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SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
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FORM 10-SB
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
IRON MASK MINING COMPANY
(Exact name of registrant as specific in its charter)
Idaho 82-0230842
(State of Incorporation) (I.R.S. Employer
Identification No.)
656 Cedar Street
Ponderay, Idaho 83852
(Address of executive offices, including postal code)
Registrant's telephone number: (208) 263-3834
Copies to: Conrad C. Lysiak, Esq.
601 West First Avenue
Suite 503
Spokane, Washington 99201
(509) 624-1475
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
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(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
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(Title of Class)
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ITEM 1. DESCRIPTION OF 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 recently 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.
<PAGE> 3
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.
<PAGE> 5
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.
<PAGE> 8
"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.
<PAGE> 9
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.
<PAGE> 10
Let us consider a geologic premise advanced by Mr. Clyde Boyer, a
Geologist who did extensive mapping in the area in 1982. Mr. Boyer
believes additional structural features of folding will add to the
probability of finding more extensive mineralization as mine
development advances at depth. He reasons that tension cracks around
the axis of the folded sediment and the increased shear between beds on
the axis will create open areas and planes of greater weakness for
mineralization fluids to have filled. Dr. Alan M. Bateman, Professor of
Geology at Yale University in his text "The Formation of Mineral
Deposits", 1951 described saddle reef deposits such as those at Bendgo,
Australia that have yielded over $300,000,000 with gold at $35/oz. as
being openings that formed on the axis of a fold much like a saddle. He
illustrated by taking a stack of paper holding them tightly on the ends
then folding the stack. Openings would form between sheets of paper at
the crest of the fold. These three possibilities are advanced as to why
the author expects to find substantially more ore nearer the fold axis
which occurs at depth and to the West of the Paymaster mine.
Earlier work in the Ramshorn district was accomplished by Tamsley,
Shofu and Halt (1933) who complied a mining activities tabulation and
placed them in perspective with existing geologic knowledge. Berger
(1967) developed detailed mineralogy and lithology descriptions as did
Corda a few years later. Practor and Gwynn (1948) tabulated the assays
along the mineralized zone of the Ramshorn.
Mine Development
Paymaster Mine Development
The initial mine development method employed at the Paymaster Heir
Portal will be Load-Haul-Dump trackless drifting on the Paymaster vein.
Initial drift development is estimated to be 500 feet from portal.
Based on projections of old near surface workings above the elevation
of this portal two (2) mineralized ore shoots should be intercepted in
the drift-on-vein. The first intercept will be the Paymaster Heir ore
shoot and the second the Old Timer ore shoot. The second phase of
development would be at the already opened Paymaster Portal.
The Paymaster Heir portal drift will be driven in the hanging wall
adjacent to and parallel to the Paymaster vein. The Paymaster vein will
be on the east wall of the drift. Therefore, as the drift is driven
through the ore shoot mineralized areas the ore in the wall will be
mined through secondary slabbing to reduce dilution of ore grade.
Stope development will progress after the drift has passed through
an ore shoot delineating the width and thickness of mineralization. A
raise will be driven on the hanging wall side of the vein through the
near center of the ore shoot to break out either at surface or in the
old workings. The ore in the vein exposed by the raise will be mined
separately with each lift.
<PAGE> 11
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> 12
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 the Company believes contain diatomite.
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> 13
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. Other uses account for the
remaining 13% of U.S. diatomite production (Pettifer 1982; Kadey,
1975). Uses of diatomite are tabulated in Table 1.
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> 14
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> 15
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> 16
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> 17
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> 18
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> 19
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> 20
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.
Year 2000
The Year 2000 issue is the result of computer programs written
using two digits rather than four to define the applicable year. As a
result, date-sensitive software may recognize a date using "00" as the
year 1900 rather than the Year 2000. This could result in system
failures or miscalculations causing disruptions of operations,
including among others, temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
Since the Company has yet to acquire any technology in support of
its services, the planned acquisitions will most likely involve
hardware and software which is relatively new and therefore management
does not anticipate that it will incur significant operating expenses
or be required to invest heavily in computer systems improvements to be
Year 2000 compliant. As the Company makes arrangements with significant
hardware and software suppliers, the Company intends to determine the
extent to which the Company's systems may be vulnerable should those
third parties fail to address and correct their own Year 2000 issues
and take measures to reduce the Company's exposure, such as, finding
alternative suppliers or requiring the suppliers to correct Year 2000
compliance issues prior to the Company acquiring the product. The
Company anticipates that this will be an ongoing process relative to
computer products manufactured prior to January 1, 2000. There can be
no assurances that the systems of suppliers or other companies on which
the Company may rely on will be Year 2000 compliant. Additionally there
can be no assurances that all computer systems necessary to maintain
the viability of the Internet will be Year 2000 compliant. The Company
believes that it is taking the steps necessary regarding Year 2000
compliance issues with respect to matters within its control.
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."
<PAGE> 21
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.
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.
<PAGE> 22
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.
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."
<PAGE> 23
13. Issuance of Additional Shares. Approximately 84,017,684
shares of Common Stock or 84.02% 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.
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."
<PAGE> 24
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The Company has inadequate cash to maintain operations during the
next twelve months. In order to meet its cash requirements the Company
will have to raise additional capital through the sale of securities or
loans. As of the date hereof, the Company has not made sales of
additional securities and there is no assurance that it will be able to
raise additional capital through the sale of securities in the future.
Further, the Company has not initiated any negotiations for loans to
the Company and there is no assurance that the Company will be able to
raise additional capital in the future through loans. In the event
that the Company is unable to raise additional capital, it may have to
suspend or cease operations.
The Company does not intend to purchase a plant or significant
equipment.
The Company will hire employees on an as needed basis, however,
the Company does not expect any significant changes in the number of
employees.
Results of Operations
The Company is in the development stage. From inception until May
1996, the Company was essentially dormant having as its only asset
unpatented mining claims located in the states of Montana and Idaho.
Liquidity and Capital Resources.
The Company has insufficient funds to carry on operations during
the next twelve months. In order to maintain operations, the Company
will have to raise additional capital through loans or through the sale
of securities. If the Company is unable to raise additional capital,
it may have to cease operations. The Company's plan of operation,
subject to maintaining sufficient funds, calls for continued geologic
mapping of the surface and underground workings, sampling and drilling
to explore for additional mineralization and to develop an ore reserve
and compilation of the data into a computer data base for reserve
calculation.
Currently the Company is spending approximately $1,000 per month
in general overhead. Over the next six months the Company has budgeted
$100,000 for payments to American; $250,000 for operations on the
diatomaceous operations; $50,000 for property payments; and, $200,000
for working capital and costs of future financing.
Year 2000
The Year 2000 issue is the result of computer programs written
using two digits rather than four to define the applicable year. As a
result, date-sensitive software may recognize a date using "00" as the
year 1900 rather than the Year 2000. This could result in system
failures or miscalculations causing disruptions of operations,
including among others, temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
<PAGE> 25
Since the Company has yet to acquire any technology in support of
its services, the planned acquisitions will most likely involve
hardware and software which is relatively new and therefore management
does not anticipate that it will incur significant operating expenses
or be required to invest heavily in computer systems improvements to be
Year 2000 compliant. As the Company makes arrangements with significant
hardware and software suppliers, the Company intends to determine the
extent to which the Company's systems may be vulnerable should those
third parties fail to address and correct their own Year 2000 issues
and take measures to reduce the Company's exposure, such as, finding
alternative suppliers or requiring the suppliers to correct Year 2000
compliance issues prior to the Company acquiring the product. The
Company anticipates that this will be an ongoing process relative to
computer products manufactured prior to January 1, 2000. There can be
no assurances that the systems of suppliers or other companies on which
the Company may rely on will be Year 2000 compliant. Additionally there
can be no assurances that all computer systems necessary to maintain
the viability of the Internet will be Year 2000 compliant. The Company
believes that it is taking the steps necessary regarding Year 2000
compliance issues with respect to matters within its control.
ITEM 3. 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 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth the Common Stock ownership of each
person known by the Company to be the beneficial owner of five percent
or more of the Company's Common Stock each director individually and
all officers and directors of the Company as a group. Each person has
sole voting and investment power with respect to the shares of Common
Stock shown, unless otherwise noted, and all ownership is of record and
beneficial.
<PAGE> 26
Name Number of Number of
of owner Shares Position Shares
Robert Delaney 1,155,000[1] President 7.22%
297 Tarrs Lane and Director
Polson, MT 59860
Robert Evans 361,088 Vice President, 2.26%
P.O. Box 178 Treasurer, CFO
Ponderay, ID 83852 and Director
Donald Delaney 1,620,000[2] Vice President, 10.14%
801 Simons Dr. Secretary
Missoula, MT 59803 and Director
Gerald E. Sarff 392,088 Director 2.45%
P. O. Box 54
Kootenai, ID 83840
All officers and 3,528,176 22.07%
directors as a
group (4 persons)
Mike Lafleur 1,710,000 10.70%
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.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The officers and directors of the Company are as follows:
Name Age Position
Robert Delaney 60 President and a member of the Board of
Directors
Robert Evans 74 Vice President, Treasurer, Secretary,
Chief Financial Officer and a member of
the Board Directors
Donald Delaney 63 Vice President, Secretary, and a member
of the Board of Directors
Gerald E. Sarff 80 Member of the Board of Directors
<PAGE> 27
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.
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.
ITEM 6. EXECUTIVE COMPENSATION.
Summary Compensation.
The following table sets forth the compensation paid by the
Company from January 1, 1996 through December 31, 1998, for each
officer and director of the Company. This information includes the
dollar value of base salaries, bonus awards and number of stock options
granted, and certain other compensation, if any.
<PAGE> 28
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
Names Other Under Restricted Other
Executive Annual Options/ Shares or Compen
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$)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert 1999 0 0 0 0 0 0 0
Delaney 1998 0 0 0 0 0 0 0
President 1997 0 0 0 0 0 0 0
Robert Evans
Vice 1999 18,355 0 0 0 0 0 0
President 1998 0 0 0 0 0 0 0
Treasurer 1997 0 0 0 0 0 0 0
Secretary
Donald 1999 0 0 0 0 0 0 0
Delaney 1998 0 0 0 0 0 0 0
Vice 1997 0 0 0 0 0 0 0
President
Gerald 1999 0 0 0 0 0 0 0
Sarff 1998 0 0 0 0 0 0 0
Director 1997 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)
</TABLE>
The Company does not anticipate paying salaries in 2000. The
Company will initiate the payment of salaries when it determines that
it is economically feasible to do so.
There are no other stock option plans, retirement, pension, or
profit sharing plans for the benefit of the Company's officers and
directors.
Option/SAR Grants.
No grants of stock options, whether or not in tandem with stock
appreciation rights ("SARs") and freestanding SARs have been
made to officers and/or directors:
Long-Term Incentive Plan Awards.
The Company does not have any long-term incentive plans that
provide compensation intended to serve as incentive for performance.
Compensation of Directors.
In general, the Directors do not receive any compensation for
serving as members of the Board of Directors. In 1999, the Company paid
$2,500 each to three former directors. The Company intends to pay
Robert Evans, a member of the Board of Directors $2,500 for past
services as a member of the Board. Mr. Evans is not one of the three
<PAGE> 29
persons previously compensated. The Company also intends to pay Nona
Evans, a former member of the Board of Directors, $2,500 for past
services as a member of the Board of Directors. Ms. Evan is the wife
of Robert Evans, the Company's Vice President, Secretary and Treasurer
of the Company. Ms. Evans was not one of the former directors
previously compensated. The Company currently does not have funds
available to pay Mr. and Mrs. Evans and will do so when funds are
available. The Company has not implemented a plan to award options to
any Directors. There are no contractual arrangements with any member
of the Board of Directors.
ITEM 7. 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.
<PAGE> 30
ITEM 8. DESCRIPTION OF SECURITIES.
Common Stock
The authorized Common Stock of the Company consists of 100,000,000
shares of $0.005 par value Common Stock. As of March 21, 2000,
15,982,316 shares are issued and outstanding of which 14,272,316 are
freely tradeable.
All shares have equal voting rights and are not assessable.
Voting rights are not cumulative and, therefore, the holders of more
than 50% of the Common Stock could, if they chose to do so, elect all
of the directors of the Company.
Upon liquidation, dissolution, or winding up of the Company, the
assets of the Company, after the payment of liabilities, will be
distributed pro rata to the holders of the Common Stock. The holders
of the Common Stock do not have preemptive rights to subscribe for any
securities of the Company and have no right to require the Company to
redeem or purchase their shares. The shares of Common Stock presently
outstanding are fully paid and non-assessable.
Dividends
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefore. No dividend has
been paid on the Common Stock since inception, and none is contemplated
in the foreseeable future.
Transfer Agent
The transfer agent for the Company's Common Stock is Idaho Stock
Transfer Company, 421 Couer d'Alene, Couer d'Alene, Idaho 83852.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.
The Company's shares were traded over-the-counter from inception
in 1957 until approximately 1991 when shares were no longer included in
the Pink Sheets. The Company intends to approach a member of the
National Association of Securities Dealers and seek listing sponsorship
on the Bulletin Board operated by the National Association of
Securities Dealers, Inc. (the "Bulletin Board"). The Company's
securities may not be listed for trading on the Bulleting Board until
this registration statement becoming effective with the SEC and there
are no outstanding pending comments with the SEC relating thereto.
There is no assurance, however, that the Company will ever be listed
for trading on any medium.
As of March 21, 2000, the Company has approximately 700 holders of
record of its Common Stock.
<PAGE> 31
The Company has not paid any dividends since its inception and
does not anticipate paying any dividends on its Common Stock in the
foreseeable future.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any pending or threatened litigation
and to its knowledge, no action, suit or proceedings has been
threatened against its officers and its directors.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures through the date of this Registration Statement.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has 15,982,316 shares of Common Stock issued and
outstanding as of March 21, 2000. Of the 15,982,316 shares of the
Company's Common Stock outstanding, 14,272,316 shares are freely
tradeable and 1,710,000 shares can only be resold in compliance with
Reg. 144 adopted under the Securities Act of 1933 (the "Act"), with the
exception of the one year holding period thereunder.
In general, under Rule 144 as currently in effect, a person (or
persons whose Shares are aggregated) who has beneficially owned Shares
privately acquired directly or indirectly from the Company or from an
affiliate, for at least one year, or who is an affiliate, is entitled
to sell within any three month period a number of such Shares that does
not exceed the greater of 1% of the then outstanding shares of the
Company's Common Stock or the average weekly trading volume in the
Company's Common Stock during the four calendar weeks, immediately
preceding such sale. Sales under Rule 144 are also subject to certain
manner of sale provisions, notice requirements and the availability of
current public information about the Company. A person (or persons
whose Shares are aggregated) who is not deemed to have been an
affiliate at any time during the 90 day preceding a sale, and who has
beneficially owned Restricted Shares for at least two years, is
entitled to sell all such Shares under Rule 144 without regard to the
volume limitations, current public information requirements, manner of
sale provisions or notice requirements.
On April 6, 1999, the Company issued 6,000,000 shares of common
stock to eleven (11) persons and entities in exchange for all of the
issued and outstanding shares of common stock of Yellow Pines
Resources, Inc., a Montana corporation pursuant to the terms of an
Acquisition Agreement dated March 5, 1999. The foregoing shares were
issued pursuant to Reg 504 of the Securities Act of 1933 (the "Act").
<PAGE> 32
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The laws of the state of Idaho under certain circumstances provide
for indemnification of the Company's Officers, Directors and
controlling persons against liabilities which they may incur in such
capacities.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments arising
in connection with a legal proceeding to which such person is a party,
if that person's actions were in good faith, were believed to be in the
Company's best interest, and were not unlawful. Unless such person is
successful upon the merits in such an action, indemnification may be
awarded only after a determination by independent decision of the Board
of Directors, by legal counsel, or by a vote of the shareholders, that
the applicable standard of conduct was met by the person to be
indemnified.
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Company is generally
the same as those set forth above; however, with respect to such
actions, indemnification is granted only with respect to expenses
actually incurred in connection with the defense or settlement of the
action. In such actions, the person to be indemnified must have acted
in good faith and in a manner believed to have been in the Company's
best interest, and have not been adjudged liable for negligence or
misconduct.
The Company's Articles of Incorporation and Bylaws do not contain
any provisions for indemnification as described above.
PART F/S
ITEM 1. FINANCIAL STATEMENTS.
Financial Statements begin on following page.
<PAGE> 33
[LETERHEAD]
Scott Beggs & Company Inc
Certified Public Accountant
304 E. Cameron Avenue
Kellogg, Id 83837
(208) 784-1124
FAX (208) 783-0304
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, 1999, and the related statements of Income and
Accumulated Costs and Statement of Cash Flows for the year 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, 1999, and the results of operations and
its cash flows for the year then ended in conformity with generally
accepted accounting principles.
/s/ Scott Beggs & Company, Inc.
Scott Beggs & Company, Inc
Kellogg, Idaho 83837
December 27, 1999
F-1
<PAGE> 34
Iron Mask Mining Company
A Development Stage Corporation
Balance Sheet
June 30, 1990
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS
Current Assets
Cash in Bank 73 452
Prepaied Insurance 750 750
--------- ---------
Total Current Assets 823 1,202
Property and Equipment
Land 87,380 87,380
Buildings 1,032 1,032
Equipment 46,176 46,176
Accumulated Depreciation (47,208) (47,208)
--------- ---------
Net Property and Equipment 87,380 87,380
Total Assets 88,203 88,582
========= =========
LIABILITIES AND EQUITY
Current Liabilities
Accounts Payable 1,419
Salaries Payable
Notes Payable - Due within one Year 28,355 23,355
--------- ---------
Total Current Liabilities 29,774 23,355
Long-Term Liabilities
Notes Payable - Due in more
than one Year 0 0
--------- ---------
Total Long-Term Liabilities 0 0
Total Liabilities 29,774 23,355
Equity
Common Stock, par value $.05,
authorized 100,000,000 shares
issued and outstanding 9,987,316 799,366 499,366
Additional Paid in Capital 215,936 174,140
Deficit accumulated during
Development Stage (956,873) (608,279)
--------- ---------
Total Equity 58,429 65,227
Total Liabilities and Equity 88,203 88,582
========= =========
</TABLE>
See the accompanying accountant's report and notes, which are
integral parts of these financial statements.
F-2
<PAGE> 35
Iron Mask Mining Company
A Development Stage Corporation
Statement of Income and Accumulated Property Costs
For the Year Ended - June 30, 1999
<TABLE>
<CAPTION>
Year Ended Cumulative Year Ended Cumulative
06/30/99 Total 06/30/98 Total
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities
Net Loss (6,798) (615,076) (20,512) (608,278)
Adjustments to reconcile to
net Cash
Depreciation Expense 47,208 47,208
Loss on Sale of Land 452 452
Changes in Operating Assets
and Liabilities
(Increase) Decrease in Prepaid
Insurance (750) (750)
Increase (Decrease) in
Salary/Accounts Payable 1,419 1,419 (6,260) 0
------ -------- ------- --------
Net Cash (Used) Provided By
Operating Activities (5,379) (566,747) (26,772) (561,368)
Cash Flows From Investing Activities
Sale of Land 15,568 15,568
Purchase of property 0 (150,609) 0 (150,609)
------ -------- ------- --------
Net Cash (Used) Provided By
Investing Activities 0 (135,041) 0 (135,041)
Cash Flows From Financing Activities
Common Stock Proceeds 673,506 673,506
Loan Proceeds 5,000 28,355 23,355 23,355
Loan Repayments 0 0 0 0
------ -------- ------- --------
Net Cash (Used) Provided By
Financing Activities 5,000 701,861 23,355 696,861
Net Increase (Decrease)
in Cash (379) 73 (3,417) 452
Cash - Start of Year 452 0 3,869 0
------ -------- ------- --------
Cash - End of Year 73 73 452 452
====== ======== ======= ========
</TABLE>
See accompanying accountant's report and notes, which are integral
part of these financial statements.
F-3
<PAGE> 36
Iron Mask Mining Company
A Development Stage Corporation
Statement of Income and Accumulated Property Costs
For the Year Ended - June 30, 1999
<TABLE>
<CAPTION>
Year Ended Cumulative Year Ended Cumulative
06/30/99 Total 06/30/98 Total
<S> <C> <C> <C> <C>
Income
Interest Income 5 83,794 74 83,789
Logging Receipts 15,470 15,470
Ore Sales 14,776 14,776
Misc. Income 25 7,328 835 7,303
Lease Income 1,400 1,400
Workmen's Comp Dividend 375 375
-------- -------- -------- --------
Total Income 30 123,143 909 123,113
Expenses
Wages and Salaries 267,648 19,000 267,648
Professional Fees 5,000 83,142 981 78,142
Tunnel Contract 73,850 73,850
Materials and Supplies 54,777 54,777
Payroll Taxes and insurance 400 49,822 466 49,422
Depreciation 47,208 47,208
Gas and Oil 35,057 35,057
Office Supplies 26,516 26,516
Exploration 25,183 25,183
Interest and, Bank Fees 60 19,155 35 19,095
Equipment Rent 17,746 17,746
Lease 14,645 14,645
Promotions 11,525 11,525
Equipment Repair 7,664 7,664
Taxes and Licenses 149 7,201 207 7,052
Road 6,012 6,012
Filing Fees 4,346 4,346
Other 1,219 4,333 732 3,114
Assays 1,032 1,032
Fire and Safety 237 237
Documentary Stamps 119 119
Rounding 2 2
-------- -------- -------- --------
Total Expenses 6,828 757,220 21,421 750,392
Net Loss (6,798) (634,077) (20,512) (627,279)
Accumulated Deficit -
Start of Year (608,279) (587,767)
-------- -------- -------- --------
Accumulated Deficit -
End of Year (615,077) (634,077) (608,279) (627,279)
======== ======== ======== ========
</TABLE>
See accompanying accountant's report and notes, which are integral
parts of theses financial statements.
F-4
<PAGE> 37
Iron Mask Mining Company
A Development Stage Company
Notes to the Financial Statements
June 30, 1999
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 that dollar
amounts be assigned to shares issued for noncash considerations.
Development Activities
The primary business purpose of the Company is 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 has various notes payable to individuals. These notes are
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 been no
principal or interest payments made on these loans.
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.
company.
F-5
<PAGE> 38
Iron Mask Mining Company
A Development Stage Company
Notes to the Financial Statements
June 30, 1999
NOTE 2: CUMULATIVE DATA
Cumulative data has been recorded on the Statement of Income and
Accumulated Property Costs and the Statement of Cash Flows. The
cumulative data is from May 1, 1957, the date of organization, to June
30, 1999. 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
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.
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: SUBSEQUENT EVENT
On August 6, 1999 the Company entered a material agreement with
American Diatomite LLC. The purpose of the agreement is for the Company
to acquire acquire a 50% interest in the mineral interest in American
Diatomite LLC earth mine. Significant terms of the agreement are: 1)
Iron Mask Mining Company will pay $1,200,000; 2) the first $200,000 is
due when the public offering of Iron Mask Mining Company is completed;
3) the remaining $1,000,000 is to be paid over the next 5 years plus 5%
interest; 4) Iron Mask will have exclusive mining rights for a 5 year
period; and 5) Iron Mask will pay a 4% royalty to American Diatomite
LLC on the net sales price.
NOTE 6: 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> 39
Board of Directors
Iron Mask Mining Company
PO Box 1713
Sandpoint, Idaho 83864
We have reviewed the accompanying Balance Sheet of Iron Mask Mining
Company as of December 31, 1999 and the related statements of Income
and Accumulated Property Costs and Statement of Cash Flows for the six
months then ended, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of
Certified Public Accountants. All information included in these
financial statements is the representation of the management of Iron
mask Mining Company.
A review consists principally of inquiries of company personnel and
analytical procedures applied to the financial data. It is
substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements in order
for them to be in conformity with generally accepted accounting
principles.
/s/ Scott Beggs & Company, Inc.
Scott Beggs & Company, Inc
Kellogg, Idaho 83837
February 17, 2000
1
<PAGE> 40
Iron Mask Mining Company
A Development Stage Corporation
Balance Sheet
December 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C>
Current Assets
Cash in Bank 426
Prepaied Insurance 750
---------
Total Current Assets 1,176
Property and Equipment
Land 87,380
Buildings 1,032
Equipment 46,176
Accumulated Depreciation (47,208)
---------
Net Property and Equipment 87,380
Total Assets 88,556
=========
Liabilities and Equity
Current Liabilities
Accounts Payable 1,827
Salaries Payable
Notes Payable - Due within one Year 33,355
---------
Total Current Liabilities 35,182
Long-Term Liabilities
Notes Payable - Due in more than one Year 0
---------
Total Long-Term Liabilities 0
Total Liabilities 35,182
Equity
Common Stock, par value $ .05,
authorized 100,000,000 shares,
issued and outstanding 9,987,316 799,366
Additional Paid in Capital 215,936
Deficit accumulated during
Development Stage (961,928)
---------
Total Equity 53,374
Total Liabilities and Equity 88,556
=========
</TABLE>
See the accompanying accountant's report and notes, which are
integral parts of these financial statements.
2
<PAGE> 41
Iron Mask Mining Company
A Development Stage Corporation
Statement of Income and Accumulated Property Costs
For the Six Months Ended - December 31, 1999
<TABLE>
<CAPTION>
Six Months
Ended Cumulative
12/31/99 Total
<S> <C> <C>
Income
Interest Income 16 83,810
Logging Receipts 15,470
Ore Sales 14,776
Misc. Income 25 7,353
Lease Income 1,400
Workmen's Comp Dividend 375
-------- ---------
Total Income 41 123,184
Expenses
Wages and Salaries 248,648
Professional Fees 5,000 88,142
Tunnel Contract 73,850
Materials and Supplies 54,777
Payroll Taxes and Insurance 49,822
Depreciation 47,208
Gas and Oil 35,057
Office Supplies 26,516
Exploration 25,183
Interest and Bank Fees 36 19,191
Equipment Rent 17,746
Leases 14,645
Promotions 11,525
Equipment Repair 7,664
Taxes and Licenses 60 7,261
Road 6,012
Filing Fees 4,346
Other 4,333
Assays 1,032
Fire and Safety 237
Documentary Stamps 119
Yellow Pine Accumulated
Costs - Consolidated 341,796
Rounding 2
-------- ---------
Total Expenses 5,096 1,085,112
Net Loss (5,055) (961,928)
Accumulated Deficit - Start of Period (956,873)
-------- ---------
Accumulated Deficit - End of Period (961,928) (961,928)
======== =========
</TABLE>
See accompanying accountant's report and notes, which are integral
parts of theses financial statements.
3
<PAGE> 42
Iron Mask Mining Company
A Development Stage Corporation
Statement of Cash Flows
For the Six Months Ended - December 31, 1999
<TABLE>
<CAPTION>
Six Months
Ended Cumulative
12/31/99 Total
<S> <C> <C>
Cash Flows From Operating Activities
Net Loss (5,055) (620,131)
Adjustments to reconcile to net Cash
Depreciation Expense 47,208
Loss on Sale of Land 452
Changes in Operating Assets and Liabilities
(Increase) Decrease in Prepaid Insurance (750)
Increase (Decrease) in Salary/Accounts Payable 408 1,827
------ --------
Net Cash (Used) Provided By Operating Activities (4,647) (571,394)
Cash Flows From Investing Activities
Sale of Land 15,568
Purchase of property 0 (150,609)
------ --------
Net Cash (Used) Provided By Investing Activities 0 (135,041)
Cash Flows From Financing Activities
Common Stock Proceeds 673,506
Loan Proceeds 5,000 33,355
Loan Repayments 0 0
------ --------
Net Cash (Used) Provided By Financing Activities 5,000 706,861
Net Increase (Decrease) in Cash 353 426
Cash - Start of Period 73 0
------- --------
Cash - End of Period 426 426
======= ========
</TABLE>
See accompanying accountant's report and notes, which are integral
part of these financial statements.
4
<PAGE> 43
Iron Mask Mining Company
A Development Stage Company
Notes to the Financial Statements
December 31, 1999
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 has various notes payable to individuals.
These notes are 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%. On
October 5, 1999 a loan with Gerald and Fonda Sarff in the amount of $
5,000, the interest rate is 12%. There have been no principal or
interest payments made on these loans.
Income Taxes The Company files its corporate income tax returns as a
development stage company. Accordingly, all income and expense items
are being capitalized as development costs.
NOTE 2: CUMULATIVE DATA
Cumulative data has been recorded on the Statement of Income and
Accumulated Property Costs and the Statement of Cash Flows. The
cumulative data is from May 1, 1957, the date of organization, to June
30, 1999. Also included in Deficit accumulated is the amount incurred
by Yellow Pine Resources Inc. See Notes 3 and 4 for more information.
4
<PAGE> 44
Iron Mask Mining Company
A Development Stage Company
Notes to the Financial Statements
December 31, 1999
NOTE 3: ACQUISITION AGREEMENT
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.
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.
5
PART III
ITEM 1. EXHIBITS.
Exhibit No. Description
3.1 Articles of Incorporation.
3.2 Amended Articles of Incorporation
3.3 Amended Articles of Incorporation
3.4 Bylaws.
4.1 Specimen Stock Certificate.
10.1 Yellow Pines Resources Agreement.
10.2 American Diatomite Agreement.
27.1 Financial Data Schedule.
<PAGE> 46
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
IRON MASK MINING COMPANY
BY: /s/ Robert Delaney
Robert Delaney, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this Form 10-SB Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
Signatures Title Date
/s/ Robert Delaney
Robert Delaney President and Director 03/22/2000
/s/ Robert Evans
Robert Evans Vice President, Treasurer, 03/22/2000
Chief Financial Officer
and Director
/s/ Donald Delaney
Donald Delaney Vice President, Secretary 03/22/2000
and Director
/s/ Gerald E. Sarff
Gerald E. Sarff Director 03/22/2000
<PAGE> 47
EXHIBIT 3.1
ARTICLES OF INCORPORATION
Of
IRON MASK MINING COMPANY.
KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned citizens
of the United States of America, each over the age of twenty-one years,
do hereby voluntarily associate ourselves together for the purpose of
forming a domestic corporation under and by virtue of the laws of the
State of Idaho. and we do hereby make, sign. acknowledge and file these
Articles of Incorporation as follows:
ARTICLE I
The name of this Corporation is and shall be, IRON MASK MINING
COMPANY.
ARTICLE II
The objects and purposes for which this Corporation is formed are
an principals, agents. or otherwise. to do In any part of the world any
and every of the things herein set forth or permitted by law to the
same extent as natural persons might and could do. In furtherance and
not in limitation of the general powers conferred by the laws of the
State of Idaho. we do expressly provide that the Corporation shall have
power:
(a) To purchase, sell, option, own, locate, lease, or otherwise
aquire mortgage and dispose of lands. mines. mining claims. and mineral
rights; to own. handle and control letters patent and inventions; and
to own, enter, apply for patents for mines and mining millsites, mills.
water-rights, tunnels and rights of way; to works prospect, explore.
exploit and develop mines and mineral lands of every kind and nature
and wherever the same may be situated, and to carry on the business of
mining, milling and producing zinc, lead, gold, silver and any and all
other metals and minerals of every kind and character and to sell and
dispose of the same and the by-products thereof, and to do everything
that may be necessary or proper in the conduct the business as of
working such mines and mineral lands and the production of ores and
metals therefrom; and to buy, sell, contract for, own, erect. and
operate all mills, smelting and other ore reduction works, sawmills,
machinery, roads. tramways, ditches, flumes, water-rights, power plants
of any and all kinds whatsoever, and to develop and use electricity for
power and lighting purposes and to file upon water-rights for any and
all purposes.
(b) To take, hold, lease, mortgage, own, purchase, or acquire by
operation of the law or otherwise, real property or any interest
therein or appurtenant thereto. Including storerooms, sawmills. store
buildings, and any part thereof, or any interest therein, or to sell,
lease, exchanges, mortgage or hypothecate real estate or any, interest
therein and to engage in any and all undertakings and business
necessary and proper to the improvement, and betterment of any of the
<PAGE> 48
land or real property or interest therein owned or otherwise acquired,
or to be owned or otherwise acquired by said corporation. or in any
other lands in which the said corporation may have any interests and to
handle and deal in any land. interest in land. or other property or
interest therein. of said corporation in any manner it may desire.
(c) To enter into, make, perform and carry out any and all
contracts or agreements of every kind, amount and character with any
person, firm, associations, corporation. Federal or State government
or any political subdivision, or corporation or agency thereof.
(d) To purchase, own, sell, convey, mortgage, pledge, exchanges
acquire, by operation of law or otherwise, personal property of every
kind and characters, debts. dues and demands or causes of action, slid
each and every kind of personal property# evidences of debts, bonds,
stocks of this and other corporations, both public and private, which
the Corporation may deem necessary and convenient for its business or
otherwise.
(e) To borrow and land money from and to any persons firm
corporation association, or Federal or State government, or any
political subdivision or corporation or agency thereof, and to make,
take and execute notes, mortgages, bonds, deeds of trust, or other
evidence of indebtedness to secure payment thereof, or by any other
lawful manner or means, and to take and receive notes, bonds,
mortgages, deeds of trust, or any evidence of indebtedness for the use
and benefit of said Corporation, or otherwise.
(f) To own, hold, lease, or sublet, or to conduct an its own
account or for any person. firm,, association, corporation, or federal
or state government or any political subdivision, or corporation or
agency thereof, all and every kind of merchandise, business or property
necessary or proper to carry on an account of the business of said
Corporation.
(g) To build any and all necessary shops, buildings, storerooms,
boarding houses, sleeping quarters, sawmills and structures at any
place proper or convenient to carry on any or all of the business of
said Corporation.
(h) To do and perform every met and thing necessary to carry out
the above enumerated purposes, or calculated directly or indirectly to
the advancements of the interests of the Corporations or to the
enhancemert of the value of its stock, holdings and property of any
kind or character.
ARTICLE III
The corporate existence of this Corporation shall be perpetual.
<PAGE> 49
ARTICLE IV
The location and post office address of the Corporation's
registered office in the State of Idaho shall be Sandpoint, Idaho.
ARTICLE V
The total authorized number of par value shares is 5,000,000.
having an aggregate par value of $500,000.00.
ARTICLE VI
The corporate powers of this Corporation shall be vested in a
Board of Directors which shall consist of at least three and not more
than nine Directors, an may be determined from time to time by the By-Laws.
ARTICLE VII
Names, post office addresses and number of shares subscribed by
each of the Incorporators is as follows:
Name Address No. of Shares
George M. Watt Sagle, Idaho 100
G. E. Sarff Kootenai, Idaho 100
R. J. Evans Kootenai, Idaho 100
Mary R. Churchill Sagle, Idaho 100
Mary McNearney Bonners Ferry, Idaho 100
Robert W. "Woods Sandpoint, Idaho 100
ARTICLE VIII
In addition to the power conferred upon the shareholders by law to
make, amend or repeal the By-Laws, the Directors shall have the power
to repeal and amend the By-Laws and adopt new By-Laws, but such powers
may be exercised only be a majority of the whole Board of Directors.
ARTICLE IX
A Director or officer of the Corporation shall not, in the absence
of actual fraud, be disqualified by his office from dealing or
contracting with the Corporation, either as vendor, purchaser or
otherwise; and, in the absence of actual fraud, no transaction or
contract of the Corporation shall be void or voidable by reason of the
fact that any Director or officer or any firm of which any Director or
officer is a members or any other corporation of which any Director or
officer is a shareholders officer or director, is in any way interested
in such transaction or contract: provided such transaction or contract
is or shall be authorized, ratified or approved, either (1) by a vote
of the majority of a quorum of the Board of Directors or of the
Executive Committee, if any, counting in for the purpose of determining
the existence of such majority or quorum any Director when present who
to so interested or who is a member of a firm so interested or who is
<PAGE> 50
a shareholder, officer or Director of a corporation so interested; or
(2) at a stockholders' meeting by a vote of the majority of the shares
of, stock of the Corporation represented at much meeting and then
entitled to vote, or (3) by writing or writings signed by a majority of
the outstanding shares of stock of the Corporation then entitled to
vote or by writing or writings signed by a majority of such holders,
which shall have the same force and effect as though such
authorization, ratification or approval were. made by all the
stockholders: and no Director or officer shall be liable to account to
the Corporation for any profits realized by him from or through any
such transaction or contract of the Corporation authorized, ratified or
approved as aforesaid, by reason. of the fact that he or any firm of
which he is a member or any corporation of which he in a shareholders
officer or director was interested in such transaction. Nothing in this
paragraph contained shall create any liability in the events above
mentioned or prevent the authorization, ratification or approval of
such contracts or transactions in any other manner permitted by law, or
invalidate or make voidable, any contract or transaction which mould be
valid without reference to the provisions of this paragraph.
IN WITNESS WHEREOF, We have hereunto set our hands and seals
in triplicate as of this day of April, 1957.
/s/ George W. Watt (SEAL) /s/ G. E. Sarff (SEAL>
George W. Watt G. E. Sarff
/s/ R. J. Evans (SEAL) /s/ H. R. Churchill (SEAL)
R. J. Evans H. R. Churchill
/s/ Mary McNearney (SEAL) /s/ Robert W. Woods (SEAL)
Mary McNearney Robert W. Woods
STATE OF IDAHO )
) ss.
County of Bonner )
On this 27th day of 1957. before me, a Notary Public in and for
the State of Idaho, personally appeared GEORGE M. WATT, G. E. SARFF, R.
J. EVANS, H. R. CHURCHILL, MARY MCNEARNEY and ROBERT W. WOODS, known to
me to be the persons whose names are subscribed to the foregoing
instrument and acknowledge to me that they executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
Notarial Seal the day and year in this certificate first above written.
/s/ L. J. McArthur
Notary Public in and for the State of
Idaho, residing at Sandpoint, Idaho.
<PAGE> 51
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT OF ARTICLES OF
INCORPORATION OF IRON MASK MINING COMPANY
KNOW ALL MEN BY THESE PRESENTS, That at a meeting of the
shareholders of the IRON MASK MINING COMPANY held at Sandpoint on the
24th day of May, 1980 pursuant to due notice at which 72.2% of all the
issued and outstanding stock of said corporation was represented
pursuant to resolution duly made, seconded and adopted, the Articles of
Incorporation of said company were amended as follows:
Article V was amended to read as follows:
ARTICLE V
The total authorized number of par value shares is 10,000,000
having a par value of five cents ($.05) per share, or an
aggregate value of $500,000.00. Said shares shall all be of
the same class and every share of said stock shall be equal
in all respects to every other of said shares, and shall not
be subject to assessment.
Notwithstanding the provisions of Section 30-1-26 Idaho Code,
the Board of Directors of this corporation shall have power
and authority from time to time to authorize the sale of, and
to sell for cash or otherwise, all or any portion of the
unissued and/or of the treasury stock of this corporation
without said stock, or any thereof, being first offered to
the shareholders of this corporation.
At the time of said amendment the number of shares of stock In
said corporation which were outstanding and entitled to vote on said
amendment were 2,538,512. The number of shares voting for said
amendment were 1,832,434; the number of voting against said amendment
were -0-. One additional share of the capital stock of said company
will be issued to each shareholder for each share previously owned.
IN WITNESS WHEREOF, the President or Vice President and Secretary
this 20th day of September, 1980.
/s/ Robert J. Evans
Robert J. Evans, Vice President
/s/ Robert W. Woods
Robert W. Woods, Secretary
<PAGE> 52
EXHIBIT 3.3
ARTICLES OF AMENDMENT
To the Secretary of State of the State of Idaho.
Pursuant to Title 30, Chapter 1, Idaho Code, the undersigned
corporation amends its articles of incorporation as follows:
1. The name of the corporation is: Iron Mask Mining Company
2. The text of each amendment is as follows:
Article V was amended to read as follows:
"ARTICLE V"
The total authorized number of par value shares is
100,000,000 having a par value of $.005 per share, or
an aggravate value of $500,000.00.
Said shares shall all be of the same class and every
share of said stock shall be equal in all respects to
every other of said shares, and shall not be subject to
assessment.
3. The date of adoption of the amendment(s) was: January 21,
1998
4. Manner of adoption (check one):
[ ] The amendment consists exclusively of matters which do
not require shareholder action pursuant to section 30-1-
1002, Idaho Code, and was, therefore, adopted by the
board of directors,
[ ] None of the corporation's shares have been issued and
was, therefore, adopted by the incorporator board of
directors.
[x] The number of shares outstanding and entitled to vote
was 9,987,316
The number of shares cast for and against each amendment was:
Amended article Shares for Shares against
Article V 5,569,928 77,900
Dated: January 28, 1998
Signed by: /s/ W. E. Delaney
Its: President
<PAGE> 54
EXHIBIT 3.4
BY - LAWS
Of
IRON MASK MINING COMPANY.
ARTICLE I. NAME, SEAL AND OFFICES, ETC.
Section 1. Name: The name of the Corporation is IRON MASK MINING
COMPANY.
Section 2. Seal: The seal of the Corporation shall be in such form
as the Board of Directors shall from time to time prescribe.
Section 3. Offices: The registered office of the Corporation shall
be in City of Sandpoint, State of Idaho. The Corporation may also have
offices at such other places within or without the State of Idaho as
the Board of Directors may from time to time establish.
Section 4. Book of By-Laws: These By-Laws shall be recorded in a
book kept in the registered office of the Corporation, to be known as
the Book of By-Laws, and no By-Laws, or repeal or amendment thereof,
shall take effect until so recorded. Said book may be inspected at said
office by the public during office hours of each day, except holidays.
ARTICLE II. SHAREHOLDERS
Section 1. Annual meetings of Shareholders: The annual meeting of
the Shareholders for the election of Directors and for such other
business as may be laid before such meeting shall be held, in the
registered office of the Corporation, or at such other place within or
without the State of Idaho as the Board of Directors may from time to
time appoint at 7:00 o'clock in the afternoon, on the second Monday in
April, unless that day shall be a legal holiday in which event it shall
be held on the next following day which shall not be a legal holiday
whether or not mentioned in the notice. Any corporate business may be
transacted at such meeting.
Section 2. Special meetings of Shareholders: Special meetings of
the Shareholders may be called at any time by the Board of Directors,
and the Shareholders may meet at any convenient place, within or
without the State of Idaho, designated in the call for such meeting. If
more than eighteen months are allowed to elapse without the annual
Shareholders I meetings being held, any Shareholder may call such
meeting to be held at the registered office of the Corporation. At any
time, upon written request of any Director, or any Shareholder or
Shareholders holding in the aggregate one-fifth of the voting power of
all Shareholders, it shall be the duty of the Secretary to call a
special meeting of Shareholders to be held at the registered office at
such time as the Secretary may fix, not less than fifteen nor more than
thirty-five days after the receipt of said request, and if the
Secretary shall neglect or refuse to issue such call, the Director or
Shareholder or Shareholders making the request may do so.
<PAGE> 55
Section 3. Adjourned meetings: An adjournment or adjournments of
any annual or special meeting may be taken without a new notice being
given.
Section 4. Notice of meetings: A written notice of the time, place
and purposes of meetings, including annual meetings, shall be given by
the Secretary or other person authorized so to do, to all stockholders
entitled to vote at such meeting, at least ten days prior to the day
named for the meeting. If such written notice is placed in the United
States mail, postage prepaid, addressed to a Shareholder at his last
known post office address, notice shall be deemed to have been given
him.
Section 5. Waiver of notice: Notice of time, place and purposes of
any meeting of Shareholders may be waived by the written assent of a
Shareholder entitled to notice, filed with or entered upon the records
of the meeting before or after the holding thereof.
Section 6. Action without formal meeting: Any action which, under
any provision of the laws of Idaho, or the Articles, or By-Laws, may be
taken at a meeting of Shareholders, may be taken without a meeting if
authorized by a writing signed by all of the holders of shares who
would be entitled to notice of a meeting for such purpose. Whenever a
certificate in respect to any such action is required by the laws of
Idaho to be filed in the office of the County Recorder or in the office
of the Secretary of State, the officers signing the same shall therein
state that the action was authorized in the manner aforesaid.
Section 7. Waiver of invalid call or notice: When all the
Shareholders of this corporation are present at any meeting, however
called or notified, and sign a written consent thereto on the record of
such meeting, the doings of such meeting are as valid as if had at a
meeting legally called and notified.
Section 8. Voting: Every Shareholder shall have the right at every
Shareholders' meeting to one vote for every share of stock standing in
his or her name on the books of the corporation on the record date
fixed as hereinafter provided, or, if no such date has been fixed, ten
days prior to the time of the meeting, and in voting for Directors, but
not otherwise, he may cumulate his votes in the manner and to the
extent permitted by the laws of the State of Idaho.
The Board of Directors may fix a time not more than forty days
prior to the date of any meeting of the stockholders as the record date
as of which stockholders entitled to notice of and to vote at such
meeting shall be determined.
At each meeting of the stockholders a full, true and complete
list, in alphabetical order, of all the stockholders entitled to vote
at such meeting, and indicating the number of shares held by each,
certified by the Secretary or transfer agent, shall be furnished, which
list shall be open to the inspection of the stockholders.
<PAGE> 56
Shareholders may vote at all meetings, either in person or by
proxy appointed by instrument in writing, subscribed by the Shareholder
or by his duly authorized attorney in fact, executed and filed with the
Secretary not less than one day before the meeting which shall be named
therein. Shareholders may also be represented at all meetings by
persons holding general power of attorney.
At least twenty-four hours prior to any meeting, powers of
attorney or proxies shall be submitted to the Secretary for
examination. The certificate of the Secretary as to the regularity of
such powers of attorney or proxies and as to the number of shares held
by the persons who severally and respectively executed such powers of
attorney or proxies shall be received as prima facie evidence of the
number of shares held by the holder of such powers of attorney or
proxies for the purpose of establishing the presence of a quorum at
such meeting and for organizing the same, and for all other purposes.
9 Quorum: Except as otherwise provided in the Articles of
Incorporation, at any meeting of the Shareholders, the presence, in
person or by proxy, of the holders of a majority of the voting power of
all Shareholders shall constitute a quorum. The Shareholders present at
a duly organized meeting can continue to do business until adjournment,
notwithstanding the withdrawal of enough Shareholders to leave less
than a quorum. If a Shareholders' meeting cannot be organized because
a quorum has not attended, those Shareholders present may adjourn the
meeting to such time and place as they may determine, but in case of
any meeting called for the election of Directors, those who attend the
second of such adjourned meetings, although less than a majority of the
voting power of all shareholders, shall, nevertheless, constitute a
quorum for the purpose of electing Directors.
Whenever all Shareholders entitled to vote at any meeting consent,
either by writing on the records of the meeting or filed with the
Secretary of the Corporation or by presence at such meeting, an oral
consent entered on the minutes, or by taking part in the deliberations
at such meeting without objection, the doings of such meeting shall be
as valid as if had at a meeting regularly called and noticed and at
such meeting any business may be transacted which is not excepted from
the written consent or to the consideration of which no objection from
want of notice is made at the time, and if any meeting be irregular for
want of notice or of such consent provided a quorum was present at such
meeting, the proceedings of said meeting may be ratified and approved
and rendered likewise valid and the irregularity or defect therein
waived by a writing signed by all the Shareholders having the right to
vote at such meeting and such consent or approval of Shareholders may
be by proxy or power of attorney in writing.
ARTICLE III. DIRECTORS
Section 1. Number and Election: The business of the Corporation
shall be managed by a Board of at least three Directors or of such
other number (which shall not be less than three nor more than nine)
as may be determined from time to time by the Board of Directors.
Directors need not be stockholders. A Director shall hold office for
<PAGE> 57
the term for which he was named or elected and until his successor is
elected and qualified, except as hereinafter otherwise provided.
Directors shall be chosen by ballot.
Section 2. Annual meetings: The Board of Directors may hold its
first annual meeting and all subsequent annual meetings after its
election by the Shareholders, without notice and at such place within
or without the State of Idaho as the Board of Directors may from time
to time appoint, for the purpose of organization, the election of
officers, and the transaction of other business. At such meetings the
Board shall elect a President, a Secretary and a Treasurer, and may
elect one or more Vice Presidents, an Assistant Secretary, and an
Assistant Treasurer.
Section 3. Special meetings: Special meetings of the Board of
Directors may be called by the President or any Vice-President or by
any two members of the Board of Directors.
Section 4. Notice of meetings: Notice of all Directors' -meetings,
except as herein otherwise provided, shall be given either by mail.
telegraph, or personal service of notices oral or written, at such time
or times as the person or persons calling the meeting may deem
reasonable but in no event upon less than one day's notice. Special
meetings of the Board may be held at such place within or without the
State of Idaho as the Board of Directors may from time to time appoint.
Notice of any meeting may be waived by any Director entitled to notice
before or after the holding thereof by his written or oral assent and
the presence of any Director at any meeting, even though without any
notice, shall constitute a waiver of notice. Unless otherwise indicated
in the notice thereof, any and all business may be transacted at any
Directors' meeting,
Section 5. Quorum: At all meetings of the Board a majority of the
Directors shall be necessary and sufficient to constitute a quorum for
the transaction of business, and the acts of a majority of the
Directors present at any meeting at which a quorum is present shall be
the acts of the Board of Directors, except as may be otherwise
specifically provided for herein or by law.
If at any meeting there is less than a quorum present. a majority
of those present may adjourn the meeting from time to time without
further notice to any absent Director.
Section 6. Removal: A Director may be removed either with or
without cause, by two-thirds of the vote of the Shareholders at a
special meeting called for that purpose.
Section 7. Vacancies: Any vacancy in the Board of Directors
occurring during the year may be filled for the unexpired portion of
the term and until a successor is elected and qualified, either
(a) at the next annual meeting of Shareholders or at any special
meeting of Shareholders duly called for that purpose and held
prior thereto, or
<PAGE> 58
(b) by a majority of the remaining members of the Board.
Section 8. Powers: All the corporate powers, except such as are
otherwise provided for in the Articles of Incorporation, in these By-
Laws and by the laws of the State of Idaho, shall be, and are, hereby
vested in and shall be exercised by the Board of Directors.
Section 9. Executive Committee: The Board of Directors may, by
resolution passed by a majority of the whole Board, designate two or
more of their number to constitute an Executive Committee to serve
during the pleasure of the Board, which Committee shall have and
exercise the authority of the Board in the management of the business
of the Corporation to the extent authorized by said resolution. All
action taken by the Executive Committee shall be reported to the Board
of Directors at its meeting next succeeding such action, and shall be
subject to revision or alteration by the Board; providing, however,
that no rights or acts of third parties shall be affected by any such
revision or alteration.
A majority of the Executive Committee present at a meeting thereof
shall constitute a quorum. Vacancies in the Executive Committee shall
be filled by the Board of Directors. The Executive Committee shall fix
its own rules of procedure including the time and place of and method
or manner of calling meetings thereof.
ARTICLE IV. OFFICERS
Section 1. Officers: The officers of the Corporation shall be a
President, Secretary and Treasurer and, in the discretion of the Board
of Directors one or more Vice Presidents, and an Assistant Secretary,
and an Assistant Treasurer., each of whom shall be elected at a meeting
of and by the Board of Directors.
Any officer may resign by mailing a notice of resignation to the
registered office of the Corporation or such other office as may be
designated by the Board of Directors. To the extent permitted by law,
the resignation shall become effective at the time designated in the
notice of resignation, but in no event earlier than its receipt by the
Secretary or Assistant Secretary of the Corporation.
In case of a vacancy of any of said offices for any reason, the
Board of Directors shall at any regular or special meeting, elect a
successor who shall hold office for the unexpired term of his
predecessor. Any two of the offices of Vice-President, Secretary,
Treasurer, Assistant Secretary and Assistant Treasurer may be combined
in one person.
The Board of Directors may appoint such other officers and agents
as may be necessary for the business of the Corporation.
Any officer or agent may be removed by the Board of Directors
whenever in their judgment the interest of the Corporation may be
served thereby; such removal, however, shall be without prejudice to
the contract rights of the person so removed.
<PAGE> 59
Section 2. President: The President shall preside at all meetings
of the Shareholders and Directors. He shall see that all orders and
resolutions of the Board are carried into effect, shall execute all
deeds, mortgages, bonds or documents authorized by the Board of
Directors, and shall sign -as President all certificates of stock, all
contracts,. and other instruments., in writing, excepting only those
which are specifically provided to be signed by others. He shall from
time to time, as requested, report to the Board of Directors all of the
matters within his knowledge of interest to the Corporation, and shall
also perform such duties as may be required by the State of Idaho,
these By-Laws, and by order of the Board of Directors,
Section 3. Vice-President: The Vice-President shall be vested with
all the powers and shall perform all the duties of the President in the
absence or disability of the latter.
Section 4. Treasurer: The Treasurer shall be custodian of the
Corporation's moneys and securities, and shall deposit and withdraw the
same in the Corporation's name as directed by the Board of Directors;
he shall keep a record of his account's and report to the Board of
Directors as requested.
Section 5. Secretary The Secretary shall keep a record of the
meetings of the Shareholders and Board of Directors. He shall keep the
books of certificates of stock, fill out and sign all certificates of
stock issued, and make corresponding entries on the margin or stub of
such book. He shall keep a debit and credit form, showing the number of
shares issued to and transferred by the Shareholders, and the dates
thereof. He shall keep the corporate seal and shall affix same to
certificates of stock and other corporate instruments, and shall make
such acknowledgments as may be required on behalf of the Corporation.
He shall perform duties as may be prescribed by the Board of Directors.
The Secretary shall give or cause to be given. notice of all meetings
of Shareholders and Board of Directors, and all other notices required
by the laws of the State of Idaho, or by these By-Laws.
Section 6. Assistant Treasurer and Assistant Secretary: The
Assistant Treasurer and Assistant Secretary shall be vested with all
the powers and shall perform all the duties of the Treasurer and
Secretary, respectively, in the absence or disability of the Treasurer
or Secretary as the case may be.
Section 7. Salary: The salaries of all officers shall be fixed by
the Board of Directors and the fact that any officer is a Director
shall not preclude him from receiving a salary or from voting on the
resolutions providing for the same,
ARTICLE V. STOCK
Section 1. Certificates of Stock: Each Shareholder shall be
entitled to a certificate of stock signed by the President and the
Secretary, or by such other officers as are authorized by these By-Laws
or by the Board of Directors. When any certificate of stock is signed
<PAGE> 60
by a transfer agent or registrar, the signature of any such corporate
officer and the corporate seal upon such certification may be
facsimiles, engraved or printed.
Certificates of stock shall be numbered in the order of issuance
thereof and, except insofar as prescribed by law, shall be in such form
as the Board of Directors may determine.
Section 2. Transfer of Shares: Transfer of shares of stock shall
be made on the books of the Corporation only by the holder in person or
by written power of attorney duly executed and witnessed and upon
surrender of the certificate or certificates of such shares.
Section 3. Transfer Agent and Registrar The Board of Directors may
appoint either a transfer agent or registrar, or both of them.
Section 4. Stock Transfer Books: Stock transfer books may be
closed for not exceeding forty days next preceding the meeting of
Shareholders and for the payment of dividends during such periods as
may be fixed from time to time by the Board of Directors. During such
periods no stock shall be transferable.
Section 5. Lost or Destroyed Certificates: In case of loss or
destruction of a certificate of stock of this Corporation, another
certificate may be issued in its place upon proof of such loss or
destruction and the giving of a bond of indemnity or other security
satisfactory to the Board of Directors.
ARTICLE VI.; REPEAL OR AMENDMENT OF BY-LAWS
Section 1. By the Shareholders: The power to make, amend, or
repeal By-Laws shall be in the Shareholders, and By-Laws may be
repealed or amended or new By-Laws may be adopted at any annual
Shareholders meeting, or at any special meeting of the Shareholders
called for that purpose, by a vote representing a majority of the
allotted shares, or by the written consent duly acknowledged in the
same manner as conveyances of real estate required by law to be
acknowledged of the holders of a majority of the allotted shares, which
written consent may be in one or more instruments.
Section 2. By the Directors: Subject to the power of the
Shareholders to make, amend or repeal any By-Laws made by the Board of
Directors, a majority of the whole Board of Directors at any meeting
thereof shall have the power to repeal and amend these By-Laws and to
adopt new By-Laws.
The foregoing By-Laws were regularly adopted at the first meeting
of the Shareholders of the Corporation held on _____ the day of
__________, 1957, at Sandpoint, Idaho, by a majority of the allotted
capital stock.
<PAGE> 61
/s/ George M. Watt
Chairman of Meeting of Shareholders
George W. Watt
/s/ Robert W. Woods
Secretary of Meeting of Shareholders
Robert W. Woods
We, the Shareholders of the above named Corporation, representing
and holding more than a majority of the allotted shares thereof, do
hereby adopt the foregoing code of By-Laws.
/s/ George W. Watt
/s/ G. E. Sarff
/s/ R . J. Evans
/s/ H. R. Churchill
/s/ Mary McNearney
/s/ Robert W. Woods
We, the undersigned, constituting (a) a majority of the Board of
Directors, and (b) the Secretary of the above named Corporation,
certify that the foregoing is a true and exact copy of the By-Laws of
the Corporation duly adopted at a meeting of the Shareholders of the
Corporation held on the _____ day of _______________, 1957.
/s/ George W. Watt
/s/ G. E. Sarff
/s/ R . J. Evans
/s/ H. R. Churchill
/s/ Mary McNearney
/s/ Robert W. Woods
<PAGE>
EXHIBIT 4.1
IRON MASK MINING COMPANY
INCORPORATION UNDER THE LAWS OF THE STATE OF IDAHO
AUTHORIZED SHARES $0.005 PAR VALUE
NUMBER SHARES
CUSIP
See Reverse
For Certain Definitions
THIS CERTIFIES THAT
Is The Owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF $0.005 PAR VALUE COMMON
STOCK OF
IRON MASK MINING COMPANY
Transferable only on the books of the Company in person or by
duly authorized attorney upon surrender of this Certificate
properly endorsed. This Certificate is not valid unless
countersigned by the Transfer Agent and Registrar.
IN WITNESS WHEREOF, the said Company has caused this
Certificate to be executed by the facsimile signatures of its
duly authorized officers and to be sealed with the facsimile seal
of the Company.
Dated:
_______________________ _________________________
Secretary SEAL President
<PAGE>
IRON MASK MINING COMPANY
TRANSFER FEE: $_____ PER NEW CERTIFICATE ISSUED
The following abbreviations when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable law or
regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - __________ Custodian ___________ (Minor)
under Uniform Gifts to Minors Act ____________ (State)
Additional abbreviations may also be used though not in the above
list.
For Value Received, _________________ hereby sell, assign and
transfer unto _______________ (Please insert Social Security or
other identifying number of Assignee).
_________________________________________________________________
Please print or typewrite name and address, including zip code of
Assignee)
_________________________________________________________________
_________________________________________________________________
__________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint _______________________
attorney-in-fact to transfer the said stock on the books of the
within-named Corporation, with full power of substitution in the
premises.
Dated: _________________
_____________________________________________
Notice: The signatures to this Assignment
must correspond with the name(s) as written
upon the face of the certificate in every
particular, without alteration or enlargement
or any change whatsoever.
Signature(s) Guaranteed:
___________________________
The signature(s) must be guaranteed by an eligible guarantor
institution (Banks, Stockbrokers, Savings and Loan Associations
and Credit Unions with membership in an approved signature
guarantee Medallion Program), pursuant to S.E.C. Rule 17Ad-15.
<PAGE> 62
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement") is made as this 5th
day of March, 1999, by and among Iron Mask Mining Company, an Idaho
corporation (hereinafter referred to as "IMMC"); Yellow Pine Resources,
Inc., a Montana corporation (hereinafter referred to as "YPRI"); and
Mike LaFleur; Donald L. Delaney; Shirley 0. Delaney; Ella M. Delaney;
Robert L. Delaney; Paul Delaney; Ellana Delaney; Susanne Jordan;
William R. Myers; Marilyn M. Darrough; and, Delaney Creditor Trust
(hereinafter collectively referred to as the "Stockholders"), who are
the sole shareholders of YPRI;
BACKGROUND:
A. The Stockholders own or will own as of the Closing Date (as
defined below), all of the issued and outstanding stock of YPRI
(the "YPRI Stock"), which they desires to exchange pursuant to the
terms, conditions and covenants of this Agreement, solely for
shares of voting Common Stock of IMMC. par value (the "IMMC
Stock") as hereinafter provided; and,
B. IMMC desires to acquire all of the YPRI Stock from the
Stockholders, solely in exchange for shares of IMMC Stock, as
hereinafter provided.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants
herein contained, the parties hereto hereby agree as follows:
1. THE EXCHANGE OF SHARES.
On the Closing Date, the Stockholders agree to deliver or cause to
be delivered to IMMC all of the issued and outstanding shares of YPRI
Stock (the " YPRI Exchange Shares"). In exchange for the YPRI Exchange
Shares, IMMC shall issue to the Stockholders 6,000,000 shares of common
stock of IMMC Stock (the "IMMC Exchange Shares") as follows:
Mike LaFleur 1,710,000
Donald L. Delaney 870,000
Shirley 0. Delaney 450,000
Ella M. Delaney 435,000
Robert L. Delaney 855,000
Paul Delaney 60,000
Ellana Delaney 60,000
Susanne Jordan 60,000
William R. Myers 750,000
Marilyn M. Darrough 150,000
Delaney Creditor Trust 600,000
<PAGE> 63
2. DELIVERY OF SHARES.
2.1 Delivery. At the Closing the Stockholders, as the holder of
all outstanding certificates representing shares of YPRI Stock, shall,
upon surrender of such certificates, receive the IMMC Exchange Shares
which shall be delivered to the Stockholders at the principal office of
the Stockholders.
2.2 Unrestricted Nature of Shares. As provided in Section 14 of
this Agreement, the parties propose that a portion of the IMMC Exchange
Shares will be issued in reliance on Regulation 504 promulgated
pursuant to the Securities Act of 1933 (the "Act') and will be "free
trading," subject to control restrictions.
3. ENDORSEMENT OF YPRI SHARES.
The Stockholders shall deliver the certificates representing the
YPRI Exchange Shares, duly endorsed in blank by the Stockholders or
accompanied by blank stock powers, with signatures Medallion Guaranteed
by a national bank, and with all necessary transfer tax and other
revenue stamps, acquired at the Stockholders's expense, affixed and
canceled. The Stockholders agrees to cure any deficiencies with respect
to the endorsement of the certificates or other documents of conveyance
with respect to such YPRI Exchange Shares or with respect to the stock
powers accompanying any YPRI Exchange Shares.
4. CLOSING.
The exchange and delivery of shares referred to in Section 2
hereof (hereinafter referred to as the "Closing") shall take place on
6th day of April, 1999 at the law offices of Christian, Samson & Jones,
P.C., Attorneys at Law, 3 1 0 West Spruce, Missoula, Montana 5 9807 or
at such other time and date as IMMC, YPRI and the Stockholders may in
writing designate, which date shall be referred to as the "Closing
Date." 'Time is of the essence. The effective date for accounting/tax
purposes shall be April 5, 1999.
5. REPRESENTATIONS AND WARRANTIES OF THE Stockholders AND YPRI.
The Stockholders and YPRI represent and warrant that all of the
following representations and warranties shall, except as otherwise
disclosed herein, be true at the time of Closing and that such
representations and warranties as made at the time of Closing shall
survive the Closing for a period of two (2) years from the Closing Date
(which date is hereinafter called the "Expiration Date").
5.1 Due Organization. YPRI is a corporation duly organized,
validly existing and in good standing under the laws of the state of
Montana and is duly authorized, qualified and licensed under all
applicable laws, regulations, ordinances and orders of public
authorities to carry on its businesses in the places and in the manner
as now conducted except where the failure to be so authorized,
<PAGE> 64
qualified or licensed would not have a material adverse effect on the
business of YPRI taken as a whole. Copies of the Articles of
Incorporation, Bylaws, each as amended, stock records and minute books
of YPRI as heretofore made available to IMMC, are correct and complete.
5.2 Authorization. The Stockholders and YPRI have full legal
right, power and authority to enter into this Agreement, and the
exchange of YPRI Exchange Shares for IMMC Exchange Shares, pursuant to
the provisions of this Agreement will transfer valid title in the YPRI
Exchange Shares to IMMC, free and clear of all liens, encumbrances and
claims of every kind.
5.3 Capital Stock of YPRI. The authorized capital stock of YPRI
consists solely of ____________ shares of voting common stock, ____ par
value, of which 10.000 shares are issued and outstanding. All of the
issued and outstanding shares of the capital stock of YPRI are owned by
the Stockholders, and are free and clear of all liens, encumbrances and
claims of every kind. All of the issued and outstanding shares of YPRI
Stock have been duly authorized and validly issued, are fully paid and
nonassessable, are owned of record and beneficially by the Stockholders
and further, such shares were offered, issued, sold and delivered by
YPRI in compliance with all applicable state and federal laws
concerning the issuance of securities.
5.4 Transactions in Capital Stock. No option, warrant, call,
conversion right or commitment of any kind exists which obligates YPRI
to issue any of its authorized but unissued capital stock. In addition,
YPRI has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein
or to pay any dividend or make any distribution in respect thereof.
5.5 Financial Statements. The Stockholders have delivered to IMMC
copies of unaudited financial and must prepare within sixty (60) days
from the Closing Date audited financial statements to be filed with the
Securities and Exchange Commission. The YPRI financial statements will
been prepared in accordance with generally accepted accounting
principles and applied on a consistent basis throughout the periods
indicated. The YPRI financial statements will present fairly the
financial condition of YPRI as of the date indicated thereon, and such
Statements of Earnings, and Cash Flows and Retained Earnings will
present fairly the results of its respective operations for the periods
indicated thereon.
5.6 Mining Claims. The Stockholders have delivered to IMMC an
accurate list and summary description (Schedule 5.6) of each mining
claim owned by YPRI (hereinafter "YPRI Claims"). The YPRI Claims owned
by YPRI constitute substantially all of the property, real or personal,
owned by YPRI.
5.7 Material Contracts and Commitments. YPRI is not a party to,
nor bound by, any material contracts, or commitments (including, but
not limited to, joint venture or partnership agreements, contracts with
any labor organizations, loan agreements, indemnity or guaranty
<PAGE> 65
agreements, bonds, mortgages, options to purchase land, liens, pledges
or other security agreements) other than as disclosed on "Exhibit 5.7"
hereto.
5.8 Conformity with Law. YPRI is not in material default under any
law or regulation or under any order of any court or -federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over either of them which
would have a material adverse effect on their businesses, taken as a
whole; and there are no claims, actions, suits or proceedings, pending
or threatened, against or affecting YPRI, at law or in equity, or
before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over either of them and no notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received.
YPRI has conducted and is conducting its business in compliance with
the requirements, standards, criteria and conditions set forth in
applicable federal, state and local statutes, ordinances, permits,
licenses, orders, approvals, variances, rules and regulations and is
not in violation of any of the foregoing which might materially and
adversely affect the business, operations, affairs, prospects,
properties, assets, profits or condition (financial or otherwise) of
them, taken as a whole.
5.9 Taxes. YPRI has timely filed all requisite federal and other
tax returns for all fiscal periods ended; and there are no open years,
examinations in progress or claims against them for federal and other
taxes (including penalties and interest) for any period. YPRI and its
subsidiaries will conform their taxable year end to that of IMMC.
5.10 Absence of Changes. Since the date of the YPRI financial
statements, there has not been:
(a) any material adverse change in the financial condition,
assets, liabilities (contingent or otherwise), income or business
of YPRI;
(b) any damage, destruction or loss (whether or not covered
by insurance) materially adversely affecting the properties or
business of YPRI;
(c) any change in the authorized capital of YPRI or in their
respective securities outstanding or any change in their
respective ownership interests or any grant of any options,
warrants, calls, conversion rights or commitments;
(d) any declaration or payment of any dividend or
distribution in respect of the capital stock or any direct or
indirect redemption, purchase or other acquisition of any of the
capital stock of YPRI;
(e) any transaction by YPRI outside the ordinary course of
their respective businesses.
<PAGE> 66
5.11 Deposit Accounts, Powers of Attorney. The Stockholders have
delivered to IMMC an accurate schedule as of the date of the Agreement,
of
(a) the name of each financial institution in which YPRI has
accounts or safe deposit boxes;
(b) the names in which the accounts or boxes are held;
(c) the type of account; and
(d) the name of each person authorized to draw thereon or
have access thereto.
YPRI has also set forth the name of each person, corporation, firm or
other entity holding a general or special power of attorney from YPRI
and a description of the terms of such power.
5.12 Environmental Matters. YPRI has no knowledge of any assertion
by any governmental agency or other regulatory authority of any
environmental lien or action.
5.13 Validity of Obligations. The execution and delivery of this
Agreement by YPRI and the performance of the transactions contemplated
herein have been duly and validly authorized by the Board of Directors
of YPRI, and this Agreement has been duly and validly authorized by all
necessary corporate action and is a legal, valid and binding obligation
of the Stockholders and YPRI.
5.14 Relations with Government. YPRI has not made, offered or
agreed to offer anything of value to any governmental official,
political party or candidate for government office nor has it otherwise
taken any action which would cause YPRI to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended or any law of similar
effect.
5.15 Disclosure. This Agreement and all other documents and
information furnished to IMMC and its representatives pursuant hereto
do not and will not include any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein
not misleading. If YPRI or the Stockholders become aware of any fact or
circumstance which would change a representation or warranty of YPRI or
the Stockholders in this Agreement or any representation made on behalf
of YPRI, YPRI and the Stockholders shall immediately give notice of
such fact or circumstance to IMMC. However, such notification shall not
relieve either YPRI or the Stockholders of their respective obligations
under this Agreement, and at the sole option of IMMC, the truth and
accuracy of any and all warranties and representations of YPRI, or on
behalf of YPRI and of the Stockholders at the date of this Agreement
and at the closing, shall be a precondition to the consummation of this
transaction.
<PAGE> 67
5.16 Employee Benefit Plans. YPRI does not maintain or otherwise
have any liability (whether direct or indirect, actual or contingent)
in respect of any employee pension benefit plan {as such term is
defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")} or under any "employee welfare benefit
plan" {as such term is defined in Section 3(l) of ERISA}.
5.17 No Subsidiaries. YPRI has no subsidiaries, and there are no
related entities controlled by YPRI.
6. REPRESENTATIONS OF IMMC.
IMMC represents and warrants that all of the following
representations and warranties be true at the time of Closing and that
such representations and warranties as made at the time of Closing
shall survive the Closing for a period of two (2) years from the
Closing Date (which date is hereinafter called the "Expiration Date"),
unless otherwise modified by documents furnished to YPRI.
6.1 Due Organization. IMMC is duly organized, validly existing and
in good standing under the laws of the State of Idaho, and is duly
authorized, qualified and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to carry on
its business in the places and in the manner as now conducted except
where the failure to be so authorized, qualified or licensed would not
have a material adverse effect on the business of IMMC taken as a
whole. Copies of the Articles of Incorporation, Bylaws, stock records
and minute books of IMMC as heretofore made available to YPRI, are
complete and correct.
6.2 Authorization. IMMC has full legal right, power and authority
to enter into this Agreement, and the exchange of the IMMC Exchange
Shares for the YPRI Exchange Shares, pursuant to the provisions of this
Agreement will transfer valid title in the IMMC Exchange Shares to the
Stockholders, free and clear of all liens, encumbrances and claims of
every kind,
6.3 Capital Stock of IMMC. The authorized capital stock of IMMC
consists solely of 100,000,000 shares of voting common stock,
_______________ par value, of which ________________ shares are issued
and outstanding. The IMMC Exchange Shares to be delivered to the
Stockholders at the Closing Date will constitute valid and legally
issued shares of IMMC fully paid and nonassessable, and with the
exception of restrictions upon resale, will be legally equivalent in
all respects to the IMMC Stock issued and outstanding as of the date
hereof.
6.4 Transactions in Capital Stock. No option, warrant, call,
conversion right or commitment of any kind exists which obligates IMMC
to issue any of their authorized but unissued capital stock.
6.5 Financial Statements. IMMC has delivered to YPRI and
Stockholders copies of the following financial statements (the "IMMC
Financial Statements"):
<PAGE> 68
IMMC's unaudited financial statement as (hereinafter referred to
as the IMMC Financial Statements") and Statements of Earnings,
Cash Flows and Retained Earnings for the period ended ___________.
The IMMC Financial Statements have been prepared in accordance with
generally accepted accounting principles and applied on a consistent
basis throughout the periods indicated (except as noted). The IMMC
Financial Statements present fairly the financial condition of IMMC as
of the date indicated thereon, unless disclosed in Schedule 6.5
attached hereto, and such Statements of Earnings, and Cash Flows and
Retained Earnings present fairly the results of its respective
operations for the periods indicated thereon.
6.6 Property. IMMC owns no property other than as set forth in
"Exhibit 6.6" hereto.
6.7 Liabilities. IMMC has no liabilities other than as set forth
in "Exhibit 6.7 hereto.
6.8 Conformity with Law. IMMC is not in material default under any
law or regulation or under any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality having jurisdiction over them which would
have a material adverse effect on their businesses, taken as a whole;
and except to the extent set forth in Schedule 6.9, there are no
claims, actions, suits or proceedings, pending or threatened, against
or affecting IMMC or the IMMC Subsidiaries at law or in equity, or
before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over either of them and no notice of any claim, action,
suit or proceeding, whether pending or threatened, has been received.
IMMC and the IMMC Subsidiaries have conducted and are conducting their
businesses in substantial compliance with the requirements, standards,
criteria and conditions set forth in applicable federal, state and
local statutes, ordinances, permits, licenses, orders, approvals,
variances, rules and regulations and is not in violation of any of the
foregoing which might materially and adversely affect the business,
operations, affairs, prospects, properties, assets, profits or
condition (financial or otherwise) of them, taken as a whole.
6.9 Taxes. IMMC has timely filed all requisite federal and other
tax returns for all fiscal periods, there are no open years,
examinations in progress or claims against them for federal and other
taxes (including penalties and interest) for any period or periods and
no notice of any claim, whether pending or threatened, for taxes has
been received, except as disclosed in "Exhibit 6.91' hereto.
6.10 Absence of Changes. Since the date of the IMMC financial
statements, there has not been:
(a) any material adverse change in the financial condition,
assets, liabilities (contingent or otherwise), income or business
of IMMC;
<PAGE> 69
(b) any damage, destruction or loss (whether or not covered
by insurance) materially adversely affecting the properties or
business of IMMC;
(c) any declaration or payment of any dividend or
distribution in respect of the capital stock or any direct or
indirect redemption, purchase or other acquisition of any of the
capital stock of IMMC;
6.11 Deposit Accounts; Powers of Attorney. IMMC has delivered to
the Stockholders an accurate schedule as of the date of the Agreement,
of
(a) the name of each financial institution in which IMMC has
accounts or safe deposit boxes;
(b) the names in which the accounts or boxes are held;
(c) the type of account; and
(d) the name of each person authorized to draw thereon or
have access thereto.
IMMC has delivered the name of each person, corporation, firm or other
entity holding a general or special power of attorney from IMMC and a
description of the terms of such power.
6.12 Environmental Matters. IMMC has no knowledge of any assertion
by any governmental agency or other regulatory authority of any
environmental lien or action.
6.13 Validity of Obligations. The execution and delivery of this
Agreement by the IMMC and the performance of the transactions
contemplated herein have been duly and validly authorized by the Board
of Directors of IMMC, and this Agreement has been duly and validly
authorized by all necessary corporate action and is a legal, valid and
binding obligation of the IMMC.
6.14 Relations with Government. IMMC has not made, offered or
agreed to offer anything of value to any governmental official,
political party or candidate for government office nor has it otherwise
taken any action which would cause IMMC to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended or any law of similar
effect.
6.15 Disclosure. This Agreement and all other documents and
information furnished to the Stockholders and its representatives
pursuant hereto do not and will not include any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein not misleading. If IMMC becomes aware of any fact or
circumstance which would change a representation or warranty of IMMC in
this Agreement or any representation made on behalf of IMMC, IMMC shall
immediately give notice of such fact or circumstance to the
Stockholders. However, such notification shall not relieve IMMC of its
<PAGE> 70
obligations under this Agreement, and at the sole option of the
Stockholders, the truth and accuracy of any and all warranties and
representations of IMMC at the date of this Agreement and at the
Closing, shall be a precondition to the consummation of this
transaction.
6.16 Employee Benefit Plans. IMMC does not maintain or otherwise
have any liability (whether direct or indirect, actual or contingent)
in respect of any "employee pension benefit plan" (as such term is
defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") I or under any "employee welfare benefit
plan" { as such term is defined in Section 3(1) of ERISA}.
6.17 Affiliations and Subsidiaries. IMMC does not presently own,
of record or beneficially, or control, directly or indirectly, the
capital stock securities convertible into capital stock of any other
equity interest in any corporation, association or business entity.
IMMC is not, directly or indirectly, a participant in any joint
venture, partnership or other non-corporate entity. Further, IMMC does
not own any subsidiary corporations.
6.18 Predecessor Status; Etc. IMMC has not owned any predecessor
companies. IMMC has never been a subsidiary or division of another
corporation nor been a part of an acquisition which was later
rescinded, other than as disclosed in "Exhibit 6.18" hereto.
7. COVENANTS OF THE STOCKHOLDERS AND YPRI PRIOR TO CLOSING.
7.1 Access and Cooperation; YPRI. YPRI will afford to the officers
and authorized representatives of IMMC access to all of YPRI's
properties, books and records and will furnish IMMC with such
additional financial and operating data and other information as to the
business and properties of YPRI as IMMC may from time to time
reasonably request. YPRI will cooperate with IMMC, its representatives,
engineers, auditors and counsel in the preparation of any documents or
other material which may be required in connection with any documents
or materials required by any governmental agency. IMMC will cause all
information obtained in connection with the negotiation and performance
of this Agreement to be treated as confidential in accordance with the
provisions of Section 13 hereof
7.2 Access and Cooperation; IMMC. YPRI will afford to the officers
and authorized representatives of IMMC access to all of YPRI's
properties, books and records and will furnish IMMC with such
additional financial and operating data and other information as to the
business and properties of YPRI as IMMC may from time to time
reasonably request. YPRI and Stockholders will cooperate with IMMC, its
representatives, engineers, auditors and counsel in the preparation of
any documents or other material which may be required in connection
with any documents or materials required by any governmental agency.
IMMC will cause all information obtained in connection with the
negotiation and performance of this Agreement to be treated as
confidential in accordance with the provisions of Section 13 hereof.
7.3 Conduct of Business. Stockholders shall cause YPRI to:
<PAGE> 71
(a) carry on its business in substantially the same manner as
they have heretofore and not introduce any material new method of
management, operation or accounting;
(b) maintain their respective properties and facilities,
including those held under leases, in as good working order and
condition as at present, ordinary wear and tear excepted;
(c) perform all of their respective material obligations
under agreements relating to or affecting their respective assets,
properties or rights;
(d) keep in full force and effect present insurance policies
or other comparable insurance coverage;
(e) use their best efforts to maintain and preserve their
business organization intact, retain their present employees and
maintain their respective relationships with suppliers, customers
and others having business relations with YPRI or IMMC, as the
case may be;
(f) maintain compliance with all permits, laws, rules and
regulations, consent orders, etc.;
(g) maintain present debt and lease instruments and not enter
into new or amended debt or lease instruments, without the
knowledge and consent of all parties hereto; and
(h) maintain present salaries and commission levels for all
officers, directors, employees levees and agents.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS.
The obligations of the Stockholders hereunder are subject to the
following conditions.
8.1 Representations and Warranties; Performance of Obligations.
The representations and warranties of IMMC contained in Section 7 shall
be accurate as of the Closing Date as though such representations and
warranties had been made as of that time; and all of the terms,
covenants and conditions of this Agreement to be complied with and
performed by IMMC on or before the Closing Date shall have been duly
complied with and performed.
8.2 No Litigation. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or
threatened to restrain or prohibit the acquisition by IMMC of the YPRI
Exchange Shares and no governmental agency or body shall have taken any
other action or made any request of IMMC as a result of which the
management of IMMC deems it inadvisable to proceed with the
transactions hereunder.
<PAGE> 72
8.3 No Material Adverse Change. No material adverse change in the
results of operations, financial condition or business of IMMC and
shall have occurred, and IMMC shall not have suffered any material loss
or damages to any of its properties or assets, whether or not covered
by insurance, since the IMMC Financial Statements, which change, loss
or damage materially affects or impairs the ability of IMMC to conduct
its business.
8.4 Counsel Approval. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto and
all other related legal matters shall have been approved by, Christian,
Samson & Jones, P.C., counsel to the Stockholders.
8.5 Opinion of Counsel. The Stockholders shall have received an
opinion from Conrad C. Lysiak, counsel to IMMC, dated the Closing Date,
in form and substance satisfactory to the Stockholders, to the effect
that:
(a) IMMC has been duly organized and is validly existing in
good standing under the laws of the State of Idaho;
(b) this Agreement has been duly authorized, executed and
delivered by IMMC and constitutes a valid and binding agreement of
IMMC enforceable in accordance with its terms except as such
enforceability may be subject to bankruptcy, moratorium,
insolvency, reorganization, arrangement and other, similar laws
relating to or affecting the rights of creditors except as the
same may be subject to the effect of general principles of equity
and that no opinion need be expressed as to the enforceability of
indemnification provisions included herein; and
(c) the shares of IMMC Stock to be received by the
Stockholders on the Closing Date shall be duly authorized, fully
paid and nonassessable.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF IMMC.
The obligation's of IMMC hereunder are, at its option, subject to
the satisfaction, on or prior to the Closing Date, of the following
conditions.
9.1 Representations and Warranties, Performance of Obligations.
The representations and warranties of the Stockholders and YPRI
contained in this Agreement shall be true on and as of the Closing Date
with the same effect as though such representations and warranties had
been made on and as of such date and all of the agreements of the
Stockholders and YPRI shall have been performed.
9.2 No Litigation. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or
threatened to restrain or prohibit the acquisition by IMMC of the YPRI
Stock, and no governmental agency or body shall have taken any other
action or made any request of IMMC as a result of which the management
of IMMC deems it inadvisable to proceed with the transactions
hereunder.
<PAGE> 73
9.3 No Material Adverse Change. No material adverse change in the
results of operations, financial condition or business of YPRI shall
have occurred, and YPRI shall not have suffered any material loss or
damages to any of its properties or assets, whether or not covered by
insurance, since the YPRI Balance Sheet Date, which change, loss or
damage materially affects or impairs the ability of YPRI to conduct its
business; and IMMC shall have received a certificate signed by the
Stockholders dated the Closing Date to such effect.
9.4 Counsel Approval. All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto and
all other related legal matters shall have been approved by Conrad C.
Lysiak, counsel to IMMC.
9.5 Opinion of Counsel. IMMC shall have received an opinion from
Christian, Samson & Jones, P.C., counsel to YPRI and the Stockholders,
dated the Closing Date, in form and substance satisfactory to IMMC, to
the effect that:
(a) YPRI has been duly organized and is validly existing in
good standing under the laws of the Province of Ontario;
(b) this Agreement has been duly authorized, executed and
delivered by the Stockholders and constitutes a valid and binding
agreement of the Stockholders enforceable in accordance with its
terms except as such enforceability may be subject to bankruptcy,
moratorium, insolvency, reorganization, arrangement and other
similar laws relating to or affecting the rights of creditors
except as the same may be subject to the effect of general
principles of equity and that no opinion need be expressed as to
the enforceability of indemnification provisions included herein;
and
(c) the shares of YPRI Stock to be received by IMMC on the
Closing Date shall be duly authorized, fully paid and
nonassessable.
(d) all mining claims have been validly conveyed to YPRI and
there are no claims or suits pending against the same.
10. INDEMNIFICATION.
10.1 Indemnification by the Stockholders. The Stockholders
covenants and agrees that it will indemnify, defend, protect and hold
harmless IMMC and YPRI at all times from and after the date of this
Agreement until the Expiration Date from and against all claims,
damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without
limitation, reasonable attorneys' fees and expenses of investigation)
incurred by IMMC in excess of Ten Thousand Dollars ($ i 0,000) in the
aggregate as a result of or incident to any material breach of the
representations and warranties set forth in Section 5 of this Agreement
or certificates attached pursuant thereto and any misrepresentations or
nonfulfillment of any agreement on the part of the Stockholders under
this Agreement.
<PAGE> 74
10.2 Indemnification by IMMC. IMMC covenants and agrees that it
will indemnify and hold harmless the Stockholders at all times from and
after the date of this Agreement until the Expiration Date from and
against all claims, damages actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by YPRI in excess of Ten Thousand Dollars
($10,000) in the aggregate as a result of or incident to any material
breach of the representations and warranties set forth in Section 6 of
this Agreement or on the schedules or certificates attached pursuant
thereto and any misrepresentations or nonfulfillment of any agreement
on the part of IMMC under this Agreement.
10.3 Third Person Claims. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has
knowledge of any claim by a person not a party to this Agreement
("Third Person") or the commencement of any action or proceeding by a
Third Person, the Indemnified Party shall, as a condition precedent to
a claim with respect thereto being made against any party obligated to
provide indemnification pursuant to Sections 10. 1 or 10.2, hereof
(hereinafter the "Indemnifying Party"), give the Indemnifying Party
written notice of such claim or the commencement of such action or
proceeding. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof, and such notice
shall be effective if delivered prior to expiration of the period of
indemnity pursuant to Sections 10. 1 and 10.2. The Indemnifying Party
shall have right to defend and settle, at its own expense and by its
own counsel, any such matter so long as the Indemnifying Party pursues
the same in good faith and diligently. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party
shall cooperate with the Indemnifying Party and its counsel in the
defense thereof and in any settlement thereof. Such cooperation shall
include, but shall not be limited to, furnishing the Indemnifying Party
with any books, records or information reasonably requested by the
Indemnifying Party that are in the Indemnified Party's possession or
control. Notwithstanding the foregoing, the Indemnified Party shall
have the right to participate in any matter through counsel of its own
choosing at its own expense (unless there is a conflict of interest
that prevents counsel for the Indemnifying Party from representing
Indemnified Party, in which case the Indemnifying Party will reimburse
the Indemnified Party for the expenses of its counsel); provided that
the Indemnifying Party's counsel shall always be lead counsel and shall
determine all litigation and settlement steps, strategy and the like.
After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability,
and for so long as the Indemnifying Party diligently pursues such
defense, the Indemnifying Party shall not be liable for any additional
legal expenses incurred by the Indemnified Party in connection with any
defense or settlement of such asserted liability, except to the extent
such participation is requested by the Indemnifying Party, in which
event the Indemnified Party shall be reimbursed by the Indemnifying
Party for reasonable additional legal expenses, out-of-pocket expenses
and allocable share of employee compensation incurred in connection
<PAGE> 75
with such participation for any employee whose participation is so
requested. If the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim and the Indemnified
Party refuses to consent to such settlement, then the Indemnifying
Party's liability under this Section with respect to such Third Person
claim shall be limited to the amount so offered in settlement by said
Third Person and the Indemnified Party shall reimburse the Indemnifying
Party for any additional costs of defense which it subsequently incurs
with respect to such claim. If the Indemnifying Party does not
undertake to defend such matter to which the Indemnified Party is
entitled to indemnification hereunder, or fails diligently to pursue
such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying
Party, and the Indemnified Party may settle such matter, and the
Indemnifying Party shall reimburse the Indemnified Party for the amount
paid in such settlement and any other liabilities or expenses incurred
by the Indemnified Party in connection therewith, provided, however,
that under no circumstances shall the Indemnified Party settle any
Third Person claim without the written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld.
10.4 Tax Liability. In the event IMMC incurs any tax liability in
connection with the transaction described herein, YPRI and the
Stockholders will promptly reimburse IMMC therefore.
10.5 Method of Payment. All claims paid to the Indemnified Party
pursuant to this indemnity shall be paid in cash.
11. TERMINATION OF AGREEMENT.
IMMC or the Stockholders may, by notice in the manner hereinafter
provided on or before the Closing Date, terminate this Agreement if a
material default shall be made by the other party in the observance or
in the due and timely performance of any of the covenants, agreements
or conditions contained herein, and the curing of such default shall
not have been made on or before the Closing Date and shall not
reasonably be expected to occur.
12. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
12.1 IMMC. IMMC recognizes and acknowledges that it has in the
past, currently has, and prior to the Closing Date, will have access to
certain confidential information of YPRI, such as lists of its mining
claims and operations of YPRI and YPRI's respective businesses. IMMC
agrees that it will not disclose such confidential information to any
person, firm, corporation, association, or other entity for any purpose
or reason whatsoever, prior to the Closing Date without the
Stockholders's prior written consent. In the event of a breach or
threatened breach by IMMC of the provisions of this Section, the
Stockholders shall be entitled to an injunction restraining IMMC from
disclosing, in whole or in part, such confidential information. Nothing
contained herein shall be construed as prohibiting the Stockholders
from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.
<PAGE> 76
12.2 Damages. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused
for which they would have no other adequate remedy, IMMC, YPRI and the
Stockholders agree that, in the event of a breach by any of them of the
foregoing covenant, the covenant may be enforced against them by
injunctions and restraining orders.
13. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON IMMC STOCK.
13.1 Status of Stockholders. Stockholders hereby represents and
warrants to, and covenants with IMMC regarding as follows:
(a) The undersigned Subscriber understands that the Company's
Shares of Common Stock have not been approved or disapproved by
the United States Securities and Exchange Commission, any state
securities agency; or any foreign securities agency;
(b) The undersigned Subscriber is not an underwriter and
would be acquiring the Company's shares of Common Stock solely for
investment for his or her own account and not with a view to, or
for, resale in connection with any distribution within the meaning
of any federal securities act, state securities act or any other
applicable federal or state laws;
(c) The undersigned Subscriber understands the speculative
nature and risks of investments associated with the Company, and
confirms that the shares of Common Stock would be suitable and
consistent with his or her investment program; that his or her
financial position enable him or her to bear the risks of this
investment; and, that there is no public market for the shares of
Common Stock subscribed for herein;
(d) The shares of Common Stock subscribed for herein may not
be transferred, encumbered, sold, hypothecated, or otherwise
disposed of, if such disposition will violate any federal and/or
state securities acts. Disposition shall include, but is not
limited to acts of selling, assigning, transferring, pledging,
encumbering, hypothecating, giving, and any form of conveying,
whether voluntary or not shares issued to residents of the State
of Washington may not be resold for a period of one (1) year from
the date of issuance;
(e) To the extent that any federal, and/or state securities
laws shall require, the Subscriber hereby agrees that any shares
of Common Stock acquired pursuant to this Agreement shall be
without preference as to assets;
(f) The Company is under no obligation to register or seek an
exemption under any federal securities act, state securities act,
or any foreign securities act for any shares of Common Stock of
the Company or to cause or permit such shares of Common Stock to
be transferred in the absence of any such registration or
exemption;
<PAGE> 77
(g) The Subscriber has had the opportunity to ask questions
of the Company and has received additional information from the
Company to the extent that the Company possessed such information,
necessary to evaluate the merits and risks of any investment in
the Company. Further, the Subscriber has been given: (1) All
material books, records and financial statements of the Company;
(2) all material contracts and documents relating to the proposed
transaction; and, (3) an opportunity to question the appropriate
executive officers of the Company;
(h) The Subscriber has satisfied the suitability standards
imposed by his or her applicable state laws and has a preexisting
personal and business relationship with the Company;
(i) The Subscriber has adequate means of providing for his
current needs and personal contingencies and has no need to sell
the shares of Common Stock in the foreseeable future (that is at
the time of the investment, Subscriber can afford to hold the
investment for an indefinite period of time);
j) The Subscriber has sufficient knowledge and experience in
financial matters to evaluate the merits and risks of this
investment and further, the Subscriber is capable of reading and
interpreting financial statements; and/or
(k) The Subscriber acknowledges that if he/she/it is a
resident of the State of Florida, he/she/it has the privilege of
declaring this transaction null and void provide the Subscriber
communicates such intention to the Company in writing within three
(3) days of the of the tender of his/her/its consideration.
13.2 Status of IMMC. IMMC hereby represents and warrants to and
covenants with the Stockholders as that it is not obligated to file
reports with the United States Securities and Exchange Commission and
has not registered the shares of common stock with the United States
Securities and Exchange Commission or with the state securities
commission of the State of Montana.
14. GENERAL.
14.1 Cooperation The Stockholders and IMMC shall each deliver or
cause to be delivered to the other on the Closing Date, and at such
other times and places as shall be reasonably agreed to, such
additional instruments as the other may reasonably request for the
purpose of carrying out this Agreement. The Stockholders will cooperate
and use its best efforts to have the present officers, directors and
employees of YPRI cooperate with IMMC on and after the Closing Date in
furnishing information, evidence, testimony and other assistance in
connection with any actions, proceedings, arrangements or disputes of
any nature with respect to matters pertaining to all periods prior to
the Closing Date.
<PAGE> 78
14.2 Successors and Assigns. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and
shall be binding upon and shall inure to the benefit of the parties
hereto, the successors of IMMC and the Stockholders.
14.3 Entire Agreement. This Agreement (including the schedules and
Exhibits attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding between the
Stockholders, YPRI, and IMMC and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This
Agreement, upon execution, constitutes a valid and binding agreement on
the parties thereto enforceable in accordance with its terms and may be
modified or amended only by a written instrument executed by the
Stockholders, YPRI, and IMMC acting through their respective officers,
duly authorized by their respective Boards of Directors.
14.4 Counterparts. This Agreement may be executed simultaneously
in two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the
same instrument.
14.5 Brokers and Agents. Each party represents and warrants that
it employed no broker, finder or agent in connection with this
transaction and agrees to indemnify the other against all loss, cost,
damages or expense arising out of claims for fees or commission of
brokers employed or alleged to have been employed by such indemnifying
party.
14.6 Expenses. Each party will be responsible for their own
expenses in connection with this Agreement.
14.7 Notices. All notices of communication required or permitted
hereunder shall be in writing and may be given by depositing the same
in United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested,
overnight courier addressed to the party to be notified, postage
prepaid, or by delivering the same in person to an officer or agent of
such party.
(a) If to IMMC, addressed to it at:
Iron Mask Mining Company
Conrad C. Lysiak
Attorney at Law
601 West First Avenue
Suite 503
Spokane, Washington 99201
TEL: (509) 624-1475
FAX: (509) 747-1770
<PAGE> 79
(b) If to the Stockholders, addressed to it at:
Kirby S. Christian
Christian, Samson & Jones, P.C.
Attorneys at, Law
310 West Spruce
P. 0. Box 8479
Missoula, Montana 59807
TEL: (406) 721-7772
FAX: (406) 721-7776
(c) If to YPRI, addressed to it at:
Yellow Pine Resources, Inc.
Kirby S. Christian
Christian, Samson & Jones, P.C.
Attorneys at Law
310 West Spruce
P. 0. Box 8479
Missoula, Montana 59807
TEL: (406) 721-7772
FAX: (406) 721-7776
14.8 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Idaho and any action brought
hereunder shall be exclusively in the state or federal courts of the
State of Idaho.
14.9 Survival of Representations and Warranties. The
representations, warranties, covenants and agreements of the parties
made herein and at the time of the Closing or in writing delivered
pursuant to the provisions of this Agreement shall survive the
consummation of the transactions contemplated hereby and any exam.
examination on behalf of the parties.
14.10 Exercise of Rights and Remedies. Except as otherwise
provided herein, no delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or
default by any other party under this Agreement shall impair any such
right, power or remedy, nor shall it be construed as a waiver of or
acquiescence in any such breach or default, or of any similar breach or
default occurring later; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default occurring
before or after that waiver.
14.11 Time. Time is of the essence of this Agreement.
14.12 Reformation and Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties,
and if such modification is not possible, such provision shall be
severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
<PAGE> 80
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
IMMC:
IRON MASK MINING COMPANY
ATTEST:
BY: /s/ Robert J. Evans
Title: Secretary/Treasurer
___________________________
YPRI:
YELLOW PINE RESOURCES, INC.
ATTEST:
BY: __________________________________
__________________________ Title:
Stockholders:
_________________________ ____________________________
Mike LaFleur Donald L. Delaney
_________________________ ____________________________
Shirley 0. Delaney Ella M. Delaney
_________________________ ____________________________
Robert L. Delaney Paul Delaney
_________________________ ____________________________
Ellana Delaney Susanne Jordan
_________________________ ____________________________
William R. Myers Marilyn M. Darrough
DELANEY CREDITOR TRUST
BY: _____________________
Title: ______________
<PAGE> 81
Exhibit 10.2
AGREEMENT
THIS AGREEMENT, made and entered into this _____ day of August,
1999, by and between American Diatomite, L.L.C., an Idaho Limited
Liability Company, 310 - 19"' West, Gooding, Idaho 83330, or P.O. Box
224, Gooding, Idaho 83330 (hereinafter "American") and Iron Mask Mining
Co., an Idaho Corporation, of Sandpoint, Idaho (hereinafter "Iron
Mask")
WITNESSETH:
In consideration of the promises and covenants set forth herein,
and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, tile parties hereto agree as follows:
Iron Mask will purchase 50% of American's Diatomite claims as set forth
on Exhibit "A," subject to the following terms:
1. A total of $1,200,000.00 will be paid to American by Iron Mask on
the following terms: $200,000.00 will be paid when the public
offering of Iron Mask is completed. Said public offering will be
completed no later than 6 months from this Agreement. rhe
remaining $1,000,000.00 owed to American by Iron Mask will be paid
over a five year period, at $200,000.00 a year, plus 5% interest.
2. Iron Mask Mining will issue to American 6,000,000 shares of Iron
Mask Mining Co. stock, at the market value of Iron Mask as of July
8, 1999,
3. Within eight (8) months of the date of this agreement, Iron Mask
will pay to American $200,000.00, as an advance royalty payment.
This royalty payment does not pertain to the purchase price.
4. Iron Mask will have exclusive mining rights to the Diatomaceous
Earth deposit for a five (5) year period. If, at the end of said
five year period Iron Mask is not mining the deposits owned by
American and Iron Mask, American will have the right to mine and
sell product from said deposit. American would then be required to
split the net profits with Iron Mask, according to the net profit
calculation provided for herein.
5. A 4% royalty will be paid to American by Iron Mask on the net
sales price of the Diatomaceous Earth mined and sold. The net
sales price will be after mining, milling freight and sales costs
are deducted. If, subsequent to five years from the date of the
Agreement Iron Mask is not mining any deposit owned by American
and Iron Mask, Iron Mask will pay $ 100,000.00 per year (after the
expiration of said five years) to American in place of a
production royalty.
6. Iron Mask will be required to make all future B.L.M. lease
payments on this property and will make this year's lease payment
of $4,000.00 by August 15, 1999.
<PAGE> 82
7. Iron Mask and American will split the profits from the mining and
sale of Diatomaceous Earth products on a 50-50 basis. Mining,
milling, freight, sales and other legitimate costs will be
deducted from the sales price to determine the net profit.
American will allow $2.00 per ton home office overhead charge for
Iron Mask.
8. In the event of a default on any of the terms in this agreement,
American will, by certified mail, re turn receipt requested,
notify Iron Mask of any defaults to he corrected, Iron Mask will
have 90 days from the date of the default notice mailing to
correct any default. If the complained of default is not cured,
Iron Mask will forfeit its ownership and rights in American.
Those certain mining claims located in an unorganized mining
district, Gooding County, Idaho
Claim Section Township Range
1 SW 1/4 of 35 3S 13E
2 NW 1/4 of 35 3S 13E
3 NE 1/4 of 34 3S 13E
4 NW 1/4 of 34 3S 13E
5 NE 1/4 of 33 3S 13E
6 SW 1/4 of 28 3S 13E
7 SE 1/4 of 28 3S 13E
8 SW 1/4 of 27 3S 13E
9 SE 1/4 of 27 3S 13E
10 SW 1/4 of 26 3S 13E
11 NW 1/4 of 26 3S 13E
12 NE 1/4 of 27 3S 13E
13 NW 1/4 of 27 3S 13E
14 NE 1/4 of 28 3S 13E
15 NW 1/4 of 28 3S 13E
16 SW 1/4 of 21 3S 13E
17 SE 1/4 of 21 3S 13E
18 SW 1/4 of 22 3S 13E
19 SE 1/4 of 22 3S 13E
20 SW 1/4 of 23 3S 13E
21 NW 1/4 of 23 3S 13E
22 NE 1/4 of 22 3S 13E
23 NW 1/4 of 22 3S 13E
24 NE 1/4 of 21 3S 13E
25 NW 1/4 of 21 3S 13E
28 SW 1/4 of 15 3S 13E
29 SE 1/4 of 15 3S 13E
30 SW 1/4 of 14 3S 13E
31 SW 1/4 of 34 3S 13E
32 SE I/4 of 34 3S 13E
33 NE 1/4 of 3 4S 13E
34 NW 1/4 of 2 4S 13E
35 NE 1/4 of 2 4S 13E
36 NW 1/4 of 1 4S 13E
37 NE 1/4 of 1 4S 13E
38 NW 1/4 of 12 4S 13E
<PAGE> 83
39 SE 1/4 of 1 4S 13E
40 SE 1/4 of 2 4S 13E
41 SW 1/4 of 1 4S 13E
42 NE 1/4 of 1 4S 13E
EXTENSION AGREEMENT
This agreement entered Into this 25th day of October, between
American Diatomite and from Mask Mining Co. will grant I.M.M.C. up to
ninety (90) additional days to complete its public offering. For
granting this additional time I.M.M.C. agrees to issue A.D.L.L.C. two
hundred thousand (200,000) shares of its stock.
10/25/99 /s/ Robert L. Delaney
President, Iron Mask Mining Co.
10/26/99 /s/ Robie Strout
/s/ LeRoy Strout
Member. American Diatomite, L.L.C.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition at June 30, 1999 Audited and
12/31/99 (Unaudited) and the Consolidated Statement of Income for the year ended
June 30, 1999 (Audited) and the six months ended 12/31/99 (Unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> JUN-30-1999 DEC-31-1999
<PERIOD-END> JUN-30-1999 JUN-30-2000
<CASH> 75 426
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 823 1,176
<PP&E> 134,588 134,508
<DEPRECIATION> (47,208) (47,208)
<TOTAL-ASSETS> 88,203 88,556
<CURRENT-LIABILITIES> 29,774 35,812
<BONDS> 0 0
0 0
0 0
<COMMON> 799,366 799,366
<OTHER-SE> (740,937) (745,992)
<TOTAL-LIABILITY-AND-EQUITY> 88,203 88,556
<SALES> 25 25
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 6,828 5,096
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 5 16
<INCOME-CONTINUING> (6,798) (5,055)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (6,798) (5,055)
<EPS-BASIC> (0.04) (0.03)
<EPS-DILUTED> (0.04) (0.03)
</TABLE>
