-----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, DqLP63M1MjKW6BzoKRUcmbFe1Nn/wcE972BUQMcE8OokKKCplrEQQ0Oaeo+wRLd5 YaDJCTwyKV4or2qG8Y5PHQ== 0000731727-98-000022.txt : 19980720 0000731727-98-000022.hdr.sgml : 19980720 ACCESSION NUMBER: 0000731727-98-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980531 FILED AS OF DATE: 19980714 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: 98665723 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 FORM 10-Q 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 May 31, 1998 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 98-0045034 - ------------------------ ---------- (State or other jurisdiction of (I.R.S. Employer I.D. No.) incorporation or organization) Suite 505, 1111 West Georgia Street Vancouver, British Columbia, Canada V6E 4M3 (604) 689-1535 - ------------------------------------------- -------------- (Address of Principal Executive Offices) (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 June 24, 1998 - -------------------- ---------------------------- (Common stock (npv)) 8,951,222 SILVERADO GOLD MINES LTD. CONSOLIDATED BALANCE SHEETS EXPRESSED IN U.S. DOLLARS
As at May 31, November 30, 1998 1997 ------------- ------------- Assets Current Assets Cash and cash equivalents $ 16,022 $ 20,914 Gold inventory (Note 2) 23,990 48,875 Accounts receivable 10,000 8,297 Prepaid expenses paid to related parties 681,188 366,303 ------------- ------------- 731,200 444,389 Mineral Properties and Development Claims and options 2,509,731 2,436,972 Deferred exploration and development expenditures 13,508,923 13,576,470 ------------- ------------- 16,018,654 16,013,442 Less accumulated amortization (1,384,338) (1,384,338) ------------- ------------- 14,634,316 14,629,104 Buildings, Plant and Equipment 3,470,207 4,481,399 Less accumulated depreciation (1,279,159) (1,385,423) ------------- ------------- 2,191,048 3,095,976 Deferred Financing Fees (net of amortization of $142,838: 1997-$124,238) 43,162 61,762 ------------- ------------- $ 17,599,726 $ 18,231,231 ============= ============= Liabilities and Shareholders' Equity Current Liabilities Accounts payable and accrued liabilities (Note 5) $ 633,694 $ 597,478 Capital lease obligations - current -- 81,749 ------------- ------------- 633,694 679,227 Long Term Liabilities Capital lease obligations -- 9,741 Convertible debenture (Note 7) 2,000,000 2,000,000 ------------- ------------- 2,000,000 2,009,741 Shareholders' Equity Share capital (Note 6) Issued and outstanding: May 31, 1998 - 8,551,222 shares 44,143,420 43,084,420 November 30, 1997 - 8,001,222 shares Unamortized stock compensation expense (44,797) (151,612) Advances to related parties secured by common shares in the company (16,195) (480,236) Deficit (29,116,396) (26,910,309) ------------- ------------- 14,966,032 15,542,263 ------------- ------------- $ 17,599,726 $ 18,231,231 ============= ============= See accompanying notes to consolidated financial statements.
SILVERADO GOLD MINES LTD. CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT EXPRESSED IN U.S. DOLLARS
Six Months Ended May 31, May 31, 1998 1997 --------------- --------------- Revenue from gold sales $ 25,542 $ 77,482 Less mining and processing costs 26,884 44,835 --------------- --------------- Gain (loss) from Operations (1,342) 32,647 Employment contract expense 448,315 1,225,682 Administrative Expenditures 1,756,430 1,063,420 Loss for the period (2,206,087) (2,256,455) Accumulated deficit at beginning of the period (26,910,309) (22,495,537) --------------- --------------- Accumulated deficit at end of the period $ (29,116,396) $ (24,751,992) =============== =============== Loss per share $ (0.27) $ (0.40) =============== =============== See accompanying notes to consolidated financial statements.
Three Months Ended May 31, May 31, 1998 1997 --------------- --------------- Revenue from gold sales $ 11,819 $ 19,580 Less mining and processing costs 10,652 21,921 --------------- --------------- Gain (loss) from Operations 1,167 (2,341) Employment contract expense 384,321 154,992 Administrative Expenditures 1,298,748 490,440 Loss for the period (1,681,902) (647,773) Accumulated deficit at beginning of the period (27,434,494) (24,104,219) --------------- --------------- Accumulated deficit at end of the period $ (29,116,396) $ (24,751,992) =============== =============== Loss per share $ (0.20) $ (0.20) =============== =============== See accompanying notes to consolidated financial statements.
SILVERADO GOLD MINES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS EXPRESSED IN U.S. DOLLARS
Six Months Ended May 31, May 31, 1998 1997 -------------- -------------- CASH PROVIDED BY (USED FOR): Operations: Loss for the year $ (2,206,087) $ (2,256,455) Items not involving cash: Employment contract expense 448,315 1,063,420 Depreciation 243,134 233,331 Amortization of deferred financing fees 18,600 18,600 Loss on disposal of buildings, plant and equipment 51,715 -- Changes in non-cash operating working capital: Increase in accounts receivable (1,703) (3,973) Decrease in gold inventory 24,885 44,129 Increase in prepaid expenses paid to related parties (314,885) (667,148) Increase (decrease) in accounts payable and accrued liabilities 36,215 50,179 -------------- -------------- (1,699,811) (1,517,917) Financing: Shares issued for cash 258,500 1,560,470 Shares issued for consulting services 75,000 -- Decrease in payable to related parties 464,041 -- Decrease in loans payable secured by gold inventory -- (66,511) Decrease in mineral claims payable -- (120,000) Decrease in capital lease obligation (91,490) (17,155) -------------- -------------- 706,051 1,356,804 Investments: Mineral claims and options 61,241 54 Deferred exploration and development expenditures 317,547 (1,168,352) Proceeds from sale of equipment 611,300 -- Purchases of equipment (1,220) (55,345) -------------- -------------- 988,868 (1,223,643) Increase (decrease) in cash and cash equivalents (4,892) (1,384,756) Cash and cash equivalents at beginning of the period 20,914 1,925,469 -------------- -------------- Cash and cash equivalents at end of the period $ 16,022 $ 540,713 ============== ============== Supplemental cash flow information Interest paid $ 80,000 $ 80,000 ============== ============== Issue of shares for purchase of mineral property, a non-cash financing and investing activity $ 384,000 $ -- ============== ============== See accompanying notes to consolidated financial statements.
SILVERADO GOLD MINES LTD. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (EXPRESSED IN U.S. DOLLARS) (UNAUDITED) MAY 31, 1998 1. Basis of Presentation The financial information at May 31, 1998 and for the three month period ended May 31, 1998 and May 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 three month period ended May 31, 1998 are not necessarily indicative of the results to be expected for the full year. 2. Gold Inventory Gold inventory is valued at the lower of weighted average cost or estimated net realizable value. At May 31, 1998 and May 31, 1997, gold is valued at net realizable value. 3. Mineral Properties (a) On January 30, 1998, the Company completed an Exploration and Development Option Agreement with Placer Dome U.S. Inc. ("Placer Dome") with respect to a 20.5 square mile portion of its Barelka / May and Range Minerals properties on Ester Dome. This agreement provides for Placer Dome to perform up to $10 million of work on the subject claims over a five-year period, and to purchase up to 400,000 shares of the Company's stock at an aggregate price of $5,450,000 over a four year period. (b) On December 19, 1997, the Company entered into an option agreement to purchase the Ryan Lode property from La Teko Resources Ltd. for a total purchase price of $12,000,000. The Company issued 100,000 shares of its common stock as partial consideration under this agreement. On March 26, 1998, the Company notified La Teko Resources Ltd. that it was electing to terminate its option relating to the Ryan Lode Property. Accordingly, previously capitalized drilling costs totally $743,016 were written off during the quarter. (c) During the first quarter the Company received a waiver and extension of its December 1997 royalty payment to the Alaska Mining Company Inc., with respect to the Company's Hammond River claims. 4. Buildings Plant and Equipment Buildings, plant and equipment are stated at cost. Depreciation is provided on buildings, plant and equipment using the straight-line method based on estimated lives of 3 to 20 years. 5. Accounts Payable Accounts payable and accrued liabilities are delineated in the following table: MAY 31, NOVEMBER 30, 1998 1997 ----------- ----------- Accounts payable $ 413,714 $ 334,812 Accrued interest 66,666 66,666 Accrued reclamation expenses 153,314 196,000 ----------- ----------- $ 633,694 $ 597,478 =========== =========== 6. Share Capital (a) Common Shares.Authorized:100,000,000 common shares, without par value. (b) Reverse Stock Split and Increase in Authorized Shares. On May 11, 1998, at the Company's Annual General Meeting the shareholders approved a reverse stock split of one for ten shares and approved an increase in the Company's authorized shares to 100,000,000 common shares. (c) Directors Options. The Company has reserved 347,500 common shares for issuance, exercisable until August 14, 2004, in accordance with the terms and conditions of its December 12, 1994, Stock Option Plan; and 45,000 common shares for issuance, exercisable until June 1, 2002, in accordance with the terms and conditions of its June 1, 1992, Stock Option Plan. The Company accounts for stock compensation arising from options to directors in accordance with APB 25, "Accounting for Stock Issued to Employees". (d) 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 Statement of Financial Standards No. 123, "Accounting for Stock Based Compensation". Under this statement, stock compensation cost to contract employees is measured at the grant date of the stock option based on the value of the award and is recognized over the service period. (e) Warrants. In connection with the private placement of common shares the Company has outstanding at May 31, 1998, warrants for 89,200 common shares exercisable until September, 1998; warrants for 36,000 common shares exercisable until October, 1998; warrants for 100,000 common shares exercisable until August, 1999; warrants for 55,000 common shares exercisable until September, 1999 and warrants for 250,000 common shares exercisable until March 22, 2000. (f) Other Share Transactions. The Company issued 100,000 of its common shares to La Teko Resources Ltd. in consideration for an extension of its payment obligations with respect to the Ryan Lode property. The Company has reserved 107,700 common shares for issuance upon the potential conversion of a convertible debenture; 110,000 common shares for issuance with respect to a potential purchase of property; and has agreed to grant options to purchase 50,000 of its common shares, exercisable until September 5, 1999, to Millennium Holdings Group Inc. as partial consideration for a consulting agreement. The Company issued 70,000 common shares with respect to its renegotiation of the Range Minerals II and Burggraf agreements, precedent to executing an agreement with Placer Dome. On March 23, 1998, the Company entered into an agreement with IBK Capital Corporation to redeem one-half of an outstanding warrant for 100,000 shares exercisable at $4.20 per share until April 2, 1999 in consideration for the issuance of new warrants for 500,000 shares exercisable at $2.20 per share until March 22, 1999; a warrant for 250,000 shares exercisable at $1.00 per share until June 22, 1998; and a warrant for 250,000 shares exercisable at $1.00 immediately. 7. Convertible Debenture In July, 1994, the Company issued a convertible callable debenture with interest payable at the rate of 8.0% per annum on December 31 and June 30 each year. The debenture 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 a conversion price of $1.857 U.S. per share (the "Conversion Price"), subsequently modified to $18.57 as a result of the Company's 1/10 "reverse stock split" approved May 11, 1998. In addition, conversion of the debenture may be called by the Company provided that the average trading price of the Company's common stock has exceeded 125% of the Conversion Price for the period of 20 consecutive trading days. Financing fees paid related to the debenture have been deferred and are being amortized on a straight line basis over the debenture term of 60 months. The Company completed payment of the December 31, 1997 interest installment on March 25, 1998. 8. 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. 9. Subsequent Events On June 22, 1998, the Company completed a Reg D private placement for 400,000 units at $0.20 for a total of $80,000. A unit consisted of one share and one half warrant. The warrants are exercisable until June 23, 2000 at an exercise price of $0.25. 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. Six Months 1998 v. 1997 - ----------------------- The Company continued to engage in limited exploration activities during the second quarter of 1998. It received some revenue from sales of existing gold inventory, but received most of its cash from sale of equipment and from the partial execution of a warrant for its common shares. Current assets increased to reflect advances to its contractor during the quarter, while Buildings, Plant and Equipment were reduced reflecting the equipment sale. Current liabilities decreased as a function of a repayment of the capital lease. Long term liabilities decreased as a result of the capital lease repayment, leaving the Company's $2 million convertible debenture. Employment contract expense was reduced substantially reflecting the fact that the Company has now absorbed most of the cost of previously issued contracts (see Note 6(d)). Administrative expenses increased primarily as a result of writing off previously capitalized drilling costs totally $743,016 associated with the Ryan Lode. Liquidity and Capital Resources at May 31, 1998 - ----------------------------------------------- During the first six months of 1998 the Company received cash from sale of equipment, from the partial execution of a warrant, and from the proceeds of a 250,000 share private placement. Also it eliminated the remainder of its long-term lease obligations, thereby reducing its debt portfolio to its convertible debenture and its on-going trade payables. At May 31, 1998, the Company's cash position remained relatively unchanged at $16,022 as it continued to incur limited expenses. The Company completed payment of the December 31, 1997, semi-annual interest installment on March 25, 1998. Results of Operations - --------------------- (a) Ester Dome Gold Project The Company completed an agreement with Placer Dome U.S. Inc. ("Placer Dome") granting Placer Dome an option to explore 20.5 miles of the Ester Dome project. The optioned claims include the Rhyolite and Ready Bullion targets, but exclude the St. Paul gold deposit, and the Grant Mine and Mill. The Company intends to continue investigation of the St. Paul gold deposit, subject to the availability of financing. (b) Ryan Lode Gold Project The Company issued 100,000 to La Teko Resources Ltd. ("La Teko") as consideration for deferring its payment obligations with respect to this project. However, the Company found it necessary to drop its purchase option due to the excessive drop in gold prices and the significant reclamation expenses associated with the property. (c) Nolan Gold Project At the Nolan Gold Project in northern Alaska, the Company completed a number of reclamation activities. The Company intends to resume development of both placer and lode gold deposits at Nolan, subject to the availability of financing. (d) Other Properties The Company continued to maintain its other properties in good standing, pending further exploration and development, subject to the availability of financing. OTHER INFORMATION Item 4 Submission of Matters to Vote of Security Holders. - ------ -------------------------------------------------- The Annual General Meeting of Shareholders was held on May 11, 1998. Results of the voting were as follows: (a) Election of Directors In Favor Against Withheld --------------------- -------- ------- -------- Garry L. Anselmo 63,630,494 nil 989,026 K. Maxwell Fleming 64,085,454 nil 544,066 James F. Dixon 64,066,938 nil 562,582 (b) KPMG as Auditors In Favor Against Withheld ---------------- -------- ------- -------- 65,170,724 1,502,979 313,600 (c) Reverse Stock Split* In Favor Against Withheld -------------------- -------- ------- -------- 57,586,122 9,420,874 47,443 (d) Increase Authorized Share 100,000** ----------------------------------- In Favor Against Withheld -------- ------- -------- 53,262,036 13,753,878 56,631 *973,069 shares not voted **80,757 shares not voted Item 5 Other Information. - ------ ------------------ None. Item 6 Exhibits and Reports on Form 8-K. - ------ --------------------------------- Exploration and Development Option Agreement between Silverado Gold Mines Ltd., Silverado Gold Mines Inc., and Placer Dome U.S. Inc. filed April 14, 1998. The Company filed Current Reports on Form 8-K on December 19, 1997 and January 28, 1998. - -------------------------------------------------------------------------------- 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 FDS 5/31/98
5 6-mos NOV-30-1998 DEC-01-1997 MAY-31-1998 16,022 0 691,188 0 23,990 731,200 3,470,207 (1,279,159) 17,599,726 633,694 0 0 0 44,143,420 (29,177,388) 17,599,726 25,542 25,542 26,884 26,884 2,204,745 0 0 (2,206,087) 0 0 0 0 0 (2,206,087) (0) 0
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