-----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, CXUv1U7byMR0xdBR10rNLflQ+JZiSm43ruKRmC1P+qGSdr4HxyeI4G5T8J6pwLjN q8R2LfWtJa1zMZmHyw3tWA== 0001075793-02-000157.txt : 20020416 0001075793-02-000157.hdr.sgml : 20020416 ACCESSION NUMBER: 0001075793-02-000157 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020228 FILED AS OF DATE: 20020415 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SILVERADO GOLD MINES LTD CENTRAL INDEX KEY: 0000731727 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 980045034 STATE OF INCORPORATION: A1 FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-12132 FILM NUMBER: 02611514 BUSINESS ADDRESS: STREET 1: 1111 WEST GEORGIA ST STREET 2: SUITE 505 CITY: VANCOUVER BC CANADA STATE: A1 ZIP: V6E 4M3 BUSINESS PHONE: 6046891535 MAIL ADDRESS: STREET 1: 1111 WEST GEORGIA ST STREET 2: SUITE 505 CITY: VANCOUVER BC CANADA STATE: A1 ZIP: V6E 4M3 FORMER COMPANY: FORMER CONFORMED NAME: SILVERADO MINES LTD DATE OF NAME CHANGE: 19940722 10QSB 1 tenqsbsilverado.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended FEBRUARY 28, 2002 [__] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period to Commission File Number 0-12132 ------- SILVERADO GOLD MINES LTD. --------------------------------------------------------------- (Exact name of small Business Issuer as specified in its charter) BRITISH COLUMBIA 98-0045034 - ----------------------------------- ------------------------ (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) Suite 505, 1111 West Georgia Street Vancouver, British Columbia Canada V6E 4M3 - ----------------------------------------- ------------ (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: 604-689-1535 ------------------------- 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 Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [X] Yes [__] No State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 68,879,336 Shares of no par value Common Stock outstanding as of April 9, 2002.
SILVERADO GOLD MINES LTD. Consolidated Balance Sheets (Expressed in United States Dollars) - -------------------------------------------------------------------------------- February 28, November 30, 2002 2001 ------------- ------------- (unaudited) - -------------------------------------------------------------------------------- Assets Current assets: Cash $ 247,639 $ 17,093 Gold inventory 10,169 11,140 Accounts receivable (note 3) 247,231 2,876 Receivable from related party (note 3) 121,389 ------------- ------------- 626,428 31,109 Mineral properties (note 2) 1,159,529 1,159,529 Buildings, plant and equipment 2,981,360 2,980,200 Accumulated depreciation (2,260,466) (2,185,947) ------------- ------------- 720,894 794,253 ------------- ------------- $ 2,506,851 $ 1,984,891 ------------- ------------- Liabilities and Stockholders' Deficiency Current liabilities: Bank indebtedness $ - $ - Accounts payable and accrued liabilities 681,665 792,395 Loans payable secured by gold inventory 35,729 35,729 Mineral claims payable 316,500 316,500 Due to related party (note 3) - 291,310 Debentures, current portion (note 2) 140,000 140,000 Debenture, current portion (note 2) 75,000 75,000 Debenture, current portion (note 2) 357,734 476,978 ------------- ------------- 1,606,628 2,127,912 Debentures (note 2) 1,705,638 1,705,638 Stockholders' deficiency: Common stock: Authorized: 100,000,000 common shares Issued and outstanding: February 28, 2002 - 62,294,626 shares; November 30, 2001 - 42,423,988 48,581,015 47,000,034 Share subscriptions received 30,000 - Accumulated deficit (49,416,430) (48,848,693) ------------- ------------- (805,415) (1,848,659) ------------- ------------- $ 2,506,851 $ 1,984,891 ------------- -------------
Continuing operations (note 2) Contingencies (notes 2 and 5) Subsequent events (note 6) See accompanying notes to unaudited consolidated financial statements. 1
SILVERADO GOLD MINES LTD. Consolidated Statements of Operations (Expressed in United States Dollars) - --------------------------------------------------------- Three months Three months ended ended February 28, February 28, 2002 2001 (unaudited) (unaudited) - --------------------------------------------------------- Revenue from gold sales $ 971 $ 1,655 Mining, processing, and development costs 18,229 40,660 - --------------------------------------------------------- Loss before the undernoted 17,257 39,005 Other expenses: Accounting and audit 6,182 9,857 Advertising and Promotion 13,896 - Consulting Fees 236,084 - Depreciation 74,519 74,296 General exploration 32,232 6,286 Interest on convertible debentures 45,005 40,938 Legal (201) 14,713 Loss (gain) on foreign exchange (6,343) (194) Management services from related party 45,051 39,922 Office expenses 42,219 33,172 Other interest and bank charges 2,571 1,221 Transfer agent fees and mailing expenses 3,977 3,892 Research 55,288 73,897 - --------------------------------------------------------- 550,480 298,000 Loss and comprehensive loss for the period $ (567,737) $ (337,005) - --------------------------------------------------------- Loss per share - basic and diluted $ (0.01) (0.01) Weighted average number of common shares outstanding 44,536,354 30,636,558 - ---------------------------------------------------------
2
SILVERADO GOLD MINES LTD. Consolidated Statements of Cash Flows (Expressed in United States Dollars) - ------------------------------------------------------------------ Three months Three months ended ended February 28, February 28, 2002 2001 (unaudited) (unaudited) - ------------------------------------------------------------------ Cash provided by (used in): Operating activities: Loss for the period $ (567,737) $(337,005) Depreciation, an item not involving cash 74,519 74,296 Changes in non-cash operating working capital: Accounts receivable (244,355) 98 Gold inventory 971 1,571 Receivable from related party 121,390 - Accounts payable and accrued liabilities: (110,729) 53,069 ------------ ---------- (725,941) (207,971) Financing activities: Bank indebtedness - (3,007) Shares issued for cash 1,218,957 30,000 Repayment of loans payable - (600) Share subscriptions received 30,000 59,000 Due to related party (291,310) 123,636 ------------ ---------- 957,647 209,029 Investing activities: Purchase of equipment (1,160) - Increase in cash 230,546 1,058 ------------ ---------- Cash, beginning of period 17,093 - ------------ ---------- Cash, end of the period $ 247,639 $ 1,058 ------------ ---------- Supplementary cash flow information - ------------------------------------------------------------------ Non-cash activities not reflected in statements of cash flows: Exercise of stock options for reduction in amount due to related party $ 555,000 - Issue of shares in lieu of required payment on replacement debenture 162,897 - Issue of shares for consulting services 183,084 - ------------ ----------
3
SILVERADO GOLD MINES LTD. Consolidated Statements of Stockholders' Equity (Deficiency) (Expressed in United States Dollars) Three months ended February 28, 2002 and year ended November 30, 2001 - -------------------------------------------------------------------------------- Number of Share common Share subscriptions Accumulated shares Capital received deficit - -------------------------------------------------------------------------------- Balance, November 30, 2000 30,589,891 $45,669,977 $ 20,000 $(47,170,719) Year ended November 30, 2001 Loss for the year - - - (1,677,974) Shares issued: On exercise of options for cash 600,000 60,000 - - On exercise of warrants for cash 5,060,000 498,800 - 498,800 Shares issued for subscriptions received in prior year 4,418 20,000 (20,000) - Private placements for cash 4,522,249 470,000 - - Shares issued in lieu of cash payments for replacement debentures 1,647,430 281,257 - - - -------------------------------------------------------------------------------- 11,834,097 1,330,057 (20,000) (1,677,974) - -------------------------------------------------------------------------------- Balance, November 30, 2001 42,423,988 47,000,034 - (48,848,693) Loss for the period ended February 28, 2002 - - - (567,737) Shares issued: On exercise of options for cash 3,700,000 555,000 - - Cash received for shares to be issued 30,000 On exercise of warrants for cash 4,300,000 215,000 Shares issued for consulting fees 1,441,667 183,084 Private placements for cash 8,800,000 465,000 Shares issued in lieu of payment for debentures 1,628,971 162,897 - -------------------------------------------------------------------------------- 19,870,638 1,580,981 30,000 (567,737) - -------------------------------------------------------------------------------- Balance, February 28, 2002 (unaudited) 62,294,626 $48,581,015 $ 30,000 $(49,416,430) - -------------------------------------------------------------------------------- Total ------------ Balance, November 30, 2000 $(1,480,742) Year ended November 30, 2001 Loss for the year (1,677,974) Shares issued: On exercise of options for cash 60,000 On exercise of warrants for cash Shares issued for subscriptions received in prior year - Private placements for cash 470,000 Shares issued in lieu of cash payments for replacement debentures 281,257 - --------------------------------------------------------------- (367,917) - --------------------------------------------------------------- Balance, November 30, 2001 (1,848,659) Loss for the period ended February 28, 2002 (567,737) Shares issued: On exercise of options for cash 555,000 Cash received for shares to be issued 30,000 On exercise of warrants for cash 215.000 Shares issued for consulting fees 183,084 Private placements for cash 465,000 Shares issued in lieu of payment for debentures 162,897 - --------------------------------------------------------------- 1,043,244 - --------------------------------------------------------------- Balance, February 28, 2002 (unaudited) $ (805,415) - ---------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements. 4 SILVERADO GOLD MINES LTD. Notes to Consolidated Financial Statements (Unaudited) (Expressed in United States Dollars) Three months ended February 28, 2002, and February 28, 2001 1. Basis of presentation: The unaudited consolidated balance sheet and the unaudited consolidated statements of operations, stockholders' equity (deficiency) and cash flows include the accounts of the Company and its 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 opinion of management, 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 28, 2002, 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 28, 2002, and February 28, 2001, 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 the Company's annual report on Form 10-K for the fiscal year ended November 30, 2001. 2. Continuing operations: At February 28, 2002, the Company has a working capital deficiency of $980,200, down from $3,880,540 at February 28, 2001, primarily as a result of renegotiating the repayment terms of a portion of the $2,000,000 convertible debentures and related interest. The Company is in arrears of required mineral claims and option payments for certain of its mineral properties at February 28, 2002, in the amount of $316,500 and therefore, the Company's rights to these properties with a carrying value of $315,000 may be adversely affected as a result of these non-payments. The Company understands that it is not in default of the agreements in respect of these properties. The unpaid mineral claims and option payments are included in current liabilities at February 28, 2002. 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 the Company's ability to obtain the continued forbearance of certain creditors, to obtain additional financing to fund its operations and acquisition, exploration and development activities, the discovery of economically recoverable ore on its properties, and the attainment of profitable operations. Current uncertainty with regard to these matters raises substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. 5 SILVERADO GOLD MINES LTD. Notes to Consolidated Financial Statements (Unaudited) (Expressed in United States Dollars) Three months ended February 28, 2002, and February 28, 2001 2. Continuing operations (continued): The Company plans to continue to raise capital through private placements and warrant issues. The Company also plans to option to third parties the Ester Dome and Marshall Dome properties, near Fairbanks, Alaska. No specific third parties have been identified and there can be no certainty that any such parties will be identified in the future. In addition, the Company is 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. On March 1, 2001, the Company completed negotiations to restructure its $2,000,000 convertible debentures. The Company 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. 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 the Company fails to make any payment of principal or interest, the Company must issue shares equivalent in value to the unpaid amounts at 20% below the average market price. On December 11, 2001, the Company issued 1,628,971 shares at the average market price of $0.10 to the holders of the replacement debenture to satisfy the quarterly payments due November 30, 2001. The value of the transaction consists of $119,244 of principal and $43,653 of interest. As at February 28, 2002, $1,860,000 plus $524,892 of accrued interest has been exchanged for replacement debentures. Of its aggregate amount $2,063,372, $357,734 is classified as a current liability and $1,705,638 has been classified as non-current. Remaining debentures of $140,000, plus accrued interest of $45,226 are in default, however, it is unclear whether they will be exchanged for replacement debentures. In February 1999 the Company issued a debenture for $75,000 with interest payable at a rate of 5.0% per annum. The debenture is unsecured and is due February 28, 2002. 6 SILVERADO GOLD MINES LTD. Notes to Consolidated Financial Statements (Unaudited) (Expressed in United States Dollars) Three months ended February 28, 2002, and February 28, 2001 3. Related party transactions: The Company has 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 the Company. The Tri-Con Mining Group are operations, exploration, and development contractors, and have been employed by the Company under contract since 1972 to carry out all of its fieldwork and to provide administrative and management services. Under its current contract dated January, 1997 work is charged at cost plus 15% for operations and cost plus 25% for exploration and development. Cost includes a 15 % charge for office overhead. 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 the Company are not charged. At February 28, 2002, the Company had prepaid $244,711 to the Tri-Con Mining Group for exploration, development and administration services to be performed during the current fiscal year on behalf of the Company. The Tri-Con Mining Group's services for the current fiscal year are focusing mainly on the Company's low rank coal water fuel program as well as corporate planning and preparation for year round production on its Nolan property, and administration services at both its 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 the Company's projects, and including interest charged on outstanding balance at the Tri-Con Group's borrowing costs are shown below:
- -------------------------------------------------------------------------------- February 28, February 28, 2002 2001 - -------------------------------------------------------------------------------- Operations and field services $ 3,168 $ 3,188 Exploration and development services 49,811 15,085 Administrative and management services 44,950 39,923 Research 55,288 73,897 ------------ ----------- $153,217 $132,093 Amount of total charges in excess of Tri-Con costs incurred $ 35,155 $ 29,181 ------------ ----------- Excess amount charged as a percentage of actual costs incurred 22.9% 22.1% ------------ ----------- 7
SILVERADO GOLD MINES LTD. Notes to Consolidated Financial Statements (Unaudited) (Expressed in United States Dollars) Three months ended February 28, 2002, and February 28, 2001 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. Litigation: On February 8, 2002, the Company settled its litigation with Bundy and Christenson, an association of professional law corporations, for $30,000. The litigation pertained to monies owed for quiet title action on mining property and the enforcement rights under an agreement to purchase mining property. The Company paid the settlement in trust to Bundy and Christenson. 6. Subsequent events: (a) Subsequent to February 28, 2002, 1,000,000 common share purchase warrants were exercised at a price of $0.05 and the Company issued 1,000,000 common shares from the treasury for total proceeds of $50,000, of which, $30,000 had been received between December 1, 2001 and February 28, 2002 as subscriptions. (b) On March 11, 2002, the Company issued 1,234,710 shares at the average market price of $0.13 to the debenture holders to satisfy the quarterly payments of principal and interest. The value of this transaction is $160,512 and includes principal of $119,245 and quarterly interest of $41,267. (c) On March 22, 2002, the Company paid $5,000 to the previous operators of the Smith Creek property as part of the acquisition costs under an agreement from 1993. (d) On March 27, 2002, the Company made its annual interest payment of $3,750 to the holder of the $75,000 debenture. (e) Also on March 27, 2002, the Company issued 350,000 shares to the consultants for a portion of their services under the terms of the agreements as reported on form S-8. (f) On April 2, 2002, 2,000,000 common share purchase warrants were exercised at a price of $0.08 per share and the Company issued 2,000,000 common shares from the treasury for proceeds of $160,000. 8 SILVERADO GOLD MINES LTD. Notes to Consolidated Financial Statements (Unaudited) (Expressed in United States Dollars) Three months ended February 28, 2002, and February 28, 2001 6. Subsequent events (continued): (g) On April 2, 2002, the Company completed a private placement of 1,000,000 units at a price of $0.09 per unit. For total proceeds of $90,000. Each unit consists 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 a price of $0.15 until September 3, 2002. (h) On April 2, 2002, the Company completed a private placement of 1,000,000 units at a price of $0.09 per unit. For total proceeds of $90,000. Each unit consists 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 a price of $0.15 until September 3, 2002. 9 Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. PLAN OF OPERATIONS The Company's plan of operations for the next nine months includes its plan to place the Nolan gold project into commercial production. The Company estimates that it will cost approximately $3,000,000 in order to place the Nolan gold project into year round gold production. The Company is currently in negotiations to obtain a loan in the amount of $3,000,000 in order to enable the Company to proceed with this plan of operations. The details of the gold loan have not been finalized and it has not been determined whether the loan would be secured by future gold sales or if it would be an unsecured loan. The Company also plans to proceed with its plan to establish the commercial viability of the low-rank-coal-water-fuel technology. In order to commence the tests necessary to establish commercial viability, the Company has applied for an $8,000,000 grant from the U.S. Department of Energy. If this funding is achieved, the Company plans to its Grant Mill located on the Ester Dome property into the world's first demonstration facility for producing low-rank-coal-water-fuel. The conversion would take approximately one year to complete at an estimated cost of $10,000,000. The Company currently does not have sufficient cash or working capital to proceed with its plan of operation. As discussed above, the Company's plan of operation is subject to achieving the required financing. In addition, the Company will require funding in the amount of approximately $900,000 in order to fund its ongoing operating expenses over the next nine months. Accordingly, the Company will require additional financing in order to finance its current operations. See the discussion of the Company's cash resources and working capital below under Liquidity and Financial Condition. RESULTS OF OPERATIONS Three months ended February 28, 2002 compared to the three months ended February 28, 2001 Revenues Revenue from gold sales decreased to $971 for the three months ended February 28, 2002 from $1,655 for the three months ended February 28, 2001. Revenues in the three month period were attributable to sales of existing gold inventory. The Company anticipates that significant revenues will not be achieved until the Company is able to place the Nolan gold project into production. The Company anticipates that revenues from the Company's low-rank-coal-water-fuel business will not be achieved until commercial feasibility of this technology has been established. Revenues from the Nolan gold project and the low-rank-coal-water-fuel business are contingent upon the Company achieving additional financing. Mining, Processing and Development Costs Mining, processing and development costs decreased to $18,229 for the three months ended February 28, 2002 from $40,660 for the three months ended February 28, 2001, representing a decrease of $22,431. These costs are primarily attributable to mining and processing costs at the Company's mining operations. The decrease was attributable to decreased exploration and development activity by the Company on its mineral properties. The Company anticipates that these mining, processing and development costs will increase once the Company is able to place the Nolan gold project into production. Other Expenses Other expenses increased to $550,480 for the three months ended February 28, 2002 from $298,000 for the three months ended February 28, 2001. This increase in the amount of $252,480 was primarily due to increased consulting and commission costs. Management services attributable to the activities of the Tri-Con Group increased to $45,051 for the three months ended February 28, 2002 from $39,922 for the three months ended February 28, 2001, representing an increase in the amount of $5,129. This increase was primarily the result of increased activity by the Company on its mineral properties. This increased activity also caused general exploration expenses to increase to $32,232 for the three months ended February 28, 2002 from $6,286 for the three months ended February 28, 2001. The Company anticipates that these expenses will continue to increase if the Company is able to achieve additional financing to increase its activities on its mineral properties. Research activities attributable to the Company's low-rank coal water fuel technology decreased to $55,288 for the three months ended February 28, 2002 from $73,897 for the three months ended 10 February 28, 2001, representing a decrease in the amount of $18,609. This decrease is primarily the result of the Company's determination to focus its limited capital resources on its efforts to put its Nolan gold project into year-round production. The Company is still very determined to commercialize its low-rank-coal-water-fuel technology. Office expenses increased to $42,218 for the three months ended February 28, 2002 from $33,172 for the three months ended February 28, 2001, representing an increase in office expenses of $9,046. Office expenses relate to the general operations of the Company. Loss The Company's loss increased to $567,737 for the three months ended February 28, 2002 from $337,005 for the three months ended February 28, 2001, representing an increase of $230,732. This increase in the Company's loss was primarily attributable to the increase in consulting and commissions costs in the amount of $236,084. The Company anticipates that it will continue to incur a loss until such time as the Company can achieve significant revenues from its Nolan gold project. LIQUIDITY AND FINANCIAL CONDITION The Company had cash of $247,639 as at February 28, 2002, compared to cash of $17,093 as at November 30, 2001. The Company had a working capital deficiency of $980,200 as at February 28, 2002, compared to a working capital deficiency of $2,096,803 as of November 30, 2001. The decrease in the Company's working capital deficiency was primarily a result of financings completed during the three months ended February 28, 2002. Cash used in operating activities increased to $725,941 for the three months ended February 28, 2002, compared to $207,971 for the three months ended February 28, 2001. The Company funded the net cash outflow from operating activities of $725,941 primarily through equity sales of its common shares and by an increase in the prepaid expenses to related party balance with the Tri-Con Group. Cash provided by financing activities increased to $957,647 for the three months ended February 28, 2002, compared to $209,029 for the three months ended February 28, 2001. Of the cash provided by financing activities, a total of $1,218,957 was provided by share issuances. Cash provided by financing activities was reduced by an amount of $291,310 on account of the reduction of the amount payable to the Tri-Con Group. Accordingly, the Company financed its operating activities primarily through equity issuances of its common shares. On March 1, 2001, the Company completed negotiations to restructure its $2,000,000 convertible debentures. The Company issued replacement debentures in the aggregate amount of $2,564,400 in consideration of cancellation of the $2,000,000 principal amount 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 the Company fails to make any payment of principal or interest, the Company must issue shares equivalent in value to the unpaid amounts at 20% below the average market price. On December 11, 2001, the Company issued 1,628,971 shares at the average market price of $0.10 to the holders of the replacement debenture to satisfy the quarterly payments due November 30, 2001. The value of the transaction consists of $119,244 of principal and $43,653 of interest. As at February 28, 2002, $1,860,000 plus $524,892 of accrued interest has been exchanged for replacement debentures. Of its aggregate amount $2,063,372, $357,734 is classified as a current liability and $1,705,638 has been classified as non-current. Remaining convertible debentures of $140,000, plus accrued interest of $45,226 are in default, however, it is unclear whether they will be exchanged for replacement debentures. The Company is also in arrears of required mineral property claims and option payments of $316,500 and therefore the rights to these properties with a carrying value of $315,000 may be adversely affected. The Company anticipates continuing to rely on equity sales of its common shares in order to continue to fund its business operations. Issuances of additional shares will result in dilution to existing shareholders of the Company. The Company is pursuing debt financing in the principal amount of $3,000,000 in order to place the Nolan gold project into commercial production. The terms of any debt financing for the Nolan gold project have not been finalized and may include the granting of security against future gold revenues. In addition, the Company is attempting to obtain a grant of $10,000,000 in order to proceed with establishing the commercial viability of the Company's low-rank-coal-water-fuel business. There is no assurance that the Company will achieve any of additional sales of its equity securities or arrange for debt or other financing for its planned business expansion. 11 Uncertainty as to the Company's ability to meet its liabilities and commitments as they become payable causes doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern and recover the amounts recorded as mineral properties is dependant on its ability to obtain the continued forbearance of its creditors, to obtain additional financing and/ or the entering into joint venture agreements with third parties in order to complete exploration, development and production of its mineral properties, the continued delineation of reserves on its properties and the attainment of profitable operations. There is no assurance that such items can be obtained by the Company. Failure to obtain these may cause the Company to significantly decrease its level of exploration and operations and to possibly sell or abandon certain mineral properties or capital assets to reduce commitments or raise cash as required. 12 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. The Company completed the following unregistered sales of its securities during the three months ended February 28, 2002: 1. On December 11, 2001, the Company issued 1,628,971 common shares at the average market price of $0.10 to the holders of the replacement debentures to satisfy the quarterly payments due under the replacement debentures on November 30, 2001. 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 December 14, 2001, the Company issued 500,000 common shares at a price of $0.05 pursuant to the exercise of outstanding warrants for total proceeds of $25,000. 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. No commissions or fees were paid. 3. On December 19, 2001, the Company completed a private placement of 2,500,000 units at a price of $0.04 per unit for total proceeds of $100,000. Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant entitles the holder to purchase one common share at a price of $0.10 until December 19, 2002. Commissions totaling $10,000 were 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. 4. On January 22, 2002, the Company issued 3,800,000 common shares to two investors at a price of $0.05 pursuant to the exercise of outstanding warrants for total proceeds of $190,000. The sales were completed pursuant to Regulation S of the Act on the basis that the purchasers were non-U.S. persons, as defined under Regulation S of the Act. No commissions or fees were paid. 5. On January 30, 2002, the Company issued 3,700,000 shares to the Tri-Con Group for proceeds of $550,000. These shares were issued pursuant to Section 4(2) of the Act. The proceeds were applied to reduce a liability to the Tri-Con Group in the amount of $291,310 and to pay amounts due to the Tri-Con Group in respect of services provided. The balance of $121,389 has been applied as a pre-paid expense on account of future services to be provided to us by the Tri-Con Group. 6. On February 5, 2002, the Company completed a private placement of 1,000,000 units at a price of $0.10 per unit for total proceeds of $100,000. Each unit consists of one common share and one common share purchase warrant. Each common share purchase warrant entitles the holder to purchase one common share at a price of $0.15 until February 7, 2003. Commissions totaling $10,000 were 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. 7. On February 5, 2002, the Company completed a private placement of 5,300,000 units at a price of $0.05 per unit for total proceeds of $365,000 to three investors. Each unit consists of one common share and one-half of a common share purchase warrant. Each common share purchase warrant entitles the holder to purchase one common share at a price of $0.10 until February 7, 2003. Commissions totaling $10,000 were 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. 13 In addition, the Company completed the following registered sales of its securities during the three months ended February 28, 2002: 1. On February 1, 2002 the Company issued 1,091,667 shares to certain consultants for a portion of their services under the terms of their respective consultant agreements. The issuance of these shares was registered on Form S-8. 2. On February 15, 2002, the Company issued 350,000 shares to certain consultants for a portion of their services under the terms of their respective consultant agreements. The issuance of these shares was registered on Form S-8. Item 3 Default Upon Senior Securities The Company is in default of obligations pursuant to convertible debentures in the aggregate principal amount of $140,000, plus accrued interest of $45,226. The Company is attempting to negotiate the issuance of replacement debentures in exchange for the amount of indebtedness owed to the investor. Item 4 Submission of Matters to a Vote of Security Holders No matters were submitted to our security holders for a vote during our first quarter ended February 28, 2002. Item 5 Other Information None. Item 6 Exhibits and Reports on Form 8-K None. 14 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. DATE: April 15, 2002 SILVERADO GOLD MINES LTD. /s/ G.L. Anselmo G.L. Anselmo President Chief Executive Officer (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer) 15 -----END PRIVACY-ENHANCED MESSAGE-----