-----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, BWTIX1s9e+XSwLsBljmAjr+FW10DKZbMFfvyNlblAGcG12MEm/XjPZPdGlrxQTns TYCU5YTUDuKS2XMHZjwf0A== /in/edgar/work/0001096906-00-000322/0001096906-00-000322.txt : 20001115 0001096906-00-000322.hdr.sgml : 20001115 ACCESSION NUMBER: 0001096906-00-000322 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANSBURY HOLDINGS CORP CENTRAL INDEX KEY: 0000093566 STANDARD INDUSTRIAL CLASSIFICATION: [1400 ] IRS NUMBER: 870281239 STATE OF INCORPORATION: UT FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-06034 FILM NUMBER: 763879 BUSINESS ADDRESS: STREET 1: 8801 E HAMPDEN AVE STREET 2: STE 200 CITY: DENVER STATE: CO ZIP: 80231 BUSINESS PHONE: 7207481407 MAIL ADDRESS: STREET 1: PO BOX 370010 CITY: DENVER STATE: CO ZIP: 80237 FORMER COMPANY: FORMER CONFORMED NAME: STANSBURY MINING CORP DATE OF NAME CHANGE: 19901003 10-Q 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the Quarterly Period ended September 30, 2000 Commission File Number: 0-6034 STANSBURY HOLDINGS CORPORATION -------------------------------------------------- (Exact Name of Issuer as Specified in its Charter) UTAH 87-0281239 - - ------------------------------- --------------------------------------- (State or Other Jurisdiction of (I.R.S. Employer Identification Number) Incorporation or Organization) 8801 East Hampden Avenue, Suite 200, Denver, CO 80231 ----------------------------------------------------- (Address of Principal Executive Offices) (720) 748-1407 ---------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ X ] NO [ ] Indicate the number of shares outstanding of the issuer's classes of common stock as of the latest practicable date. At September 30, 2000, there were 94,748,901 common shares issued and outstanding, $.001 par value. PART 1 - FINANCIAL STATEMENTS STANSBURY HOLDINGS CORPORATION AND SUBISIDARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2000 2000 ------------ Assets Current Assets: Inventory $ 64,848 Prepaid expenses $ 43,982 Other $ 9,916 ------------- Total Current Assets $ 118,746 Land $ 120,000 Property and Equipment, at cost: Undeveloped mineral claims and projects, using full-cost method $ 23,328,237 Los Banos exfoliation plant $ 569,102 Buildings $ 850,000 Other property and equipment $ 6,219 ------------- $ 24,753,558 Less: accumulated depreciation $ (35,233) ------------- Net Property and Equipment $ 24,718,325 Other Assets: Reclamation bonds $ 45,100 Investment in Resource Vermiculite LLC $ 126,088 Deposits $ - ------------- Total Other Assets $ 171,188 Total Assets $ 25,128,258 ------------- Liabilities and Stockholders' Equity Current Liabilities: Bank overdrafts $ 62,159 Elk Creek acquisition obligations $ 1,072,500 Los Banos acquisition obligation $ 350,000 Sweetwater acquisition obligation $ 663,000 Current installments of long-term debt $ 820,718 Convertible notes payable to officers and shareholders $ 194,724 Convertible note payable to related party $ 130,000 Accrued interest $ 695,309 Trade accounts payable $ 809,980 ------------- Total Current Liabilities $ 4,798,390 Long-Term Debt $ - ------------- Total Liabilities $ 4,798,390 ------------- Stockholders' Equity: Common stock, par value $0.001, authorized 100,000,000, issued and outstanding 94,748,901 and 48,159,234 at September 30, 2000 and 1999, respectively $ 94,749 Paid-in capital $ 31,998,150 Deferred interest $ (88,691) Accumulated deficit $(11,674,340) ------------- Total Stockholders' Equity $ 20,329,868 ------------- Total Liabilities and Stockholders' Equity $ 25,128,258 ------------- See Accompanying Notes to Consolidated Financial Statements STANSBURY HOLDINGS CORPORATION AND SUBISIDARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTH'S ENDING SEPTEMBER 30, 2000 AND 1999 2000 1999 -------------- ------------- Sales $ 9,756 0 Cost of sales $ - 0 Gross profit $ 9,756 $ - Expenses: Operating $ 156,889 0 General and administrative $ 686,314 $ 352,809 Interest, conversion premiums, and equity inducements $ 435,884 $ 593,428 -------------- ------------- Total Expenses $ 1,279,087 $ 946,237 Loss from operations $ (1,269,331) $ (946,237) Other income $ - $ 65 Loss before extraordinary item $ - $ - Extraordinary gain from debt restructuring $ - $ - Net Loss $ (1,269,331) $ (946,172) Basic and diluted earnings per share: Loss from continuing operations $ (0.02) $ (0.02) Extraordinary gain $ - $ - Net Loss $ (0.02) $ (0.02) Basic and diluted weighted average shares outstanding 69,914,869 47,203,585 STANSBURY HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended September 30 2000 1999 ------------ ------------ OPERATING ACTIVITIES Net Income (Loss) $(1,269,331) $ (946,172) Adjustments to reconcile Net Income (loss) to net cash provided by operations: Stock issued for interest,Debt inducement and $ 661,974 compensation $ 711,854 Depreciation $ 670 Prepaid Expenses $ (32,342) $ 4,823 Inventory $ (45,888) Accounts Payable $ 179,376 $ 44,289 Other Assets $ (3,500) Accrued Interest Payable $ 592 Other Current Liabilities $ 2,688 $ (6,353) Net cash provided by (used in) Operating Activities $ (502,931) $ (194,389) INVESTING ACTIVITIES Mineral property $(2,211,263) $ 25,833 Land $ (120,000) Other Property and Equipment $(2,503,143) $ 2,307 Development Costs $ (14,632) $ 53,854 Net cash provided by (used in) Investing Activities $(4,849,038) $ (81,994) FINANCING ACTIVITIES Bank Overdraft Payments on Elk Creek obligations $ (67,000) Payments on Sweetwater obligations Payments on convertible notes $ 311,680 Satisfaction on convertible notes to shareholders $ (432,945) Increase in Accrued Interest on Convertible notes and Notes payable $ 40,649 Stock Issued for conversion of Term Debt $ 5,342,037 $ 440,035 Net cash provided by (used in) $ 5,342,037 $ 292,419 Financing Activities Net cash increase for period $ (9,932) $ 16,036 Cash at beginning of period $ 52,228 $ (7,648) Cash at end of period $ (62,160) $ 8,388 STANSBURY HOLDINGS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Stansbury Holdings Corporation ("Stansbury") was incorporated in 1969 under the name Stansbury Mining Corporation. In 1985, Stansbury changed its name to Stansbury Holdings Corporation. During June 1999, Stansbury acquired Elk Creek Vermiculite, Inc. ("Elk Creek"), and its wholly owned subsidiary, Dillon Vermiculite, LLC ("Dillon"), as well as formed International Vermiculite Montana), Inc., as a wholly owned subsidiary. In May 2000, Stansbury acquired the Los Banos Exfoliation Plant through the company's wholly owned California subsidiary, International Vermiculite (California), Inc. In July, 2000, Stansbury acquired Sweetwater Garnet, Inc., as a wholly owned subsidiary; Sweetwater Garnet, Inc., owns the Sweetwater Garnet Mine and concentration mill in Madison County, Montana, and the Sweetwater Garnet Finishing Mill in near Dillon, in Beaverhead County, Montana. Stansbury, Elk Creek, Dillon, International Vermiculite (Montana), Inc., International Vermiculite (California), Inc., and Sweetwater Garnet, Inc., are referred to collectively herein as the "Company." The Company's business is the acquisition, exploration, and development of industrial mineral properties, particularly vermiculite and garnet mineral sites. NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION - The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. These statements do not include any adjustments that might result from the outcome of this uncertainty. These financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, such interim statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and the results of operations and cash flows for the interim periods presented. The results of operations for these interim periods are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements and footnotes for the year ended June 30, 2000, filed with the Company's Form 10-KSB. Principles of Consolidation --------------------------- The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. Cash and Cash Equivalents ------------------------- The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Inventory --------- Inventory is stated at the lower of cost or market. Undeveloped Mineral Claims and Projects --------------------------------------- The Company follows the full-cost method of accounting for its mineral claims and projects. Accordingly, all costs associated with the acquisition, exploration, and development of mineral properties, including directly related overhead costs, are capitalized. Once these properties are developed, the capitalized costs will be amortized on the unit-of-production method using estimates of proved reserves. In addition, the capitalized costs are separated into cost centers on a state-by-state basis. The capitalized costs for each cost center are subject to a "ceiling test", which limits such costs to the aggregate of the estimated present value of future net revenues from proved reserves, plus the lower of cost or fair market value of undeveloped and unproved properties. Other Plant, Property, and Equipment ------------------------------------ Other plant, property and equipment, consisting of the Los Banos exfoliation plant, two buildings, and office equipment, are recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which are 20 years for the plant and buildings, and 5 years for the office equipment. Revenue Recognition ------------------- Revenue is recognized when products are shipped to customers. Income Taxes ------------ The Company uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. This method also requires the recognition of future tax benefits such as net operating loss carryforwards, to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Earnings (Loss) Per Share ------------------------- Basic earnings (loss) per share are based on the weighted average shares outstanding. Outstanding stock options and convertible debt obligations are generally treated as common stock equivalents for purposes of computing diluted earnings per share. However, since the Company reported net losses for the years ended June 30, 2000 and 1999, these common stock equivalents are excluded from the computation of diluted earnings per share because their effect on net loss per share would be anti-dilutive. Use of Estimates ---------------- The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - GOING CONCERN STATEMENT The Company emerged from Chapter 11 bankruptcy proceedings during 1985, and has been non-operating since that time until June, 2000. At September 30, 2000, its negative working capital was approximately $4,798,390 and accumulated deficit was approximately $11,674,340. During 1999, the Company hired a new president who also now serves as chairman of the Board of Directors and chief executive officer. Eldon W. Brickle, Chief Operating Officer and Executive Vice-President, was elected to the Board on August 18, 2000. James R. Hindman, Martin J. Peskin, Edward C. Stanojev, Jr., and Jeff Wertz each resigned from the Board on August 18, 2000, in order to exempt themselves from certain common stock lock-up agreements being required by an underwriter who has agreed on a best efforts basis to raise a private placement of $2.5 million for the company. There can be no assurances that the Company or its joint venture partner will be successful in obtaining the financing necessary to develop its mineral reserves. Nor can there be any assurances that other sources of funds can be obtained to cover general and administrative costs. The Company's independent public accountants have included a "going concern" emphasis paragraph in their audit report accompanying the June 30, 2000, consolidated financial statements reported in the Company's 10K-SB for that reporting period. The paragraph states that the Company's recurring losses and negative working capital raise substantial doubt about the Company's ability to continue as a going concern and cautions that the financial statements do not include adjustments that might result from the outcome of this uncertainty. Management believes that, despite the financial and funding difficulties going forward, it now has a business plan that, if successfully funded and executed, will result in the development of its mining claims thereby improving operating results. NOTE 3 ACQUSISITION OF SWEETWATER GARNET During July 2000, Stansbury acquired all of the outstanding shares of Sweetwater Garnet, Inc., a Nevada corporation qualified to do business in Montana. The acquisition was accounted for as a purchase and the results of Sweetwater Garnet's operations were included in the Company's 2000 consolidated statements of operations from the date of acquisition. Total consideration included the issuance of 15,560,000 common shares valued at $4,140,000, the assumption of $480,000 in debt, and payment of legal fees of $7,500. The assets of Sweetwater Garnet represent various developed and undeveloped mining interests, and an office and mill building, located in the state of Montana. The total consideration of $4,627,500 was allocated as follows: Land $ 120,000 Equipment 1,750,000 Building 750,000 Mineral Property 2,007,500 Debt obligations assumed by Stansbury included a $330,000 note payable due to a creditor of Sweetwater Garnet (paid in full at closing), and a $1,000,000 debenture satisfied at closing by the issuance of 3,000,000 commons shares of Stansbury and the grant of a royalty interest, and a $150,000 debt obligation to the parent of Sweetwater Garnet of which $25,000 was paid at closing, with a note and mortgage on the Sweetwater Garnet assets given in favor of the parent/Seller. NOTE 5 - SWEETWATER GARNET, INC., ACQUISITION OBLIGATIONS -------------------------------------- Obligations resulting from the Sweetwater Garnet acquisition (see Note 4) at September 30, 2000, consisted of the following: One promissory note payable $ 38,000 One promissory note payable, 2nd mortgage to Tanqueray 125,000 Promissory Note and Mortgage payable To source of funds for closing 500,000 ---------- $ 663,000 ========== The promissory note for $38,000 bears interest at the rate of 12%, and is due currently. The promissory note for $125,000 bears interest at the rate of 12%, and is due as follows: $25,000 plus accrued interest on August 28, 2000; $50,000 plus accrued interest on September 28, 2000; and $50,000 plus accrued interest on October 28, 2000. The entire amount is currently due and payable. The Promissory note payable to the source of funding for the $500,000 utilized to effect the closing on the acquisition is payable interest monthly, beginning August 28, 2000, and on the same day of each month thereafter, at the rate of 12% per annum. Principal is payable quarterly at 30% of the profit margin of each ton of vermiculite concentrate produced and sold by the Dillon Project, with a balloon payment of any unpaid principal and interest due 36 months following the date of acquisition. The note payments are current. NOTE 6 - COMMITMENTS AND CONTINGENCIES Effective June 1, 1999, the Company entered into a 37-month lease agreement for office space in Denver, Colorado. Rent is payable in advance in six-month increments. Rent expense for the year ended June 30, 1999 was $2,000. Minimum future annual rent payments are $24,000 for each of the years ending June 30, 2000 and 2001, and $22,000 for the year ending June 30, 2002. The Company is obligated to the federal government for approximately $24,100 per year to maintain the ownership of its mineral claims. These funds are due and payable by noon, on September 1, each year, and have been aid through August 31, 2001. Various legal proceedings and claims are pending against the Company. Some of the plaintiffs in these matters are certain of the Company's shareholders and former officers, and others are trade creditors. Actions brought by shareholders and former officers generally pertain to default in the repayment terms of amounts loaned to the Company. The Company is accruing interest on these amounts pursuant to the terms of the underlying obligations. At September 30, 2000, the principal amount of these obligations is included in long-term debt under the caption "officers, directors and shareholders." Actions brought by certain trade creditors and others have resulted in the Company issuing promissory notes payable to those creditors. The Company is accruing interest on these amounts pursuant to the terms of the promissory notes. At September 30, 2000, the principal amount of these promissory notes is included in long-term debt under the caption "other". Amounts due other trade creditors who have brought action against the Company are included in trade accounts payable. The total of these amounts included in the balance of accounts payable at September 30, 2000, was approximately $170,000. An action has also been brought by the Company with respect to the debt obligation that resulted from the Elk Creek acquisition. Management believes that the matter will be settled for an amount not greater than the recorded amount of that obligation at September 30, 2000 of $772,500. ITEM 2 - PLAN OF OPERATIONS GENERAL The Company is currently directing its efforts to: (1) Bringing into production the Dillon (Montana)Vermiculite Mine and Concentration Mill, by assuming operational control of the project. (2) Bringing into production the Los Banos (California) Exfoliation Plant, which the Company acquired in May of 2000. (3) Acquiring, and preparing for operation, the Sweetwater Garnet (Montana) Mine and concentration Mill The summer quarter (July 1-September 30, 2000), was significantly impacted by the forest fires which ravaged southwestern Montana. The United States Bureau of Land Management and United States Forest Service effectively shut down mining and milling operations at the company's facilities on the public domain in Ravalli, Beaverhead and Madison Counties. The State of Montana took similar action, which supplemented the shutdown on State lands. Through repeated efforts, the Company was able to obtain exemptions from complete closure, in order to continue rehabilitation and reconstruction of the Dillon Vermiculite Mill in Beaverhead County, albeit with greatly reduced hours of operation and considerable expense in installing and maintaining additional fire suppression capability. The inability to operate the Dillon Mine and Mill for much of the summer impacted the ability to deliver product to the Los Banos Exfoliation Plant, and had a negative impact on both production of exfoliated product, and the resulting inability to build inventory for sale, although the Company did have occasional sales from inventory on hand at the time of acquisition. Production at Dillon resumed slowly during October, and product shipments to Los Banos are expected to be adequate to meet customer demand in the fourth calendar quarter, 2000. In July, 2000, the Company acquired Sweetwater Garnet, Inc.(a Nevada corporation qualified to do business in Montana), from Absolute Resources Corp., an Alberta, Canada, publicly traded company. Sweetwater Garnet, Inc., now a wholly owned subsidiary of the Company, is the owner of (1) an 1860 acre mineral lease in Madison County, Montana, upon which a garnet concentrating mine and mill are located, and (2) the owner in fee of a finishing mill located on four acres in Beaverhead County, Montana, about six miles south of the town of Dillon, Montana, adjacent to Interstate 15 and a rail siding. The Company is currently adding minor improvements to the finishing mill, and purchasing garnet ore concentrate from an independent miner. The Company plans to start-up the finishing mill, to commence mining on its mineral lease, and to begin shipping garnet product in the fourth quarter, 2000. DESCRIPTION OF PROPERTIES AND OPERATIONS A. VERMICUILTE PROPERTIES AND OPERATIONS (1) THE DILLON VERMICULITE PROJECT MINE AND MILL (a) UNPATENTED LODE MINING CLAIMS: The mining property consists of 95 unpatented lode-mining claims of approximately 20 acres each, or a total of 1300 acres (slightly over two square miles). Prior owner's exploration indicated that drilling had confirmed sufficient ore at a 25% grade to support the mill at 30,000 tons of concentrate output a year for a period of twenty years. (b) MINE AND CONCENTRATION MILL: The concentration mill consist of a building of approximately 60 by 40 feet, with a thirty-foot ceiling. Outside the building, the mill "front-end" consists of certain gross screening processes to remove large waste rock, a dryer to remove moisture, and a pre-feed storage bin. Inside the mill are four double-screened shaker screens feeding up to twelve winnowing boxes. Concentrated product from the winnowers is stored in three silos adjacent to the mill. Fuel tanks and a power plant are located outside the mill building. As designed, the mill is expected to be able to take up to 35 tons an hour of ore feed, and yield 4 to 5 tons per hour of concentrate. Tailings are returned to the open pit from whence the ore is mined, and reclaimed in place by contouring and seeding the surface. (2) THE HAMILTON VERMICULITE PROJECT (a) FEE LAND AND IMPROVEMENTS: The Company owns a small office building and surrounding land (1.25 acres) at Victor Siding, Montana (southwestern Montana), which can be used for a field office (the "Field Office Property"), and which building is adequate to use presently to expand exploration activities. (b) UNPATENTED LODE MINING CLAIMS AND MILL SITE CLAIMS: The Company is the holder of 96 unpatented lode-mining claims in Ravalli County, Montana, which were formerly managed and developed under the name of "Western Vermiculite". These claims and the development of a mining and milling project to exploit the Skalkaho Mountain vermiculite deposit covered by these claims is referred to as the "Hamilton Vermiculite Project". A "mineral deposit" or "mineralized material" is a mineralized body which has been delineated by appropriately spaced drilling and/or underground sampling to support a sufficient tonnage and average grade of metal(s). Such a deposit does not qualify as a reserve, until a comprehensive evaluation based upon unit cost, grade, recoveries, and other material factors conclude legal and economic feasibility. Under the original Western Vermiculite Project, the Company proposed to build an open pit vermiculite mine, haul road, ore beneficiation plant, host rock waste stockpile, water storage tanks, sedimentation ponds and administrative and maintenance buildings. The Company has commenced construction on this original project proposed as part of the Environmental Impact Statement study. At this current point in time, the Company's mining experts have recommended that, as part of the new Hamilton Vermiculite Project, mining and processing on the vermiculite property be commenced with a small mill designed to produce the larger sized vermiculite concentrates (Sizes 0, 1, and 2). The Company's 96 unpatented mining and mill site claims, comprising approximately 1,750 acres, are located about 11 air miles East and slightly North of Hamilton, Montana. Access to the property is by an improved, private road. The nearest rail siding, located on the Montana Rail Link Railroad, is an additional 9 miles North of Hamilton, Montana, at Victor Crossing, Montana. The mine proposed in the Environmental Impact Statement ("EIS") would be located on ABM Ridge and would involve disturbance of up to approximately 77 acres. A portion of the permit area is comprised of unreclaimed land disturbed by previous mining activities. Prior mining operations at the proposed project site are documented in the EIS, and remnants of these operations are evident on the site. At the request of the US Forest Service, the Company performed reclamation work at the proposed mine site in September 1995. The Company's vermiculite deposit near Hamilton, Montana was first identified as a potential deposit in the 1930s. During the summer of 1986 the Company conducted a drilling program on the Hamilton vermiculite deposit. The drilling was performed by Boyles Brothers Drilling Company of Spokane, Washington, and consisted of 90 diamond core drill holes covering the ABM Ridge and Horse Ridge areas. The drilling program produced over 9,500 feet of core. The core was split and representative samples of each five-foot section of core were analyzed by an independent laboratory for vermiculite content. An estimate of the contained vermiculite deposit in the Company's Hamilton property was made based on the analyses of the drilling program samples. An estimate made in 1987 by Western Resources Company and indicated proven and probable ore reserves of 6.3 million tons of ore containing 628,000 tons of vermiculite. The Company is aware that there are a number of variables and assumptions that enter into the calculation of proven (verified by drilling) and probable (extrapolated from nearby drilling) ore deposits. These include assumptions of in-ground ore density and the limitation of an acceptable ore grade cutoff. There are other exposures of vermiculite ore outside ABM Ridge and Horse Ridge and the Company notes that the area covered by the 1986 drilling program was only 33 acres compared to a total 1,750 acres currently under claim. The Company assumes that additional drilling will verify additional deposits within the ore body. (3) THE LOS BANOS EXFOLIATION PLANT: The Los Banos Exfoliation Plant, located in the San Joaquin valley of central California, was acquired by the Company in May, 2000. The facility consists of two rotary furnaces for the exfoliation of vermiculite, and certain ancillary equipment. The Plant is capable of processing 5000 tons of product per year. All exfoliate product processed by the plant has been sold to customers in the San Joaquin Valley. The Company, subsequent to this reporting period, has entered into a contract to purchase a larger facility in which to relocate the equipment, and in which it may expand production facilities to up to 20000 tons per year. Additionally, the company owns perlite furnaces which it intends to install in the new facility, with a capacity of 10000 tons per year of expanded perlite. (4) CURRENT VERMICULITE MARKET AND COMPETITION All of the vermiculite that is now being mined in the United States comes from mines in Virginia and South Carolina. W.R. Grace & Company has a large vermiculite operation near Enoree, South Carolina, which is capable of producing approximately 100,000 short tons of vermiculite concentrate per year. Virginia Vermiculite Ltd. produces vermiculite from a mine near Woodruff, South Carolina, and from a mine near Louisa, Virginia. The Company believes that the combined output of Virginia Vermiculite Ltd. Is approximately 90,000 tons per year. Both Grace and Virginia Vermiculite consider their reserve and production data to be confidential so the Company's estimates of their production are approximations. There is one other small mining operation in South Carolina. This operation was for many years known as Patterson Vermiculite and was recently sold to Palmetto Vermiculite (now Virginia Vermiculite). This operation has historically produced vermiculite at the rate of 15,000 tons per year. The sum total of all three companies is an estimated maximum production capacity of 205,000 short tons per year. The Company believes that vermiculite produced from its Dillon property will be competitive with South Carolina and Virginia sources throughout the western United States and Canada. There is no vermiculite mine currently active in the western United States. Currently, substantially all of the vermiculite imported into the United States and Canada comes from either the Peoples Republic of China or the Republic of South Africa. The amount of vermiculite arriving at ports in California and Washington is quite small and relatively high priced. Although the possibility of larger and lower cost shipments of imported vermiculite landing on the Pacific Coast is possible, the Company believes that the information available at this time is insufficient to allow it to reasonably predict its potential impact on the marketability of its vermiculite ores. B. GARNET PROPERTIES AND OPERATIONS On July 28, 2000, the Company acquired Sweetwater Garnet, Inc.(a Nevada corporation qualified to do business in Montana), from Absolute Resources Corp., an Alberta, Canada, publicly traded company. Sweetwater Garnet, Inc., now a wholly owned subsidiary of the Company, is the owner of the Sweetwater Garnet Mine and Mill Project. The Sweetwater Garnet Mine and Mill Project consists of 1860 acre lease in Madison County, Montana, upon which a garnet concentrating mine and mill are located, and a finishing mill located on four acres of fee land in Beaverhead County, Montana, about six miles south of the town of Dillon, Montana, adjacent to Interstate15 and a rail siding. The acquisition was completed on July 28, 2000. The garnet facilities have a fully permitted capacity of at least 12,000 tons per year of finished garnet, which in the past has been sold to the abrasives and water treatment industries. With modest expenditures, the mine and two mills can be increased to 20,000 tons per year output, which represents 20% of current United States demand. The Plant building can house further capacity increase up to 50,000 tons per year. Industrial grade garnet, used in the abrasives industry, and in water-jet cutting and water treatment facilities, sells generally for $180 to $225 per ton, depending on size. The facilities of Sweetwater Garnet, Inc., produce the full suite of sizes used in the industry. The known ore body covers an extensive area from the surface to an average depth of nine feet, with an estimated resource able to supply 16 years of ore to the mills at a production rate of 20,000 tons of finished garnet per year. C. LIQUIDITY AND FINANCE Prior to 1999, the Company had been inactive and non-operating for years; consequently, it is questionable as to whether or not it can remain a going concern. The primary activity in the past few years has been to preserve and maintain mineral leases and claims. No actual mining has occurred since the Company acquired such properties in 1984, other than the operations commenced in December, 1999. Other than the revenues from recent production, the Company has had no income since 1991, and has utilized proceeds of loans from shareholders and the issuance of capital stock for meeting its operating capital commitments. Funding for Company general and administrative expenses is not expected to be satisfied by this source, and further funding from shareholders is expected to be required in the 2000-2001 fiscal year. PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS LEGAL PROCEEDINGS Pending actions against the Company, as of November 10, 2000, include the following: (1) An action against the Company by Ellsworth, Wiles & Chalphin, P.C., filed in the Court of Common Pleas, Bucks County, Pennsylvania, on September 14, 1998. James G. Wiles ("Wiles") acted as former counsel to the Company as partner in Ellsworth, Wiles & Chalphin, P.C. The complaint alleges $69,654.95 is due for legal services rendered by Wiles on behalf of the Company. The matter has been settled for $60,000, to be paid on a scheduled pay-out. (2) The Montana Department of Environmental Quality issued two Notices of Noncompliance regarding disturbances at the Dillon Vermiculite Property and the Hamilton Property with Civil penalties totaling $42,950. With respect to Dillon Project, the Company is currently negotiating with the Department of Environmental Quality to pay $20,000 and to complete $20,000 in reclamation work on various abandoned mine sites around the State. With respect to the Hamilton Project, the proposed penalty is $500. (3) A Notice of default on the note with Nevada Vermiculite ,L.L.C. that the Company has failed to make a $130,000 payment plus interest due October 28,1999. Management is diligently pursuing financing to cure the default. No action as been filed by the claiming party. (4) An agreement between the Company and four other co-plaintiffs against Resource Vermiculite, L.L.C.. The court has ordered that the Company be substituted as plaintiff in place of all other plaintiffs as a result of that agreement. The Company is currently in the process of seeking settlements with the defendant. (5) A judgment obtained by Dorsey & Whitney, a general partnership, in December, 1994, for $52,683 in principal, along with prejudgment interest of $32,527, the total amount of which is $85,210 and is accruing interest at an annual rate of 12% from December 1994; at June 30, 2000 a proposed settlement of $90,000 was negotiated with agreement received subsequent to fiscal year end. (6) A judgment obtained by Martineau & Co. in Salt Lake City, Utah, for $12,587, (7) A judgment obtained by Bruce Blessington, in Salt Lake County, Utah, for $14,674. These judgments remain due and payable by the Company as of June 30, 2000. ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3 - DEFAULTS UPON SENIOR SECURITIES None. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5 - OTHER INFORMATION None. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) 27.1 Financial Data Schedule (b) There were no reports on Form 8-K filed during the three months ended September 30, 2000. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DATED: November 13, 2000 STANSBURY HOLDINGS CORPORATION By:/s/ Aldine J. Coffman, Jr. ALDINE J. COFFMAN, JR., Chief Executive Officer and President By:/s/ Dennis R. Staal DENNIS R. STAAL, Chief Financial Officer and Treasurer EXHIBIT INDEX EXHIBIT METHOD OF FILING - - ------- ----------------------------- 27. FINANCIAL DATA SCHEDULE Filed herewith electronically EX-27 2 0002.txt
5 3-MOS JUN-30-2001 JUL-1-2000 SEP-30-2000 0 0 0 0 64,848 118,746 24,753,558 35,233 25,128,258 4,798,390 0 0 0 94,749 0 25,128,258 9,756 9,756 0 0 1,279,087 0 435,884 (1,269,331) 0 (1,269,331) 0 0 0 (1,269,331) (.02) (.02)
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