10QSB 1 form10qsb.htm QUARTERLY REPORT FOR THE PERIOD ENDED FEBRUARY 29, 2004 Filed by Automated Filing Services Inc. (604) 609-0244 - Silverado Gold Mines Ltd. - Form 10QSB

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

FORM 10-QSB

x  Annual Report Pursuant To Section 13 Or 15(D) Of The Securities Exchange Act Of 1934
For the fiscal year ended FEBRUARY 29, 2004

¨  Transition Report Under Section 13 Or 15(D) Of The Securities Exchange Act Of 1934
For the transition period from _____ to _____

Commission File Number 0-12132

SILVERADO GOLD MINES LTD.
(Name of small business issuer in its charter)

British Columbia, Canada 98-0045034
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification
  No.)
   
Suite 505, 1111 West Georgia Street  
Vancouver, British Columbia, Canada V6E 4M3
(Address of principal executive offices) (Zip Code)
   
(604) 689-1535  
Issuer's telephone number  

NONE.

___________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ¨

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 175,012,171 Shares of no par value Common Stock outstanding as of April 13, 2004.

SILVERADO GOLD MINES LTD.
Consolidated Balance Sheets
(Expressed in United States Dollars)

    February 29,     November 30,  
    2004     2003  
    (unaudited)        
Assets            
Current assets:            
         Cash and cash equivalents $ 786,138   $ 397,290  
         Gold inventory   100,519     100,519  
         Accounts receivable   32,487     23,093  
    919,144     520,902  
             
Exploration and development advances   31,806     118,889  
Mineral properties   7,371,613     6,690,362  
Buildings, plant and equipment   2,854,506     2,926,663  
             
  $ 11,177,069   $ 10,256,816  
             
Liabilities and Stockholders' Equity            
Current liabilities:            
         Accounts payable and accrued liabilities   584,866     594,840  
         Loans payable secured by gold inventory   7,873     7,873  
         Mineral claims payable   240,000     240,000  
         Debentures, current portion (note 6 (a))   268,669     193,303  
         Current portion of capital lease obligation (note 7)   744,085     594,085  
    1,845,493     1,630,101  
             
Debentures (note 6 (a))   -     194,142  
Capital lease obligations (note 7)   429,948     641,492  
    2,275,441     2,465,735  
Stockholders' equity:            
         Common stock:            
                  Authorized: 200,000,000 common shares            
                  Issued and outstanding:            
                           February 29, 2004– 174,049,154            
                           November 30, 2003 – 146,027,352   65,775,100     63,568,652  
         Additional paid-in capital   464,314     464,314  
         Shares to be issued   -     115,000  
         Deferred compensation   (77,712 )   (77,712 )
         Accumulated deficit   (57,260,074 )   (56,279,173 )
    8,901,628     7,791,081  
             

 

 $ 11,177,069   $ 10,256,816  

Continuing operations (note 2)
Subsequent events (note 8)
See accompanying notes to unaudited consolidated financial statements.

/s/ G.L. Anselmo /s/ S.C. McCulloch
Garry L. Anselmo Stuart C McCulloch
DIRECTOR DIRECTOR

2

SILVERADO GOLD MINES LTD.
Consolidated Statements of Operations
(Expressed in United States Dollars)

    Three months     Three months  
    ended     ended  
    February 29,     February 28,  
    2004     2003  
    (unaudited)     (unaudited)  
             
Expenses:            
         Accounting and audit $ 10,246   $ 4,629  
         Advertising and Promotion   60,415     217,891  
         Consulting Fees   371,229     993,171  
         Depreciation   73,345     60,524  
         General exploration   107,793     -  
         Interest on debentures   4,767     23,779  
         Legal   16,333     26,151  
         Loss (gain) on foreign exchange   21,006     (13,161 )
         Management services from related party   174,259     63,183  
         Office expenses   118,182     253,450  
         Other interest and bank charges   15,743     980  
         Reporting and investor relations   1,496     2,034  
         Research   -     59,154  
         Transfer agent fees and mailing expenses   6,817     5,335  
    981,631     1,697,120  
             
Interest and other income   730     3,950  
Loss and comprehensive loss for the period $ (980,901 ) $ (1,693,170 )
             
Loss per share - basic and diluted $ (0.01 ) $ (0.02 )
Weighted average number of            
common shares outstanding   163,062,129     99,673,318  

3

SILVERADO GOLD MINES LTD.
Consolidated Statements of Cash Flows
(Expressed in United States Dollars)

    Three months     Three months  
    ended     ended  
    February 29,     February 28,  
    2004     2003  
    (unaudited)     (unaudited)  
Cash provided by (used in):            
Operating activities:            
         Loss for the period $ (980,901 ) $ (1,693,170 )
Adjustments to reconcile loss to net cash used by operating            
activities            
         Depreciation, an item not involving cash   73,345     60,524  
         Stock issued for services   148,320     602,712  
         Interest accrued   18,222     -  
         Changes in non-cash operating working capital:            
                  Accounts receivable   (9,394 )   1,693  
                  Accounts payable and accrued liabilities:   (11,400 )   (76,863 )
                  Increase (decrease) in mineral claims payable:   -     (140,000 )
    (761,808 )   (1,245,104 )
             
Financing activities:            
         Shares issued for cash   1,820,000     4,342,750  
    1,820,000     4,342,750  
             
Investing activities:            
         Advances for Exploration and development   87,083     89,312  
         Mineral claims and options expenditures, net of recoveries   (681,251 )   (1,541,235 )
         Purchase of equipment   (175 )   (114,996 )
         Repayment of capital lease obligation   (75,000 )   -  
    (669,343 )   (1,566,919 )
             
Net increase in cash   388,849     1,530,727  
             
Cash, beginning of period   397,290     905,000  
             
Cash, end of the period $ 786,139   $ 2,435,727  
             
Supplementary disclosure with respect to cash flow            
         (note 5)            

4

SILVERADO GOLD MINES LTD.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in United States Dollars)

Three months ended February 29, 2004 and February 28, 2003

1.

Basis of presentation:

The unaudited consolidated balance sheet, the unaudited consolidated statements of operations and cash flows include the accounts of us and our wholly-owned subsidiary company. These statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information. These financial statements comply, in all material respects, with generally accepted accounting principles in Canada.

The accompanying unaudited consolidated financial statements do not include all information and footnote disclosures required under United States or Canadian generally accepted accounting principles. In the our opinion, all adjustments (consisting solely of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows as at February 29, 2004, and for all periods presented, have been included. Readers of these financial statements should note that interim results for the three-month periods ended February 29, 2004, and February 28, 2003, are not necessarily indicative of the results that may be expected for the fiscal year as a whole.

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form 10-KSB for the fiscal year ended November 30, 2003.
   
2.

Continuing operations:

At February 29, 2004, we had a working capital deficiency of $926,349, down from a working capital deficiency of $1,109,199 at November 30, 2003, primarily as a result of increased funding from issuances of common stock and a significant reduction of our debt.

These financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. The application of the going concern concept and the recovery of amounts recorded as mineral properties and buildings, plant and equipment is dependent on our ability to obtain additional financing to fund our operations and acquisition, exploration and development activities, the discovery of economically recoverable ore on our properties, and the attainment of profitable operations.

5

SILVERADO GOLD MINES LTD.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in United States Dollars)

Three months ended February 29, 2004 and February 28, 2003

2. Continuing operations (continued):

We plan to continue to raise capital through private placements and warrant issues. We are exploring other business opportunities including the development of Low-Rank Coal-Water Fuel as a replacement fuel for oil fired industrial boilers and utility generators.

3. Related party transactions:

We have had related party transactions with Tri-Con Mining Ltd., Tri-Con Mining Inc., Tri-Con Mining Alaska Inc. (collectively the “Tri-Con Mining Group”), all of which are controlled by a director of ours.

The Tri-Con Mining Group are operations, exploration, and development contractors, and have been employed by us under contract since 1972 to carry out all of our fieldwork and to provide administrative and management services. Under our current contract dated January, 1997 work is charged at cost plus 25% for exploration and cost plus 15% for development and mining. Cost includes out of pocket or actual cost plus 15% charge for office overhead including stand by and contingencies. There is no mark up on capital purchases. Services of the directors of the Tri-Con Mining Group are charged at a rate of Cdn. $75 per hour. Services of the directors of the Tri-Con Mining Group who are also directors of ours are not charged. At February 29, 2004, we had prepaid $31,806 to the Tri-Con Mining Group for exploration, development and administration services to be performed during the current fiscal year on behalf of us. The Tri-Con Mining Group’s services for the current fiscal year are focusing mainly on the our Low-Rank Coal-Water Fuel program as well as corporate planning and preparation for year round production on our Nolan property, and administration services at both our field and corporate offices.

The aggregate amounts paid to the Tri-Con Group each period by category, including amounts relating to the Grant Mine Project and Nolan properties, for disbursements and for services rendered by the Tri-Con Group personnel working on our projects, and including interest charged on outstanding balance at the Tri-Con Group's borrowing costs are shown below:

  February 29, 2004
 February 28, 2003
     
Exploration and development services 633,020 1,009,269
Administrative and management services 158,648 56,482
Research - 59,154
  $791,668 $1,124,905
     
Amount of total charges in excess of Tri-Con costs incurred $111,392 $457,186
     
Excess amount charged as a percentage of actual costs incurred 16.4% 40.6%

6

SILVERADO GOLD MINES LTD.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in United States Dollars)

Three months ended February 29, 2004 and February 28, 2003

4.

Loss per share:

Basic loss per share has been calculated using the weighted average number of common shares outstanding for each period. Loss per share does not include the effect of the potential exercise of options and warrants and the conversion of debentures as their effect is anti-dilutive.
   
5.

Supplementary cash flow information:

Supplemental non-cash investing and financing activities:

      February 29,     February 28,  
      2004     2003  
               
  Purchase of fixed assets under capital lease $ -   $ (145,170 )
  Issuance of shares for:            
           Debentures   119,245     119,245  
           Interest on debentures   3,883     22,426  
           Consulting services   148,320     116,750  
  Capital lease obligation   -     145,170  

6.

Debentures:

On March 1, 2001, we completed negotiations to restructure our $2,000,000 convertible debentures. We issued replacement debentures in the aggregate amount of $2,564,400 consideration of cancellation of the $2,000,000 principal amount plus all accrued interest on the original debentures to March 1, 2001.
     
 
(a)
The replacement debentures bear interest of 8.0% per annum and mature March 1, 2006. Principal payments are due at the end of each month. Interest is due and payable on a quarterly basis on February 28, May 31, August 31, and November 30. If we fail to make any payment of principal or interest, we must issue shares equivalent in value to the unpaid amounts at 20% below the average market price. On December 10, 2003, we issued 1,119,342 shares at the average market price of $0.11 to the holders of the replacement debenture to satisfy the quarterly payments due November 30, 2003. The value of the transaction consists of $119,245 of principal and $3,883 of interest. As at February 29, 2004, the total balance of $74,897 owing on the replacement debenture is classified as a current liability. Remaining debentures of $140,000, plus accrued interest of $67,627 are in default, however, it is unclear whether they will be exchanged for replacement debentures.
     
 
(b)
In February 1999 we issued a debenture for $75,000 with interest payable at a rate of 5.0% per annum. The debenture is unsecured and was due February 28, 2003. However, subsequent to February 29, 2003, we began re-payment of the $75,000 debenture and the balance as at February 29, 2004 is $37,500.

7

SILVERADO GOLD MINES LTD.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in United States Dollars)

Three months ended February 29, 2004 and February 28, 2003

7.

Lease purchase agreement:
     
  a)

On October 11, 2002, we entered into a lease purchase agreement whereby we would purchase three dump trucks, an underground loader, two surface loaders, and other equipment valued at a total of $1,496,150. The agreement required payment upon signing of $550,000 (paid) and future payments beginning on December 1, 2003 for the balance of the purchase price plus interest. The payment schedule requires the payment of $100,000 on or before December 1, 2003 and 24 equal payments thereafter in an amount to be determined. The amount of the payments shall be determined based on the amount of the equipment and other expenses which are added to the lease before December 1, 2003. The payments will be sufficient to amortize the total balance outstanding once all costs are included over the 24 payments.
     
  b)

On February 14, 2003, we entered into another lease purchase agreement whereby we would purchase one grader, one dozer, three light towers and other equipment worth approximately $250,170. The agreement required a down payment upon signing of $105,000 which was paid February 16, 2003, one payment of $25,000 due December 1, 2003, and 24 equal payments of an amount to be determined. The amount of the payments shall be determined based on the amount of the equipment and other expenses which are added to the lease before December 1, 2003. The payments will be sufficient to amortize the total balance outstanding once all costs are included over the 24 payments.

As at February 29, 2004, the total amount outstanding under the lease purchase agreements was $1,174,033. The lease payment schedule below is calculated on this amount using an interest rate of 12% per annum as is implied in the lease agreement. We are required to maintain the equipment in good working order and is also required to maintain adequate insurance on the equipment.

The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets are amortized over their estimated productive life, which is estimated to be 10 years. Amortization on assets under capital leases charged to expense in the three months ended February 29, 2004 was $43,658.

A minimum future lease payment under capital leases as of February 29, 2004 for each of the next three years and in the aggregate is:

      Amount  
         
  November 30, 2004 $ 643,922  
  November 30, 2005   635,302  
  November 30, 2006   52,880  
         
  Total minimum lease payments   1,332,104  
  Less: Amount representing interest   158,071  
      1,174,033  
  Less: Current portion   744,085  
         
    $ 429,948  

8

SILVERADO GOLD MINES LTD.
Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in United States Dollars)

Three months ended February 29, 2004 and February 28, 2003

8.
Subsequent events:
     
 
(a)
Issued an aggregate of 559,915 shares at a price of $0.10 per share in lieu of payment of convertible debentures.
     
 
(b)
Issued a total of 50,000 shares to consultants for a portion of their services under the terms of the service agreements at a value of $0.10.
     
  (c) Issued a total of 120,000 shares to consultants for a portion of their services under the terms of the service agreements at a value of $0.137.

9

Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

FORWARD-LOOKING STATEMENTS

The information in this Quarterly Report on Form 10-QSB contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding the market price of gold, availability of funds, government regulations, common share prices, operating costs, capital costs, outcomes of ore reserve development and other factors. Forward-looking statements are made, without limitation, in relation to operating plans, property exploration and development, availability of funds, environmental reclamation, operating costs and permit acquisition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined below, and, from time to time, in other reports we file with the SEC. These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

OVERVIEW

We are engaged in the acquisition, exploration and development of mineral properties in the State of Alaska. Currently we are actively engaged in development, mining and exploration activities at our Nolan Gold Project. Our plan of operations for the next twelve months is to continue development, mining and exploration activities at the Nolan Gold Project. We are also seeking financing to enable us to construct a commercial test facility with the objective of establishing the viability of the production of low-rank coal-water fuel as a replacement for oil fired boilers and electrical utility generators.

We hold interests in four groups of mineral properties in Alaska, namely:

1. our Nolan Gold Project;
   
2. our Ester Dome Gold properties;
   
3. our Hammond properties; and
   
4. our Eagle Creek properties.

PLAN OF OPERATIONS

Our plan of operation for our mineral properties is discussed below:

The Nolan Gold Project

Our plan of operation is to continue exploration, development and mining programs at the Nolan Gold Project. Our exploration activities are directed at the definition of placer gold targets and location of the lode source of the Nolan placer gold deposits. Gold placer exploration and development is presently ongoing to evaluate the gold bearing gravel deposits on the Nolan property which include extensive areas of ancient elevated bench gravels and deep channel gold bearing gravels. Both types of deposits are the result of intra-glacial geo-hydrologic events including deposition, erosion, transportation. Our exploration for lode gold is being focused on the Solomon Shear Trend. Our successful definition of a significant gold deposit in any of these areas could lead to us developing and mining those areas. Our recent development and mining activities have been carried out as part of a three year mining plan for the Nolan Gold Project.

10

We have presently suspended our development and mining activities on the Nolan Deep Channel that are being carried out as part of the three year mining plan for the Nolan Gold Project. We are currently evaluating our mining and development plans for 2004. We anticipate proceeding with development and mining on the elevated benches above the Nolan Creek, however no determination has been made to date. We anticipate proceeding with development and mining of the elevated benches above the Nolan Creek, rather than continuing with the development and mining of the Nolan Deep Channel, as the elevated benches are less prone to the severe water problems that we encountered at the Nolan Deep Channel in winter 2002/ 2003. We believe that further development drilling on the Nolan Deep Channel is warranted prior to re-commencing development and mining activities at the Nolan Deep Channel in order to better delineate areas targeted for development and mining while minimizing inflow water problems.

The main focus of our current mining and development activities is “placer” gold. Placer gold is gold that has been separated from its host rock and is often re-concentrated in beds of old streams and rivers. Placer gold will occur in both nugget form and in fine gold form.

We plan to spend approximately $2,400,000 in the next twelve months in carrying out our development, mining and exploration plans for the Nolan Gold Project. While this amount of expenditures may be off-set by any revenues we achieve from gold production, we anticipate that we will require substantial financing in order to proceed with our plan of operations. We presently have sufficient financing that will enabled us to proceed with mining and development plans for the next 6 months. See the discussion of our cash resources and working capital under Liquidity and Financial Condition below and in the section entitled Risk Factors.

Planned Mining Operations

We are drilling the following areas of the Nolan Gold Project in order to determine our current mining plan as part of our drilling program for the 2003/ 2004 winter season: Mary's Bench, the Nolan Deep Channel, the Swede Channel and the Treasure Chest area. Mary’s Bench, the Swede Channel and the Treasure Chest area are various gravel benches located above the elevation of Nolan Creek on the slopes of the Smith Dome. Mary’s Bench is located approximately 200 to 300 feet in elevation above the confluence of Nolan Creek and Archibald Creek. Treasure Chest bench is located approximately 200 to 400 feet in elevation above the Nolan Creek to the south of Mary’s Bench.

We anticipate that our mining plan will include the mining of Mary’s Bench by open cut mining methods. However, to date we have not finalized our current mining plan. Our plan is dependent on the geological review of the drill holes being completed during the winter of 2004 as well as our assessment of whether surface or underground mining will be optimal for extraction operations. Any gravel that is mined as part of our mining plan will be processed for gold recovery in the summer of 2004.

Our plan of operations at the Nolan Gold Project will be continually evaluated and modified as mining, development and exploration results become available. Modifications to our plan will be based on many factors, including: assessment of data, weather conditions, mining costs the price of gold and available capital. Further, the extent of the mining plan that we undertake will be dependent upon the amount of financing available to us to carry out our mining plans.

Exploration Program Planned for Nolan during 2004

We are currently undertaking an extensive geological exploration program on the Nolan Gold Project. The objective of this geological exploration program is to further define gold deposits in order to provide a basis for the assessment of the feasibility of future additional mining at the Nolan Gold Project. We plan to conduct further exploration of the Nolan Placer, Nolan Lode, Smith Creek Placer, and Slisco Bench properties that comprise the Nolan Gold project. Our planned geological exploration program is described in detail in Item 1. - Description of Business of our Annual Report on Form 10-KSB for the year ended November 30, 2004.

We plan to spend approximately $600,000 on exploration activities during the next twelve months. This amount will fluctuate depending on the actual amount of funds that we have available for exploration. The exploration work to be completed will be subject to intermittent interruptions caused by inclement or intense cold weather.

11

Low-Rank Coal-Water Fuel Project

We plan to submit a revised proposal to the DOE’s second solicitation under the Clean Coal Power Initiative in September 2004. There is no assurance that our second submission for a commercial-scale LRCWF facility to the DOE CCPI will be successful. If our proposal is successful, funds would not be available until 2005 and any funds would be repayable under the terms of the grant. In addition, we may be required to obtain additional financing in order to fund our required contribution to this project. We anticipate spending approximately $300,000 during the current fiscal year on our application to the Department of Energy and on other work in connection with establishment of the demonstration facility at the Grant Mill.

RESULTS OF OPERATIONS

Three months ended February 29, 2004 compared to the three months ended February 28, 2003.

Revenues

We did not earn revenues during the three months ended February 29, 2004 or February 28, 2003 as we did not reach commercial production of gold from the Nolan Gold Project during this period. We did not achieve any gold sales during the three months ended February 29, 2004.

We plan to re-commence extraction activities in summer 2004 when available melt water will allow the processing of ore to separate gold if we proceed with any development and mining plans for 2004. Any recoveries from gold sales are not anticipated to be realized until the third quarter of 2004. Under our accounting policies, any gold sales that may be realized will be treated as sales received incidental to developmental activities on the Nolan Gold Project until such time as we have reached commercial levels of gold production from the Nolan Gold Project. We cannot provide investors with any assurance as to sales of gold during fiscal 2004 due to the uncertainties of gold mining. See Risk Factors.

We anticipate that we will not realize revenues during the current fiscal year from the low-rank coal-water fuel component of our plan of operations. We will not be able to realize revenues from this business until we are able to proceed with the construction and operation of a commercial-scale demonstration facility for the low-rank coal-water fuel technology. There is no assurance that we will be able to secure the financing necessary to proceed with construction of this demonstration facility or that the demonstration facility will prove the commercial viability of the process.

Operating Costs

We did not incur any operating costs during the period ended February 29, 2004 and February 28, 2003 due to the fact that we did not achieve commercial production from mining activities during either period.

We incurred development costs in the amount of $681,251, net of recoveries from gold sales, on the Nolan Gold Project during the three months ended February 29, 2004 compared to $1,541,235 during the three months ended February 28, 2003. These development costs were incurred in connection with our development and mining activities at the Nolan Gold Project. Development costs were capitalized in accordance with our policy to capitalize development expenses prior to production. Development expenses at the Nolan Gold Project will be expensed as operating costs once production at the Nolan Gold Project commences.

Expenses

Our expenses decreased to $981,631 for the three months ended February 29, 2004 compared to $1,697,120 for the three months ended February 28, 2003, representing a decrease of $715,489 or 42%. The decrease in expenses was primarily attributable to reductions in consulting fees, advertising and promotion, research and office expenses during the three months ended February 29, 2004. Decreases on these expenditures were in-part off-set by increases in general exploration and management services from related party expenses.

Management services attributable to the activities of the Tri-Con Group increased to $174,259 for the three months ended February 29, 2004 compared to $63,183 for the three months ended February 28, 2003.

12

Our increased exploration activity on our mineral properties caused our general exploration expenses to increase to $107,793 for the three months ended February 29, 2004 compared to $nil for the three months ended February 28, 2003 The increase in exploration expenses was attributable to increased exploration activities at the Nolan Gold Project compared to 2003 when activities were directed to mining of the Nolan Deep Channel. These exploration activities included drilling and exploration activities on the Nolan Deep Channel, Mary’s Bench, and Treasure Chest areas. We anticipate that these expenses will continue as we proceed with our planned drilling and exploration activities on the Nolan Gold properties.

Research activities attributable to the low-rank coal water fuel technology decreased to $nil for the three months ended February 29, 2004 compared to $59,154 for the three months ended February 28, 2003. Our research activities are primarily in connection with the submission of our application for a grant to the Department of Energy and include the compensation of Dr. Warrack Willson. We anticipate that these expenses will not increase during the current fiscal year based on our decision to re-submit our application for the second round of financing. We do not expect significant research expenses as we plan to continue our focus on development, mining and exploration at the Nolan Gold Project.

Office expenses decreased to $118,182 for the three months ended February 29, 2004 compared to $253,450 for the three months ended February 28, 2003, representing a decrease of $135,268 or 53%. This decrease reflects a decrease in our general operations and activity in our offices in Fairbanks, Alaska due to the fact that we were not carrying out mining activities during the first quarter of our current fiscal year.

Consulting fees decreased to $371,229 for the three months ended February 29, 2004 compared to $993,171 for the three months ended February 28, 2003, representing a decrease of $621,942 or 63%. The decrease was attributable to less stock based compensation paid to our consultants compared to last year. Compensation was recorded based on the quoted market price of our shares as of the date of issue.

Loss

Our loss decreased to $980,901 for the three months ended February 29, 2004 compared to $1,693,170 for the three months ended February 28, 2003 representing a decrease of $712,269 or 42%. This decrease in our loss was primarily attributable to the decreases in our other expenses, as discussed above. We anticipate that we will continue to incur a loss until such time as we can achieve significant revenues from sales of gold processed from the Nolan Gold Project.

LIQUIDITY AND FINANCIAL CONDITION

Cash and Working Capital

We had cash and cash equivalents of $786,138 as of February 29, 2004, compared to cash of $397,290 as of November 30, 2003. We had a working capital deficiency of $926,349 as of February 29, 2004, compared to a working capital deficiency of $1,109,199 as of November 30, 2003. The decrease in our working capital deficiency was primarily the result of financings completed during the three months ended February 29, 2004.

We will require additional financing during the current fiscal year due to our current working capital deficiency, our plan of operations for the Nolan Gold Project, our planned exploration activities and our plan to re-submit a grant application to the Department of Energy. We are able to proceed with our plan of operations for approximately 6 months based on our current cash reserves. While financing requirements will be off-set by revenues generated from gold sales, these gold sales are not anticipated to cover all financing requirements. In addition, revenues will be subject to the quantity of gold recovered.

Cash Used in Operating Activities

Cash used in operating activities decreased to $761,808 for the three months ended February 29, 2004, compared to $1,245,104 for the three months ended February 28, 2003. We funded the cash used in operating activities primarily through equity sales of our common shares.

13

Financing Activities

Cash provided by financing activities decreased to $1,820,000 for the three months ended February 29, 2004, compared to $4,342,750 for the three months ended February 28, 2003. All cash provided by financing activities was provided by share issuances. Cash provided by financing activities was used to fund our operating and investing activities. Equity financings were completed with private purchasers at prices that were reflective of the market price of our common shares as of the date of the financing.

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders.

Investing Activities

We used $669,343 in investing activities during the three months ended February 29, 2004 compared to $1,566,919 during the three months ended February 28, 2003, representing a decrease of $897,576. The decrease was due to our scaling back mining operations at the Nolan Gold Project.

We incurred development costs in the amount of $681,251 on the Nolan Gold Project during the three months ended February 29, 2004 compared to $1,541,235 during the three months ended February 28, 2003, each net of recoveries. These amounts were capitalized and are included in our consolidated statements of cash flows as investing activities.

Capital Leases

On October 11, 2002, we entered into a lease purchase agreement whereby we would purchase three dump trucks, an underground loader, two surface loaders, and other equipment valued at a total of $1,496,150. The agreement required payment upon signing of $550,000 (paid), $100,000 on or before December 1, 2003 and 24 equal payments thereafter for the balance of the purchase price plus interest at a rate of 12% per annum.

On February 14, 2003, we entered into a three year lease agreement whereby we would purchase mining equipment valued at $250,170. The agreement required a payment on signing of $105,000 (paid), $25,000 on or before December 4, 2003 and 24 equal payments for the balance of the purchase price plus interest at a rate of 12% per annum.

As at February 29, 2004, the total amount outstanding under the two lease purchase agreements was $1,332,104, including interest of $158,071. We are required to maintain the equipment in good working order and are also required to maintain adequate insurance on the equipment. We are required to complete future lease payments of $643,922 during the 2004 fiscal year, $635,302 during the 2005 fiscal year and $52,880 during the 2006 fiscal year.

Tri-Con Group

We had pre-paid $31,806 to the Tri-Con Group as of February 29, 2004 in connection with planned development activities to be carried out on the Nolan Gold Project during fiscal 2004. These activities will be carried out by the Tri-Con Group on behalf of us in accordance with our operating agreements with the Tri-Con Group. See item – 12 Certain Relationships and Related Transactions of our Annual Report on Form 10-KSB.

Debt Re-Structuring

On March 1, 2001, we completed negotiations to restructure our $2,000,000 convertible debentures. We approved the issuance of replacement debentures in the aggregate amount of $2,564,400 in consideration of cancellation of the $2,000,000 principal amount of the original debentures, plus all accrued interest on the original debentures to March 1, 2001. The replacement debentures bear interest of 8.0% per annum and mature March 1, 2006. Principal payments are due at the end of each month. Interest is due and payable on a quarterly basis on February 28, May 31, August 31, and November 30. If we fail to make any payment of principal or interest, we must issue shares equivalent in value to the unpaid amounts at 20% below the average market price for the 30 day period prior to the payment being made. We did not make any cash payments of principal or interest during the three months ended February 29, 2004. We completed the issue of 1,119,342 shares at

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the average market price of $0.11 to the holders of the replacement debenture to satisfy the quarterly payments due February 29, 2004. The value of the transaction consists of $119,245 of principal and $3,883 of interest.

As at February 29, 2004, $1,860,000 plus $524,892 of accrued interest has been exchanged for replacement debentures. The amount of the replacement debentures outstanding as of February 29, 2004 was $74,897, all of which is classified as current. Remaining original convertible debentures of $140,000 plus accrued interest of $67,627 are in default and are recorded as current liabilities. There is no agreement to exchange this amount of remaining original convertible debentures into replacement debentures.

Low-Rank Coal-Water Fuel Business

We are continuing our attempt to obtain a grant of $10,000,000 in order to proceed with establishing the commercial viability of our low-rank coal-water fuel business. The first round of grants on the Clean Coal Power Initiative was released by the Department of Energy and our application for a grant was not approved. We plan to re-submit our application to the Department of Energy for the second round of grants in September of 2004 There is no assurance that we will be awarded any grant or that it will be able to complete any additional sales of our equity securities or arrange for debt or other financing to fund this component of our plan of operations.

Future Financings

We require additional financings in order to fund our plan of operations. We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned mining, development and exploration activities.

CRITICAL ACCOUNTING POLICIES

Going Concern

Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. The application of the going concern concept and the recovery of amounts recorded as mineral properties and the capital assets are dependent on our ability to obtain additional financing to fund our operations and acquisition, exploration and development activities, the discovery of economically recoverable ore on our properties, and the attainment of profitable operations. We plan to continue to raise capital through private placements and warrant issues. In addition, we are exploring other business opportunities including the development of low-rank coal-water fuel as replacement fuel for oil fired industrial boilers and utility generators.

Mineral Properties

We confine our exploration activities to areas from which gold has previously been produced or to properties, which are contiguous to such areas and have demonstrated mineralization. We capitalize the costs of acquiring mineral claims until such time as the properties are placed into production or abandoned. Expenditures for mine development are capitalized when the properties are determined to have economically recoverable, proven reserves but are not yet producing at a commercial level. Once a property reaches commercial levels of production operating costs will be charged against related revenues. Based on the application of this accounting policy, the expenditures incurred in development of the Nolan Gold Project during fiscal 2003 were capitalized. Development expenses at the Nolan Gold Project will be expensed as operating costs once production at the Nolan Gold Project commences.

Amortization of mineral property costs relating to properties in production is provided during periods of production using the units-of-production method based on the estimated economic life of the ore reserves. On an ongoing basis, we evaluate each property for impairment based on exploration results to date, and considering facts and circumstances such as operating results, cash flows and material changes in the business climate. The carrying value of a long-lived asset is considered impaired when the anticipated discounted cash flow from such asset is separately identifiable and is less than its carrying value. If an asset is impaired, a loss

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is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated discounted cash flows with a discount rate commensurate with the risk involved. Losses on other long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the costs of disposal.

The amounts shown for mineral properties and development which have not yet commenced commercial production represent costs incurred to date, net of recoveries from developmental production, and are not intended to reflect present or future values.

Stock Based Compensation

Effective November 1, 2002, we adopted the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation. Under the modified prospective method of adoption selected by us under the provisions of FASB Statement No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, compensation cost recognized in 2003 is the same as that which would have been recognized had the recognition provisions of Statement 123 been applied from its original effective date. Results for prior years have not been restated.

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RISK FACTORS

We face risks in completing our exploration and development plans and achieving revenues. The following risks are material risks that we face. We also faces the risks identified elsewhere in this Quarterly Report on Form 10-QSB and in other filings with the Securities and Exchange Commission. If any of these risks occur, our business, our ability to achieve revenues, our ability to produce gold, our operating results and our financial condition could be seriously harmed.

If we do not obtain new financings, the amount of funds available to us to pursue development and mining of the Nolan Gold Project and to pursue further exploration of our mineral properties will be reduced.

We have relied on recent private placement financings in order to fund development of the Nolan Gold Project and our exploration activities. We will continue to require additional financing to complete our plan of operations for mining and development work at the Nolan Gold Project, to achieve gold production and to carry out our exploration programs on our other mineral properties. While our financing requirements may be reduced if gold production is achieved, any impairment in our ability to raise additional funds through financings would reduce the available funds for the development and mining of the Nolan Gold Project and for additional exploration activities, with the result that our plan of operations may be adversely affected and potential revenues reduced or delayed.

As we have a working capital deficit and we have not reported revenues in our last two fiscal years there is no assurance that we will be able to achieve the financing necessary to enable us to proceed with our exploration, development and mining activities.

We had a working capital deficiency of $926,349 as of February 29, 2004. We did not report revenues in our last two fiscal years ended November 30, 2003 or 2002. Our plan of operations calls for substantial expenditures of $2,400,000 to be incurred by us over the next twelve months in order to continue mining and development activities at the Nolan Gold Project and to pursue exploration activities on our mineral properties. While we will apply proceeds from gold sales to cover these expenditures, we anticipate that proceeds from gold sales over the next twelve months will not exceed our projected expenditures during this period with the result that we will require substantial financing in order for us to pursue our plan of operations. If we do not achieve the necessary financing, then we will not be able to proceed with our planned exploration, development and mining activities and our financial condition, business prospects and results of operations will be materially adversely affected.

If we are unable to achieve predicted gold recoveries from our Nolan Gold Project, then our financial condition and our revenues will be adversely affected.

We are currently undertaking the development and the mining of the Nolan Gold Project. We proceeded with the underground mining of the Nolan Deep Channel and surface mining of the Mary’s and Wooll Benches as a result of geological exploration which predicted a certain recovery rate of gold per volume of ore recovered. Any sales of gold that we realize from up coming mining activity on the Nolan Gold Project will be less than anticipated if the mined material that we mine does not contain the concentration of gold predicted by geological exploration. If sales of gold are less than anticipated, then our ability to continue operations of the Nolan Gold Project, to continue further exploration activities on our other mineral properties and our ability to raise financing for further development will be adversely impacted.

If the price of gold declines, our financial condition and ability to obtain future financings will be impaired.

Our business is extremely dependent on the price of gold. Our recoveries from sales of gold for the current fiscal year are dependent on the price of gold in addition to the quantity of gold that we are able to recover. If gold prices decline prior to the production and sale of gold from the Nolan Gold Project, then our recoveries from sales of gold and financial condition will be adversely impacted. We have not undertaken any hedging transactions in order to protect us from a decline in the price of gold. A decline in the price of gold may also decrease our ability to obtain future financings to fund our planned development and exploration programs.

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The price of gold is affected by numerous factors, all of which are beyond our control. Factors that tend to cause the price of gold to decrease include the following:

(a) Sales or leasing of gold by governments and central banks;
   
(b) A low rate of inflation and a strong US dollar;
   
(c) Speculative trading;
   
(d) Decreased demand for golds industrial, jewellery and investment uses;
   
(e) High supply of gold from production, disinvestment, scrap and hedging;
   
(f) Sales by gold producers and foreign transactions and other hedging transactions;
   
(g) Devaluing local currencies (relative to gold price in US dollars) leading to lower production costs and higher production in certain major gold producing regions.

If costs of production at our Nolan Gold Project are higher than anticipated, then our profitability will be adversely affected.

We have proceeded with the Nolan Gold Project on the basis of estimated capital and operating costs. If capital and operating costs are greater than anticipated, then the profitability of the production at the Nolan Gold Project will be adversely affected. This reduced profitability will cause us to have less funds for other expenses, such as administrative and overhead expenses and exploration of our other mineral properties and further development of the Nolan Gold Project.

If our exploration costs are higher than anticipated, then our profitability will be adversely affected.

We are currently proceeding with exploration of our mineral properties on the basis of estimated exploration costs. This exploration program includes drilling programs at various locations within the Nolan Gold Project. If our exploration costs are greater than anticipated, then we will have less funds for other expenses, such as expenses associated with mining and development of the Nolan Gold Project. If higher exploration costs reduce the amount of funds available for production of gold through mining and development activities, then our ability to achieve revenues and profitability will be adversely affected. Factors that could cause exploration costs to increase are: adverse weather conditions, difficult terrain and shortages of qualified personnel.

Mining exploration, development and operating activities are inherently hazardous.

Mineral exploration involves many risks that even a combination of experience, knowledge and careful evaluation may not be able to overcome. Operations that we undertake will be subject to all the hazards and risks normally incidental to exploration, development and production of gold and other metals, any of which could result in work stoppages, damage to property and possible environmental damage. The nature of these risks are such that liabilities might result in us being forced to incur significant costs that could have a material adverse effect on our financial condition and business prospects.

Our estimates of reserves are subject to uncertainty.

Estimates of reserves, including the estimates in our Annual Report on Form 10-KSB for the year ended November 30, 2003, are subject to considerable uncertainty. Such estimates are arrived at using standard acceptable geological techniques, and are based on the interpretations of geological data obtained from drill holes and other sampling techniques. Engineers use feasibility studies to derive estimates of cash operating costs based on anticipated tonnage and grades of ore to be mined and processed, the predicted configuration of the ore bodies, expected recovery rates of metal from ore, comparable facility and operating costs and other factors. Actual cash operating costs and economic returns on projects may differ significantly from the original estimates, primarily due to fluctuations in the current prices of metal commodities extracted from the deposits,

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changes in fuel costs, labor rates, changes in permit requirements, and unforeseen variations in the characteristics of the ore body. Due to the presence of these factors, there is no assurance that our reported proven and probable reserves reflect actual quantities of gold that can be economically processed and mined by us.

If we experience mining accidents or other adverse events at our Nolan Gold Project, then our financial condition and profitability could be adversely affected.

Our mining operations at the Nolan Gold Project are subject to adverse operating conditions. Mining accidents or other adverse incidents, such as cave-ins or flooding, could affect our ability to continue development and production of the Nolan Gold Project. A particular concern at the Nolan Gold Project is warm temperatures that can reduce the winter season during which we can safely conduct underground mining activities. The occurrence of any of these events could cause a delay in production of gold or could reduce the amount of gold that we are able to produce, with the result that our ability to achieve revenues and to sustain operations would be adversely impacted. Adverse operating conditions may also cause our operating costs to increase. Mining accidents or other adverse events could also result in an adverse environmental impact to the land on which our operations are located with the result that we may become subject to the liabilities for environmental clean up and remediation.

If we become subject to increased environmental laws and regulation, our operating expenses may increase.

Our development and production operations are regulated by both US Federal and State of Alaska environmental laws that relate to the protection of air and water quality, hazardous waste management and mine reclamation. These regulations may impose operating costs on us. If the regulatory environment for our operations changes in a manner that increases costs of compliance and reclamation, then our operating expenses would increase with the result that our financial condition and operating results would be adversely affected.

As we have not reported revenues in recent fiscal periods, there is no assurance that we will be able to continue as a going concern.

Our financial statements included with our Annual Report on Form 10-KSB for the year ended November 30, 2003 have been prepared assuming that we will continue as a going concern. Our auditors have made reference to the substantial doubt as to our ability to continue as a going concern in their audit report on our audited financial statements for the year ended November 30, 2003. If we are not able to achieve revenues, then we may not be able to continue as a going concern and our financial condition and business prospects will be adversely affected.

Because of the speculative nature of exploration of mineral properties, there is no assurance that our exploration activities will result in the discovery of new commercially exploitable quantities of minerals or that the amount of our proven and probable reserves will increase as a result of new exploration.

We plan to continue exploration on our mineral properties. The search for valuable minerals as a business is extremely risky. We can provide investors with no assurance that additional exploration on our properties will establish that additional commercially exploitable reserves of gold exist on our properties. Problems such as unusual or unexpected geological formations or other variable conditions are involved in exploration and often result in exploration efforts being unsuccessful. The additional potential problems include, but are not limited to, unanticipated problems relating to exploration and attendant additional costs and expenses that may exceed current estimates. These risks may result in us being unable to establish the presence of additional commercial quantities of ore on our mineral claims with the result that our ability to fund future exploration activities may be impeded.

As we face intense competition in the mining industry, we will have to compete with our competitors for financing and for qualified managerial and technical employees.

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The mining industry is intensely competitive in all of its phases. Competition includes large established mining companies with substantial capabilities and with greater financial and technical resources than we have. As a result of this competition, we may be unable to acquire additional attractive mining claims or financing on terms we consider acceptable. We also compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees, our exploration and development programs may be slowed down or suspended.

Our business venture into the low rank coal water fuel business is subject to a high risk of failure.

Our business venture into the low rank coal water fuel technology business is at a very early stage and is subject to a high risk of failure. The low rank coal water fuel technology has not been proven by us to be a commercially viable fuel alternative. In order to establish commercial viability, we will have to undertake the construction and operation of the contemplated demonstration facility. The construction of the demonstration facility would cost approximately $20 million. Even if the demonstration facility were constructed and operational, there is no assurance that the commercial viability of this process would be established or that we would be able to expand the facility into a commercially viable operation or to generate revenues from this technology. We have applied to the Department of Energy for a grant to fund the construction of the demonstration facility. Our initial application has been rejected. While we intend to resubmit for a second round of funding grants, there is no assurance that our application will be accepted. Even if the grant were obtained and the demonstration facility constructed, we will still require additional financing and there is no assurance that we would be able to generate profits or revenues from the operations or be able to repay the Department of Energy grant.

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PART II - OTHER INFORMATION

Item 1 Legal Proceedings

The Company currently is not a party to any material legal proceedings and to the Company’s knowledge, no such proceedings are threatened or contemplated.

Item 2 Changes in Securities and Use of Proceeds.

We completed the following unregistered sales of securities during the three months ended February 29, 2004:

1. 
On December 1, 2003, we issued 1,119,342 shares to the holders of our replacement debentures, at the average market price of $0.11 per share. No commissions or fees were paid in connection with the issuance of the shares. The sales were completed pursuant to Regulation S of the Act on the basis that each holder of the replacement debentures is a non-U.S. person, as defined under Regulation S of the Act.
   
2. 
On January 9, 2004, we completed a private placement with one investor of 4,000,000 units at a price of $0.075 per unit for total proceeds of $300,000. Each unit consisted of one common share and one common share purchase warrant. Each common share purchase warrant entitles the warrant holder to purchase one common share at the price of $0.125 per share until January 9, 2005. A commission of $30,000 was paid in connection with the offering. The sales were completed pursuant to Regulation S of the Act on the basis that each purchaser is a non-U.S. person, as defined under Regulation S of the Act. All securities issued were endorsed with a restrictive legend confirming that the securities had been issued pursuant to Regulation S of the Act and were “restricted securities” under the Act and could not be resold without registration under the Act or an applicable exemption from the registration requirements of the Act.
   
3. 

We entered into warrant exercise agreements with each of investors who purchased an aggregate of 11,750,000 units at a price of $0.10 per unit for total proceeds of $1,175,000 in August and September of 2003 pursuant to Rule 506 of Regulation D of the Act. Each unit purchased consisted of one common share and one common share purchase warrant. Under the terms of the warrant exercise agreements, we agreed that the investors would be entitled to exercise their share purchase warrants at a reduced exercise price of $0.075 per share, provided the selling shareholder exercised their share purchase warrants by December 31, 2003. Upon exercise by any of the selling shareholders of their share purchase warrants in accordance with the warrant exercise agreements, we agreed to issue to the selling shareholder additional warrants to purchase a number of our common shares equal to the number of share purchase warrants exercised, which additional warrants will be exercisable for a period from the date of issue to January 10, 2005 at an exercise price, subject to adjustment, of $0.20 US per share (the “Replacement Warrants”). Notwithstanding the exercise price of the Replacement Warrants, we have agreed that the selling shareholders will be entitled to exercise the Replacement Warrants at a reduced exercise price of $0.075 per share, provided that:

     
  (a)
in aggregate, a total of 5,000,000 of the Replacement Warrants are exercised by selling shareholders on or before January 10, 2004;
     
  (b)
in the event that, in aggregate, more than 5,000,000 of the Replacement Warrants are exercised on or before January 10, 2004, then the number of Replacement Warrants deemed exercised by each selling shareholder exercising their Replacement Warrants will be reduced according to the following formula such that in aggregate 5,000,000 Replacement Warrants will have been exercised:

  Number of Replacement   5,000,000 x [Number of Replacement
  Warrants Deemed =   Warrants Exercised a
  Exercised by a Selling     Selling Shareholder]
  Shareholder      
         
        [Aggregate Number of Replacement
        Warrants Exercised]

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In the event the Replacement Warrants are exercised at the reduced exercise price of $0.075 per share on or before January 10, 2004 in accordance with warrant exercise agreements, we will:
   
  (a) issue to each selling shareholder who has exercised their Replacement Warrants additional warrants to purchase an additional number shares of the Company equal to the number of Replacement Warrants exercised, which additional warrants will be exercisable for a period from the date of issue to January 10, 2005 at an exercise price, subject to adjustment, of $0.20 US per share (the “Additional Replacement Warrants”). In aggregate, a total of 5,000,000 additional warrants would be issued to the selling shareholders exercising their Replacement Warrants; and
     
  (b) undertake to expeditiously register:
     
    (i) the resale of the shares issued to the selling shareholders upon exercise of the Replacement Warrants by the selling shareholders (the “Replacement Warrant Shares”). In aggregate, a total of 5,000,000 Replacement Warrant Shares issued upon exercise of the Replacement Warrants would be included on the registration statement;
       
    (ii) the resale of the shares issuable to the selling shareholders upon exercise of the Additional Replacement Warrants (the “Investor Additional Replacement Warrant Shares”). In aggregate, a total of 5,000,000 Investor Additional Replacement Warrant Shares would be included on the registration statement; and
       
    (iii) the resale of the shares issuable upon the balance of the unexercised Replacement Warrants. In aggregate, a total of 6,750,000 shares issuable upon exercise of the unexercised Replacement Warrants would be included on the registration statement;
     
    by the filing of a registration statement on Form SB-2, or any other eligible form, with the Securities Exchange Commission pursuant to the 1933 Act (the “Additional Registration Statement”). We will pay all required expenses and fees in connection with the preparation and filing of the Additional Registration Statement. We will be entitled to include additional shares and warrant shares held by other investors on the Additional Registration Statement. The Additional Registration Statement would be filed with the Securities and Exchange Commission no later than 60 days from the date of the completion of the exercise of the aggregate of 5,000,000 Replacement Warrants in accordance with warrant exercise agreements by the selling shareholders.
     
 

As of December 31, 2003, investors holding an aggregate of 11,750,000 share purchase warrants had exercised their share purchase warrants pursuant to the warrant exercise agreements. We received aggregate proceeds of $881,250 pursuant to these warrant exercises and have issued an additional 11,750,000 shares and 11,750,000 Replacement Warrants in accordance with the terms of the share purchase warrants and the warrant exercise agreements.

On January 10, 2004, the 5,000,000 Replacement Warrants were exercised at a price of $0.075 per share for total proceeds of $575,000 and 5,000,000 additional shares and 5,000,000 Additional Replacement Warrants were issued.
   
4. 
On January 13, 2004, we completed a private placement with one investor of 2,666,667 units at a price of $0.075 per unit for total proceeds of $200,000. Each unit consisted of one common share and one common share purchase warrant. Each common share purchase warrant entitles the warrant holder to purchase one common share at the price of $0.125 per share, until January 13, 2005. A commission of $20,000 was paid in connection with the offering. The sales were completed pursuant to Regulation S of the Act on the basis that the purchaser is a non-U.S. person, as defined under Regulation S of the Act. All securities issued were endorsed with a restrictive legend confirming that the securities had been issued pursuant to Regulation S of the Act and were “restricted securities” under the Act and could not be resold without registration under the Act or an applicable exemption from the registration requirements of the Act.

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5.  On January 13, 2004, we completed a private placement with one investor of 3,333,333 units at a price of $0.075 per unit for total proceeds of $250,000. Each unit consisted of one common share and one common share purchase warrant. Each common share purchase warrant entitles the warrant holder to purchase one common share at the price of $0.125 per share until January 13, 2005. A commission of $25,000 was paid in connection with the offering. The sales were completed pursuant to Regulation S of the Act on the basis that the purchaser is a non-U.S. person, as defined under Regulation S of the Act. All securities issued were endorsed with a restrictive legend confirming that the securities had been issued pursuant to Regulation S of the Act and were “restricted securities” under the Act and could not be resold without registration under the Act or an applicable exemption from the registration requirements of the Act.
   
6.  On February 24, 2004, we completed a private placement with one investor of 2,666,666 units at a price of $0.075 per unit for total proceeds of $200,000. Each unit consisted of one common share and one common share purchase warrant. Each common share purchase warrant entitles the warrant holder to purchase one common share at the price of $0.15 per share until February 25, 2007. A commission of $20,000 was paid in connection with the offering. The sales were completed pursuant to Regulation S of the Act on the basis that the purchaser is a non-U.S. person, as defined under Regulation S of the Act. All securities issued were endorsed with a restrictive legend confirming that the securities had been issued pursuant to Regulation S of the Act and were “restricted securities” under the Act and could not be resold without registration under the Act or an applicable exemption from the registration requirements of the Act.

Item 3 Default Upon Senior Securities

We are currently in default of obligations pursuant to convertible debentures in the aggregate principal amount of $140,000, plus accrued interest of $67,627. There is no agreement to exchange this amount of remaining original convertible debentures into replacement debentures

Item 4 Submission of Matters to a Vote of Security Holders

No matters were submitted to our security holders for a vote during the fiscal quarter ended August 31, 2003.

Item 5 Other Information

None.

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Item 6 Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit    
Number   Description of Exhibit
3.1   Articles of the Company (1)
3.2   Amendment to Articles of the Company (2)
3.3   Altered Memorandum of the Company (3)
3.4   Amendment to Articles of the Company (8)
4.1   Share certificate representing common shares of the capital of the Company (1)
10.1   Agreement for Conditional Purchase and Sale of Mining Property between the Company and Roger C. Burggraf dated October 6, 1978 – Grant Mine Property (1)
10.2   Agreement for Conditional Purchase and Sale of Mining Property between the Company and Paul Barelka, Donald May and Mark Thoennes dated May 12, 1979 – St. Paul Property (1)
10.3   Lease of Mining Claims with Option to Purchase between the Company and Alaska Mining Company, Inc. dated February 3, 1995 – Hammond Property (4)
10.4   Change of Control Agreement between the Company and Garry L. Anselmo dated May, 1995(6)
10.5   Change of Control Agreement between the Company and James Dixon dated May, 1995 (6)
10.6   Amendment to Change of Control Agreement between the Company and Garry L. Anselmo (6)
10.7   Operating Agreement between the Company and Tri-Con Mining Ltd. dated January 1, 1997 (5)
10.8   Operating Agreement between the Company and Tri-Con Mining Inc. dated January 1, 1997 (6)
10.9   Operating Agreement between the Company and Tri-Con Mining Alaska Inc. dated January 1, 1997 (6)
10.10   Contract between the Company and Dr. Warrack Willson dated March 19, 2001 (6)
10.11   Equipment Lease Agreement between the Company and Airport Equipment Rentals Inc. dated October 11, 2002 (6)
10.12   2003 Stock Option Plan (7)
31.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(9)
32.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(9)
     
(1 ) Filed as an exhibit to the Company’s Registration Statement on Form 10 filed initially on May 11, 1984, as amended.
(2 ) Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed on July 15, 1997.
(3 ) Filed as an exhibit to the Company’s Current Report on Form 8-K filed on September 11, 2002.
(4 ) Filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended November 30, 1995.
(5 ) Filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended November 30, 1996.
(6 ) Filed as an exhibit to the Company’s Annual Report on Form 10-KSB for the year ended November 30, 2002.
(7 ) Filed as an exhibit to the Company’s Schedule 14A Proxy Statement filed April 29, 2003.
(8 ) Filed as an exhibit to the Company’s Current Report on Form 8-K filed on June 13, 2003.
(9 ) Filed as an exhibit to this Quarterly Report on Form 10-QSB.

REPORTS ON FORM 8-K

We did not file any Current Reports on Form 8-K during our fiscal quarter ended February 29, 2004.

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SIGNATURES

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.
   
DATE: April 14, 2004  
   
  /s/ G.L. Anselmo
  Garry L. Anselmo
  President
  Chief Executive Officer
  (Principal Executive Officer)
  Chief Financial Officer
  (Principal Financial Officer)

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