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FORM 10-KSB
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, and (2) these joints were reactivated by Laramide stresses and
possibly controlled by the shape of the Tobacco Root Batholith.
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"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.
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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.
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
<PAGE> 14
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. 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).
<PAGE> 15
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 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
<PAGE> 16
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. Other factors such as
particle size are controlled by milling and processing.
<PAGE> 18
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. 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
<PAGE> 20
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.
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.
<PAGE> 24
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 5,000 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 - (47,208)
---------- ---------
Net Property and Equipment - 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 - -
---------- ---------
Total Long Term Liabilties - -
Total Liabilities 3,693 29,774
Equity
Common Stock, par value $ .005, authorized
100,000,000 shares, issured 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 accompanying accountant's report and notes, which are an integral
part 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 31,000 0
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 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
Payble 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-4
<PAGE> 33
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.
F-5
<PAGE> 34
Iron Mask Mining Company
A Development Stage Company
Notes to the Financial Statements
June 30, 2000
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.
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.
F-6
<PAGE> 35
Iron Mask Mining Company
A Development Stage Company
Notes to the Financial Statements
June 30, 2000
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.
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-7
<PAGE> 36
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> 37
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> 38
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 1999 18,355 0 0 0 0 0 0
President 1998 0 0 0 0 0 0 0
Treasurer
Secretary
Donald 2000 0 0 0 0 0 0 0
Delaney 1999 0 0 0 0 0 0 0
Vice 1998 0 0 0 0 0 0 0
President
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> 39
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 Washington.
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> 40
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> 41
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> 42
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 documents are incorporated herein:
10.3 American Diatomite Agreement.
27 Financial Data Schedule
<PAGE> 43
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 12th day of October,
2000.
IRON MASK MINING COMPANY
(Registrant)
BY: /s/ Robert 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 Delaney President, Chief October 12 ,2000
Robert Delaney Executive Officer and
Member of the Board
of Directors
/s/ Robert Evans Vice President, October 12, 2000
Robert Evans Treasurer, Chief
Financial Officer and
Member of the Board
of Directors
/s/ Donald Delaney Vice President, October 12, 2000
Donald Delaney Secretary and Member
of the Board of
Directors
/s/ Gerald E. Sarff
Gerald E. Sarff Member of the Board October 12, 2000
of Directors
