh screen.

Coal washing means processing of pulverized coal to remove ash and
pyrite.

Environmental remediation means removal of harmful mineral particles
from a site previously altered by human activities.

Heavy minerals sands means beach or dune sands which contain a small
fraction of heavy particles. Heavy mineral sands are commercially mined to
produce titanium minerals and zircon.

13

Ilmenite means a titanium-bearing oxide mineral containing variable
percentages of iron and used as a raw material in the production of titanium
pigments.

Mesh means one of the openings or spaces in a screen. The value (size)
of the mesh is given as the number of openings per linear inch.

Mill means a building with machinery for processing ore. Dry mill
refers to heavy minerals sand processing of dry materials. Wet mill refers to
heavy minerals sand process of material that are mixed with water in slurry.

Mineralized Deposit or Mineral Deposit means a mineralized body which
has been delineated by appropriately spaced drilling and/or underground sampling
to support a sufficient tonnage and average grade of metals. Such a deposit does
not qualify as a reserve until a comprehensive evaluation based upon unit cost,
grade, recoveries and other material factors conclude legal and economic
feasibility.

Placer means deposits of sand, gravel and other detrital or residual
material containing a valuable mineral which has accumulated through weathering
and natural mechanical concentration processes. A placer mine is an operation
that recovers certain valuable minerals based on differences in specific
gravity.

Pyrite means a yellowish-brown mineral sulfide containing iron and
sulphur. Pyrite is an undesirable component of coal because sulphur dioxide gas
is released when it is burned with coal.

Specific gravity means the ratio of the mass of a solid or liquid to
the mass of an equal volume of water at a specified temperature.

Tails or tailings means those portions of washed ore that are regarded
as too poor to be treated further, as distinguished from material (concentrates)
that is to be smelted or otherwise utilized.

Thermal value means a measure of the ability of a fuel (coal) to
produce energy when ignited.

Forward-looking Statements.

This Form 10-K contains various forward-looking statements. Such
statements can be identified by the use of the forward-looking words
"anticipate," "estimate," "project," "likely," "believe," "intend," "expect," or
similar words. These statements discuss future expectations, contain projections
regarding future developments, operations, or financial conditions, or state
other forward-looking information. When considering such forward-looking
statements, you should keep in mind the risk factors noted in this section and
other cautionary statements throughout this Form 10-K and the Company's other
filings with the Commission. You should also keep in mind that all
forward-looking statements are based on management's existing beliefs about
present and future events outside of management's control and on assumptions
that may prove to be incorrect. If one or more risks identified in this Form
10-K or any other applicable filings materializes, or any other underlying
assumptions prove incorrect, the Company's actual results may vary materially
from those anticipated, estimated, projected, or intended.

Among the key factors that may have a direct bearing on the Company's
operating results are risks and uncertainties described under "Factors That May
Affect Future Results," including those attributable to the absence of operating
revenues or profits, uncertainties regarding the development and
commercialization of the Jig, development risks associated with the Mineral
Properties, and uncertainties regarding the Company's ability to obtain capital
sufficient to continue its operations and pursue its proposed business strategy.

Factors that May Affect Future Results.

- ---------------------------------------------
Risk Factors Related to the Company Generally
- ---------------------------------------------

14

Absence of Operating Revenues or Profits. The Company is a development
stage company. To date, the Company has not generated revenues from operations
or realized a profit. The Company is presently investing substantial resources
in the testing and development of the Jig and the exploration of the Mineral
Properties. There can be no assurance that the Jig, the Mineral Properties, or
any other project undertaken by the Company will ever enable the Company to
generate revenues or that the Company will at any time realize a profit from
operations.

Possibility of Continuing Operating Losses. The Company has experienced
a loss from operations in every fiscal year since its inception. The Company's
losses from operations in 1997 were $1,831,471 and its losses from operations in
1998 were $1,762,088. Consistent with its history, the Company expects to
experience a net loss from operations during 1999. The Company will continue to
experience a net operating loss until, and if, the Jig and/or the Mineral
Properties begin generating revenues for the Company. Even if the Jig or the
Mineral Properties begin generating revenues, such revenues may not exceed the
costs of production. Accordingly, the Company cannot provide assurance that it
will ever realize a profit from operations.

Risks Associated With Sufficiency and Price of Capital. The Company's
existing capital may prove insufficient to complete testing and development of
the Jig or exploration of the Mineral Properties. This insufficiency may be
caused by numerous factors, including without limitation, unanticipated expenses
associated with developing the Jig or exploring the Mineral Properties, the
Company's inability to locate and reach an agreement with a company willing to
manufacture the Jig at a reasonable price, or the need for a radical change in
the design of the Jig.

If the Company determines to construct and operate a mine on
the Tennessee Mineral Property or the California Mineral Property, the Company's
existing capital will be inadequate to complete construction of the mine and
commencement of operations. In addition, the Company may need additional capital
for necessary or discretionary acquisitions of equipment, properties,
intellectual property rights or companies. General and industry market factors
or other unforeseen events may also affect the Company's use of and need for
capital.

If the Company needs additional capital, it may not to be able
obtain the amount of additional capital needed or may be forced to pay an
extremely high price for capital. Factors affecting the availability and price
of capital may include, without limitation, the following:

o market factors affecting the availability and cost of capital
generally;
o the performance of the Company;
o the size of the Company's capital needs;
o the market's perception of mining, technology, and or minerals stocks;
o the economics of projects being pursued; and
o industry perception of the Company's ability to recover minerals with
the Jig or otherwise.

If the Company is unable to obtain sufficient capital or is forced to pay a high
price for capital, the Company may be unable to complete testing and production
of the Jig, exploration and development of the Mineral Properties, or otherwise
pursue and fully exploit existing or future development opportunities. In
addition, because of their size, resources, history and other factors, certain
competitors of the Company may have better access to capital than the Company
and, as a result, may be able to exploit opportunities more easily or thoroughly
than the Company.

Government Regulation. The Company's exploration of the Mineral
Properties and testing of the Jig are, and any future testing, construction or
mining activities of the Company will be, subject to a number of federal, state,
and local laws and regulations concerning mine and machine safety and
environmental protection. Such laws include, without limitation, the Clean Air
Act, the Clean Water Act, the Resource Conservation and Recovery Act, and the
Comprehensive Environmental Response Compensation Liability Act. Such laws
require that the Company take steps to, among other things, maintain air and
water quality standards, protect threatened, endangered and other species of
wildlife and vegetation, preserve certain cultural resources, and reclaim
exploration, mining and processing sites. These laws are continually changing
and, as a general matter, are becoming more restrictive.

Compliance with federal, state, or local laws or regulations
represents a small part of the Company's present budget; nevertheless, continued
compliance may be extremely costly, especially if the Company actually commences
mining operations on the Tennessee Mineral Property or the California Mineral
Property. If the Company fails to comply with any such laws or regulations, a

15

government entity may levy a fine on the Company or require the Company to take
costly measures to ensure compliance. Any such fine or expenditure may adversely
affect the Company's development.

Enforceability of Civil Liabilities Against Foreign Persons. The
Company is an Ontario corporation, and a majority of its directors are residents
of Canada. In addition, certain of the Company's experts (including its
principal accountants and Canadian legal counsel) are located in Canada. As a
result, investors may be unable to effect service of process upon such persons
within the United States and may be unable to enforce court judgments against
such persons predicated upon civil liability provisions of the United States
securities laws. It is uncertain whether Canadian courts would (i) enforce
judgments of United States courts obtained against the Company or such
directors, officers or experts predicated upon the civil liability provisions of
United States securities laws or (ii) impose liability in original actions
against the Company or its directors, officers, or experts predicated upon
United States securities laws.

Dependence on Key Personnel. The continued success of the Company will
depend to a significant extent on the services of Dr. William P. Long, President
and Chief Executive Officer of the Company, and Mr. C. Patrick Costin, Vice
President of the Company and President of Fine Gold and MRS. The loss or
unavailability of Mr. Long or Mr. Costin could have a material adverse effect on
the Company. The Company does not carry key man insurance on the lives of such
key officers.

In addition to the individuals identified above, the Company
employs a Vice President of Marketing, Director of Finance, controller, senior
process engineer, process engineer, metallurgist, geologist, and administrative
assistant. The Company has no other employees. Aside from Dr. Long, Mr. Costin,
the Vice President of Marketing, and the Director of Finance, the Company has no
employment agreements with any of its personnel. Competition for such personnel
is intense, and the Company can provide no assurance that it will be able to
attract and maintain all personnel necessary for the development and operation
of its business.

Acquisition Risks. The Company is currently evaluating, and plans to
continue to evaluate, licensing or acquiring additional mining products or
properties. The Company also plans to remain open to acquiring, or developing
strategic relations with, other companies that have products, manufacturing
capabilities, or other qualities that are compatible with the Company's business
objectives. The Company must compete for attractive acquisition or strategic
alliance candidates with numerous other companies, many of whom have
significantly greater financial and technological resources than the Company. In
addition, to the extent the Company is in a competitive position, it may fail to
identify or consummate acquisition or strategic alliance opportunities.

Even if the Company identifies and completes such alliances,
consummation thereof may require the Company to incur additional debt, amortize
expenses related to goodwill and intangible assets, or issue dilutive equity
securities, all of which could adversely affect the Company's operating results
or financial condition. In addition, a failure by the Company to integrate its
operations with that of an ally or acquisition target may adversely affect
operating results. Disruptions in operations are likely to be especially severe
during the fiscal quarters immediately following any acquisition or alliance
transaction, while the operations of the acquired or combined business are being
integrated into the Company's operations.

Possible Issuance of Substantial Amounts of Additional Shares Without
Stockholder Approval. The Company's Articles of Incorporation authorize the
issuance of an unlimited number of shares of Common Stock. All such shares may
be issued without any action or approval by the Company's stockholders. In
addition, the Company has two stock option plans which have potential for
diluting of the ownership interests of the Company's stockholders. The issuance
of any additional shares of Common Stock would further dilute the percentage
ownership of the Company held by existing stockholders.

Volatility of Stock Price. The Common Stock was listed on the Alberta
Stock Exchange through April 23, 1998 and has been listed on the Nasdaq National
Market since January 26, 1998. Between March 24, 1997 and January 23, 1998, the
Common Stock was listed on the Nasdaq SmallCap Market. Trading in the Common
Stock has been characterized by a high degree of volatility. See "Price Range of
Common Stock." Trading in the Common Stock may continue to be characterized by
extreme volatility for numerous reasons, including the following:

16

o The continued absence of any revenues from the Jig;

o Uncertainty regarding the viability of mining the Tennessee Mineral
Property or the California Mineral Property;

o Continued dominance of trading in the Common Stock by a small
number of firms;

o Positive or negative announcements by the Company or its
competitors;

o Industry trends, general economic conditions in the United States
or elsewhere, or the general markets for equity securities,
minerals, and commodities;

o The announcement of financial or research and development results
that differ from analyst and investor expectations, regardless of
the health of the Company;

o Significant changes in future prospects of the Company; and

o Speculation by short sellers of shares of Common Stock or other
persons who stand to profit from a rapid increase or decrease in
the price of the Common Stock.

Shares Eligible for Future Sales. The resale of "restricted securities"
as well as securities held by "affiliates" of the Company, is generally subject
to the provisions of Rule 144 ("Rule 144") promulgated under the Securities Act
of 1993, as amended (the "Securities Act"). In general, under Rule 144 as
currently in effect, a person (or persons whose shares are aggregated) who has
beneficially owned restricted securities for at least one year (including the
holding period of any prior owner except an affiliate), including persons who
may be deemed "affiliates" of the Company, would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1% of
the number of shares of common shares then outstanding or the average weekly
trading volume of the Common Stock during the four calendar weeks preceding the
filing of a Form 144 with respect to such sale. In addition, a person who is not
deemed to have been an affiliate of the Company at any time during the 90 days
preceding a sale, and who has beneficially owned the shares proposed to be sold
for at least two years (including the holding period of any prior owners except
an affiliate), would be entitled to sell such shares under Rule 144(k) without
regard to the requirements described above. The Company is unable to predict the
effect that future sales under Rule 144 may have on the then prevailing market
price of the Common Stock.

In addition, shares issued upon exercise of options granted
pursuant to the Company's employee stock option plans are presently registered
under the Securities Act. Subject to certain restrictions on resale by
affiliates, such shares may be sold without restriction. The sale of any
substantial number of shares of Common Stock will have a depressive effect on
the market price of the Common Stock.

Absence of Dividends The Company has never declared or paid dividends
on the Common Stock. Moreover, the Company currently intends to retain any
future earnings for use in its business and, therefore, does not anticipate
paying dividends on the in the Common Stock in the foreseeable future.

- --------------------------------------------------------
Risk Factors Primarily Related to Development of the Jig
- --------------------------------------------------------

Capacity Limitations of the Series 12 Jig. To date, the Company has
developed and tested a lower-capacity Series 12 Jig and a higher-capacity Series
30 Jig. Test results on the Series 12 Jig, designed to be capable of processing
approximately 120 tons of solids per day, suggest that commercial use of the
Series 12 Jig is technically feasible. Nevertheless, the designed capacity of
the Series 12 Jig is too small for coal washing, heavy minerals extraction, and
most other intended applications of the Jig, except use in small placer gold
mines or similar operations. Even if the Series 12 Jig performs to design
specifications in subsequent tests or at a commercial facility, the Company
believes that, because of its small capacity, the potential market for the
Series 12 Jig is limited.

Testing Status of the Series 30 Jig--Mineral Sands Processing. The
Series 30 Jig is designed to process approximately 500 tons of solids per day.

17

The Company believes that this designed capacity is sufficient for heavy mineral
sands processing and many other intended commercial applications. Having
completed an initial set of tests on the Series 30 Jig at a heavy minerals sand
processing facility in Northern Florida, the Company hopes that it can begin
marketing the Series 30 Jig for heavy mineral sands recovery during 1999.
Nevertheless, the Company can provide no assurance that the Series 30 Jig will
prove attractive to potential end users. Even if the Company is successful in
leasing the Series 30 Jig to end users, the Company can provide no assurance
that, once installed in uncontrolled operational environments, the Series 30 Jig
will prove efficient, durable, or cost-effective enough to satisfy the
expectations of end users. In addition, the introduction of new technologies by
competitors could render the Series 30 Jig or larger Jig obsolete or
unmarketable or require costly alterations to make it marketable.

Testing Status of the Series 30 Jig--Coal Washing. With respect to coal
washing, the larger volume series 30 Jig has not yet been tested to evaluate its
ability to operate at a commercial production facility. The Company expects to
have installed a Series 30 Jig at an independent coal production facility during
1999, and expects that testing will take a minimum of six months. Depending upon
the results of such testing, the Company hopes to begin marketing the Series 30
Jig for coal washing within three months of the date such testing is complete.
Nevertheless, the test results may indicate that the Series 30 Jig is not
capable of processing the volume of coal it is designed to process or capable of
removing fine pyrite particles and ash from coal fines with acceptable
efficiency or with reasonable maintenance costs. If not, the Company expects
that marketing of the Series 30 Jig for coal washing will be delayed. Moreover,
even if the Series 30 Jig or larger Jig performs to design specifications in a
controlled test in a production facility, the Series 30 Jig may not wash coal
fines in a cost-effective manner outside the test environment, prove
sufficiently durable, or otherwise prove attractive to end users. In addition,
the introduction of new technologies by competitors could render the Series 30
Jig or larger Jig obsolete or unmarketable or require costly alterations to make
it marketable.

Risks Upon Completion of Testing. Although test results from controlled
tests on the Series 30 Jig suggest that it is capable of separating valuable
heavy minerals from mineral sands and removing fine pyrite particles and ash
from coal fines, the Series 30 Jig has not been operated as part of an actual
commercial mineral processing or coal production facility. When integrated into
an actual commercial operations, the Series 30 Jig:

o may not be able to process sand or coal at its design capacity;

o may not recover a commercially valuable end product at a commercial
viable rate when processing mineral sands or coal;

o may break down frequently or otherwise be too costly to operate and
maintain;

o may be displaced or rendered obsolete by the introduction of
competing technologies or jigs and may be incompatible with
developing mining or extraction processes; and

o may be rendered obsolete by the absence of demand for heavy
minerals, coal, or other end product of processing.

Competition From Alternative Technologies. The centrifugal jig process
may not prove superior, either technically or commercially, to alternative
technologies. As explained in "Competition--Alternative Technologies" on page 7,
various mineral processing technologies perform many functions similar or
identical to those for which the Jig is designed. The Company believes that, in
certain applications, the Jig may prove more efficient, cost effective, or
adaptable than spirals and cones, froth flotation devices, or heavy media
separation devices. Nevertheless, results from further tests or actual
operations may reveal that these alternative technologies are better adapted to
any or all of the uses for which the Jig is intended. Moreover, regardless of
test results, consumers may view any or all of such alternative technologies as
technically superior to, or more cost effective than, the Jig.

Competition From Other Jig-like Products. The Company believes that the
Jig currently faces several forms of competition in the commercial segregation
of dense particles contained in feeds between 150 and 400 mesh, including the
Kelsey Jig, Falcon concentrators and the Knelsen batch concentrator unit, which
are currently being used worldwide. See "Factors That May Affect Future
Results--Competing Products and Alternative Technologies." Another centrifugal
jig device, the Kelsey jig, has been developed in Australia subsequent to the
invention of the Jig. According to the Kelsey jig's manufacturer, Geo Logics

18

Pty. Ltd., Kelsey jigs are in service at 20 plants worldwide. In addition,
Falcon, a Canadian company, produces a small batch concentrator as well as a
machine which is used mainly for pre-concentration and scavenging. Their
principal applications to date have been in the gold and tantalum industries.
There also exists a batch concentrator known as the Knelsen Bowl. Knelsen units
have been installed in various mining applications, primarily gold, throughout
the world. Competitors, many of whom may have significant capital and resources,
may develop, or be in the process of developing, superior or less expensive
alternatives to the Jig.

Dependence on Commodities Markets. If the Jig is successfully developed
and manufactured, the Company intends to use the Jig, or lease the Jig for use,
to separate and recover valuable, heavy mineral particles. Active international
markets exist for gold, titanium, zircon, and many other minerals potentially
recoverable with the Jig. Prices of such minerals fluctuate widely and are
beyond the control of the Company. A significant decline in the price of
minerals capable of being extracted by the Jig could have significant negative
effect on the value of the Jig. Similarly, a significant decline in the price of
minerals being produced or expected to be produced on the Tennessee Mineral
Property or California Mineral Property could have a significant negative effect
on the viability of a mine or processing facility on either such property. In
addition, because the Company intends to market the Jig primarily to mining
companies, a general economic downturn in the mining or mineral industries may
have a material adverse effect on the Company.

Dependence on Third Party Manufacturers. The Company currently
contracts on a per-unit basis with a machine shop located in central Tennessee
for assembly of the Jig but has no long-term contract with such entity. If the
Company completes testing of the Jig and develops a final production model, the
Company does not currently have the know-how or resources to establish its own
manufacturing facility. Management is considering options for manufacture of the
Jig, including manufacturing under a long-term contract or through an exclusive
licensing arrangement or joint venture. The Company may not be able to obtain
adequate manufacturing capacity. Moreover, even if a manufacturer is found, it
may not be able to cost-effectively produce affordable, high-quality units
capable of sustaining continuous operations with low maintenance costs in a
production environment.

Patents for the Centrifugal Jig. Initial patents on the Jig have been
issued in the United States, South Africa, United Kingdom, Australia and Canada.
These patents expire on various dates between May 1999 and December 2000. A
series of second patents have been issued with respect to a critical component
of the Jig in the United States, South Africa, Japan, Europe, Australia, Canada,
United Kingdom, Germany and France. These patents expire on various dates
between January 2010 and January 2011. The Company filed an application in the
United States seeking a third patent for a recently developed component of the
Jig on May 15, 1997. Patents on the same component have been issued in Europe,
Australia, Japan, South Africa, Canada and Brazil with expiration dates between
April and November 2018.

The Company can provide no assurance that pending patent
applications will be granted. In addition, persons in countries in which the
Company has not patented the Jig or certain critical components may develop and
market an infringing product. The cost of enforcing patents outside of North
America, and similar obstacles, may limit the Company's ability to enforce its
patents and keep infringing products out of the market for the Jig.

- ------------------------------------------------------------------------
Risk Factors Primarily Related to Development of the Minerals Properties
- ------------------------------------------------------------------------

Exploratory Stage of Development--Tennessee Mineral Property.
The Tennessee Mineral Property is currently in the exploratory stage. An
independent consultant hired by the Company has completed a pre-feasibility
study on the Tennessee Mineral Property, which study concludes sands on the
Tennessee Mineral property contain commercial quantities of heavy minerals. The
preliminary study further concludes that the sands can be economically mined to
produce commercial grade products and that established markets exist for such
products. Based on these results, the Company has determined to commence a
feasibility study of the Tennessee Mineral Property.

19

The feasibility study, commenced during August 1998, will involve the
actual design, pricing, and analysis of equipment and facilities that would be
used to mine the Tennessee Mineral Property. The Company expects that
completion of a feasibility study will take 12-18 months and that, if the
feasibility study suggests that cost-effective mining of the Tennessee Mineral
Property is feasible, a mine would not be operational for 24-36 months after
completion of the study. The pre-feasibility testing or the feasibility study
may indicate that the Tennessee Mineral Property does not contain minable
quantities of heavy minerals or that such deposits are not amenable to
large-scale, low-cost mining, as contemplated by the Company. Even if the
testing and studies suggest that mining is economically feasible on the
Tennessee Mineral Property, the Company can provide no assurance that it will be
able to obtain the capital, resources, and permits necessary to mine the
Tennessee Mineral Property. Moreover, market factors, such as a decline in the
price of, or demand for, minerals recoverable at the Tennessee Mineral Property,
may adversely affect the development of mining operations on such property.

Uncertainty of Obtaining Environmental Permits for the Tennessee
Mineral Property. In order to begin construction and mining on the Tennessee
Mineral Property, the Company may have to obtain a number of federal, state, and
local permits, none of which the Company has obtained. Because the Company has
not yet commenced design of a mining facility in the Tennessee Mineral Property,
the Company is not in a position to definitively ascertain which federal, state
and local mining and environmental laws or regulations would apply to a mine on
the Tennessee Mineral Property. Nevertheless, the Company anticipates that
compliance with the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act, and the Comprehensive Environmental Response
Compensation Liability Act would be necessary if the Company determined to
commence construction and operation of a mine on the Tennessee Mineral Property.
See "--Government Regulation."

In addition to these federal laws and regulations, the Company
anticipates that, if the Tennessee Property is developed, the Company will be
required to obtain a surface mining permit from the State of Tennessee under the
Tennessee Mineral Surface Mining Law of 1972. The application for such a permit
must be preceded by public notice and must include, among other things, a filing
fee, a reclamation and revegetation plan, and a bond to cover the costs of
reclamation. Moreover, absent definitive plans for a mining operation on the
Tennessee Mineral Property, the Company cannot determine what such operation's
water needs or discharge levels would be. Nevertheless, the Company anticipates
that it will be required to obtain a water discharge permit under the Tennessee
Water Quality Control Act. The Company can provide no assurance that it will be
able to obtain the federal and state permits necessary to construct and operate
a mine on the Tennessee Mineral Property.

The Company is not aware of any existing local land use restrictions
that would prevent or affect mining operations on the Tennessee Mineral
Property. Nevertheless, in the absence of a detailed plan for a mining operation
on the Tennessee Mineral Property, the Company has not held discussions with
State and local officials regarding land use issues and can provide no assurance
as to their response any proposed mining operation.

Exploratory Stage of Development--California Mineral Property. Altair
acquired leasehold rights to the California Mineral Property during October 1998
and immediately commenced initial testing of the stockpiles located on such
property. Such initial testing involves drilling holes to collect samples for
use in defining the stockpile base and, assuming the analysis of such samples
yields favorable results, experiments regarding the ease with which constituent
heavy minerals--particularly ilmenite--can be separated out and extracted. If
such initial tests suggest that valuable heavy minerals can be cost effectively
extracted, Altair plans to begin designing and pricing the equipment necessary
to process minerals on the California Mineral Property. Assuming Altair is able
to design and obtain all necessary equipment at a reasonable price and in a
timely manner, Altair anticipates that mineral processing operations on the
California Mineral Property would commence as early as the end of 1999 or the
first quarter of 2000. Nevertheless, the initial testing may reveal that the
stockpiles on the California Mineral Property do not contain a sufficient volume
or density heavy minerals or that constituent valuable heavy minerals can not be
cost effectively extracted. Even if the testing suggests that mineral processing
is economically feasible, Altair may be unable to obtain necessary equipment at
the projected price, and the revenues generated by such mineral processing may
be insubstantial. Moreover, the Company may be unable to obtain the capital,
resources, and permits necessary to process minerals on the California Mineral
Property, and market factors, such as a decline in the price of, or demand for,
minerals recoverable at the California Mineral Property, may adversely affect
the development of mineral processing operations on such property.

20

Absence of Detailed Plans for the California Mineral Property. The
Company is not aware of specific circumstances which would significantly delay,
or increase the cost of, developing the California Mineral Property; however,
the Company has not obtained sufficient mineral and economic feasibility

information to develop definitive

plans with respect to the precise design and nature of mineral processing
operations, if any, on the California Mineral Property. The specific details of
such plans will largely determine the cost and difficulty of complying with
governing environmental and land use laws. Significant factors the Company has
not explored include the following:

o The Company has not commenced any of the environmental,
cultural, and other studies required by governing
environmental and regulatory laws. Such studies are designed
to reveal the existence of factors that may increase the cost
and difficulty of obtaining necessary permits and approvals.

o The Company has not reviewed State of California or local
environmental or land use laws to determines what permits
would be necessary to conduct mineral processing operations on
the California Mineral Property or what restrictions may
increase the cost of, or prevent, planned mineral processing
activities. In general, land use and environmental
restrictions in California are strict and may be cost
prohibitive.

o Absent definitive plans for a mineral processing operation on
the California Mineral Property, the Company cannot determine
what such operation's water needs or discharge levels would
be. Depending on the nature of water use at the proposed
mineral processing site, the Company may be required to obtain
a water discharge permit under California's water control
laws.

Uncertainty of Obtaining Environmental Permits for the California
Mineral Property. In order to begin processing the stockpiles on the California
Mineral Property, the Company may have to obtain a number of federal, state, and
local permits, none of which the Company has obtained. Because the Company has
not yet commenced design of a mineral processing facility, the Company is not in
a position to definitively ascertain which federal, state and local mining and
environmental laws or regulations would apply to a mineral processing facility
on the California Mineral Property. Nevertheless, the Company anticipates that
compliance with the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation Liability Act, and applicable state and local laws would be
necessary if the Company determined to commence construction and operation of a
mineral processing facility on the California Mineral Property. See
"--Government Regulation."

Environmental Liability on Mineral Properties. Any proposed mining or
processing operation on the Tennessee Mineral Property, the California Mineral
Property, or any other property acquired by the Company will be subject to
federal, state, and local environmental laws. Under such laws, the Company may
be jointly and severally liable with prior property owners for the treatment,
cleanup, remediation, and/or removal of substances discovered on either of the
Mineral Properties or any other property used by the Company, which are deemed
by the federal and/or state government to be toxic or hazardous ("Hazardous
Substances"). Courts or government agencies may impose liability for, among
other things, the improper release, discharge, storage, use, disposal, or
transportation of Hazardous Substances. The Company might use Hazardous
Substances and, although the Company intends to employ all reasonably
practicable safeguards to prevent any liability under applicable laws relating
to Hazardous Substances, Companies engaged in mineral exploration and processing
are i