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FORM 10-KSB/A-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended - June 30, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission file number 000-30065
IRON MASK MINING COMPANY
(Exact name of registrant as specified in its charter)
Idaho Unavailable
State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
656 Cedar Street
Ponderay, Idaho 83852
(Address of principal executive offices, including zip code.)
(208) 263-3834
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
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 [ ] NO [ x ]
Check if no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is contained herein, and no disclosure will be contained,
to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ ]
State Issuer's revenues for its most recent fiscal year.
June 30, 2000 - $-0-.
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There is no market for the voting stock of the Registrant. There are
approximately 18,229,918 shares of common voting stock of the
Registrant held by non-affiliates.
Issuers involved in Bankruptcy Proceedings during the past Five
Years. Not Applicable.
State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date: June 30,
2000 - 22,177,316 shares of Common Stock
Documents Incorporated by Reference
1. Form 10SB Registration Statement (SEC File #000-30065) and all
amendments thereto, which was filed on March 22, 2000, with the
Securities and Exchange Commission and all exhibits thereto.
2. All reports filed with the Securities and Exchange Commission
after March 22, 2000.
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TABLE OF CONTENTS
Item 1. Description of Business
Item 2. Description of Property
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Market for Common Equity and Related Stockholder Matters
Item 6. Management's Discussion and Analysis or Plan of
Operation
Item 7. Financial Statements
Item 8. Changes in and Disagreements with Accounting
and Financial Disclosure
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section 16(a)
Of the Exchange Act
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial
Owners and Management
Item 12. Certain Relationships and Related Transactions
Item 13. Exhibits and Reports on Form 8-K
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PART I
ITEM 1. BUSINESS.
Background
IRON MASK MINING COMPANY (the "Company") is an exploration stage
enterprise formed under the laws of the State of Idaho, on May 16,
1957, to engage in the business of mining.
From 1957 to 1991 the Company was active in the business of
mining. From 1991 to February 1999, the Company was inactive.
On March 5, 1999, the Company acquired all of the issued and
outstanding shares of common stock of Yellow Pine Resources, Inc. in
exchange for 6,000,000 shares of the Company's common stock.
Current Operations
The Company is engaged in the business of mining. The Company
conducts its operations through its wholly owned subsidiary
corporation, Yellow Pines Resources, Inc.
The Paymaster and Geel Property
The Company acquired 12 contiguous unpatented mining claims (the
"Paymaster Claims") in the Ramshorn Mining District in Madison
County, Montana. After initial exploration, sample and
reconnaissance, the Company acquired an additional 26 unpatented and
three patented mining claims adjacent to the Paymaster Claims. These
claims are known as the Geel, Matchless, and Northstar (collectively
known as the Geel claims) and are just west of the Paymaster and run
for 3 miles to the south.
All of the Company's mining claims are leased claims coupled
with purchase options. The Company does not own these claims
outright, but instead pays rental and royalties to the underlying
landowner-lessors for the right to conduct mining activities. These
payments are credited toward the purchase price of the claims under
the purchase option provision of the leases. If such rental and
royalty payments are made, as is expected, the Company will acquire
ownership of the mining claims.
In August 1996, the Company acquired State and Federal permits
to commence mining operations on its Paymaster Claims, under the
Small Miners Exemptions, which allows the mining of up to 36,500 tons
per annum. These mining operations can commence, within days of
notice to proceed, on two levels, from existing adits and drifts.
Production is expected to build up to 72 tons per day on a year-round
basis. A $10,000 reclamation bond must be acquired prior to
initiating mining operations. As of the date hereof, the Company has
not acquired the reclamation bond.
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The Company will ship the Paymaster ore to the M&W Custom Mill
in Virginia City, Montana. M&W has performed the assays on ore
samples from the Paymaster Claims and the metallurgical testing to
establish a preliminary mill flow sheet, which indicated a net
recovery of 88-95% of the contained gold with regrind of the
middlings and tails. Just over 50% was shown to be free gold in their
tests.
The Company is currently in discussion with owners of several
targeted gold properties located in Montana, Idaho and Oregon. Most
of these properties have drill indicated gold resources, based on
drilling performed by major mining companies. These properties,
however, do not appear to have the potential for large volumes of
gold resources required by the majors, and, therefore most properly
fit into the portfolio of junior mining companies such as YPR.
The Company's goal is to develop a gold resource base of at.
least 1,000,000 ounces and annual production of approximately 100,000
ounces and to maintain this 10:1 reserve to production ratio
thereafter.
The Paymaster Claims
The Paymaster Claims are located in the Ramshorn Mining District
in Madison County, Montana, approximately 15 miles southeast of
Sheridan, Montana. The Ramshorn District is east of the Sheridan,
South of the -Pony and on the north reach of the Alder District on
the northeast flank of Copper Mountain. The original twelve
contiguous claims contain the Paymaster and the Paymaster Heir
portals, one on each end of an estimated at-least one-half mile long
vein. The property lies at elevations between 7,000 and 7,400 feet
above sea level and is accessible via an improved road near Bivens
Creek.
The area was heavily placer mined in the late 1800's and the
Paymaster underground mine was opened in 1920 by the father of one of
the current landowner-lessors. The mine was operated until. 1929, and
was closed due to the market crash. Subsequent assessment work has
maintained the two adits in satisfactory condition for federal and
state inspectors to issue the current operating permit in August
1996.
After sampling and assaying of the Paymaster and Paymaster Heir,
the Company acquired twenty-six unpatented and three patented claims
(the Geel Claims) adjacent to the original twelve unpatented
Paymaster Claims. The entire group of claims is collectively referred
to as the Paymaster Mine.
The Company plans to open the upper portal (the Paymaster) and
the lower portal (the Paymaster Heir) some 2,600 feet apart, and to
drive a new adit at the Old Timers Pit, roughly halfway between, thus
enabling the Company to operate on three levels from adits opening
directly onto the access road.
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Based on historical data and subsequent works conducted by Dr.
Robert E. Cohenour, Consulting Geologist, the Company estimates that
the Paymaster fault zone between the Paymaster adit and the Paymaster
Heir adit contains a gold resource of 34,600 tons averaging .83
ounces of gold per ton. This resource is not based on drillings but
rather on actual mining and assays at each end of the mineralized
structure.
Major mining companies have conducted drilling programs in the
area, but because of the high-grade, narrow-vein structure, the area
is not conducive to large scale open pit mining desired by the
majors. Small underground mining techniques are required to
economically exploit the extensive mineralization of the area.
The sheared mineralized zone and adjacent marble bed has been
traced by roadcuts, trenches, bull dozer cuts and mines for at least
4 1/2 miles over the Ramshorn Properties. The evidence of the
continuance of the mineralized zone, can be seen as "blue talc" or
gouge with veinlets of quartz, iron oxide and other materials. The
zone varies from 40 to 70 feet in width.
Most of the mineralized zone is covered with a mantle of
overburden so that only a fractional part of the prospective body has
been seen in the few cuts made in it over the years and numerous high
grade "pocket" mines have been worked along the principal mineralized
zone.
At places where the sheared mineralized zone is exposed, there
is abundant evidence of strong deformation and premineralization.
Fractures and vugs in milky quartz and marble are filled with pyrite
and galena, chalcopyrite and other copper materials. A reddish-brown
and black coating formed from oxides of iron and manganese covers
most of the rocks. Bluish-gray clay and micaceous, friable, schistose
rocks surround the dense quartz and marble beds in the ore bearing
zone. Native gold is found in vugs and vein filings. Silver lead
sulfide blends are found at numerous localities in and near the
principal shear zone. By crushing and panning quartzose mineralized
rocks, free gold is readily obtained, demonstrating that the gold is
widely disseminated throughout the rocks along the mineralized shear
zone.
The evidence at hand suggests that there exists a large quantity
of millable ore along the Ramshorn sheared, mineralized zone under
the Geel Claims extending for three miles.
The Paymaster Mine is a unique mining opportunity ready for
immediate production with permits issued and without significant
development cost and time. The only development work will consist of
driving a new adit to open a third level of operation, and this will
be done several months after the start of production.
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Geology
Ramshorn District History
Gold was first discovered in the vicinity of the Ramshorn
District along Alder Gulch near Virginia City in 1863. The placers
first attracted feverish interest, but as they were worked upward
toward the source of the precious metal, the nuggets and flour gold
abruptly diminished in concentration at a point where the streams
cross the Ramshorn mining properties and elsewhere on the higher
slopes of the Tobacco Root Mountains. Attention was then focused on
lode mining. Mining of placers and lodes in the local area flourished
for about 30 years. There was a resurgence of interest between 1890
and 1900 which saw the reopening of many abandoned mines. The extent
of the activity in the Ramshorn District is only suggested by the
present remains of crude log cabins, dilapidated stamp mills,
placer-mining ditches, caved-in shafts and tunnels and the stone
masonry foundation of forgotten structures.
It is important to consider the primitive conditions in
existence in the area as well as the state of mining and ore dressing
technology during the time the area was first exploited in order to
appreciate the magnitude of the, remaining mineral resources there.
The dense, hard, massive, mineralized igneous and metamorphic rocks
had to be worked with great physical exertion, using "hand steel" and
black powder. The miners labored in dank, virtually unventilated
shafts with only wax candles to see by. The rock was bashed or
blasted from the mine walls and hand-carried to the wheel barrows and
ore buckets. The heavy ore was then pushed or pulled out to a
primitive hoist or out on a dump, hand sorted, and put into
horse-drawn wagons or on pack horses to be hauled to a stamp mill.
Water wheels or steam engines drove the stamp mills and the recovery
of small gold particles was undoubtedly inefficient.
For these reasons, only the visibly high-trade veins could be
worked at a profit. Where the gold, silver, and other metals were
sparsely disseminated through the rock matrix, the miners passed them
by in search of "glory holes", "pockets" and rich veins.
Indeed, some of the apparently worthless material dumped outside
shafts and tunnels of the old excavations on the Geel patented lode
claim were assayed some 58 years later (Procter and Gwynn, 1948, p.5)
and found to contain values in gold and silver up to $31.50 per ton
with gold at about $30/oz. Present day mining and milling techniques
make it possible to extract considerable profit from low
concentrations of precious metals which were in past times
uneconomical.
In 1923, the large placer operations in the area were virtually
discontinued and the huge dredges used on Alder Gulch were dismantled
and taken away. There was sporadic activity in the mines and placers
during the 1930's and again after World War II, but nothing has
transpired in the area which equaled the "Gold Rush" days of the
latter part of the 19th century.
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General
In 1896, Peal, A.C., a geologist with the U.S. Geologic Survey,
gave the name "Cherry Creek" to a series of metamorphosed sediments
exposed over a fifty square mile area in the vicinity of Virginia
City, Montana. (reference U.S. Geological Survey Geology Atlas, Three
Forks folio No. 24, 1986). He considered these rocks to be of
Algonkian (late Proterozoic) age. He considered the Cherry Creek
series to be younger than the Pony Series, although no evidence of an
unconformity has been found, and older than the Belt series. These
three units make up the sedimentary metamorphic rocks of the Tobacco
Root Mountains that were in place prior to the period of regional
uplift and igneous intrusion although some igneous activity may have
occurred during the sedimentary period of formation of these units.
The Cherry Creek unit or series has an estimated 8,000 ft. vertical
section of metamorphosed sediments consisting of quartz-feldspar
gneiss, hornblende-biotite schist.
On the southern flank of the Tobacco Root range the Cherry Creek
rocks occupy a broad structural trough or synclinorium infolded in
the Pony gneiss. Within the broad trough, the Cherry Creek rocks are
highly contorted into overturned folds with regional westward dipping
limbs. The constancy of westward dips between Virginia City and
Sheridan gives a deceptive conception of the thickness of the Cherry
Creek group for
instead of one great westward dipping series, the formations are
repeated again and again by folding. The pitch of the axis of the
folds has been found to vary by local area.
The Cherry Creek series has been highly folded and intensely
metamorphosed during the major period of the Rocky Mountain uplift
which included the intrusion of the Tobacco Root Batholith during the
late Cretaceous period. The Montana State Bureau of Mines in Memoir
No. 9, dated June, 1933 (A Geological Reconnaissance of the Tobacco
Root Mountains, Madison County, Montana) speculated that sub-surface
connections from this major Batholith, which has more than one
hundred square miles of surface exposure in the central portion of
the Tobacco Root Mountains, were found southwest of Virginia City
near the Easton Mine. Quartz bodies occur abundantly as irregular
masses, pipes or chimneys, and veins. These quartz bodies have been
noted to increase in number nearer the Batholith.
Small diabase dikes are numerous and may be found cutting the
schists and gneisses in almost any locality in the Cherry Creek
formation. State Bureau of Mines geologists have speculated that
these dikes may be related to the basalt flows that currently cover
an area of more than fifty square miles just east of Virginia City.
(it may be important to note that many major silver deposits are
related to diabase formations, which are related to the surface flows
of basalt rock). The basalt volcanic rocks once covered the area an
estimated one thousand feet in thickness. Although eroded from the
area west of Virginia City a small patch of basalt still exists on
Williams Gulch. These very young rocks are considered to have been
extruded in Paleocene time.
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Ramshorn Geologic Investigations
Geological investigations around the Ramshorn properties have
been directed toward examining broad, generalized geological features
or reporting of localized mineral studies on mining properties.
Tansley, Shafer, and Hart (1933) compiled a useful tabulation of
mining activities in the general area and placed them in perspective
with existing geological knowledge of that time.
The most recent study in the area of the Ramshorn Mining
District and extending northwestward across a portion of the
metamorphic sequence east of Sheridan was published by Burger. Burger
(1967, p. 4) observed that the distinctive mineral assemblages on
either side, mapped over long traverses, "retain consistent and
predictable relations with the continuous marble bed [s] throughout
the area and are believed to represent original sedimentary or
igneous sequences."
The metamorphic sequence of the Ramshorn district is considered
to be Precambrian age and the stratigraphic equivalent of the Cherry
Creek (pre-Beltian) as defined by Peale (1896, p. 2) and portions of
the Pony metamorphic rocks as descried by Tansley and Shafer (1933,
p. 8). By inference from a few absolute age determinations in the
area, Burger (1967, p. 16) concluded that the Cherry Creek rocks were
probably deformed and metamorphosed during a single orogenic period
which occurred approximately 1.6 - 1.7 billion years ago.
The intensity of the deformation is profound. The beds have been
so greatly disturbed from the original configuration that in some
areas their stratigraphic and structural complexity defies precise
description. Burger (1967, p. 11-12) proposed an interesting model
for arriving at an interpretation of the folding of the local Cherry
Creek sequences, but added, "These folds are termed antiforms and
snyforms instead of anticlines and synclines because no evidence is
available to show which are the youngest beds."
The metamorphic rocks lie at the surface in the Ramshorn
District. No Paleozoic rocks are found locally, but they are present
on the north side of the Tobacco Root Mountains. The metamorphic
rocks were intruded in late Cretaceous-early Tertiary time by the
Tobacco Root Batholith and by localized stocks of probable Tertiary
age. Tertiary basin deposits cover the basin-ward margins of. the
metamorphic rocks and Pleistocene glacial deposits and recent
alluvium are present in stream and river valley deposits. A thin
mantle of soil, "bogs", and hillside "float" obscure the surface
exposures over much of the Ramshorn District.
Burger (1967, p. 16) observed that the regional joint patterns
parallel each other and trend north 30 degrees - 35 degrees east,
whereas the Tobacco Root Batholith joint system has a north 35
degrees - 45 degrees west trend. He concluded that "the joint and
fracture patterns are (1) in the metamorphic rocks primarily due to
Precambrian stresses,
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and (2) these joints were reactivated by Laramide stresses and
possibly controlled by the shape of the Tobacco Root Batholith.
"The direction and density of the joint and fracture patterns in the
Ramshorn District are of particular importance because they provided
the avenues for the mineralizing fluids moving out of the Batholith
stocks as well as provided space for vein and fissure filing with
metallic ores.
The fracturing, shearing and chemical alteration of the host
rock along and into the marble beds is an important prospecting and
mining factor. Burger's maps (his plates 1 and 2) clearly demonstrate
the relationship between the marble beds and the mineralized zones
worked in the area in mines. He concluded that the ore deposits of
the area "are by metasomatic replacement of gneiss and marble country
rock. The deposits associated with the fissure veins are mainly
within marble gneiss. Almost every fissure vein parallels regional
fracture systems; most follow a north 30 degrees - 40 degrees
northwest fracture system, Metasomatic replacement deposits are
almost confined to marble beds. Replacement is localized along
fractures cutting across marble beds; along marble - gneiss contacts,
especially where these contacts parallel a fracture system; and along
shear zones parallel to foliation, most likely developed by shearing
related to intrusion."
Burger also concluded that the Tobacco Root Batholith was
intruded about 66 million years ago. "After this episode of intrusion
and fracturing, quartz monzonite and quartz monzonite prophyry stocks
were intruded. These were controlled by fracturing and foliation
trends in the country rock. The Tertiary intrusions were accompanied
by widespread ore mineralization."
The mineralization on the Betsy Baker Lode claim along the
Ramshorn Properties, according to Tansley, Shafer, and Hart (1933, p.
45), is along bedding planes which strike N. 10' E and dip W 450. It
is in a sheared calcareous zone. Another vein with an East-West
strike, dipping south 700 on the north end of the claim was exposed
in three cross-cut adits and was being worked by miners at the time
of their report (1933).
The principal shipping ores were reportedly auriferous pyrite
with galena and silver minerals in quartz.
Paymaster Claims Group Site Specific Geology
The host rock, in which the previously mined ore bodies located
within the mineral property are found, is a paragneissis meaning a
rock containing the minerals derived from igneous rocks formed from
sedimentary formations that has been exposed to metamorphic actions.
Through heat and the pressures of folding actions the rock crystals
are arranged in a subparallel fashion. Rough foliation is evident in
the rocks meaning minerals of a like kind tend to band together
resembling bedding, but isn't. It is the result of shearing from
folding pressures. The rock also tends to split along the parallel
foliation structure.
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The regional geology map prepared by the Montana State Bureau of
Mines shows a major fold axis cutting through the property (The Geel
Claims) west of the Paymaster vein. The fold is either a syncline or
an over turned anticline, oriented approximately northeasterly.
Site specific geologic evaluations in part conform to the
regional structural orientation. A line drawn between the Paymaster
mine and the last excavation trench, which are approximately three
miles apart, shows regional structure is a near perfect fit. The tip
and the strike of the structure in both excavations conforms with the
location of regional structural fold.
Ores may be from a different origin than the ores that are found
in the Paymaster mines which are principally gold ores. Although the
same origin but changed mineralization could be explained by hypogene
succession, zonal distribution or arrangement of ore minerals outward
from the intrusive origin due to lower temperature deposition.
Because of the short distance involved and the major change in both
controlling structural features and ore content it is believed that
the ore in the Silver Crown property came from a different source or
a younger successive phase from the same source than the ores of the
Paymaster mine. Understanding the origins and controlling structure
influencing the deposition of the ores of these mines is very
important. Our efforts will be to find extensions and additional ore
bodies of these mines. The prior mining activity on the Paymaster
Claims properties has just scratched the surface of the potential for
major ore bodies. A correct prognosis of the location of additional
ore should lead to some very profitable mines.
Because of the predominance of quartz veins on and about the
property and the amount of quartz associated with the ore mined to
date it is strongly suggestive that the ore bodies are associated
with a fissure vein system of igneous origin most likely extrusions
from the Tobacco Root Batholith. The ores bodies in the Paymaster and
the mines are very likely connected by the same dilation vein system.
Each mine has ore bodies that have the same dip and strike and are in
alignment on strike although three miles apart. The controlling
depositional feature is the weak flotation planes created by the
folding and metamorphism of the Cherry Creek sediments. The
intersection of the metalliferous, quartz intrusive at depth with the
weakened structural plane in the Cherry Creek sediments likely
established the dilation vein system at this location. Because
folding of the Cherry Creek sediments occurred prior to the extrusion
of the metalliferous quartz from the Tobacco Root Batholith the
current location of dilated ore bodies should have downward extension
to the contact of the sediments with the igneous body. The Montana
Bureau of Mines and Geology field mapping in this area estimated the
Cherry Creek sediments to extend in excess of 4000 feet in depth.
Other folded metamorphic sediments such as found at the Homestake
Mine at Lead, South Dakota have been mined to depths exceeding 8000
feet. The eastward and westward extension of the current three mile
long known mineralization structure is open.
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Let us consider a geologic premise advanced by Mr. Clyde Boyer,
a Geologist who did extensive mapping in the area in 1982. Mr. Boyer
believes additional structural features of folding will add to the
probability of finding more extensive mineralization as mine
development advances at depth. He reasons that tension cracks around
the axis of the folded sediment and the increased shear between beds
on the axis will create open areas and planes of greater weakness for
mineralization fluids to have filled. Dr. Alan M. Bateman, Professor
of Geology at Yale University in his text "The Formation of Mineral
Deposits", 1951 described saddle reef deposits such as those at
Bendgo, Australia that have yielded over $300,000,000 with gold at
$35/oz. as being openings that formed on the axis of a fold much like
a saddle. He illustrated by taking a stack of paper holding them
tightly on the ends then folding the stack. Openings would form
between sheets of paper at the crest of the fold. These three
possibilities are advanced as to why the author expects to find
substantially more ore nearer the fold axis which occurs at depth and
to the West of the Paymaster mine.
Earlier work in the Ramshorn district was accomplished by
Tamsley, Shofu and Halt (1933) who complied a mining activities
tabulation and placed them in perspective with existing geologic
knowledge. Berger (1967) developed detailed mineralogy and lithology
descriptions as did Corda a few years later. Practor and Gwynn (1948)
tabulated the assays along the mineralized zone of the Ramshorn.
Mine Development
Paymaster Mine Development
The initial mine development method employed at the Paymaster
Heir Portal will be Load-Haul-Dump trackless drifting on the
Paymaster vein. Initial drift development is estimated to be 500 feet
from portal. Based on projections of old near surface workings above
the elevation of this portal two (2) mineralized ore shoots should be
intercepted in the drift-on-vein. The first intercept will be the
Paymaster Heir ore shoot and the second the Old Timer ore shoot. The
second phase of development would be at the already opened Paymaster
Portal.
The Paymaster Heir portal drift will be driven in the hanging
wall adjacent to and parallel to the Paymaster vein. The Paymaster
vein will be on the east wall of the drift. Therefore, as the drift
is driven through the ore shoot mineralized areas the ore in the wall
will be mined through secondary slabbing to reduce dilution of ore
grade.
Stope development will progress after the drift has passed
through an ore shoot delineating the width and thickness of
mineralization. A raise will be driven on the hanging wall side of
the vein through the near center of the ore shoot to break out either
at surface or in the old workings. The ore in the vein exposed by the
raise will be mined separately with each lift.
<PAGE> 13
Open stoping will be employed fanning out laterally from the
raise both directions on vein from the raise to the width extent of
the stope. Where the fan angle or the vein dip becomes too shallow
for the ore to gravity feed, a slusher will be utilized to move the
ore to the ore pass. The minimum mining width will be 3 ft.
A crown pillar will be left above the haulage drift until all
ore is mined out at further depth at this mine level. Then the crown
pillars will be extracted as the miners retreat from the mine leaving
no ore above this level.
Ventilation is required to remove LHD exhaust, blasting fumes,
and dust. Until a natural air circulation circuit is developed by a
raise break through to surface, vent tubing will be necessary for
both drifting and raise development. Fresh air requirements will be
met both during development and in production phases of mining by a
fan located outside the portal.
Mine water will be collected in the haulage drift and channeled
via ditch to the portal. The haulage drift will be driven up-grade
from the portal. All waters from the mine will be held in a sediment
tank long enough for all sediments to settle out. All mine water will
be reticulated.
Because of the shallow dip of the seam, 40"-600, jackleg
drilling will be employed in all development and mining areas
including drifts, raises, and stopes. All blasting will be with
electric cap, booster, and ANFO. No stick powder will be used.
Hanging Wall rock is relatively soft yet structurally competent.
A 1 7/8 inch drill hole 6 ft. deep has been drilled on a regular
basis in 2 minutes. A 13 hole drift round for a 5 x 7 face has been
drilled in 30 minutes. A six foot round will pull five feet in a
blast. Within 500 ft of the portal a 1/2 yard bucket LHD can remove a
drift round in three hours or less. Therefore, two drift rounds can
be drilled, shot and removed in a single shift. Thus, ten feet of
advance is projected per shift.
Raise sets are five (5) feet but support construction will limit
the raise advance to a single round per shift. Rounds will be drilled
with two (2) ft. hole centers in the hanging wall rock, which, due to
its broken soft in-place nature, will pull with the hanging wall
blast. The raise manway will be a minimum face dimension of 4 x 4 ft.
and will extend to above workings.
Thin vein stope mining, difficult but achievable, will be
employed. Drilling in the soft, broken vein material will be slow but
few drill holes per 6' x 12' x 2' round blast will be needed. Two
stope miners will produce only 22 tons per shift which includes:
pulling ore from prior work day's blast, cleaning a working face,
drilling and loading, and blasting. While one man in the crew is
pulling ore the other can be transporting the ore to an ore pass or
out of the mine to a loading bin.
<PAGE> 14
When the open stope is clean of broken rock each miner will work his
stope face constructing his working support and protection above his
working place. He will drill his face, but both miners will work
together to load and prepare for blasting at both stope faces. No
wall rock will be pulled intentionally unless the vein narrows to
less than two (2) feet in thickness. Methods to prevent dilution of
ore will be aggressively employed at the expense of increased
production.
Mine planning for development and production will be near term
and long term goal oriented. The Paymaster vein at current
development status was the least cost to develop to initiate
production in known ore shoot areas (projected from above workings to
the Paymaster Heir mine level). Beyond the Paymaster Heir and Old
Timer shoots a drift to intercept the next known ore shoot, the
Paymaster, on the Paymaster Heir portal level is 1,000 ft. To
initiate early production at the least time and cost for development
the development equipment utilized on the lower level will be moved
to the Paymaster portal approximately 400' vertically above and
2,000' north on the same Paymaster seam.
The Paymaster ore shoot that was projected by Dr. Cohenoer near
the end of the Paymaster adit will be developed in the aforementioned
manner as will the Old Timers drift-on-vein as mining progresses.
Diatomite Property
In August 1999, the Company entered into an agreement with
American Diatomite, L.L.C., an Idaho limited liability company
("American") wherein the Company acquired a 50% interest in and to
one property consisting of 42 unpatented mining claims located in
Gooding County, Idaho which contain diatomite. The foregoing
contract was cancelled, and a new contracted was executed between the
parties dated May 10, 2000.
Diatomite is a sedimentary rock composed of the microscopic
skeletons or frustules of single-celled, mainly planktonic aquatic
plants (diatoms). A cubic inch of relatively pure diatomite can
contain over 40 million frustules. The frustules which consist of
opaline hydrous silica are complexly perforated and exhibit ribs,
spines and bristles. Some species exhibiting bilateral symmetry
resemble boats, feathers, ladders, and needles whereas other species
with radial symmetry resemble wheels, discs, and golf balls. The
combined area of holes in the frustules ranges from 10 to 30% of the
total area. Diatomaceous rocks may consist almost exclusively of
diatoms or the diatoms may be mixed with varying amounts of clay,
silt, volcanic ash or other impurities (Bates 1969; Durham, 1973)
When pure, diatomite is light-colored, soft, very porous and
extremely light-weight. Generally, diatomite is white or nearly white
and has an apparent hardness of 1.5 although the opaline silica
comprising the diatom skeletons has a hardness ranging from 4 to 6.
Porosity may be 75% or more and diatomite powder can absorb 1 1/2 to 3
times its weight of water.
<PAGE> 15
Dry blocks of crude diatomite have an apparent density ranging from
20 to 40 pounds per cubic foot and diatomite powder packs so loosely
that the apparent density is as low as 10 pounds per cubic foot
(Durham, 1973; Bates, (1969).
Diatomite possess a number of characteristics which are utilized
in many industrial applications. It is insoluble in most chemical
reagents (inert), moderately refractory with a softening point of
1400 degrees to 1600 degrees Centigrade, and an abrasive due to the
thin-walled cellular structure which collapses under pressure.
Diatomite also has a low thermal conductivity and an enormous
specific area. Less than half-pound of diatomite has a surface area
45,000 feet (about equal to the area of a football field).
Uses
Powdered diatomite is used as a filter aid, filler, heat
insulator, abrasive, and absorbent. The major use of diatomite
powders produced in the U.S. is as filter aids which account for
about 67% of U.S. production. The second largest use of diatomite
powders, accounting for about 20% of U.S. production, is for fillers.
Most of the filler market for diatomite is as a functional filler in
which diatomite imparts, a desired effect to the product rather than
as a mineral filler in which diatomite simply replaces a more
expensive component in the formulation of the product. The Company is
working to develop a natural insect killer, and a bulk product
crushed to 3/4 inch minus for use in agriculture and other
industries. Other uses account for the remaining 13% of U.S.
diatomite production (Pettifer 1982; Kadey, 1975).
Geology
Both fresh-water and marine diatoms exist. Marine diatoms first
appear in a Mesozoic rocks but did not become numerous until the Late
Cretaceous (Durham, 1973; Pettifer, 1982). The lack of older
diatomaceous rocks may in part be due to the conversion of the
opaline silica in diatoms skeletons to other forms of silica (Ernst
and Calvert, 1969). Most of the known thick accumulations of marine
diatomite are middle Tertiary or younger. Non-marine diatoms first
occur in late Eocene rocks, but most non-marine diatomites are late
Tertiary or Quaternary (Durham, 1973). Some 12,000 to 16,000 species
of diatoms have been recognized. They provide food for other aquatic
organisms and control the geochemical balance of silica in ocean and
lake waters (Kadey, 1975).
The main environmental conditions necessary for diatom
development are: (1) large, shallow (less than 120 feet deep) basins,
(2) an abundant supply of soluble silica, (3) an abundant supply of
nutrients, and (4) the absence Of growth-inhibiting soluble salts in
the water (Kadey, 1975). In shallow lakes, sunlight penetration is
sufficient for both floating and bottom- dwelling diatoms to
proliferate. Evidence exists that the accumulation of thick marine
diatomite is aided when the rate of deposition and the rate of
downwarping in the basin are in equilibrium and a fairly shallow
water environment is maintained allowing proliferation of
<PAGE> 16
bottom-dwelling diatoms. A worldwide correlation exists between the
occurrence of thick diatomite accumulations and nearby
contemporaneous deposits of volcanic ash; therefore, it appears that
the higher than normal silica concentrations in water, a prerequesite
for diatomite development, are largely supplied by volcanism.
Generally, sea water and most lake waters do not contain soluble
salts which inhibit diatom growth except in cases where the rate of
evaporation exceeds the rate of inflow during long period of the
year.
In addition to an environment favorable for diatom growth,
formation of commercial diatomite deposits requires that the supply
of commercial diatomite deposits requires the that the supply of
clastic sediments is minimal for a considerable period of time. The
presence of a significant amount of clastic sediment renders a
diatomite commercially useless (Kadey, 1975).
Durham (1973) classifies economic diatomite deposits into three
categories: (1) marine rocks which accumulated near continental
margins, (2) non-marine rocks that were deposited in lakes or
marshes, and (3) sediments in modern lakes, marshes, and bogs. The
large Miocene-Pliocene marine diatomite deposits near Lompoc,
California are typical of the first category. Diatcmaceous sediments
commonly found in Tertiary and Quaternary lake basins in Oregon,
Washington, Idaho, Nevada and Eastern California are representative
of the second group of diatomite deposits. At present, there are no
producing deposits in the third category, but bog and lake bottom
deposits near Pensacola and in central Florida have received
exploratory attention in the past (Kadey, 1975).
Production
World diatomite production in 1987 was over 1.5 million short
tons. The United States, the largest producing country, accounted for
40% of world production. Combined diatomite production from the
U.S.S.R. and Romania accounts for about 18% of world production.
Other major producing countries are Japan (314,0OO short, tons) and
France (239,000 short tons). Brazil probably is also an important
producer, but accurate production statistics are not available
(Pettifer, 1982).
Mining 10%
Processing 60%
Packing and Shipping 30%
The two most significant cost factors are energy and
transportation. Crude diatomite contains 20 to 40 percent moisture
which must be removed by drying. Additional energy is used to produce
calcined diatomites which are required for some uses (Coombs, 1983).
Freight charges are high because of the low bulk density of processed
diatomite (Kadey, 1975).
Due to the high moisture content of crude diatomite and
processing losses, it is desirable to locate the mill as close as
possible to the mine (Kadey, 1975). Most U.S. processing plants are
within 20 miles or less of the mine.
<PAGE> 17
Diatomites which can be used as filter aids command the highest
market prices. The economic viability of a potential diatomite
deposit is severely impacted if the crude ore cannot be processed
into a single, if not a range, of filter aid products (Kadey, 1975).
Processing and Grading
The large number of uses for diatomite powders require dozens of
different grades which are produced by a variety of techniques
including: (1) utilizing crude material from different beds or
quarries in variable proportions, (2) crushing and size
classification, (3) calcination or heating Of the powder to incipient
fusion either with or without a flux (usually soda ash) to adjust the
particle size distribution, (4) additional mining and classification,
and (5) blending of two or more grades. The physical and chemical
characteristics of each grade of diatomite powder are kept within
very close tolerances.
The successful marketing of diatomite powders is largely
dependant upon the ability of the producer to furnish reliable
technical advice and service to the consumer. Grades are often custom
formulated to solve a specific production problem for the consumer;
therefore, many processed grades exist which are designed for
numerous uses. The main attributes of a particular diatomite depend
on the type, size, species, structure, and shape of the diatoms
themselves, and care is taken during milling and processing to
preserve the original structure and shape of the skeletons. In the
following paragraphs desirable characteristics of different grades of
diatomite, including examples of specifications, are discussed for
the major use categories in order to provide the reader with an idea
of the general requirements a commercially useful diatomite must
meet.
Grades produced for filtration are numerous with one company
alone producing 12 different products for use as filter aids (Benton,
1983). Principal characteristics affecting the use of a particular
diatomite as a filter aid include diatom skeletal constitution and
structure, density, and soluble impurities. The space between diatom
particles as well as the arrangement of interstices and chambers
within the skeleton determine the effectiveness of the diatomite in
trapping impurities. As filtration aids, diatomites composed of a
multi-species assemblage seem to provide the best flow rate to
clarity relationship, however single species diatomites sometimes
possess merits for certain applications requiring a fast flow rate.
Generally, filter aid diatomites must have a low density and low
concentration of soluble impurities, particularly those used in food
processing.
Diatomite grades produced for filler applications include 11
natural, 6 calcined, and 17 flux calcined products (Benton, 1983).
The principal characteristics affecting the use of a particular
diatomite as a filler include diatom structure, particle size,
brightness, pH, refractive index, and chemical stability. Many of
these factors are determined by the nature of the source diatomite
and can be controlled by mixing diatomites from several sources.
<PAGE> 18
Other factors such as particle size are controlled by milling and
processing.
Diatomite is useful as a mild abrasive since the hardness of a
diatom is sufficient to abrade metal surfaces. In addition, the small
particle size coupled with the friability of the delicate skeleton
result in a polishing rather than a scratching affect. Natural milled
diatomite is incorporated into silver polishes whereas flux-calcined
diatomite powders are used in automobile polishes. Flux calcination
increases the particle size which produces the more abrasive effect
required in automobile polishes.
Other applications of diatomite usually are based on a key
property in combination with several other properties. For example,
the large surface area and low bulking value of diatomite powders
give them an ability to absorb up to 3 times their weight in water;
thus, they make ideal industrial absorbents and liquid carriers. The
large surface area of a high quality diatomite powder coupled with
its exceptionally high silica content (up to 94% make it a
particularly reactive source of silica for the manufacture of
lime-silicate insulations and calcium-silicate powders. Due to the
high silica content, diatomite powders are inert to most chemical
reactions and have a high softening point (about 2,600 degrees
Fahrenheit), two properties which are responsible for the use of
diatomite powders as catalyst carriers and in insulation. The latter
two properties coupled with diatom structure and high absorption
capabilities of high quality diatomite powders make them useful as a
support in chromatographic reactions.
Specifications and Testing
A number of standard tests are used to measure the ability of a
specific grade of diatomite powder to perform certain functions.
Filter aids must produce a specified degree of clarity at a
reasonable flow rate, possess a specified wet density, and contain a
specified particle size distribution. Filter aids used in food
processing must also meet pH and resistivity requirements as well as
specified trace element limits using Food Codex analytical methods.
Specifications on for fillers may include precise particle size
limits, brightness as reflected in a TAPP or General Electric
brightness test, fineness based on a Hegman reading, and abrasion as
measured by the Valley Iron Method. A number of other
specifications and tests for diatomite products are agreed upon
between the producer and consumer; therefore, they are proprietary.
The Clove Creek Diomaties
Location and Development
The Clover Creek diatomites are located in Township 3 South and
Township 4 South., Ranges 13 and 14 East, in Gooding County,
south-central Idaho. The area is about 80 miles east-southeast of
Boise. The diatomites crop out along the southern and southwestern
boundaries of the Gooding and City of Rocks WSAs located in the Mt.
Bennett Hills. The diatomites are in the Bennett Hills Resource Area
of the Shoshone Bureau of Land Management district.
<PAGE> 19
The area underlain by the diatomites is accessible from the
towns of Bliss, approximately 15 miles south-southwest by road, and
Gooding, about 16 miles south-southeast by road. In both cases most
of the distance is over unimproved roads. The Union Pacific railroad
passes through both Bliss and Gooding. Interstate Highway 84 is
accessible at Bliss.
The potential for the development of geothermal energy in the
vicinity of the Clover Creek area is good. Thermal wells and springs
are common along the margins of the Mt. Bennett Hills. High heat
flows and geothermal gradients are also present in the region. The
southern margins of the Gooding and City of Rocks WSAs have definite
potential for the development of low to moderate temperature
geothermal resources and may have potential for the development of
high temperature geothermal (Ferrette et al. 1983).
Regional Geological Setting
The Clover Creek area is underlain by the Idavada Volcanics and
the Banbury Basalt. In nearby areas the Idavada Volcanics
unconformably overlie the Challis Volcanics and the plutonic rocks of
the Idaho batholith. The Idavada Group consists of about 1,500 feet
of dacitic, latitic and rhyolitic ignimbrite, basalt and arkosic
gravel. The Idavada is divided into six lenticular formations: (1)
the Gwin Spring Formation, (2) the Hash Spring Formation, (3) the Fir
Grove Tuff, (4) the McHan Basalt, (5) the City of Rocks Tuff, and (6)
the Burnt Willow Basalt. Paleontologic and stratigraphic evidence
indicate that the Idavada Volcanics are early Pliocene in age. The
Idavada Volcanics were deposited in the latter stages of silicic
caldera volcanism which characterized early development of the Snake
River Plain. Thereafter, basaltic veicanism became dominant beginning
in the middle Pliocene with deposition of the overlying Banbury
Basalt.
The Banbury Basalt is the youngest member of the Idaho Group
which unconformably overlies the Idavada Volcanics. The Banbury
consists of a sequence of lava flows locally interbedded with
stream and lake sediments. The unit ranges from 630 to 1,000 feet in
thickness and is middle Pliocene in age. The flows are composed of
olivine basalt and less porphyritic, plagioclase-olivine. Individual
flows have a columnar and vesicular texture and are 15 to 50 feet
thick. Stream and lake sediments were deposited during periods
between volcanic episodes. Stream sediments largely consist of brown
sand and pebble gravel in lenticular channel deposits whereas lake
sediments principally consist of silt, clay and diatomite. The
diatomites in the Clover Creek area are within lake sediments the
Banbury Basalt.
Structurally, the Clover Creek area is on the northern edge of
the Snake River Plain in an area where the Cenozoic volcanic rocks
overlap the Idaho batholith. The area is a complexly-faulted,
southeasterly dipping horst bounded by the Camas Prairie graben on
the north and the Snake River Plain downwarp to the south.
<PAGE> 20
Gravity data and regional geologic studies indicate an east-west
trending zone of high angle faulting. To the north, extensive normal
block (basin-and-range) faulting began about 17 million years ago
and ceased about two million years ago. South of the Clover Creak
area subsidence of the Snake River Plain began about 15 million years
ago. The predominant structural features in the Clover Creek region
are steeply dipping, dip-slip, normal faults. These fall into two
roughly conjugate sets trending N40-70W and N70-90W. The faults dip
steeply 75 degrees to 90 degrees. The northwest trending faults have
the greater displacement. The normal faulting was active throughout
Cenozoic time and greatly influenced the distribution of the volcanic
units.
Diatomite Occurrences and Sampling
In the Clover Creek area, diatomaceous lacustrine sedimentary rocks
are discontinuously interbedded with basalts. The sedimentary rocks
crop out along the valley slopes within a 10 square mile area in Ts.3
and 4S., R.s.13 and 14E. The lake sediments range from 0 to 400 feet
in thickness. Thin beds or lenses, up to 3 feet thick, of clay and
volcanic ash are interbedded with the diatomites. The diatomites also
locally contain variable amounts of intermixed clay, volcanic ash and
carbonates.
In order to assess the potential commercial utility of the
Clover Creek diatomites, 37 samples were collected for preliminary
testing. Whenever possible the samples were taken from channels cut
into diatomite outcrops, but due to the lack of good outcrops fifteen
samples were from more highly weathered material. Thirty-two of the
diatomite samples were sent to Johns-Mansville Research and
Development Center in Denver, Colorado for the following tests:
1. Microscopic Examination. Evaluation of a representative.
dried sample using a high magnification microscope shows identifiable
diatom structure. The variety and type of species (or genus) of
diatoms are noted and compared with examples in standard reference
books. The presence and approximate percentage of contaminating
materials are also noted.
2. Ignition Test. A representative piece of the crude diatomite
is evaluated for visual color and block consolidation. The moisture
content, consisting of water and trace amounts of organic is obtained
by measuring the difference in the weight of the original sample and
its weight after drying at 110 degrees Centigrade (dry basis). The
dried sample is then heated to 1000 degrees Centigrade and again
weighed. The resulting weight loss from a dry basis represents the
ignition loss. The color and consolidation of the ignited sample is
also noted.
Discussion of Test Results
The 32 samples of crude diatomite submitted for testing were of
variable quality. All of the samples had good colors and consisted of
a mixture of fresh water diatoms, primarily actinoptychus, melosira,
epithemia, and novicula.
<PAGE> 21
Eleven of the diatomite samples exhibited good qualities based
on the preliminary tests. Five of these samples are from a dozer cut
in the valley side in the southeast quarter of Sec. 34, T3S, R13E and
four samples are from the Chalk Mine (northwest quarter of Sec. 12,
T4S, R13E, Figs. 3 and 5), another dozer cut into the valley side.
All nine samples consist of channel samples cut in relatively
unweathered diatomite. The other two good samples were taken in the
central portion of Sec. 2, T4S, R13E. Both of these samples are from
moderately weathered diatomite outcrops.
The diatomite samples which exhibited good quality were
collected from three different areas approximately equally spaced
over a distance of more than two miles along the southwestern facing
slopes of Clover Creek valley. The spacing between the three sample
areas suggests that good quality diatomites may be continuous over
fairly large areas and not restricted to local, isolated occurrences.
Most of the 21 lower quality diatomite samples were contaminated
by higher than normal levels of carbonates, clay, or iron. The areas
from which these samples were collected require further sampling to
evaluate the commercial quality of the diatomites, due to two
factors:
1. Some of the contamination may be restricted in extent. For
example, certain samples, were from an outcrop of diatomite
which contained a small recemented fragmental breccia; thus, the
carbonate contamination may be limited to the brecciated
diatomite.
2. Some of the samples, were from highly weathered exposures which
probably represent Zone C in the soil profile rather than true
outcrop.
3. Two samples show a low diatom content, were collected from
colluvium. Consequently, their low quality is not surprising.
It is encouraging that all samples from the less-weathered
diatomite exposures with the exception of five samples contained good
quality diatomite. As discussed above, the contamination in three
samples may be very local in extent.
Markets
Most of the domestic markets for diatomite are in the eastern
United States, but several nearby Idaho food processors use diatomite
filter aids. Known consumers of diatomite located in nearby areas in
Idaho are the Amalgamated Sugar Company and the Payette Cider
Company.
The Amalgamated Sugar Company has sugar beet refining plants at
Nampa, Paul and Twin Falls. The company uses-several grades of
diatomite filter aids in a multi-stage filtering process to produce a
sanitary, bacteria-free sugar beet syrup. The three plants use a
total of about 1,200 tons of diatomite annually. Amalgamated buys
much of its diatomite from Eagle-Picher Industries at Lovelock,
Nevada at a cost of $200 per short ton including freight.
<PAGE> 22
The Payette Cider Company at Fruitland uses three grades of
diatomite filter aids in a three-stage filtering process for apple
cider. Payette Cider was not able to provide annual diatomite
consumption figures. The company obtains the diatomite from
Eagle-Picher in Lovelock at an average price of $200 per short ton
including freight.
RISK FACTORS
1. Exploration Stage Mining Company with No Current History of
Operations. While the Company was organized in 1957, it has no
significant operations in a number of years. As such, the Company is
considered to be in its exploration stage and subject to all the
risks inherent in a new business enterprise. The likelihood of
success of the Company must be considered in light of the problems,
expenses, difficulties, complications and delays frequently
encountered in connection with a new business, and the competitive
and regulatory environment in which the Company will operate. See
"Business."
2. No Commercially Mineable Ore Body. No commercially mineable
ore body has been delineated on the properties, nor have any reserves
been identified. See "Business."
3. Risks Inherent in the Mining Industry. The Company is
subject to all of the risks inherent in the mining industry
including, without limitation, the following: competition from a
large number of companies, many of which are significantly larger
than the Company, in the acquisition, exploration, and development of
mining properties; the concession holder must pay fees and perform
labor on the concessions to maintain the concessions title;
exploration for minerals is highly speculative and involves
substantial risks, even when conducted on properties known to contain
significant quantities of mineralization, and most exploration
projects do not result in the discovery of commercially mineable
deposits of ore; operations are subject to a variety of existing laws
and regulations relating to exploration and development, permitting
procedures, safety precautions, property reclamation, employee health
and safety, air quality standards, pollution and other environmental
protection controls; a large number of factors beyond the control of
the Company, including fluctuations in metal prices, inflation, and
other economic conditions, will affect the economic feasibility of
mining; mining activities are subject to substantial operating
hazards some of which are not insurable or may not be insured due to
economic considerations; and, the availability of water, which is
essential to milling operations.
4. Nature of the Industry. Exploration, development and mining
of mineral properties is highly speculative and involves unique and
greater risks than are generally associated with other businesses.
The Company's operations will be subject to all the operating hazards
and risks normally incident to the exploration, development and
mining of mineral properties, including risks enumerated above and
below.
<PAGE> 23
5. Fluctuating Price for Metals. The Company's operations will
be greatly influenced by the prices of silver, copper, lead, zinc and
other metals. These prices fluctuate widely and are affected by
numerous factors beyond the Company's control, including expectations
for inflation, the strength of the United States dollar, global and
regional demand and political and economic conditions and production
costs in major metal producing regions of the world.
6. Mining Claims. The Company holds mining claims which
require work and financial expenditures to retain their validity. See
"Business."
7. Environmental Controls. Compliance with statutory
environmental quality requirements may necessitate significant
capital outlays, may materially affect the earning power of the
Company, or may cause material changes in the Company's intended
activities. No assurance can be given that environmental standards
imposed by either federal or state governments will not be changed or
become more stringent, thereby possibly materially adversely
affecting the proposed activities of the Company.
8. Governmental Regulation and Environmental Controls. The
Company's activities are subject to federal regulations controlling
not only the exploration for and development of mineral properties,
but also the possible effect of such activities upon the environment.
In its mining operations, the Company will use certain equipment
which will subject the Company to safety and health regulations.
While the Company intends to act in compliance with all such
regulations, any adverse ruling under any regulations, any imposition
of a fine, or any imposition of more stringent regulations could
require the Company to make additional capital expenditures that
could impair its operations.
9. Availability of Water Shortages of Supplies and Materials.
Water is essential in all phases of the exploration and development
of mineral properties. It is used in such processes as exploration,
drilling, leaching, placer mining, dredging, testing, and hydraulic
mining. Any water that may be found will be subject to acquisition
pursuant to appropriate governing laws. The Company has definitely
not determined the availability of water, except to note that
adequate water supplies are generally developed by drilling, but has
not determined the cost of acquisition. Both the lack of available
water and the cost of acquisition may make an otherwise viable
project economically impossible to complete. The mineral industry
has experienced from time to time shortages of certain supplies and
materials necessary in the exploration for and evaluation of mineral
deposits. The prices at which such supplies and materials are
available have also greatly increased. There is a possibility that
planned operations may be subject to delays due to such shortages and
that further price escalations will increase the costs of the
Company.
<PAGE> 24
10. Uninsured Risks. The Company may not be insured against
all losses or liabilities which may arise from operations, either
because such insurance is unavailable or because the Company has
elected not to purchase such insurance due to high premium costs or
other reasons.
11. Need for Subsequent Funding. The Company has an immediate
need for additional funds in order to finance its proposed business
operations. The Company's continued operations therefore will depend
upon the availability of cash flow, if any, from its operations or
its ability to raise additional funds through bank borrowings or
equity or debt financing. There is no assurance that the Company
will be able to obtain additional funding when needed, or that such
funding, if available, can be obtained on terms acceptable to the
Company. If the Company cannot obtain needed funds, it may be forced
to curtail or cease its activities.
12. Reliance Upon Directors and Officers. The Company is
wholly dependent, at the present, upon the personal efforts and
abilities of its Officers and Directors who will exercise control
over the day to day affairs of the Company. See "Business" and
"Management."
13. Issuance of Additional Shares. Approximately 77,822,684
shares of Common Stock or 77.82% of the 100,000,000 authorized shares
of Common Stock of the Company will remain unissued even if all
shares offered hereby are sold. The Board of Directors has the power
to issue such shares, subject to shareholder approval, in some
instances. The Company may also issue additional shares of Common
Stock pursuant to a plan and agreement of merger with a private
corporation. Although the Company presently has no commitments,
contracts or intentions to issue any additional shares to other
persons, the Company may in the future attempt to issue shares to
acquire products, equipment or properties, or for other corporate
purposes. Any additional issuance by the Company following the
offering, from its authorized but unissued shares, would have the
effect of further diluting the interest of investors in this
offering. See "Description of Securities - Shares Eligible for Future
Sale."
14. Non-Arms's Length Transaction. The number of shares of
Common Stock issued to present shareholders of the Company for cash
was arbitrarily determined and may not be considered the product of
arm's length transactions. See "Principal Shareholders."
15. Competition. The Company believes that it will have
competitors and potential competitors, many of whom may have
considerably greater financial and other resources than the Company.
16. No Public Market for Securities. At present, the Company's
common stock is not traded on any medium. Previously, the Company's
common stock traded over-the-counter in the Pink Sheets. However,
due to inactivity, the Company's common stock is no longer traded in
the Pink Sheets. There is no assurance that the Company's common
stock will ever trade in any medium in the future.
<PAGE> 25
17. Cumulative Voting, Preemptive Rights and Control. There
are no preemptive rights in connection with the Company's Common
Stock. The shareholders purchasing in this offering may be further
diluted in their percentage ownership of the Company in the event
additional shares are issued by the Company in the future.
Cumulative voting in
the election of Directors is not provided for. Accordingly, the
holders of a majority of the shares of Common Stock, present in
person or by proxy, will be able to elect all of the Company's Board
of Directors. See "Description of the Securities."
18. No Dividends Anticipated. At the present time the Company
does not anticipate paying dividends, cash or otherwise, on its
Common Stock in the foreseeable future. Future dividends will depend
on earnings, if any, of the Company, its financial requirements and
other factors. Investors who anticipate the need of an immediate
income from their investment in the Company's Common Stock should
refrain from the purchase of the securities being offered hereby.
See "Dividend Policy."
ITEM 2. DESCRIPTION OF PROPERTIES.
The Company does not own any real or personal property other
than its mining claims.
The Company's corporate offices are located at 656 Cedar Street,
Ponderay, Idaho 83852 and its telephone number is (208) 263-3834.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not the subject of any pending legal proceedings;
and to the knowledge of management, no proceedings are presently
contemplated against the Company by any federal, state or local
governmental agency.
Further, to the knowledge of management, no director or
executive officer is party to any action in which any has an interest
adverse to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to the shareholders during the
fourth quarter which ended June 30, 2000.
<PAGE> 26
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDERS MATTERS.
No market exists for our securities and there is no assurance
that a regular trading market will develop, or if developed, that it
will be sustained. A shareholder in all likelihood, therefore, will
be unable to resell the securities referred to herein should he or
she desire to do so. Furthermore, it is unlikely that a lending
institution will accept our securities as pledged collateral for
loans unless a regular trading market develops.
Pennaluna Securities, however, has filed a Form 211 with the
National Association of Securities Dealers, Inc. (the "NASD")
requesting that the Company's common stock be listed on the Bulletin
Board operated by the NASD. As of the date hereof, the NASD has not
listed the Company's shares for trading.
We have no outstanding options or warrants, or other securities
convertible into, common equity. Of the 22,187,316 shares of common
stock outstanding as of June 30, 2000 10,988,122 shares are
restricted and may only be resold in compliance with Rule 144 of the
Securities Act of 1933 with the exception of the one year holding
period contained therein. Our officers and directors do not have to
comply with said one year holding period because the shares issued to
them were sold pursuant to Reg. 504 of the Act.
At June 30, 2000, there were approximately 1,200 holders of
record including shares held by brokerage clearing houses,
depositories or otherwise in unregistered form. The beneficial
owners of such shares are not known to us.
We have not declared any cash dividends, nor do we intend to do
so. We are not subject to any legal restrictions respecting the
payment of dividends, except that they may not be paid to render us
insolvent. Dividend policy will be based on our cash resources and
needs and it is anticipated that all available cash will be needed
for our operations in the foreseeable future.
SEC Rule 15g
Our shares are covered by Section 15g of the Securities Act of
1933, as amended that imposes additional sales practice requirements
on broker/dealers who sell such securities to persons other than
established customers and accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with
net worth in excess of $1,000,000 or annual income exceeding $200,000
or $300,000 jointly with their spouses). For transactions covered by
the Rule, the broker/dealer must make a special suitability
determination for the purchase and have received the purchaser's
written agreement to the transaction prior to the sale. Consequently,
the Rule may affect the ability of broker/dealers to sell our
securities and also may affect your ability to sell your shares in
the secondary market.
<PAGE> 27
Section 15g also imposes additional sales practice requirements
on broker/dealers who sell penny securities. These rules require a
one page summary of certain essential items. The items include the
risk of investing in penny stocks in both public offerings and
secondary marketing; terms important to in understanding of the
function of the penny stock market, such as "bid" and "offer" quotes,
a dealers "spread" and broker/dealer compensation; the broker/dealer
compensation, the broker/dealers duties to its customers, including
the disclosures required by any other penny stock disclosure rules;
the customers rights and remedies in causes of fraud in penny stock
transactions; and, the NASD's toll free telephone number and the
central number of the North American Administrators Association, for
information on the disciplinary history of broker/dealers and their
associated persons.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULT OF OPERATIONS.
The Company is a mining company engaged in exploration and
development activities. The Company is pursuing opportunities within
the mining industry as well as other industries. The Company filed
Form 10-SB General Form for Registration of Securities with the
Security and Exchange Commission on March 22, 2000. The Company's
registration became effective on April 26, 2000. Pennaluna and
Company has made formal application with NASD (National Association
of Security Dealers) to list Iron Mask Mining Company's stock on the
electronic bulletin board. Public trading will begin when and if the
application is approved. The Company expects its shares will be
listed on the bulletin board exchange before calendar year end. The
Company's fiscal year end is June 30th.
OVERVIEW
The Company was formed on May 16, 1957 and engaged in mining
activities from 1957 to 1991. From 1991 to February 1999 the Company
was inactive. On March 5, 1999, the Company acquired 100% of the
stock of Yellow Pine Resources, Inc., in exchange for 6,000,000
shares of the Company's common stock. On May 10th, 2000, the Company
entered into an agreement with American Diatomite, L.L.C., to
develop, mine and retain profits from 42 unpatented mining claims in
exchange for 6,200,000 shares of iron Mask Mining Company common
stock. The Company has a five-year option to purchase the 42 mining
claims for $3,000,000 from American Diatomite, L.L.C.
Revenues
The Company's total income for the year ended June 30, 2000
resulted mainly from the sale of land originally acquired in 1957.
The Company recorded a loss on the sale of land although the sale
generated a cash flow of $57,829. The loss on the sale of land was
$29,551. Other sources of income were $111 of interest income and
miscellaneous income of $296. Revenue in total decreased from the
previous year's period from $30 to $(29,144).
<PAGE> 28
Expenses
Total expenses for the year ended June 30, 2000 and June 30,
1999 were $59,882 and $6,828 respectively. In each year significant
costs were related to the registration and filing requirements of the
Company's common stock. Professional fees were $22,255 and $5,000
respectively and were related to the costs of registering the
Company's stock and SEC filings. Interest expense on short-term
loans was $3,915 and $60 respectively and all interest was paid or
forgiven when the land sale occurred. Taxes and license costs were
$642 and $149 for each period. Office supplies for the year ended
June 30, 2000 increased to $2,070 from zero for the year ended June
30, 1999. Right to mine expense was $31,000 and zero respectively.
This expense was incurred by issuing 6,200,000 shares of Iron Mask
Mining Company stock to American Diatomite, L.L.C., in exchange for
mining rights. Other costs were zero and $1,679 respectively.
FINANCIAL CONDITION
Liquidity
Cash increased $3,273 during the year. Proceeds from the land
sale allowed the Company to also pay off current liabilities in the
amount of $29,774. Prepaid insurance remained constant at $750.
Capital Requirements
The Company's stock registration, listing, and subsequent offering
will allow the Company to raise the capital needed to pursue its
long-term goals of developing its gold and diatomite mining operation
and other opportunities identified by management
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
<PAGE> 29
Independent Auditor's Report
Board of Directors
Iron Mask Mining Company
PO Box 1713
Sandpoint, Idaho 83864
We have audited the accompanying Balance Sheet of Iron Mask Mining
Company as of June 30, 2000 and 1999, and the related Statements of
Income and Accumulated Deficit and Statement of Cash Flows for the
years then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Iron Mask
Mining Company as of June 30, 2000 and 1999, and the results of
operations and its cash flows for the years then ended in conformity
with generally accepted accounting principles.
/s/ Scott Beggs & Company, Inc
Scott Beggs & Company, Inc
Kellogg, Idaho 83837
September 12, 2000
F-1
<PAGE> 30
Iron Mask Mining Company
A Development Stage Corporation
Balance Sheet
June 30, 2000 and 1999
2000 1999
Assets
Current Assets
Cash in Bank 3,346 73
Prepaid Insurance 750 750
----------- --------
Total Current Assets 4,096 823
Property and Equipment
Land 87,380
Buildings 1,032
Equipment 46,176
Accumulated Depreciation 0 (47,208)
----------- --------
Net Property and Equipment 0 87,380
Total Assets 4,096 88,203
=========== ========
Liabilities and Equity
Current Liabilities
Accounts Payable 350 1,419
Interest Payable 3,343
Notes Payable - Due within One Year 28,355
----------- --------
Total Current Liabilities 3,693 29,774
Long Term Liabilities
Notes Payable - Due in more than One Year 0 0
----------- --------
Total Long Term Liabilities 0 0
Total Liabilities 3,693 29,774
Equity
Common Stock, par value $ .005,
authorized 100,000,000 shares,
issued and outstanding 22,187,316 830,366 799,366
Additional Paid in Capital 215,936 215,936
Deficit accumulated during
Development Stage (1,045,899) (956,873)
----------- --------
Total Equity 403 58,429
Total Liabilities and Equity 4,096 88,203
=========== ========
See the accompanying accountant's report and notes, which are
integral parts of these financial statements.
F-2
<PAGE> 31
Iron Mask Mining Company
A Development Stage Corporation
Statement of Income and Accumulated Deficit
For the Years Ended - June 30, 2000 and 1999
Year Ended Cumulative Year Ended Cumulative
06/30/00 Total 06/30/99 Total
Income
Interest Income 111 83,905 5 83,794
Logging Receipts 15,470 15,470
Ore Sales 14,776 14,776
Misc Income 296 7,624 25 7,328
Lease Income 1,400 1,400
Gain (Loss) on Sale
of Property (29,551) (29,551) 0
Workman's Comp Dividend 375 375
---------- ---------- --------- ----------
Total Income (29,144) 93,999 30 123,143
Expenses
Wages and Salaries 248,648 248,648
Professional Fees 22,255 105,397 5,000 83,142
Tunnel Contract 73,850 73,850
Materials and Supplies 54,777 54,777
Payroll Taxes and
Insurance 49,822 400 49,822
Depreciation 47,208 47,208
Gas and Oil 35,057 35,057
Office Supplies 2,070 28,586 26,516
Exploration 25,183 25,183
Interest and Bank Fees 3,915 23,070 60 19,155
Equipment Rent 17,746 17,746
Leases 14,645 14,645
Promotions 11,525 11,525
Equipment Repair 7,664 7,664
Taxes and Licenses 642 7,843 149 7,201
Road 6,012 6,012
Filing Fees 4,346 4,346
Other 4,333 1,219 4,333
Assays 1,032 1,032
Fire and Safety 237 237
Documentary Stamps 119 119
Right to Mine 31,000 31,0000
Rounding 2 2
---------- ---------- --------- ----------
Total Expenses 59,882 798,102 6,828 738,220
Net Loss (89,026) (704,103) (6,798) (615,077)
Extra Ordinary Transactions -
Acquistions and Related Party -
See Notes 3 and 7 (341,796) (341,796)
Accumulated Deficit -
Start of Year (956,873) 0 (608,279) 0
---------- ---------- --------- ----------
Accumulated Deficit - End
of Year (1,045,899)(1,045,899) (615,077) (956,873)
========== ========== ========= ==========
See accompanying accountant's report and notes, which are integral
parts of these financial statements
F-3
<PAGE> 32
Iron Mask Mining Company
A Development Stage Corporation
Statement of Changes in Stockholders Equity
For the Years Ended - June 30, 2000
Common Additional Accumulated
Stock Paid In Deficit Total
Balance at Start of Year 799,366 215,936 (956,873) 58,429
Additions During Year Stock
Issued for Right to Mine 31,000 31,000
Reductions During Year
Current Year Loss (89,026) (89,026)
--------- -------- ----------- -------
Balance at End of Year 830,366 215,936 (1,045,899) 403
========= ======== =========== =======
See accompanying accountant's report and notes, which are integral
parts of these financial statements
F-4
<PAGE> 33
Iron Mask Mining Company
A Development Stage Corporation
Statement of Cash Flows
For the Years Ended - June 30, 2000 and 1999
Year Ended Cumulative Year Ended Cumulative
06/30/00 Total 06/30/99 Total
Cash Flow from Operating
Activities
Net Loss (59,475) (674,551) (6,798) (615,076)
Adjustments to Reconcile
to Net Cash
Depreciation Expense 47,208 47,208
Loss on Sale of Land 452 452
Changes in Operating Assets
(Increase) Decrease in Prepaid
Insurance (750) (750)
Increase (Decrease) in
Payable Accounts 2,274 3,693 1,419 1,419
---------- ----------- ---------- ----------
Net Cash (Used) Provided by
Operating Activities (57,201) (623,948) (5,379) (566,747)
Cash Flow from Investing
Activities
Sale of Land 57,829 73,397 15,568
Purchase of Property (150,609) (150,609)
---------- ----------- ---------- ----------
Net Cash (Used) Provided by
Investing Activities 57,829 (77,212) 0 (135,041)
Cash Flow from Financing
Activities
Common Stock Proceeds 31,000 704,506 673,506
Loan Proceeds 5,000 33,355 5,000 28,355
Loan Repayments (33,355) (33,355) 0 0
---------- ----------- ---------- ----------
Net Cash (Used) Provided by
Financing Activities 2,645 704,506 5,000 701,861
Net Increase (Decrease) in Cash 3,273 3,346 (379) 73
Cash - Start of Year 73 0 452 0
---------- ----------- ---------- ----------
Cash - End of Year 3,346 3,346 73 73
========== =========== ========== ==========
See accompanying accountant's report and notes, which are integral
parts of these financial statements.
F-5
<PAGE> 34
Iron Mask Mining Company
A Development Stage Company
Notes to the Financial Statements
June 30, 2000
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development Stage Company - General Accounting In June 1975, the
Financial Accounting Standards Board (FASB) issued Statement of
Financial Standards No 7 effective for fiscal periods beginning
after January 1, 1976, for companies in the development stage. That
statement requires that such companies follow the same accounting
practices as operating companies and, thus, defer only those costs
which an operating company would normally defer and that dollar
amounts be assigned to shares issued for noncash considerations.
Development Activities The primary business purpose of the Company
is the purchase and development of mining properties. The
realization of profits and recovery of development costs are
dependent upon increased market values and the recover ability of
the minerals of the Company's properties.
Cash and Cash Equivalents For the purpose of the statement of cash
flows, the Company considers all highly liquid debt instruments with
a maturity of three months or less to be cash equivalents.
Property and Equipment Depreciation is provided for on the straight
line method of accounting over 5 to 7 years on equipment and 20
years on buildings. All depreciable assets have been fully
depreciated.
Notes Payable The Company had various notes payable to
individuals. These notes were secured by a lien on the Company's
real property. On January 21, 1998 the following loans were
provided to the Company; 1) Gerald Sarff $ 3,000; 2) Robert Evans $
15,355; 3) Charles McNearney $ 2,500; and 4) Walter Ripley $ 2,500.
These loans total $ 23, 355 and the interest rate is 7%. On April
1, 1999 a loan with Montana Land Investments LLC in the amount of $
5,000, the interest rate is 12%. There have interest payments made
on these loans. During the year ended June 30, 2000, the Company
was able to pay off these loans using cash proceeds from the sale of
real estate. The interest accumulated on these notes is still
recorded as a Company payable.
Income Taxes The Company files its corporate income tax returns as
a development stage company. Accordingly, all income and expense
items are being capitalized as development costs.
NOTE 2: CUMULATIVE DATA
Cumulative data has been recorded on the Statement of Income and
Accumulated Deficit and the Statement of Cash Flows. The cumulative
data is from May 1, 1957, the date of organization, to June 30,
2000. Also included in Deficit accumulated is the amount incurred
by Yellow Pine Resources Inc. See Notes 3 and 4 for more
information.
F-6
<PAGE> 35
Iron Mask Mining Company
A Development Stage Company
Notes to the Financial Statements
June 30, 2000
NOTE 3: ACQUISITION AGREEMENT YELLOW PINE RESOURCES INC
The Company entered an agreement with Yellow Pine Resources Inc
to acquire all of the outstanding shares of Yellow Pine
Resources Inc in a stock for stock exchange. After concluding
the transaction, Iron Mask Mining Company owns 100% of the
outstanding stock of Yellow Pine Resources Inc. Iron Mask
Mining Company issued 6,000,000 shares to the shareholders of
record of Yellow Pine Resources Inc. Iron Mask received $
341,796 of capitalized development costs and the applicable
mining leases and other assets of Yellow Pine Resources. $
300,000 has been included as Common stock and $ 41,796 as
additional paid in capital.
This transaction was recorded as a pooling of interest for
business combinations. During the period for the year ended
June 30, 1999, Yellow Pine Resources Inc had no significant
business activity.
NOTE 4: CONSOLIDATION INFORMATION
Included in the deficit accumulated during development stage
activities is $ 341,796 incurred by Iron Mask Mining Company's
wholly owned subsidiary Yellow Pine Resources Inc. See Note 3
for more information concerning the acquisition of Yellow Pine
Resources Inc.
NOTE 5: LEASES
The State lease was for 10 years from 1988, payable annually at
$ 1 per acre. This lease has expired and was not renewed.
NOTE 6: LAND SALE
During the year ended June 30, 2000, the company sold some land.
This land was acquired in approximately 1957 and the recorded
book basis was $ 132,588 for land, buildings, and equipment.
The buildings and equipment had been fully depreciated over
their useful lives, and were either included in the sale or had
been discarded over the years and not recorded. The Company
currently does not own any real property, improvements, or
equipment. The sales price for the land, net of selling
expenses was $ 57,829. The loan from Montana Land Investments
LLC, plus interest, was paid directly by the title company.
F-7
<PAGE> 36
Iron Mask Mining Company
A Development Stage Company
Notes to the Financial Statements
June 30, 2000
NOTE 7: AMERICAN DIATOMITE LLC AGREEMENT AND RELATED PARTY ACTIVITY
In May of 1999, Iron Mask Mining Company entered into an
agreement American Diatomite LLC. Under the terms of this
agreement, Iron Mask Mining Company issued to American Diatomite
LLC 6,200,000 shares of restricted common stock, par value $
0.005. Iron Mask Mining Company received in exchange for this
stock, the right to mine and develop of property currently owned
by American Diatomite LLC. There is a provision for an option
to purchase in 5 years.
Two of the principals in American Diatomite LLC also serve on
the board of directors of Iron Mask Mining Company. Thus, the
agreement with American Diatomite LLC is considered a related
party transaction. This transaction has been recorded as a
credit to common stock of $ 31,000 and a Right to Mine operating
expense. The value of this transaction was recorded at par
value for the stock.
F-8
<PAGE> 37
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures from the inception of the Company through the date of
this Registration Statement.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Officers and Directors
Each of our directors is elected by the stockholders to a term
of one (1) year and serves until his or her successor is elected and
qualified. Each of our officers is elected by the board of directors
to a term of one (1) year and serves until his or her successor is
duly elected and qualified, or until he or she is removed from
office. The board of directors has no nominating, auditing or
compensation committees.
The name, age and position of our present officers and directors
are set forth below:
Name Age Position
Robert Delaney 61 President and a member of the Board of
Directors
Robert Evans 75 Vice President, Treasurer, Secretary,
Chief Financial Officer and a member of
the Board Directors
Donald Delaney 64 Vice President, Secretary, and a member
of the Board of Directors
Gerald E. Sarff 81 Member of the Board of Directors
All directors hold office until the next annual meeting of
shareholders or until their successors have been elected and
qualified. The Company's officers are elected by the Board of
Directors at the annual meeting and hold office until their death, or
until they resign, or have been removed from office.
<PAGE> 38
Officer and Director Biographies:
Robert Delaney, President and a member of the Board of Directors
Since January 1998 Mr. Delaney has been a member of the Board of
Directors of the Company and since April 1999 he has been President
of the Company. Since 1958, Mr. Delaney has been self employed in
timber sales and mining development. Mr. Delaney is the brother of
Donald Delaney, the Company's Vice President, Secretary and a member
of the Board of Directors.
Robert Evans, Vice President, Secretary, Treasurer, Chief Financial
Officer, and a member of the Board of Directors
Since 1957, Mr. Evans has been a member of the Board of
Directors of the Company and since April 1999 he has been Vice
President, Secretary and Treasurer of the Company. Prior to April
1999, Mr. Evans was President of the Company. Mr. Evans is also a
director and Secretary of Silver Butte Mining Co.
Donald Delaney, Vice President and a member of the Board of Directors
Since April 1999, Mr. Delaney has been Vice President and a
member of the Board of Directors of the Company. Since 1958, Mr.
Delaney has been self employed in timber sales and mining
development. Mr. Delaney is the brother of Robert Delaney, the
Company's President and a member of the Board of Directors.
Gerald E. Sarff, Member of the Board of Directors
Since 1957 Mr. Sarff has been a member of the Board of
Directors.
All of our officers and directors are engaged in other business.
As such, they will not be devoting time exclusively to our
operations. Our officers and directors intend to devote approximately
80% of their time to the operation of our business.
None of the individuals listed above are subject to any
anticipated or threatened legal proceedings of a material nature.
We have not held an annual meeting of shareholders since
inception.
Compliance with Section 16(a) of the Exchange Act.
The Company's directors, executive officers and ten percent
shareholders made all required filings pursuant to Section 16(a) of
the Securities Exchange Act of 1934.
<PAGE> 39
ITEM 10. EXECUTIVE COMPENSATION.
Summary Compensation
The following table sets forth the compensation paid to our
officers during fiscal 2000. This information includes the dollar
value of base salaries, bonus awards and number of stock options
granted, and certain other compensation, if any.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards Payouts
Securities
Names Other Under Restricted Other
Executive Annual Options/ Shares or Annual
Officer and Compen- SARs Restricted LTIP Compen-
Principal Year Salary Bonus sation Granted Share Payouts sation
Position Ended (US$) (US$) (US$) (#) Units (US$) (US$) (US$)
Robert 2000 0 0 0 0 0 0 0
Delaney 1999 0 0 0 0 0 0 0
President 1998 0 0 0 0 0 0 0
Robert Evans 2000 0 0 0 0 0 0 0
Vice President 1999 18,355 0 0 0 0 0 0
Treasurer 1998 0 0 0 0 0 0 0
Secretary
Donald 2000 0 0 0 0 0 0 0
Delaney 1999 0 0 0 0 0 0 0
Vice President 1998 0 0 0 0 0 0 0
Gerald 2000 0 0 0 0 0 0 0
Sarff 1999 0 0 0 0 0 0 0
Director 1998 0 0 0 0 0 0 0
Michael 1999 0 0 0 0 0 0 0
LaFleur 1998 0 0 0 0 0 0 0
Director 1997 0 0 0 0 0 0 0
(Resigned)
There are no stock option, retirement, pension, or profit sharing
plans for the benefit of our officers and directors.
Option/SAR Grants
No individual grants of stock options, whether or not in tandem
with stock appreciation rights ("SARs") and freestanding SARs have been
made to any executive officer or any director since our inception,
accordingly, no stock options have been exercised by any of the
officers or directors in fiscal 1999.
Long-Term Incentive Plan Awards
We do not have any long-term incentive plans that provide
compensation intended to serve as incentive for performance to occur
over a period longer than one fiscal year, whether such performance is
measured by reference to our financial performance, our stock price, or
any other measure.
<PAGE> 40
Compensation of Directors
Each member of the Board of Directors received 50,000 shares of
common stock to serve on the Board of Directors during fiscal 1999. The
directors did not receive any other compensation for serving as members
of the Board of Directors. The Board has not implemented a plan to
award options. There are no contractual arrangements with any member of
the Board of Directors.
We do not expect to pay salaries to any of our officers until such
time as we generate sufficient revenues to do so any compensation
earned prior to this is expected to be waived. We do not anticipate
paying any salaries to our officers until fiscal 2002. We do not intend
to pay any additional compensation to our directors. As of the date
hereof, we have not entered into employment contracts with any of our
officers and we do not intend to enter into any employment contracts
until such time as it profitable to do so.
Indemnification
Pursuant to the Articles of Incorporation and Bylaws of the
corporation, we may indemnify an officer or director who is made a
party to any proceeding, including a law suit, because of his position,
if he acted in good faith and in a manner he reasonably believed to be
in our best interest. In certain cases, we may advance expenses
incurred in defending any such proceeding. To the extent that the
officer or director is successful on the merits in any such proceeding
as to which such person is to be indemnified, we must indemnify him
against all expenses incurred, including attorney's fees. With respect
to a derivative action, indemnity may be made only for expenses
actually and reasonably incurred in defending the proceeding, and if
the officer or director is judged liable, only by a court order. The
indemnification is intended to be to the fullest extent permitted by
the laws of the State of Idaho.
Regarding indemnification for liabilities arising under the
Securities Act of 1933, as amended, which may be permitted to directors
or officers pursuant to the foregoing provisions, we are informed that,
in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy, as expressed in the Act and
is, therefore, unenforceable.
<PAGE> 41
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Name Number of Number of
of owner Shares Position Shares
Robert Delaney 1,689,374[1] President 7.62%
4022 South Avenue W and Director
#12
Missoula, MT 59804
Robert Evans 361,104 Vice President, 1.63%
P.O. Box 178 Treasurer, CFO
Ponderay, ID 83852 and Director
Donald Delaney 1,504,832[2] Vice President, 6.79%
801 Simons Dr. Secretary
Missoula, MT 59803 and Director
Gerald E. Sarff 392,088 Director 1.77%
P. O. Box 54
Kootenai, ID 83840
All officers and 3,947,398 17.81%
directors as a
group (4 persons)
Mike Lafleur 1,544,470 6.96%
3725 Pine Park Dr.
Baton Rouge, LA 70809
[1] Includes 300,000 shares of common stock owned by the Delaney
Creditor Trust.
[2] Includes 450,000 shares owned by Mr. Delaney's wife Shirley
Delaney and 300,000 shares of common stock owned by the Delaney
Creditor Trust.
Future Sales by Existing Stockholders
A total of 4,692,750 shares of common stock were issued and
outstanding on April 20, 2000. Mr. Sterling has agreed to return
1,692,750 shares which he owns to us upon our pending Form SB-2
registration statement being declared effective by the SEC. After
Mr. Sterling returns 1,692,750 shares to us, there will be
outstanding prior to the offering, 3,000,000 shares of common stock.
While the foregoing 3,000,000 shares are all free trading, each
officer and director has agreed not to sell transfer or convey by
registration or otherwise, without the prior consent of the
underwriter, any of our securities owned by them, directly or
indirectly, for a period of two years from the effective date of our
pending registration statement. However, Robert Sterling, our
President and Matthew Sterling his son, may resell up to a maximum of
200,000 shares provided the bid price for the common stock is at
least $10.00 after one year from the effective date. Further, all
sales of such stock must be made through the underwriter.
<PAGE> 42
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On April 6, 1999, the Company issued 6,000,000 shares of common
stock in exchange for all of the issued and outstanding shares of
common stock of Yellow Pine Resources, Inc., a Montana corporation.
Donald Delaney and Robert Delaney, current officers and directors of
the Company were officers and directors of Yellow Pines at the time
of the transaction. Further, Mike LaFleur, a former officer and
director of the Company was an officer and director of Yellow Pine.
In August 1999, the Company entered into an agreement with
American Diatomite, L.L.C., an Idaho limited liability company
("American") wherein the Company acquired a 50% interest in one
property containing 42 unpatented mining claims. Robert Delaney, the
Company's President and Donald Delaney, the Company's Vice President
each own a 25% interest in and to American. Under the terms of the
agreement, the Company is obligated to pay American $1,200,000 as
follows: $200,000 from the proceeds of a public offering to be
conducted by the Company with the remaining $1,000,000 to be paid at
the rate of $200,000 per year plus interest at the rate of 5% per
annum. Further the Company is obligated to issue to American
6,000,000 restricted shares of the Company's common stock and pay an
additional $200,000 as an advance royalty payment. The royalty
payment is specifically excepted from the purchase price. Under the
terms of the agreement, the Company will have the exclusive mining
rights to the property for a period of five years. If at the end of
the five years, the Company is not mining the deposits, American will
have the right to mine and sell diatomaceous earth from the property.
The Company will pay a royalty of four percent (4%) of the net sales
price of the diatomaceous earth mined and thereafter split the net
profit of diatomaceous earth sold. The Company will be responsible
for all future Bureau of Land Management lease payments of
approximately $4,000.00 per year. On October 25, 1999, the Company
and American entered into an extension agreement wherein the Company
was granted an additional ninety (90) days to complete its public
offering. The consideration for the extension agreement was an
additional 200,000 restricted shares of the Company's common stock.
As of the date hereof no moneys have been paid to American and no
shares of common stock have been issued to American.
The foregoing agreement was canceled on May 10, 2000 and a
new contract was entered into between the parties. Under the terms
of the new agreement, American will receive 6,200,000 restricted
shares of common stock. The Company will pay $25,000 each quarter as
a minimum royalty payment and all pertinent assessment fees. The
Company will have the option of acquiring the entire diatomaceous
earth deposit owned by American in consideration of an additional
$3,000,000. The option will expire five years from the date of this
agreement. The Company will pay a $10.00 per ton royalty for
diatomaceous earth that is sold and shipped from the property. LeRoy
and Robie Stout will receive a combined $2,000 per month consulting
fee from the Company. The consulting fee will be increased up to
$3,000 per month during the next 60 months. The consulting fee will
not be paid until the Company's common stock is traded on the
Bulletin Board operated by the National Association of Securities
Dealers, Inc.
<PAGE> 43
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Reports on Form 8-K
The Company has not filed any reports on Form 8-K during the
period ended June 30, 2000.
(b) Exhibits
The following Exhibits are incorporated herein by reference from
the Registrants's Form 10SB Registration Statement filed with the
Securities and Exchange Commission, SEC file #000-30065 on March 22,
2000. Such exhibits are incorporated herein by reference pursuant to
Rule 12b-32:
Exhibit No. Document Description
------------ -------------------
3.1 Articles of Incorporation.
3.2 Bylaws.
3.3 Amended Articles of Incorporation.
3.4 Amended Articles of Incorporation.
4.1 Specimen Stock Certificate.
10.1 Yellow Pines Resources Agreement.
10.2 American Diatomite Agreement.
The following Exhibits are incorporated herein by reference
from the Registrants's Form 10-K Registration Statement filed with
the Securities and Exchange Commission. Such exhibits are
incorporated herein by reference pursuant to Rule 12b-32:
10.3 American Diatomite Agreement.
27 Financial Data Schedule
<PAGE> 44
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, on this 26th day of December,
2000.
IRON MASK MINING COMPANY
(Registrant)
BY: /s/ Robert L. Delaney
Robert Delaney, President
In accordance with the Exchange Act, this report has been signed
below by the following person on behalf of the Registrant and in the
capacities.
SIGNATURES TITLE DATE
/s/ Robert L. Delaney President, Chief December 26 ,2000
Robert Delaney Executive Officer and
Member of the Board
of Directors
/s/ Robert Evens Vice President, December 26, 2000
Robert Evans Treasurer, Chief
Financial Officer and
Member of the Board
of Directors
/s/ Donald Delaney Vice President, December 26, 2000
Donald Delaney Secretary and Member
of the Board of
Directors
------------------
Gerald E. Sarff Member of the Board December __, 2000
of Directors
