-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q1zT3S10C3vaDf0h9Jqw3eT4o0Rir9w5RXziPn2V8YuxJVtgjYtxOZJY1A/rPP15 QJh7ahyQy0kSGp4Wa2SHhw== 0000731727-97-000012.txt : 19971015 0000731727-97-000012.hdr.sgml : 19971015 ACCESSION NUMBER: 0000731727-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970831 FILED AS OF DATE: 19971014 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SILVERADO GOLD MINES LTD CENTRAL INDEX KEY: 0000731727 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 980045034 FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12132 FILM NUMBER: 97695321 BUSINESS ADDRESS: STREET 1: SUITE 505 1111 WEST GEORGIA ST STREET 2: STE 505 CITY: VANCOUVER BC CANADA STATE: A1 BUSINESS PHONE: 6046891535 MAIL ADDRESS: STREET 1: 1111 WEST GEORGIA STREET STREET 2: STE 505 CITY: VANCOUVER BC STATE: A1 FORMER COMPANY: FORMER CONFORMED NAME: SILVERADO MINES LTD DATE OF NAME CHANGE: 19940722 10-Q 1 QUARTERLY REPORT FORM 10Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED August 31, 1997. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission file number 0-12132 SILVERADO GOLD MINES LTD. ------------------------- (Exact name of registrant as specified in its charter) British Columbia, Canada ------------------------ (State or other jurisdiction of incorporation or organization) 98 -0045034 ----------- (I.R.S. Employer I.D. No.) Suite 505, 1111 West Georgia Street Vancouver, British Columbia, Canada V6E 4M3 ------------------------------------------- (Address of Principal Executive Offices) (604) 689-1535 -------------- (Registrant's telephone number) - -------------------------------------------------------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 13(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for a 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at September 24, 1997 - -------------------- --------------------------------- (Common stock (npv)) 70,967,493
SILVERADO GOLD MINES LTD. CONSOLIDATED BALANCE SHEETS As at EXPRESSED IN U.S. DOLLARS August 31 November 30 1997 1996 ------------- ------------- Assets Current Assets Cash and cash equivalents $ 90,471 $ 1,925,469 Gold inventory (Note 2) 83,342 213,004 Accounts receivable 22,289 11,265 Prepaid expenses to related parties 430,617 479,959 Receivable from related parties 770,425 -- Deferred employment contract expense -- 350,000 ------------- ------------- 1,397,144 2,979,697 Mineral Properties and Development Claims and options 2,326,971 2,327,025 Deferred exploration and development expenditures 13,088,532 11,286,816 ------------- ------------- 15,415,503 13,613,841 Less accumulated amortization (1,384,338) (1,384,338) ------------- ------------- 14,031,165 12,229,503 Building, Plant and Equipment 4,474,278 4,423,428 Less accumulated depreciation (1,273,262) (920,246) ------------- ------------- 3,201,016 3,503,182 Deferred Financing Fees 71,062 98,962 (net of amortization of $114,938, 1996 - $87,038) ------------- ------------- $ 18,700,387 $ 18,811,344 ============= ============= Liabilities and Shareholders' Equity Current Liabilities Accounts payable and accrued liabilities (Note 4) $ 377,425 $ 351,154 Loans payable secured by gold inventory -- 66,511 Loans payable unsecured 15,000 -- Current portion of mineral claims payable -- 179,000 Capital lease obligations - current 30,310 64,939 ------------- ------------- 422,735 661,604 Long Term Liabilities Capital lease obligations 92,214 92,214 Convertible debenture (Note 6) 2,000,000 2,000,000 ------------- ------------- 2,092,214 2,092,214 Shareholders' Equity Share capital (Note 5) Authorized: 100,000,000 common shares Issued and outstanding: August 31, 1997 - 68,376,493 shares 41,660,366 38,553,063 November 30, 1996 - 56,406,493 shares Deficit (25,474,928) (22,495,537) ------------- ------------- 16,185,438 16,057,526 ------------- ------------- $ 18,700,387 $ 18,811,344 ============= =============
See accompanying notes to consolidated financial statements
SILVERADO GOLD MINES LTD. CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT EXPRESSED IN U.S. DOLLARS Nine Months Ended August 31 August 31 1997 1996 ------------- ------------- Revenue from gold sales $ 141,772 $ 209,278 Mining and processing costs (130,368) (157,007) Amortization of property and development costs -- (32,413) ------------- ------------- Income from Operations 11,404 19,858 Administrative Expenditures 1,857,042 1,272,965 Employment contract expense (Note 5c) 1,133,753 2,291,471 ------------- ------------- Loss for the period (2,979,391) (3,544,578) Accumulated deficit at beginning of period (22,495,537) (18,165,277) ------------- ------------- Accumulated deficit at end of period $ (25,474,928) $ (21,709,855) ============= ============= Loss per share $ (0.046) $ (0.085) ============= =============
See accompanying notes to consolidated financial statements
Three Months Ended August 31 August 31 1997 1996 ------------- ------------- Revenue from gold sales $ 64,290 $ 110,630 Mining and processing costs (85,533) (77,889) Amortization of property and development costs -- (32,413) ------------- ------------- Income (loss) from Operations (21,243) 328 Administrative Expenditures 631,360 471,584 Employment contract expense (Note 5c) 70,333 634,693 ------------- ------------- Loss for the period (722,936) (1,105,949) Accumulated deficit at beginning of period (24,751,992) (20,603,906) ------------- ------------- Accumulated deficit at end of period $ (25,474,928) $ (21,709,855) ============= ============= Loss per share $ (0.007) $ (0.025) ============= =============
See accompanying notes to consolidated financial statements
SILVERADO GOLD MINES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS EXPRESSED IN U.S. DOLLARS Nine Months Ended August 31 August 31 1997 1996 ------------- ------------- CASH PROVIDED BY (USED FOR): Operations: Loss for the period $ (2,979,391) $ (2,438,629) Items not involving cash: Employment contract expense 1,133,753 1,656,778 Depreciation 353,016 100,281 Amortization of deferred financing fees 27,900 18,600 Changes in non-cash operating working capital: Increase in accounts receivable (11,024) (7,255) Increase in receivable from related parties (770,425) -- Decrease in gold inventory 129,662 79,118 Decrease (increase) in prepaid expenses from related parties 49,342 40,490 Increase (decrease) in accounts payable and accrued liabilities 64,108 (150,531) ------------- ------------- (2,003,059) (701,148) Financing: Shares issued for cash 2,285,713 2,830,000 Increase in unsecured loan 15,000 100,000 Decrease in loans payable secured by gold inventory (66,511) (36,516) Decrease in payable to related parties -- (829,723) Decrease in mineral claims payable (179,000) (211,000) Decrease in capital lease obligation (34,629) (84,173) ------------- ------------- 2,020,573 1,768,588 Investments: Mineral claims and options 54 (60,000) Deferred exploration and development expenditures (1,801,716) (301,014) Purchases of equipment (50,850) (3,413) ------------- ------------- (1,852,512) (364,427) Increase (decrease) in cash and cash equivalents (1,834,998) 703,013 Cash and cash equivalents at beginning of period 1,925,469 155,849 ------------- ------------- Cash and cash equivalents at end of the period $ 90,471 $ 858,862 ============= ============= Supplemental cash flow information Interest paid $ 80,000 $ 80,000 ============= =============
See accompanying notes to consolidated financial statements SILVERADO GOLD MINES LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (EXPRESSED IN U.S. DOLLARS) (UNAUDITED) AUGUST 31, 1997 1. Basis of Presentation The financial information at August 31, 1997, and for the nine month period ended August 31, 1997 included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods. These consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States. The results of operations for the nine month period ended August 31, 1997 are not necessarily indicative of the results to be expected for the full year. 2. Inventories Gold inventory is valued at the lower of weighted average cost or estimated net realizable value. 3. Deferred Production Expenditures Costs associated with waste removal and preparation for gold recovery are deferred and charged to production on a unit of production basis. 4. Accounts Payable Accounts payable and accrued liabilities consists of: AUGUST 31, NOVEMBER 30, 1997 1996 ----------- ----------- Accounts payable 287,420 118,858 Accrued interest 26,666 64,065 Accrued employment contract expense (Note 5c) 60,394 98,231 Accrued reclamation expenses 2,945 70,000 ----------- ----------- $ 377,425 $ 351,154 =========== =========== 5. Share Capital (a) Common Shares. Authorized: 100,000,000 common shares, without par value. (b) Directors Options. The Company has reserved 3,475,000 shares for issuance, exercisable until August 14, 2004, in accordance with the terms and conditions of its December 12, 1994, Stock Option Plan; and 450,000 shares for issuance, originally exercisable until June 1, 1997 but subsequently extended to June 1, 2002, in accordance with the terms and conditions of its June 1, 1992, Stock Option Plan. (c) Employee Options. From time to time, the Company issues options for the purchase of common shares to selected part time independent contract employees as sole compensation for contracted services in accordance with the terms and conditions of its April 20, 1994, Stock Option and Stock Bonus Plan. The Company accounts for compensation arising from these options in accordance with APB 25. If the market price of the Company's shares exceed the exercise price of the options at the date the options are granted, then this excess is accrued and expensed over the term of the employment contracts, on a straight line basis. When the options are exercised, share capital is credited based on the market price at the date the options were granted. The Company has reserved 304,750 shares for issuance, exercisable until October 21, 1998, in accordance with the terms and conditions of this plan. (d) Warrants and Forward Commitments. The Company has reserved a total of 4,200,000 shares for issuance with respect to a warrant for 600,000 shares exercisable until March 6, 1998; a warrant for 2,000,000 shares exercisable until April 3, 1999; a warrant for 1,000,000 shares exercisable until August 22, 1999; and a warrant for 600,000 shares exercisable until September 6, 1999. (e) Other Share Transactions. The Company has reserved 1,000,000 shares for issuance upon the potential conversion of a convertible debenture, and 709,725 shares for issuance under the terms of its 14-for-13 forward stock split of May 21, 1997. The Company has also reserved 1,100,000 shares with respect to its outstanding offer to purchase the assets and liabilities of Kintana Resources Ltd. 6. Convertible Debenture In July, 1994, the Company issued an 8% convertible callable debenture which is unsecured and is due July 2, 1999, subject to prior redemption or conversion. The debenture may be converted in whole or in part by the holder into common shares of the Company at an original Conversion Price of $2.00 U.S. per share (the "Conversion Price"), subsequently modified to $1.857 as a result of the Company's 14/13 "forward stock split" approved May 21, 1997. In addition, the Company may require the holder to convert the debenture at the Conversion Price, in whole or in part, if the average market price of the Company's shares has exceeded 125% of the Conversion Price for a period of 20 consecutive trading days. Financing fees paid related to the debenture have been deferred are being amortized on a straight line basis over the five year term of the debenture. 7. Commitments and Contingencies The Company has a lease agreement for office premises for a term of 10 years commencing April 1, 1994, with an approximate annual rate of $120,000 (Cdn.) including operating costs. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain factors which have significantly affected the Company's financial position and operating results during the period included in the accompanying condensed consolidated financial statements. Nine Months 1997 v. 1996 - ------------------------ Revenue during the first nine months of 1997 was received from the on-going sale of gold from the Company's existing gold inventory, though the majority of the Company's cash was raised through equity funding of its activities by the issuance of 3,500,000 additional shares of its stock under the provisions of Regulation "S". Current liabilities continued to decrease from $661,604 and are now at $422,735, primarily as a function of a reduction in the current portion of mineral claims payable as the Company paid off its remaining obligations on the Nolan Gold Property Current assets decreased from $2,979,697 to $1,397,144 as a function of the Company's continued commitment of resources to its drilling and exploration programs on its Fairbanks, Alaska, properties - a process begun a year earlier. In particular, the Company focused its resources on its "due diligence" investigation of the Ryan Lode Gold Property, a prospective acquisition stated to contain 742,500 ounces of proven gold reserves. Prepaid expenses remained relatively constant, representing contractual payments to the Company's principal Alaska contractor to fund the exploration and development work being conducted on the Company's properties near Fairbanks, while receivables from related parties increased as a function of the Company incurring legal expenses on behalf of Kintana Resources Ltd. in anticipation of its purchase of Kintana through issuance of shares (see Note 5 (e)). The Company's long term liabilities consist primarily of a $2,000,000 convertible debenture. Administrative expenditures increased by $584,077 primarily as a result of an increase in management services expense, and an increase in depreciation and amortization charges, attributable to the Grant Mine mill facilities. Employment contract expenses decreased by $1,157,718 as few such contracts were issued (see Note 5 (c)). Liquidity and Capital Resources at August 31, 1997 - -------------------------------------------------- At August 31, 1997, the Company's cash position was reduced to $90,471 as it funded an intensive drilling program on the Ryan Lode Property as part of its "due diligence" investigation. During the quarter it received cash from continued sales of existing gold inventory, and from shares issued in accordance with the provisions of Regulation "S". The Company expects to replenish its cash reserves through the issuance of additional shares in accordance with the provisions of Regulation "D", though it may also vend some of its properties or consider a joint-venture, or similar arrangement, with another company if it is advantageous for it to do so. Results of Operations - --------------------- (a) Ryan Lode Property The Company entered into an agreement with La Teko Resources Ltd. ("La Teko") to complete a $12 million - 5 year buyout of La Teko's Ryan Lode Property, located a mile southwest of the Company's Ester Dome Gold Project in Fairbanks, Alaska. This property, consisting of 63 federal and state claims, contains a known gold reserve of 742,500 proven ounces and 79,500 probable ounces, according to La Teko. The Company believes it is in a unique position to process ore from this property because of the close proximity of its existing mill facilities at the Grant Mine, on Ester Dome. If the Company's due diligence investigation confirms the deposit to the Company's satisfaction and eliminates any environmental concerns, it will issue a notice of acceptance to La Teko that it intends to proceed with acquisition and development of the property. (b) Ester Dome Gold Project At Ester Dome, also near Fairbanks, Alaska, the Company is continuing to define the St. Paul Gold Deposit through drilling and trenching programs. Surface trenching has shown the St. Paul Gold Deposit to be at least 3,000 feet long and open to extension in all directions. Detailed drilling on a 700 foot long section of the deposit has shown intersections of 10 to 125 feet and average gold grades from 0.02 to 0.17 ounces per ton. The Company intends to continue drilling this property for the purpose of proving-up minable gold deposits which it can then put into production. (c) Chatanika Property This property, consisting of 774 mining claims and 24 prospecting sites, was newly staked by the Company in late 1996 in response to aerial and ground anomalies which it observed. The Company plans to continue ground evaluation of these claims during the winter of 1997/98. (d) Nolan Gold Project At the Nolan Gold Project in northern Alaska, the Company completed approximately 30 acres of reclamation, restoring most of the previously disturbed ground. Because the Company's resources are presently fully engaged at the Ryan Lode Property, it has postponed plans to further develop its placer and lode deposits at this location until the spring of 1998. Significantly, and as reported previously, the Company was successful in reducing its cash cost of production (production cost exclusive of depreciation and amortization) at Nolan to $292 per ounce. This reduction was attributable to the amortization of initial start-up costs and the effect of cost cutting measures the Company implemented as it became more knowledgeable of the site. (e) Hammond Property This property, located adjacent to the Company's Nolan Gold Project in northern Alaska, has a history of gold production which the Company plans to further explore and define in the spring of 1998 in conjunction with its activities on the Nolan Gold Project. OTHER INFORMATION Item 5 Other Information: - ------------------------- Subsequent to quarter end, the Company undertook the following actions to replenish its cash reserves: On September 5, 1997, the Company entered into a contract to issue 500,000 of its shares with an option for 500,000 additional shares pursuant to a consulting agreement. During the period of September 8-24 1997, the Company issued 1,371,000 of its shares, at a price of $0.20 per share, to an individual purchaser under the provisions of Rule 506 of Regulation D. The shares were sold for cash with an 8% finders fee payable. On September 9, 1997, the Company renegotiated an outstanding 600,000 share warrant from $0.60 to $0.20, in consideration for immediate exercise of the warrant. - -------------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SILVERADO GOLD MINES LTD. /s/ G.L. Anselmo ------------------------- G.L. Anselmo President / CEO / CFO EX-27 2 8/31/97 FDS
5 9-mos Nov-30-1997 Jun-01-1997 Aug-31-1997 90,471 0 792,714 0 83,342 1,397,144 4,474,278 (1,273,262) 18,700,387 422,735 0 0 0 41,660,366 0 18,700,387 141,772 141,772 130,368 2,990,795 0 0 0 (2,979,391) 0 0 0 0 0 (2,979,391) (0.046) 0
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