UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
SHOSHONE SILVER MINING CO. INC.
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(Exact name of Small Business Issuer as specified in its charter)
Idaho, USA 82-0304993
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State or other Jurisdiction (IRS Employer Identification No.)
of Incorporation or Organization
Box 2011, Coeur D'Alene, Idaho 83816
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(Address of principal executive offices)
Issuer's Telephone Number, (503) 632-4422
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Securities to be registered pursuant to Section 12(b) of the Act:
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None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Shares, $0.10 par value.
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(Title of Class)
Page 1 of xxxxx
Index to Exhibits on Page 38
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SHOSHONE SILVER MINING CO. INC.
Form 10-SB
TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business............................. 8
Item 2. Management's Discussion and Analysis or Plan of
Operation........................................... 16
Item 3. Description of Property............................. 18
Item 4. Security Ownership of Certain Beneficial Owners
and Management..................................... 29
Item 5. Directors, Executive Officers, Promoters
and Control Persons................................. 30
Item 6. Executive Compensation.............................. 33
Item 7. Certain Relationships and Related Transactions...... 34
Item 8. Description of Securities........................... 34
PART II
Item 1. Market Price Of And Dividends on the Registrant's
Common Equity and Related Stockholder Matters....... 36
Item 2. Legal Proceedings................................... 37
Item 3. Changes in and Disagreements with Accountants...... 37
Item 4. Recent Sales of Unregistered Securities............ 37
Item 5. Indemnification of Directors and Officers.......... 37
PART F/S
Item 1. Financial Statements................................ 38
PART III
Item 1. Index to Exhibits 38
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Glossary of Mining Terms
Achondrite: A type of stony meteorite that lacks chondrules and resembles
terrestrial volcanic rocks more closely than other meteorites.
Advance Royalty Payment: A payment which is not dependant upon production.
Advance royalty payments are credited against any future amounts owning due to
net smelter royalties or gross overriding royalties.
Alkalinity: The chemical nature of solutions characterized by a high
concentration of hydroxl ions.
Amorphous: A geological feature, often subsurface, distinguished by geological,
geochemical or geophysical means, which is detectably different than the general
surroundings and is often of potential economic value.
Base Level: The level below which a river cannot erode. Sea level is the base
level for rivers that empty into the ocean.
Batholith: An igneous intrusive body of unknown depth with a surface exposure of
more than 104 square kilometers. The sides, or contacts, of a batholith are
usually steep and broaden with depth.
Bed Load: The particles that move on or near the bed of a stream, including all
those that move by traction and saltation.
Breccia: A classic sedimentary rock composed of cemented angular rock fragments.
A volcanic breccia is a pyroclastic rock whose rock fragments are larger than 32
mm.
Calving: The process by which huge chunks break away from a body.
Chert: A very dense siliceous rock. Many limestones contain nudules and thin
lenses of chert.
Clastic: Consisting of rock material that has been mechanically derived,
transported, and deposited. Such material is also called detrital.
Cleavage: The tendency of a crystal to split, or break, along planes of
structural weakness.
Columnar Jointing: A pattern of jointing that breaks rock into rough, six-sided
columns. Such jointing is characteristic of basaltic flows and sills and is
believed to result from shrinkage during cooling.
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Concordant Bodies: Intrusive
igneous bodies whose contacts are parallel to the bedding of the intruded rock.
Craton: A central stable region common to nearly all continents and composed
chiefly of highly metamorphosed Precambrian rocks.
Degradation: The ongoing process of erosion in a stream.
Diagenesis: The changes that occur in a sediment during and after lithification.
These changes include compaction, cementation, replacement, and
recrystallization.
Dyke: A tabular, discordant, intrusive igneous body.
Discordant Bodies: Intrusive igneous bodies whose contacts cut across the
bedding, or other pre-existing structures, to the intruded rock.
Dunite: An intrusive, monomineralic, ultramafic rock composed almost completely
of magnesian olivine.
Ejecta: Pyroclastic material thrown out or ejected by a volcano. It includes
ash, volcanic bombs, and lapilli.
Extrusive Rock: Igneous rock that has solidified on the earth's surface.
Feldspar: A group of aluminum silicate minerals closely related in chemical
composition and physical properties. There are two major chemical varieties of
feldspar: the potassium aluminum, or potash, feldspars and the
sodium-calcium-aluminum, or plagioclase, feldspars. The feldspars possess a
tetrahedral framework of silicon and oxygen, with the partial substitution of
aluminum for the silicon. They make up about 60 percent of the earth's crust.
Felsic Materials: Light colored, rock-forming minerals such as feldspar and
quartz.
Gneiss: A coarse gaining metamorphic rock characterized by alternating bands of
unlike minerals, commonly light bands of quartz and feldspar and dark bands of
mica and hornblende.
Gross Overrining Royalty: A royalty payment which is based on the revenue
received from a purchaser.
Intrusive Rock: Any igneous rock solidified from magma beneath the earth's
surface. Such rocks possess a phanerictic, or large grained texture.
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Kimberlite: A ki8mberlite is a pipe-like volcano sourced from deep within the
earth under extreme temperatures and pressures. It is the host rock for diamonds
and diamond indicator minerals such as kimberlitic ilmenites and garnets.
Lithosphere: The crust and upper mantle, located above the asthenosphere and
composing the rigid plates.
Mineral: A naturally occurring, inorganic, solid element or compound that
possesses an orderly internal arrangement of atoms and a unique set of physical
and chemical properties.
Monocline: A structure in which a bed exhibits local steepening of otherwise
uniform dip.
Net Smelter Royalty: A royalty payment based on the gross metal value of ore
which goes to a smelter.
Outcrop: An in situ exposure of bedrock.
Peridotite: A coarse grained ultramafic rock commonly consisting of olivine and
pyroxenes.
Porphyry: An igneous rock composed of larger crystals set within a finer ground
mass.
Pyroclastic Rock: Fragmental rock material resulting from explosive volcanic
eruptions. Such material is literally deposited from the air and includes
volcanic bombs, blocks, tuff, cinders, ash, and pumice.
Rare Earth: A group of rare metallic chemical elements with consecutive atomic
numbers of 57 to 71.
Reserve: That part of a mineral deposit which could be economically and legally
extracted or produced under existing operating and economic conditions. These
proven reserves for which (a) quantity is computed from dimensions revealed in
drill holes, underground workings, trenches and surface outcrops; grade and/or
quality are computed from the results of systematically detailed sampling and
(b) the sites or holes sampled and measured are appropriately spaced that the
size, share, depth, and mineral contents are well established.
Stock: An igneous intrusive body of unknown depth with a surface exposure of
less that 104 square kilometers. The sides, or contacts, of a stock, like those
of a batholith, are usually steep and broaden with depth.
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Strike: The bearing, or magnetic compass direction, of an imaginary line formed
by the intersection of a horizontal plane with any planar surface, most commonly
with bedding planes or foliation planes in rocks.
Syncline: A fold in which the bed has been forced down in the middle or up on
the sides to form a trough.
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Glossary of Abbreviations
Ag: Silver
Au: Gold
Cu: Copper
Fe: Iron
gpm: Grammes per million
gpt: Grammes per tonne
IP: induced polarization
oz: Troy ounces
ppb: Parts per billion
ppm: Parts per million
tpd: Tonnes per day
ton: Short ton (2,000 pounds)
tonne: Metric ton
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
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Introduction
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Shoshone Silver Mining Co. Inc. (hereinafter also referred to as the "Company"
and/or the "Registrant") is a Company that was originally formed to explore
properties located in the state of Idaho for the presence of precious metals.
The Company owns the Shoshone Group which is located in the St. Joe mining
district of Idaho. The Shoshone Group consists of thirty three patented and 17
unpatented contiguous lode mining claims. Included within the Shoshone Group is
the Weber Group which consists of six patented and five unpatented mining claims
located in the Lakeview Mining District which is in Bonner County, Idaho. Also
included is the Drumheller Group which consists of six patented mining claims
located in Idaho. In addition to its mining properties, the Company also has an
agreement with its consolidated subsidiary, Lakeview Consolidated Silver Mines,
Inc. that calls the Company to receive 100% of any net profits from this
property. The Company owns the claims and the Company, as operator, uses its
mill and equipment and records the operating expenses in its accounts. In
Mexico, the Company is mining and crushing silica rock and selling it to a
copper smelter in Mexico in the state of Sonora. The name of the smelter is
Mixicana de Cobre S.A. De C.V. The Company has 49 percent of interest in four
silica properties and a 25% interest in a crushing and milling gold and silver
recovery plant. The Company also has a 25% interest ownership in the La Morena
Placer Deposit in Mexico and owns 25% of a hardrock mine called
La Vibora in Sonora also.
The Company is voluntarily filing its registration statement on Form 10-SB in
order to make information concerning itself more readily available to the
public. As a result of filing its registration statement, the Company is
obligated to file with the Commission certain interim and periodic reports
including an annual report containing audited financial statements. The Company
intends to continue to voluntarily file these periodic reports under the
Exchange Act even if its obligation to file such reports is suspended under
applicable provisions of the Exchange Act.
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The contact person is Mr. James Scheller, President and a member of the Board of
Directors. The telephone number is (503)632-4422; the facsimile number is
(503)632-1567. The Company currently does maintain a website.
The Company's authorized capital includes 20,000,000 shares of common stock with
$0.10 par value. As of the close of the Company's latest fiscal year, September
30, 2000, there were 9,080,660 shares of common stock outstanding.
The Company's common stock trades on the Pink Sheets with the symbol "SHSHE".
The information in this Registration Statement is current as of September 30,
2000, unless otherwise indicated.
Historical Corporate Development
The Company was incorporated in the state of Idaho on August 4, 1969 under the
name Sunrise Mining Company. The name was changed to Shoshone Silver Mining
Company on January 22, 1970. The Company was formed to explore mining properties
in the state of Idaho and also in Canada. The Company subsequently dropped all
of its activities in Canada and concentrated 100% of its efforts in the state of
Idaho.
BUSINESS
The Company currently has varying degrees of interest in mineral properties
located in the state of Idaho and in Mexico.
The Company also owns five percent gross sales of a company called Interactive
Displays currently doing business in Hawaii for store and building displays. See
our link on Web page to Interactive Displays.
Investment Considerations
The following investment considerations, together with other information set
forth in the Form 10-SB, should be carefully considered by current and future
investors in the Company's securities.
Risks Inherent in the Mining Industry
Mineral exploration and the development is highly speculative and capital
intensive. Most exploration efforts are not successful, in that they do not
result in the discovery of mineralization of sufficient quantity or quality to
be profitably mined. The operations of the company are also indirectly subject
to all of the hazards and risks normally incident to developing and operating
mining properties. These risks include insufficient ore reserves, fluctuations
in production costs that may make mining of reserves uneconomic; significant
environmental and other regulatory regulations; labor disputes; geological
problems; failure of pit walls or dams; force majeure events; and the risk of
injury to persons, property or the environment.
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Uncertainty of Reserves and Mineralization Estimates
There are numerous uncertainties inherent in estimating proven and probably
reserves and mineralization, including many factors beyond the control of the
Company. The estimation of reserves and mineralization is a subjective process
and the accuracy of any such estimates is a function of the quality of available
data and of engineering and geological interpretation and judgement. Results of
drilling, metallurgical testing and production and the evaluation of mine plans
subsequent to the date of any estimate may justify revision of such estimates.
No assurances can be given that the volume and grade of reserves recovered and
rates of production will not be less than anticipated. Assumptions about prices
are subject to greater uncertainty and metals prices have fluctuated widely in
the past. Declines in the market price of base or precious metals also may
render reserves or mineralization containing relatively lower grades of ore
uneconomic to exploit. Changes in operating and capital costs and other factors
including, but not limiting to, short-term operating factors such as the need
for sequential development of ore bodies and the processing of new or different
ore grades, may materially and adversely affect reserves.
Proposed Federal Legislation
The U.S. Congress is currently considering a proposed major revision of the
General Mining Law, which governs the creation of mining claims and related
activities on federal public lands in the United States. Each of the Senate and
the House of Representatives has passed a separate bill for mining law revision,
and it is possible that a new law could be enacted. The Company expects that
when the new law is effective, it will impose a royalty upon production of
minerals from federal lands and will contain new requirements for mined land
reclamation, and similar environmental control and reclamation measures. It
remains unclear to what extent any such new legislation may affect existing
mining claims or operations. The effect of any such revision of the General
Mining Law on the Company's operations in the United States cannot be determined
conclusively until such revision is enacted; however, such legislation could
materially increase costs on properties located on federal lands, and such
revision could also impair the Company's ability to develop, in the future, any
mineral prospects that are located on unpatented mining claims.
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Fluctuations in the Market Price of Minerals
The profitability of mining operations is directly related to the market price
of the metals being mined. The market price of base and precious metals
fluctuate widely and is affected by numerous factors beyond the control of any
mining company. These factors include expectations with respect to the rate of
inflation, the exchange rates of the dollar and other currencies, interest
rates, global or regional political, economic or banking crises, and a number of
other factors. The selection of a property for exploration or development, the
determination to construct a mine and place it into production, and the
dedication of funds necessary to achieve such purposes are decisions that must
be made long before the first revenues from production will be received. Price
fluctuations between the time that such decisions are made and the commence of
production can drastically affect the economics of a mine.
The volatility in metals prices is illustrated by the following table, which
sets forth, for the periods indicated, the yearly high and low prices in U.S.
dollars per ounce for silver and the high and low yearly average prices for
copper in U.S. dollars per pound.
Year Silver Price Per Ounce Copper Price Per Pound
High Low High Low
1996 $5.79 $4.67 $1.17 $0.91
1997 $6.39 $4.18 $1.14 $0.87
1998 &7.09 $4.80 $0.85 $0.65
Environmental Risks
Mining is subject to potential risks and liabilities associated with population
of the environment and the disposal of waste products occurring as a result of
mineral exploration and production. Insurance against environmental risk
(including potential liability for pollution or other hazards as a result of the
disposal of waste products occurring from exploration and production) is not
generally available to the Company (or to other companies in the minerals
industry) at a reasonable price. To the extent that the Company becomes subject
to environmental liabilities, the satisfaction of any such liabilities would
reduce funds otherwise available to the Company and could have a material
adverse effect on the Company. Laws and regulations intended to ensure the
protection of the environment are constantly changing, and are generally
becoming more restrictive.
Foreign Operations
The Company's foreign activities are subject to the risk normally associated
with conducting business in foreign countries, including exchange controls and
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currency fluctuations, limitations on repatriation of earnings, foreign
taxation, laws or policies of particular countries, labor practices and
disputes, and uncertain political and economic environments, as well as risks of
war and civil disturbances, or other risk that could cause exploration or
development difficulties or stoppages, restrict the movement of funds or result
in the deprivation or loss of contract rights or the taking of property by
nationalization or expropriation without fair compensation. Foreign operations
could also be adversely impacted by laws and policies of the United States
affecting foreign trade, investment and taxation. The Company currently has
exploration projects located in Chile.
The Lack of Assurance That the Company Will Be Able to Meet Its Future Capital
Requirements:
The Company has some limited source of operating cash flow to fund future
exploration projects or corporate overhead. The Company has some financial
resources, and there is no assurance that additional funding will be available.
The Company's ability to continue exploration of its properties will be
dependent upon its ability to raise significant additional funds in the future.
The Company has no history of significant earnings, and due to the nature of its
business, there can be no assurance that the Company will be profitable. The
Company has paid no dividends on its common shares since incorporation but would
like to in the future. The only source of funds available to the Company for
future exploration expenditures is through the sale of its equity shares. Even
if the results of future exploration are encouraging, the Company may not have
sufficient funds to conduct the further exploration that may be necessary to
determine whether or not a commercially mineable deposit exists. While the
Company may generate additional working capital through further equity offerings
or through the sale or possible syndication of one or more of its properties,
there is no assurance that such funds will be available. If available, future
equity financing may result in substantial dilution to purchasers under such
offerings.
Operating Hazards and Risks Associated with the Mining Industry That the Company
Will Face If It Begins Exploration Work On Its Properties :
Mining operations generally involve a high degree of risk, which even a
combination of experience, knowledge and careful evaluation may not be able to
overcome. Hazards such as unusual or unexpected formations and other conditions
are involved. Operations in which the Company has a direct or indirect interest
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will be subject to all the hazards and risks normally incidental to exploration,
development and production of precious and base metals, any of which could
result in work stoppages, damage to or destruction of mines and other producing
facilities, damage to life and property, environmental damage and possible legal
liability for any or all damage. The Company may become subject to liability for
cave-ins and other hazards for which it cannot insure or against which it may
elect not to insure where premium costs are disproportionate to the Company's
perception of the relevant risks. The payment of such insurance premiums and of
such liabilities would reduce the funds available for exploration activities.
Risks Associated with Penny Stock Classification:
The Company's stock is subject to "penny stock" rules as defined in 1934
Securities and Exchange Act rule 3151-1. The Commission has adopted rules that
regulate broker-dealer practices in connection with transactions in penny
stocks. The Company's common shares are subject to these penny stock rules.
Transaction costs associated with purchases and sales of penny stocks are likely
to be higher than those for other securities. Penny stocks generally are equity
securities with a price of less than U.S. $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction,
and monthly account statements showing the market value of each penny stock held
in the customer's account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally
or in writing prior to effecting the transaction and must be given to the
customer in writing before or with the customer's confirmation.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from such rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for the common shares in the United
States and shareholders may find it more difficult to sell their shares.
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Dependence On Key Personnel
The Company's continued success is dependent, to a large degree, upon the
efforts of its current executive officers. The loss or unavailability of any
such person could have an adverse effect on the Company. At the present time the
Company does not maintain key man life insurance policies for any of these
individuals. Also, the continued success and viability of the Company is
dependent upon its ability to attract and retain qualified personnel in all
areas of its business, especially management positions. In the event the Company
is unable to attract and retain qualified personnel, its business may be
adversely affected. There are currently no employment agreements in place.
Management is; however, currently negotiating agreements with the executive
officers of the Company.
The Ability to Manage Growth
Should the Company be successful in its efforts to develop its mineral
properties or to raise capital for other mining ventures it will experience
significant growth in operations. If this occurs management anticipates that
additional expansion will be required in order to continue development. Any
expansion of the Company's business would place further demands on its
management, operational capacity and financial resources. The Company
anticipates that it will need to recruit qualified personnel in all areas of its
operations. There can be no assurance that the Company will be effective in
attracting and retaining additional qualified personnel, expanding its
operational capacity or otherwise managing growth. The failure to manage growth
effectively could have a material adverse effect on the Company's business,
financial condition and results of operations.
Dividend Policy
The Company does and has hope to pay cash dividends in the foreseeable future,
at present time earnings are expected to be retained for use in developing and
expanding its business. However, the actual amount of dividends received from
the Company will remain subject to the discretion of the Company's Board of
Directors and will depend on results of operations, cash requirements and future
prospects of the Company and other factors.
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Possible Dilution to Present and Prospective Shareholders
The Company's plan of operation, in part, contemplates the accomplishment of
business negotiations by the issuance of cash, securities of the Company, or a
combination of the two. Any transaction involving the issuance of previously
authorized but unissued shares of common stock, or securities convertible into
common stock, would result in dilution, possibly substantial, to present and
prospective holders of common stock.
Competition
There is competition from other mining exploration and development companies
with operations similar to those of the Company's. Many of the mining companies
with which the Company competes have operations and financial strength many
times that of the Company. Nevertheless, the market for the Company's possible
future production of minerals tends to be commodity oriented, rather than
company oriented. Accordingly, the Company expects to compete by taking
advantage of the market for all minerals present in its properties, to offset
the primarily fixed costs of mining any one of the jointly-occurring minerals.
Commodity prices fluctuate and there is no guarantee that market prices at any
one time will be higher than production costs.
The Company does not engage in any material hedging or other transactions which
are intended to manage risks relating to the fluctuations in mineral prices and
does not intend to do so in the foreseeable future.
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Significant Customers and/or Suppliers
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N/A
Employees
---------
At 12/30/00 the Company operated with the services of its Directors, Executive
Officers, and 12 employees or consultants. There is no collective bargaining
agreement in place.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
---------------------------------------------
OR PLAN OF OPERATION
--------------------
SELECTED FINANCIAL DATA
-----------------------
The selected financial data in Table No. 1 for Fiscal 1999, ended December 31,
1999 was derived from the financial statements of the Company which were audited
by Scott Beggs & Company, Inc. CPA independent certified public accountants , as
indicated in their report which is included elsewhere in this Registration
Statement. The selected financial data for the three months ended March 31, 2000
was derived from the unaudited financial statements which were prepared by
management.
The selected financial data was extracted from the more detailed financial
statements and related notes included herein and should be read in conjunction
with such financial statements and with the information appearing under the
heading, "Management's Discussion and Analysis of Financial Condition and
Results of Operations".
Table No. 1
Selected Financial Data
($ in 000, except per share data)
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Year Ended
12/31/99
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Revenue $47
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Net Income (Loss) $194
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Earnings (Loss) per Share $0.02
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Dividends per Share 0
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Wtg Avg #Shares (000) 9,031
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Working Capital $281
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Long Term Debt 0
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Shareholders' Equity $2,457
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Total Assets $2,508
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATION
--------------------
The following discussion of the financial condition, cash flows and results of
operations of the Company for the for the year ended December 31, 2000 should be
read in conjunction with the financial statements of the Company and related
notes included therein.
For the year ended December 31, 1999 the Company had a net loss from operations
of ($34,287) and a net profit from nonoperating activities of $228,369.
Combined, this resulted in an overall net profit of $194,082 compared to an
overall net profit of $211,585 for the fiscal year ended December 31, 1998. The
decreased net profit for Fiscal Year 1999 is attributable to a higher level of
direct mining related expenses and a lower profit level from nonoperating
activities.
The Company currently plans to expand its mining operations and intends to keep
its properties in good standing during the remainder of Fiscal 2001.
Inflation
---------
The Company's results of operations have not been affected by inflation and
management does not expect inflation to have a material impact on its operations
in the future.
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ITEM 3. DESCRIPTION OF PROPERTY
-------------------------------
The Shoshone Group - Idaho
--------------------------
The Shoshone Group does not represent a producing property as yet but plans to
in 2001. It is currently in a dormant status. The Company has had no revenue
from mining operations on the Shoshone Group since 1995.
Acquisition of the Shoshone Group
---------------------------------
The Shoshone Group consists of 33 patented and 17 unpatented mining claims. Five
patented and 17 unpatented claims were acquired in 1970 from Sunshine Mining
Company and a private individual, Violet Hanson. The Company issued 1,500,000
shares of its common stock to Sunshine Mining Company in return for a 100%
ownership in the 30 unpatented mining claims. The Company issued 100,000 shares
of its common stock and $1000 in cash for a 100% interest in the 5 patented
claims. The Company issued 150,000 shares of its common stock in September 1982
for an additional 6 patented claims and 5 unpatented mining claims called the
Weber Group. The Company subsequently issued 55,760 shares of its common stock
for a 100% interest in 6 patented claims on February 10, 1984 called the
Drumheller Group. The Company issued shares of its common stock for a 97.33%
interest in an additional 7 patented mining claims called the Keep Cool Group.
The Company also issued shares of its stock for a 97.33% interest in 6 patented
mining claims called the Idaho-Lakeview Group.
Location and Access of the Shoshone Group
-----------------------------------------
The Shoshone Group is located in the state of Idaho about 23 miles northeast of
the town of Coeur d'Alene. The claims are in Sections 15, 22, 26, 27, 28, 29,
32, 33, 34, and 35 of Township 53 North, Range 1 West.
From the city of Coeur d'Alene, the claims can be reached via 36 miles of paved
and well-graded gravel roads. Approximately 16 miles north of Coeur d'Alene near
the town of Athol on U.S. Highway 95 is the intersection with Bunco Road which
becomes U.S. Forest Service Road #332. The Bunco Road traverses the Lakeview
Mining District 18-22 miles from the highway. Many secondary roads lead from the
Bunco Road to the mines and prospects of the Lakeview Mining District.
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Electric power is available at the Lakeview Mill, owned by the Company, and
could be extended to the mines. Railroad facilities are available in Athol to
assist in the transportation of supplies and equipment into the district and for
shipping ore concentrates to smelters located at Trail, British Columbia or
Helena, Montana. Because of its proximity to the active Coeur d'Alene District,
mining suppliers and qualified personnel are readily available. Several cities
and towns within commuting distance offer adequate housing and social
accommodations for any possible future employees.
Topography, Physiography and Climate
------------------------------------
The Lakeview District is characterized by rugged mountain terrain with narrow
ridges and valley floors. Within the District, elevations range from 3,000 feet
to 4,600 feet. Relief in the area typically exceeds 1,000 feet from the stream
bottoms to the adjacent ridges. Slopes in excess of 30 degrees are common.
The climate is temperate with an excess of thirty inches of annual
precipitation. The majority of the moisture comes between November and June.
Snow accumulations of five feet are typical For a winter. Summer and autumn are
relatively dry seasons. Temperatures range from winter lows of -20 degrees
Fahrenheit up to 100 degrees Fahrenheit in the summer.
A mature second growth coniferous forest and heavy brush combine to make dense
ground cover. There is considerable potential for revenue generation by
harvesting timber from the patented claims.
Regional Geology
----------------
Rocks of the region consist primarily of a thick sequence of gently folded
Precambrian Belt sediments and the igneous rocks of the Kaniksu Batholith. Near
the eastern shores of Pend Oreille Lake, there are some Cambrian quartzites,
limestones and shales. These small outcrops are the only remnants of formations
which have otherwise been completely eroded from the region.
Structurally the region lies where the west northwest trending Lewis and Clark
Line of faults terminates against the north northeast trending faults of the
Purcell Trench. The region was further complicated by a mosaic fault pattern
that resulted from the intrusion of the Kaniksu Batholith. There is strong
evidence for post-intrusion faulting also.
District Geology
----------------
Only the 7,500 foot thick Wallace Formation of the Precambrian Belt Supergroup
outcrops within the boundaries of the Lakeview District and in the mines owned
19
<PAGE>
by the Company. The Wallace Formation is a carbonate bearing sequence of
argillite and siltite which has been subjected to only the greenschist facies of
regional metamorphism. Original sedimentary features such as mud cracks and
ripple marks are commonly preserved. The rocks generally dip at less than 45
degrees to the east.
Lamprophyre dikes are commonly encountered in the mines of the district. These
basic dikes erode quickly and are exposed on the surface only in road cuts and
trenches. The dikes often occur in the same shear zones as the ore minerals.
They have also been brecciated by later movement of the faults.
Faults in the district may be divided into three distinct classes.
The Packsaddle Fault is an ancient fault that was active in the Precambrian and
has probably been reactivated on several occasions. The fault strikes N40E and
dips very steeply to the west. It has a left lateral component of movement
estimated to be between 500-1,000 feet and a normal component of movement of
approximately 6,000 feet. The Packsaddle Fault may be considered the western
boundary of the district. The Cascade Fault four miles to the east is similar to
the Packsaddle Fault and may be considered the eastern boundary of the district.
The second class of faults in the district are shear zones which strike either
northeast or northwest and dip between 45 degrees and 65 degrees. These shears
average 80-120 feet wide and serve to host all of the major mines in the
district. Vertical movement in the shear zones is estimated to b3 300-600 feet.
Within the shear zones, the rock is hydrothermally altered and brecciated.
The shears were formed in response to the batholith intrusion and were
reactivated during cooling of the magma. The mineralizing events in the mines
are separated by periods of movement within shear zones.
Finally, block faults which form a mosaic pattern have very steep to vertical
dips and offset the mineralizedshear zones. These faults are generally barren of
mineralization. They probably represent the final stage of tectonic adjustments
to the cooling and contraction of the batholith. The movement on these faults is
near vertical.
Mineralization
--------------
There are three distinct periods of mineralization in the district. Tectonism
involving crushing of veins between the stages clearly separates them. The first
period consisted of quartz, pyrite and minor arsenopyrite.
20
<PAGE>
The second period of mineralization was the most important for economic
minerals. The first minerals of the sequence were carbonates. Rhodocrosite is
found in the Conjecture Mine and siderite in the Idaho Lakeview Mine. The Keep
Cool and Weber mines have very little carbonate, but abundant quartz gangue.
Sphalerite was the earliest ore mineral to be deposited. It was soon followed by
galena, tetrahedrite and another phase of pyrite. Tetrahedrite is the primary
silver bearing mineral in the district and consequently is the most important
economically. Minor amounts of chalcopyrite, stibnite and boulangerite were also
deposited at this time.
No visible gold or electrum has been reported from the district. No x-ray or
electron microprobe work has been done on samples of the ore to identify the
mode of occurrence either. An examination of smelter returns reveals that gold
has a much greater affinity for the lead-silver concentrates than for zinc
concentrates. Since all the mines of the district have some gold, it is assumed
to have accompanied this same period of mineralization.
The third stage of mineralization consisted of quartz, pyrite, chalcopyrite and
a ruby silver, probably pyrargyrite. This period of mineralization was erratic
in its occurrence and distribution and is generally not of great economic
significance to the district.
The ore in the district is seldom seen in large continuous veins more than
200-300 feet long. Typically, it occurs as veins, stringers, and sheared pods of
ore intimately mixed with brecciated country rock and dikes. It occurs as
fracture and fissure fillings with very little replacement involved. Ore shoots
within the shear zones generally have much greater dip lengths than strike
lengths. Along the strike of the shears, ore shoots are separated by essentially
unmineralized stretches of crushed country rock. The resurgent mineralizing
fluids and dikes used the same channels over and over again.
THE WEBER MINE
--------------
The Weber Mine, owned by the Company, has the distinction of being the first
mine staked in the Lakeview District and also the largest producer. The mine is
covered by six patented and three unpatented claims. It is located in the
headwaters of Gold Creek near the southeast end of the Weber Shear Zone.
21
<PAGE>
The shear zone which hosts the vein is up to 80 feet wide and 3,600 feet long.
It strikes N65W and dips SW 45 degrees-50 degrees and is truncated on both ends
by north striking near vertical block faults. The mine is hosted by rocks of the
Wallace Formation. The vein consists of galena, sphalerite and tetrahedrite in a
gangue of quartz and pyrite. Lamprophyre dikes are also common in the shear
zone.
Since the claims were staked in September of 1988, actual mining did not begin
until the following Spring. In 1989 and 1990, a large open cut on the outcrop
was mined. Supergene enriched oxide ore which averaged 41.1 ounces/ton silver
was produced from the open cut.
From 1894 until 1915 the underground mine was developed. From 1949 until 1965
open pit mining resumed at the site of the original open cut. This operation
eventually mined down through the upper two levels of the underground mine.
In 1978 bulldozer trenching discovered another surface zone of mineralization
approximately 2,000 feet northeast of the original pit. Here the vein was 10-12
feet wide and approximately 135 feet long. This became the #2 pit which was
developed and mined during the silver price boom of the early 1980's. These
efforts were primarily responsible for the most profitable period in the
Company's history to date.
Total production to date from this mine exceeds 129,000 tons of ore from which
1.1 million ounces of silver were recovered.
The Keep Cool Mine
------------------
The Keep Cool Mine, now owned by the Company, was staked in 1888 shortly after
the Weber Mine was discovered. It is located in the east fork of Chloride Gulch
at the northwest end of the Weber Shear Zone.
The vein strikes N65W and dips SW45 degrees - 50 degrees and is hosted by the
Wallace Formation. Some lamprophyre dikes in the shear zone are the only other
rock type encountered in the mine. The ore consists primarily of sphalerite,
galena and tetrahedrite in a gangue of quartz, pyrite, and crushed wallrock. The
ore shoots are found along both the hanging wall and the footwall of the 35 foot
wide shear zone.
The Keep Cool Mine was developed by a series of five adits from the 4,230 foot
elevation down to 3,981 feet.
22
<PAGE>
Between 1937 and 1939 the Keep Cool Mine produced 3,815 tons of ore. Another
period of activity between 1951 and 1954 mined 2,600 tons.
During the silver price boom of the early 1980's, the Keep Cool Mine produced
approximately $30,000 in revenues to the Company from a surface cut on the vein
that averaged six ounces/ton silver plus 0.05 ounces/ton gold.
From 1989 to 1991, the Company contracted two miners to drive a new adit to
explore eastward along the vein beyond the limits of previous mining. A total of
882 feet of crosscuts, drifts and laterals were driven. These efforts were
successful in extending the known vein by approximately 180 feet. The ore
recovered from these efforts was stockpiled at the mill.
Idaho Lakeview Mine
-------------------
The Idaho Lakeview Mine, now owned by the Company, was also discovered in 1888.
The portal is located in Chloride Gulch at an elevation of 3,040 feet. This
claim group has four patented lode claims, one patented millsite claim, seven
unpatented lode claims and one unpatented millsite.
The mine was re-opened in 1980 in an attempt to take advantage of high silver
prices. However, only rehabilitation work and a small amount of mining was
accomplished before the silver price started to collapse.
In 1987 the Company rehabilitated 550 feet of old drift and drove 186 feet of
new drift toward a vein intercept seen in diamond drill hole LH-1 drilled in
1970 by Sunshine Mining Company, the previous owner. That drill hole found 0.4
feet of quartz, pyrite and tetrahedrite which assayed 185.7 ounces/ton silver
located 150 feet into the hanging wall of the main shear zone. The main vein had
4.0 feet of quartz and minor sulfides where it was intercepted in the hole and
it assayed only 1.6v ounces/ton silver. The new drift crosscut the main vein 325
feet from the drill hole. At that location the vein was 2.7 feet wide and
assayed 12.7 ounces/ton silver. Possible continuations of this ore zone have yet
to be investigated on strike or dip. The miners were unable to hold the ground
in the shear zone and this drift heading was abandoned before reaching the high
grade hanging wall target.
Ore reserves for the mine were calculated for silver only from old assay data
since the deeper levels of the mine have not been accessible for many years.
(Figure 6).
23
<PAGE>
IDAHO LAKEVIEW MINE RESERVES
Level Block Tons Grade Oz/T Silver Contained Oz Silver
100 F1E 230 5.9 1,357
100 H1E 1,100 7.3 8,030
100 H2E 5,980 9.7 58,006
100 H3E 4,025 7.9 31,798
200 F1E 5,305 10.6 56,233
700 F1W 1,580 11.7 18,486
1200 F1E 650 6.0 3,900
1200 F1W 2,700 22.1 59,670
1200 H1E 1,770 19.6 34,692
1400 F1E 850 15.9 13,515
TOTAL 24,190 Ave. 11.8 0z/T 285,687 oz
These reserves can be considered proven. They were calculated using very
conservative methods and only projected ore for half of the strike length above
and below each level. A possible category of reserves which connected ore blocks
between levels would contain many multiples of the proven reserves.
The Drumheller Group
--------------------
The Drumheller Group of six patented claims located south of the Bunco Road in
the Prospect Creek drainage was acquired by Shoshone Silver in 1984. Subsequent
exploration work demonstrated the necessity of staking two additional claims to
cover mineralized zones. This claim group covers the southern extension of the
Hewer Shear Zone.
The general geology of this claim group is somewhat different from the rest of
the district. Although the exposed rocks are still of the Wallace Formation,
here they dip steeply to the northeast 45 degrees - 70 degrees. The veins occupy
simple faults instead of the wide shear zones seen in all of the large mines of
the district. The strike of these veins crosscuts the stratigraphy at 30 degrees
- 70 degrees. Because of the discrete nature of the veins and their orientation
to stratigraphy, these veins should be relatively easy to mine by underground
methods.
The area covered by the Drumheller claims has been explored by trenching and by
five small adits. No deep mining has been undertaken. The 1960's and 1970's
flurry of geochemical soil sampling in the district did not extend south onto
these claims. No diamond drilling has ever been done.
The longest adit in the area is found on the Little Bill claim. An 80 foot long
crosscut leads to the vein which was then drifted in a westerly direction for
24
<PAGE>
168 feet. The vein dips south at 45 degrees - 60 degrees. The portal was
re-opened in 1990. Mapping and limited sampling was undertaken at that time.
Four samples from the adit showed the vein to have an average width of 3.3 feet.
The weighted average vein grade was 8.77 ounces/ton silver, 0.072 ounces/ton
gold, 0.62% lead and 1.82% zinc.
This vein can be projected eastward about 200 feet to an outcrop in a road cut.
Two samples taken here averaged 1.8 feet wide with an average grade of 12.35
ounces/ton silver, 0.052 ounces/ton gold and 0.69% lead. These grades are very
comparable to the rest of the district. An offset portion of the vein can be
projected and traced by float for an additional 1,000 feet to the east.
On the Gladys claim, a 160 foot long crosscut was driven to reach a vein. The
vein was then drifted along for 75 feet. Although vein widths reached up to 8
feet, grades averaged less than 2 ounces/ton silver and 0.5% combined lead and
zinc. This vein can be traced for nearly 1,000 feet on the surface.
Another vein on the Bald Top claim can be traced for 900 feet. This vein strikes
N45W and dips steeply to the southwest. Only a few assays have been taken along
this vein and they were disappointing.
The south end of the Hewer Shear Zone was explored on the O.K. claim by two
short adits and three trenches. Iron stained quartz with traces of galena and
dike rocks were observed on the dumps of these workings. One large boulder of
quartz which measured several feet in each dimension would seem to indicate the
presence of significant veining in these collapsed old workings.
Conclusions
-----------
The Lakeview Mining District has a long history as a producer of precious and
base metals. The future of the district will be determined by economics.
Historically, 10% of the revenue came from silver production. The balance was
derived from gold, lead, zinc, and copper credits.
25
<PAGE>
The Mexico Mill Plant
---------------------
The Company owns 25% of a 100 ton ball mill located in Mexico in the state of
Sonora.
Acquisition of the Mexico Mill Plant
------------------------------------
On June 7, 1999, the Company acquired its 25% interest in The Mexico Mill Plant
for a cash payment of $70,000. The Company initially purchased a 10% interest in
the Mill on February 11, 1999 and subsequently on June 7, 1999 the Company
purchased an additional 15% interest in the Plant.
Location and Access of the Mexico Mill Plant
--------------------------------------------
The Mexico Mill Plant is located in the city of Esqueda which is in Mexico in
the state of Sonora. Access is by Mexican Highway 17.
Topography and Physiography
---------------------------
The Mexico Mill Plant is located in an area of sparse desert and rolling hills.
History and Previous Work
-------------------------
The Mexico Mill Plant is a new facility which was started in February 1999.
The La Morena Placer Deposit
----------------------------
The La Morena Placer Deposit does represent a producing property and the
Company's current operations are exploration testing but positive.
La Vibora
---------
La Vibora Hard Rock Mine 25% interest stock piling of ore is currently in
operation as of July of 2000 and future production of this ore is predicted in
mill.
Acquisition of Interest
-----------------------
On November 2 1999, the Company purchased an initial 20% interest in the La
Morena Placer Deposit for a cash payment of $8,000. Subsequently, on December 9,
1999 the Company purchased an additional 5% interest for a cash payment of
$16,000 and the issuance of 100,000 shares of common stock.
26
<PAGE>
Location and Access:
--------------------
The La Morena Placer Deposit is located seven miles west of Mexican Highway 17,
approximately 22 miles south of the city of Esquida and is same location as La
Vibora hard rock mine.
History and Previous Work
-------------------------
To date trenching and placer testing has been done on the La Morena Placer
Deposit. The area tested has resulted in an average grade of 3.5 grams/ton gold.
Regional Geology
----------------
The regional geology is represented by a base of metamorphic rocks. The rock
outcrops correspond to sedimentary and igneous intrusives as well as extrusives.
The sedimentary sequence is made up of calcium carbonates, interspersed with
sandstones which are partially metamorphosed from the upper Paleozoic era.
The intrusive rocks correspond to silicified granites, with cerrusite and
kaolin. These rocks have been classified as a quartzmonzonitic intrusive,
elongated NW-SE and to which is attributed the mineralization in the present
district.
The post mineralization volcanics ore are of rhyolitic and basaltic composition,
conglomerate and basalts of the quaternary.
Local Geology
-------------
The primary outcrop is igneous rock of granodiorite and quartzmonzonite
composition, of probably the upper cretaceous lower tertiary. It constitutes the
most prominent and widely distributed unit in the region, since it outcrops in a
NW-SW direction, from the vicinity of the town of Cananea to the city of
Nacozari.
Superficially, in the study area management has found excessive decay of the
surface, forming yellowish soils due to oxidation of the sulphides that have
been leached. The sulphides appear light grey in color when they are fresh and
they are composed of feldspars, quartz, mica (principally biotite) and
hornblend.
Structurally, the intrusive body presents a system of fracturing in three
directions and a normal fault system whose direction is NE-SW that for
structures of fracture filling in veins, associated with these a control or
influence on the in place bodies by hydrothermal solutions since the zone of
alteration is found on both sides of the structures.
27
<PAGE>
The structural tendency of the group of veins present is preferentially to the
NW, varying from 64 degrees to 71 degrees. The dip is predominantly to the SW,
in a range 58 degrees to 81 degrees, although some veins are found to exist in
normal faults that run toward the NE, with the dip to the NW.
The existing mineralization on the La Vibora Mine, of 25% is owned by Shoshone
which is adjacent to the Company's interest, is gold producing and is defined by
two principle types that are described as follows:
1. Mineralization in stockworks: This type mineralization appears in the
form of fissure filled veins that vary in width from 0.2 meters to 0.9
meters. The host rock is a granite intrusive of acid composition, of
which 26 structures were detected.
They are characterized by the presence of sulphides (principally
pyrite) that are partially leached, forming oxidation zones in some
areas, with which probably the existing gold was initially associated.
There is also copper carbonate such as malachite, secondary minerals
of alteration that indicate upper portions of a zone of oxidization.
As secondary minerals they contain oxides of iron, manganese quartz
and calcite.
2. Disseminated Mineralization: This type is characterized by presenting
itself in the zones of alteration, contiguous to the structures of
fracture filling.
This second type of mineralization originated and developed within the
area that borders the Morena mine which is a deposit of placer gold.
The most frequent hydrothermal alteration is silification, showing zones of
decarbonization, defined by halos of small veins of calcite.
The Silica Properties
---------------------
Acquisition of Interest
-----------------------
The Company has varying degrees of interest in four silica properties, the Santa
Rita; the Anna; the Inez; and, the Three Brothers.
28
<PAGE>
The Company holds a 33.3% interest in the Santa Rita silica property. This
interest was obtained on February 11, 1999 for total consideration of $175,000.
$145,000 of this was paid in cash and the remaining $30,000 was paid utilizing
the Company's existing equipment.
The Company holds a 25% interest in the Inez silica property. This interest was
obtained on April 10, 1999 for total consideration of $90,000 which was paid by
the Company as follows: $18,600 in cash and the balance was paid utilizing the
Company's existing equipment.
The Company holds a 49% interest in the Anna and the Three Brothers silica
properties. This interest was obtained on June 7, 1999 for total consideration
of $78,000 which was paid in cash by the Company.
Location and Access:
--------------------
The Inez silica property is located in Mazocahui in the state of Sonora. The
Santa Rita silica property is also located in Nacozari in the state of Sonora.
The Anna and Three Brothers are also located Mazocahui in the state of Sonora.
History and Previous Work
-------------------------
Prior to 1999, no work was done on any of the silica properties. Since 1999, the
Company and its partner have delineated the structures on the Inez; the Anna;
and, the Santa Rita silica properties. Silica has been shipped from all of these
properties.
Other than building a road and putting up a work area, no work has been done to
date on the Three Brothers silica property.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------
The Registrant is a publicly-owned corporation, the shares of which are owned by
United States and Canadian residents. The Registrant is not controlled directly
or indirectly by another corporation or any foreign government.
Table No. 2 lists as of September 30, 2000 all persons/companies the Registrant
is aware of as being the beneficial owner of more than five percent (5%) of the
common stock of the Registrant.
29
<PAGE>
Table No. 2
5% Shareholders
Title Amount and Nature Percent
of of Beneficial of
Class Name of Beneficial Owner Ownership Class #
-----------------------------------------------------------------
Common James I. Scheller 1,625,250 17.9%
TOTAL 1,625,250 17.9%
# Based on 9,080,660 shares outstanding as of September 30, 2000.
Table No. 3 lists as of September 30, 2000 all Directors and Executive Officers
who beneficially own the Registrant's voting securities and the amount of the
Registrant's voting securities owned by the Directors and Executive Officers as
a group.
Table No. 3
Shareholdings of Directors and Executive Officers
Title Amount and Nature Percent
of of Beneficial of
Class Name of Beneficial Owner Ownership Class #
--------------------------------------------------------------------------------
Common James I Scheller, President & Director 1,625,250 17.90%
Common Carol Stephan, Director 291,000 3.20%
Common Don Caulkins, Director 20,000 0.22%
Common Joe Suveg, Director 7,745 0.01%
Common Frank Turley, Vice President, Mexico Operations 0 0%
Common Bruce Graham, Director 0 0%
Total 1,943,995 21.33%
# Based on 9,080,660 shares outstanding as of September 30, 2000.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
---------------------------------------------------------------------
Table No. 4 lists as of September 30, 2000 the names of the Directors of the
Company. The Directors have served in their respective capacities since their
election and/or appointment and will serve until the next Annual Shareholders'
Meeting or until a successor is duly elected, unless the office is vacated in
accordance with the Articles/By-Laws of the Company. All Directors are residents
and citizens of the United States.
30
<PAGE>
Table No. 4
Directors
Date First
Elected
Name Age or Appointed
-----------------------------------------------------------------
James I. Scheller 54 Feb 1980
Carol Stephan 59 Dec 1979
Don Caulkins 68 April 1997
Jusef Suveg 72 April 1996
Bruce Graham 28 Aug 1998
Table No. 5 lists, as of September 30, 2000, the names of the Executive Officers
of the Company. The Executive Officers serve at the pleasure of the Board of
Directors. All Executive Officers are residents/citizens of the United States.
Table No. 5
Executive Officers
Name Position Date of Board Approval
-----------------------------------------------------------------
James I. Scheller President Aug 1993
Carol Stephan Secretary/Treasurer Jan 1990
Frank Turley Vice President, Mexican Operations June 1999
Business Experience
James Scheller. Mr. Scheller is President and a Director of the Company. He has
been employed by the Company since Feb 1980. His responsibilities include
coordinating strategy and planning. Mr. Scheller is a graduate of Washington
State University where he received a Bachelor of Science Degree in Engineering
in 1968. Mr. Scheller is also the owner of Systems Manufacturing, a private
company located in Portland, Oregon which manufacturers and sells drive-thru
wash equipment. He has been involved with Systems Manufacturing since he founded
the company in 1978. Mr. Scheller also owns two patents from U.S. Patent Office.
Mr. Scheller currently spends 50% of his time on the affairs of the Registrant.
Carol Stephan. Mrs. Stephan is Secretary/Treasurer and a Director of the
Company. Her responsibilities include assisting Mr. Scheller in general
administration of the Company and planning. Mrs. Stephan has been employed by
the Company for the past 12 years. She currently acts as the transfer agent for
the Company and handles administrative matters associated with the day to day
operations. Mrs. Stephan attended college in Orange County, California where she
received a two year degree in business administration. Since receiving that
degree, she has attended various classes in both accounting and computer
training. Mrs. Stephan currently spends 30% of her time on the affairs of the
Company.
31
<PAGE>
Don Caulkins. Mr. Caulkins is a Director of the Company. His responsibilities
include assisting both Mr. Scheller and Mrs. Stephan in the planning process for
the Company. Mr. Caulkins is a graduate of Portland Bible College. He has been a
member of the Board of Directors of the Company for the past two years. For the
past 11 years he has been employed by Bob's RV Country, located in Beaverton,
Oregon, as the Sales Manager. Mr. Caulkins spends 5% of his time of the affairs
of the Company.
Jusef Suveg. Mr. Suveg is a Director of the Company. His responsibilities
include assisting both Mr. Scheller and Mrs. Stephan in the planning process for
the Company. Mr. Suveg received his Masters Degree in Mining Engineering in
1956. Since completing university, Mr. Suveg spent 22 years as a mining engineer
for Asarco; 3 years as a unit manager for Day Mines Inc.; and, 9 years as a unit
manager for Hecla Mining Company where he retired in 1990. He has been a member
of the Board of Directors of the Company for the past four years and he
currently spends 10% of his time on the affairs of the Company.
Frank Turley. Mr. Turley is the Vice President of Mexican Operations for the
Company. His responsibilities include overseeing the Company's operations on the
La Morena Placer Project; the Silica Properties; and, the Mexican Mill and La
Vibora Hard Rock Mine. Mr. Turley received a Bachelor of Science Degree in 1960
from the University of New Mexico; a second Bachelor of Science Degree in
Engineering from the University of New Mexico in 1970; and, a third Bachelor of
Science Degree in Earth Sciences from the College of Santa Fe. Mr. Turley was
employed by the Federal Aviation Administration as a Regional Inspector from
1962 until 1979 at which time he became active in the mining industry. In 1989
he left 49 Palms and became the President of Cuesta Corporation, a Mexican
mining company. He held this position until 1999 at which time he joined the
Registrant. Mr. Turley currently spends 100% of his time on the affairs of the
Company.
Bruce Graham. Mr. Graham is a Director of the Company. His responsibilities
include assisting both Mr. Scheller and Mrs. Stephan in the planning process for
the Company.
Involvement in Certain Legal Proceedings
----------------------------------------
Other than that described above, there have been no events during the last five
years that are material to an evaluation of the ability or integrity of any
director, person nominated to become a director, executive officer, promoter or
control person including:
32
<PAGE>
a) any bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the bankruptcy
or within two years prior to that time;
b) any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
c) being subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
enjoining, barring, suspending or otherwise limiting his/her involvement in any
type of business, securities or banking activities;
d) being found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
Family Relationships
--------------------
There are no family relationships between any of the officers and/or directors.
Other Relationships/Arrangements
--------------------------------
There are no arrangements or understandings between any two or more Directors or
Executive Officers, pursuant to which he/she was selected as a Director or
Executive Officer. There are no material arrangements or understandings between
any two or more Directors or Executive Officers.
ITEM 6. EXECUTIVE COMPENSATION
-------------------------------
The Company has no formal plan for compensating its Directors for their service
in their capacity as Directors. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of the Board of Directors. The Board of Directors may
award special remuneration to any Director undertaking any special services on
behalf of the Company other than services ordinarily required of a Director.
During Fiscal 1999, no Director received and/or accrued any compensation for his
services as a Director, including committee participation and/or special
assignments.
33
<PAGE>
The Company has no material bonus or profit sharing plans pursuant to which cash
or non-cash compensation is or may be paid to the Company's Directors or
Executive Officers. The Company has no stock option or other long-term
compensation program.
During 1999, no funds were set aside or accrued by the Company to provide
pension, retirement or similar benefits for Directors or Executive Officers.
The Company has no plans or arrangements in respect of remuneration received or
that may be received by Executive Officers of the Company in Fiscal 1999 to
compensate such officers in the event of termination of employment (as a result
of resignation, retirement, change of control) or a change of responsibilities
following a change of control, where the value of such compensation exceeds
$60,000 per Executive Officer.
The Company has no written employment agreements.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------
Current management is unaware of any transactions, or proposed transactions,
which have materially affected or will materially affect the Company in which
any Director, Executive Officer, or beneficial holder of more that 10% of the
outstanding common stock, or any of their respective relatives, spouses,
associates or affiliates has had or will have any direct or material indirect
interest other than those described below. Management believes that all
transactions with affiliated parties have been on terms at least as favorable to
the Company as the Company could have obtained from unaffiliated parties.
ITEM 8. DESCRIPTION OF SECURITIES
----------------------------------
The authorized capital of the Registrant is 20,000,000 shares of common stock
with $0.10 par value of which 9,080,660 shares of common stock were issued and
outstanding at September 30, 1999, the end of the most recent fiscal year. At
September 30, 2000, there were also 9,080,660 shares of common stock
outstanding.
All shares of common stock when issued were fully paid for and non-assessable.
Each holder of common stock is entitled to one vote per share on all matters
submitted for action by the stockholders. All shares of common stock are equal
to each other with respect to the election of directors and cumulative voting is
not permitted; therefore, the holders of more than 50% of the outstanding common
stock can, if they choose to do so, elect all of the directors. The terms of the
directors are not staggered. Directors are elected annually to serve until the
next annual meeting of shareholders and until their successor is elected and
34
<PAGE>
qualified. There are no preemptive rights to purchase any additional common
stock or other securities of the Company. The owners of a majority of the common
stock may also take any action without prior notice or meeting which a majority
of shareholders could have taken at a regularly called shareholders meeting,
giving notice to all shareholders thereafter of the action taken. In the event
of liquidation or dissolution holders of common stock are entitled to receive,
pro rata, the assets remaining after creditors and holders of any class of stock
have liquidation rights senior to holders of shares of common stock have been
paid in full.
Dividends in cash, property or shares of the Company may be paid, as and when
declared by the Board of Directors, out of funds of the Company to the extent
and in the manner permitted by law.
Upon any liquidation, dissolution or winding up of the Company, and after paying
or adequately providing for the payment of all its obligations, the remainder of
the assets of the company shall be distributed, either in cash or in kind, pro
rata to the holders of the common stock, subject to preferences, if any, granted
to holders of the preferred shares. The Board of Directors may, from time to
time, distribute to the shareholders in partial liquidation from stated capital
of the Company, in cash or property, without the vote of the shareholders, in
the manner permitted and upon compliance with limitations imposed by law.
Each outstanding share of common stock is entitled to one vote and each
fractional share of common stock is entitled to a corresponding fractional vote
on each matter submitted to a vote of shareholders. Cumulative voting shall not
be allowed in the election of Directors of the company and every shareholder
entitled to vote at such election shall have the right to vote the number of
shares owned by him for as many persons as there are Directors to be elected,
and for whose election he has a right to vote. Preferred shares have no voting
rights unless granted by amendment to the Articles of Incorporation.
Debt Securities to be Registered. Not applicable.
--------------------------------
American Depository Receipts. Not applicable.
----------------------------
Other Securities to be Registered. Not applicable.
---------------------------------
35
<PAGE>
PART II
Item 1. Market Price Of And Dividends on the Registrant's
----------------------------------------------------------
Common Equity and Other Shareholder Matters
----------------------------------------------------
The Company's common stock trades on the Over-the-Counter Electronic Bulletin
Board in the United States, having the trading symbol "SHSHE" and CUSIP#
825356-10-8. Trading volume and high/low/closing prices for the past ten
quarters are disclosed in the following table:
Table No. 7
Over-the-Counter Bulletin Board Trading Activity
----------------- ----------- ----------- ----------- -----------
Quarter High Low Close Volume
Ended
----------------- ----------- ----------- ----------- -----------
09/30/00 $0.12 $0.12 $0.12
----------------- ----------- ----------- ----------- -----------
06/30/00 $0.12 $0.12 $0.12 500
----------------- ----------- ----------- ----------- -----------
03/31/00 $0.13 $0.13 $0.13 400
----------------- ----------- ----------- ----------- -----------
----------------- ----------- ----------- ----------- -----------
12/31/99 $0.14 $0.09 $0.09 14,400
----------------- ----------- ----------- ----------- -----------
09/30/99 $0.15 %0.15 $0.15 21,000
----------------- ----------- ----------- ----------- -----------
06/30/99 N/A N/A N/A N/A
----------------- ----------- ----------- ----------- -----------
03/31/99 N/A N/A N/A N/A
----------------- ----------- ----------- ----------- -----------
----------------- ----------- ----------- ----------- -----------
12/31/98 N/A N/A N/A N/A
----------------- ----------- ----------- ----------- -----------
09/30/98 N/A N/A N/A N/A
----------------- ----------- ----------- ----------- -----------
06/30/98 N/A N/A N/A N/A
----------------- ----------- ----------- ----------- -----------
The Company's common stock is issued in registered form. Carol Stephan,
Secretary/Treasurer and a Director of the Company acts as both the transfer
agent and the registrar for the common stock.
On May 3, 2000 the shareholders' list for the Company's common shares showed
3454 registered shareholders and 9,280,000 shares outstanding.
The Company has researched the indirect holdings by depositories and other
financial institutions and believes it has in excess of 3500 shareholders of its
common stock.
The Company has not declared any dividends. The present policy of the Company is
to retain future earnings for use in its operations and expansion.
36
<PAGE>
ITEM 2. LEGAL PROCEEDINGS
--------------------------
The Company knows of no material, active or pending legal proceedings against
them; nor is the Company involved as a plaintiff in any material proceeding or
pending litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
------------------------------------------------------
Not Applicable
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
------------------------------------------------
Not Applicable
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
--------------------------------------------------
The Company's By-Laws address indemnification under Article VII.
The Corporation shall indemnify its present or former Directors and officers,
employees, agents and other persons to the fullest extent permissible by, ad in
accordance with the procedures contained in, Article 2.02-1 of the Texas
Business Corporation Act. Such indemnification shall not be deemed to be
exclusive of any other rights to which a director, officer, agent or other
person may be entitled, consistent with law, under any provision of the Articles
of Incorporation or By-Laws of the Corporation, any general or specific action
of the Board of Directors, the terms of any contract, or as may be permitted or
required by common law.
37
<PAGE>
PART F/S
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
The financial statements and notes thereto as required under ITEM #13 are
attached hereto and found immediately following the text of this Registration
Statement. The audit report of Scott Beggs & Company Certified Public Account,
for the audited financial statements for Fiscal 1999, 1998 and notes thereto are
included herein immediately preceding the audited financial statements.
(A-1) Audited Financial Statements: December 31, 1999
------------------------------------------------------
Auditor's Report, dated May 16, 2000
Consolidated Balance Sheet at December 31, 1999
Income Statement for the Year Ended December 31, 1999
Statement of Cash Flows for the Year Ended December 31, 1999
Statement of Changes in Owners Equity for the Year Ended December 31, 1999
Notes to Consolidated Financial Statements
(A-2) Unaudited Interim Financial Statements: June 30, 2000
-----------------------------------------------------------
Consolidated Balance Sheet at June 30, 2000
Income Statement for the Six Months Ended June 30, 2000
Statement of Cash Flows for the Six Months June 30, 2000
Statement of Changes in Owners Equity for the Six Months Ended June 30, 2000
Notes to Consolidated Financial Statements
PART III
Item 1. INDEX TO EXHIBITS:
---------------------------
Exhibit No. Item Name
2.1(a) Articles of Incorporation.
2.1(b) Amendment to Articles of Incorporation.
2.2 Bylaws.
38
<PAGE>
(A-1)
Shoshone Silver Mining Company
Audited Financial Statements
Year Ended - December 31, 1999
<PAGE>
[LETTERHEAD]
Scott Beggs & Company, Inc.
Certified Public Accountant
Never Under Estimate the Value
Email: [email protected] Offices at 304 E. Cameron Ave.
http:/ ossus.simplenet.com/beggscpa Kellogg, Id 83837
Toll Free: 1 (208) 784-1124
Kellogg: 1 800 403-1124 Fax 1 (208) 783-0304
St Maries: 1 888 560-4117
Independent Auditor's Report
Shoshone Silver Mining Company
PO Box 2011
Coeur d'Alene, Idaho 83816
We have audited the accompanying balance sheet of Shoshone Silver Mining Company
as of December 31, 1999 and the related statements of income, cash flows and
changes in equity 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 made 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 Shoshone Silver Mining Company
as of December 31, 1999 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
/s/ Scott Beggs & Company, Inc. CPA
Scott Beggs & Company, Inc. CPA
Kellogg, Idaho 83837
May 16, 2000
<PAGE>
Shoshone Silver Mining Company
Balance Sheet
December 31, 1999
Year Ended 12/31/98 Year Ended 12/31/99
Unaudited
Current Assets
Cash 60,029 59,989
Investments - Stock Portfolio 449,291 259,627
Inventory 12,732 12,732
---------- ----------
Total Current Assets 522,052 332,348
Depreciable Assets
Property, Plant and Equipment 665,781 665,781
Accumulated Depreciation (586,360) (586,388)
---------- ----------
Net Depreciable Assets 79,421 79,393
Other Assets
Depletable Assets and Mine Investments 1,150,428 1,295,298
Other Long-Term Investments 459,610 801,183
---------- ----------
Total Other Assets 1,610,038 2,096,481
---------- ----------
Total Assets 2,211,511 2,508,222
========== ==========
Current Liabilities
Accounts Payable 50,000
Minority Postions 1,630 1,630
---------- ----------
Total Current Liabilities 1,630 51,630
Long-Term Liabilities
None 0 0
---------- ----------
Total Liabilities 1,630 51,630
Equity
Common Stock, Par value 10
Cents per share 20,000,000 shares
authorized, 9,030,660 shares
issued and outstanding 850,737 903,066
Paid in Capital in excess of Par 1,590,125 1,597,425
Treasury Stock (58,733) (65,733)
Retained Earnings (172,248) 21,834
---------- ----------
Total Equity 2,209,881 2,456,592
---------- ----------
Total Liabilities and Equity 2,211,511 2,508,222
========== ==========
See the accompanying accountant's auditor's report and notes to the financial
statements which are integraf parts of these financial statements
2
<PAGE>
Shoshone Silver Mining Company
Income Statement
Year Ended - December 31, 1999
Year Ended 12/31/1998 Year Ended 12/31/99
Gross Receipts Unaudited
Mining Revenues 44,377
Transfer Fees and Misc Income 1,883 2,790
---------- ----------
Total Gross Income 1,883 47,167
Direct Expenses
Direct Mining Related Expenses 380 53,279
Equipment Rental 280 3,492
Freight 195 3,000
Contract Labor 4,414 1,500
---------- ----------
Total Direct Expenses 5,269 61,271
---------- ----------
Gross Profit (Loss) (3,386) (14,104)
Indirect Expenses
Auto 5,947 1,273
Bank Fees 80 749
Licenses and Permits 2,684
Office Supplies 4,879 813
Postage 53
Professional Fees 3,588 5,206
Rent 3,672 3,159
Misc Expenses 6,584 4,198
Property Taxes 3,032 1,397
Utilities 1,429 623
Depreciation Expense 28 28
---------- ----------
Total Indirect Expenses 29,239 20,183
---------- ----------
Net Profit (Loss) from Operations (32,625) (34,287)
Nonoperating Activities
Net Gain on Sale of Investments 229,675 210,245
Option Proceeds 20,014
Dividends 14,646 1,068
Interest 780
Margin Fees and Wire Costs (111) (3,738)
---------- ----------
Net Profit (Loss) from Nonoperating Activities 244,210 228,369
---------- ----------
Total Net Profit (Loss) 211,585 194,082
========== ==========
See the accompanying accountant's auditor's report and notes to the financial
statements which are integraf parts of these financial statements
3
<PAGE>
Shoshone Silver Mining Company
Statement of Cash Flows
Year Ended - December 31, 1999
Year Ended Year Ended
12/31/98 12/31/1999
Sources and Uses - Operating Activities Unaudited
Mining Related Income 44,377
All Other Income 1,883 2,790
Operating Expenses Paid (34,480) (81,426)
---------- ----------
Net Cash Provided (Used) by Operating Activities (32,597) (34,259)
Sources and Uses - Investing Activities
Gain on Sale of Investment Securities 229,675 210,245
Option Proceeds 20,014
Investment Income - Interest and Dividends 14,646 1,848
Margin and Other Investment Expenses (111) (3,738)
Increase in Depletable Assets Basis (144,870)
Increase in Other Investments (316,922) (341,573)
---------- ----------
Net Cash Provided (Used) by Investing Activities (72,712) (258,074)
Sources and Uses - Financing Activities
Sale of Additional Stock 14,472 59,629
Purchase of Treasury Stock (58,733) (7,000)
Increase in Accounts Payable 2,846 50,000
---------- ----------
Net Cash Provided (Used) by Financing Activities (41,415) 102,629
Total Net Cash Provided (Used) (146,724) (189,704)
Cash and Cash Equivilants - Start of Year 656,044 509,320
---------- ----------
Cash and Cash Equivilants - End of Year 509,320 319,616
========== ==========
See the accompanying accountant's auditor's report and notes to the financial
statements which are integraf parts of these financial statements
4
<PAGE>
<TABLE>
Common Additional Retained Treasury
Stock Paid In Earnings Stock Total
<S> <C> <C> <C> <C> <C>
Start of Year 850,737 1,590,125 (172,248) (58,733) 2,209,881
Net Income (Loss) 194,082 194,082
Sales of Additional Stack 52,329 7,300 59,629
Purchase of Treasury Stock (7,000) (7,000)
Other Adjustments 0
---------- ---------- ---------- ---------- ----------
End of Year 903,066 1,597,425 21,834 (65,733) 2,456,592
========== ========== ========== ========== ==========
</TABLE>
See the accompanying accountant's auditor's report and notes to the financial
statements which are integraf parts of these financial statements
5
<PAGE>
Shoshone Silver Mining Company
Notes to the Financial Statements
December 31, 1999
Note 1 - Summary of Significant Accounting Policies:
a. Business Activity - the Company was incorporated under the laws of the
state of Idaho on August 4, 1969, under the name of Sunrise Mining Company
and is engaged in the business of mining. On January 22, 1970, the
Company's name was changed to Shoshone Silver Mining Company. In addition
to mining activities, the Company has become an active trader of stocks and
securities.
b. Basis of Accounting - the financial statements are prepared on the accrual
basis of accounting. Under this method of accounting, revenues are
recognized when earned and expenses when incurred, regardless of the date
actual receipt or payment occurs.
c. Cash and Cash Equivalents - Cash and Cash Equivalents have been defined to
include all cash in bank accounts, investment money management accounts and
stocks and securities held by the company in its stock portfolio, currently
with BB Graham and Company. These stocks and securities are traded
frequently by the Company, and the Company has incurred significant short
gains and losses from these transactions. For the year ended December 31,
1999, the Company had total sales proceeds from stocks and securities of
approximately $ 1,092,979. The net gain realized on these transactions was
approximately $ 210,245, not including proceeds from the sale of options.
d. Investments Stock Portfolio - the investments held by the Company have
been actively traded and the value of the stock portfolio is stated at
mark to market. Thus, the portfolio is valued as of the last day of the
year market prices. These values are provided by BB Graham and Company
on the December 1999 monthly statement. These items have been defined
to be cash equivalents, see paragraph c above.
e. Property, Plant and Equipment - values for the mining properties and
depreciable assets represent acquisition costs, fair market value of common
stock issued in exchange for assets at the time of issue, par value of
common stock issued, or fair market value of assets received.
f. Depreciation - the cost of equipment is capitalized and written off using
the straight line method and accelerated methods over the following
estimated lives.
Building 12-15 Years
Equipment 3-10 Years
g. Other Assets - Other assets include investments in mining operations
and acquisition of various patented and un-patented mining claims and
investments held by the Company, not used for trading, but are being
held for long term investments.
6
<PAGE>
Shoshone Silver Mining Company
Notes to the Financial Statements
December 31, 1999
Note 2 - Mining Operations
a. The Company owns 33 patented and 17 un-patented contiguous lode
mining claims situated in the St Joe Mining District, acquired by the
issuance of 1,500,000 shares of capital stock to Irvin Scheller and
member of his family. The five patented claims were acquired in 1970
from Violet Hanson for $ 1,000 in cash and 100,000 shares of the
Company's stock.
b. The values of the mining properties were restated in the in 1998 to
reflect their cost at the time of acquisition, rather than par value of
stocks. The additional values are recorded as stock values in excess of
par value. The total amount of these adjustments are $ 715,242.
c. The Company has acquired for 150,000 shares, six patented and five
un-patented lode mining claims located in the Lakeview Mining District,
Bonner County, Idaho.
Note 3 - Capital Stock
The Company was originally incorporated for 5,000,000 shares of ten cent
par value stock. The shareholders amended the Articles of Incorporation on
April 1, 1983 and increased the authorized capital stock to 10,000,000
shares of ten cent par value stock. The shareholders again amended the
Articles of Incorporation on April 1, 1998 and increased the authorized
shares to 20,000,000 shares of ten cent par value stock.
Note 4 - Net Operating Loss Carryforward
The Company has a net operating loss carryforward to 1999 from prior years.
These net operating loss carryforwards will, if unused, will expire between
1996 and 2008.
Note 5 - Un-patented Mining Claims
Due to changes in the mining laws in 1995, the Company elected to abandon
some un-patented mining claims which were not considered essential to their
operations or potential operations, rather than incur the costs associated
with holding them. These claims were not carried at significant value and
therefore, were not charged to expenses.
Note 6 - Capital Gains, Losses and Call Options
During the year 1999, the Company actively traded stock and realized net
capital gains of approximately $ 210,245 on the sale of approximately $
1,092,979. In addition, the Company received approximately $ 20,013 in
proceed from various call options sold during the year. During 1999 the
Company did not have any of its various options called. All of the options
expired, thus, the Company received additional income in the amount of the
call options. At the close of 1999, the company had three unexpired
options, and these options also lapsed without being exercised.
Note 7 - Prior Year Information
The information presented in the accompanying financial statements are
unaudited. This information is presented for comparison purposes. Each of
the columns have been labeled "unaudited".
7
<PAGE>
(A-2)
Shoshone Silver Mining Company
Financial Statements
For Six Months Ended June 30, 2000
(With Year Ended December 31, 1999)
For Comparison
<PAGE>
Shoshone Silver Mining Company
Balance Sheet
June 30, 2000
Audited
December 31, 1999 June 30, 2000
----------------- -------------
Current Assets
Cash 59,989 -0-
Investments 259,627 434,158
Inventory 12,732 12,732
---------- ----------
Total Current Assets 332,348 446,890
Depreciable Assets
Property, Plant and Equipment 665,781 665,781
Accumulated Depreciation (586,388) (586,402)
---------- ----------
Net Depreciable Assets 79,393 79,379
Other Assets
Depletable Assets and Mine investments 1,295,298 1,295,298
Other Long-Term Investments 801,183 801,183
---------- ----------
Total other Assets 2,096,481 2,096,481
---------- ----------
Total Assets 2,508,222 2,622,750
========== ==========
Current Liabilities
Accounts Payable 50,000 67,118
Minority Positions 1,630 1,630
---------- ----------
Total Current Liabilities 51,630 68,748
Long Term Liabilities
None -0- -0-
---------- ----------
Total Liabilities 51,630 68,748
Equity
Common Stock, Par Value 10 Cents per share
20,000,000 shares authorized, 9,030,660
and 9,035,660 issued and outstanding 903,066 903,566
Paid in Capital in excess of Par 1,597,425 1,597,925
Treasury Stock (65,733) (65,733)
Retained Earnings 21, 834 118, 244
---------- ----------
Total Equity 2,456,592 2,554,002
---------- ----------
Total Liabilities and Equity 2,508,222 2,622,750
========== ==========
-2-
<PAGE>
Shoshone Silver Mining Company
Income Statement
For Six Months Ended June 30, 2000
Audited
Year Six Months
December 31, 1999 June 30, 2000
----------------- -------------
Gross Receipts
Mining Revenues 44,377 1,000
Transfer Fees and Misc Income 2,790 478
---------- ----------
Total Gross Income 47,167 1,478
Direct Expenses
Direct Mining Related Expenses 53,279 33,650
Equipment Rental 3,992 -
Freight 3,400 -
Contract Labor 1,500 1,000
---------- ----------
Total Direct Expenses 61,271 34,650
---------- ----------
Gross Profit (Loss) (14,104) (33,172)
Indirect Expenses
Auto 1,273 -
Bank Fees 749 230
Licenses and Permits 2,684 79
Office Supplies 813 -
Postage 53 33
Professional Fees 5,206 5,485
Rent 3,159 1,471
Misc Expenses 4,198 1,702
property Taxes 1,397 3,301
Utilities 623 936
Depreciation Expense 28 14
---------- ----------
Total Indirect Expenses 20,183 13,251
---------- ----------
Net Profit (Loss) from operations (34,287) (46,423)
Nonoperating Activities
Net Gain on Sale of Investments 210,245 166,021
Options Proceeds 20,014 13,463
Dividends 1,068 698
Interest 780 690
Margin Fees and Wire Costs (3,738) (419)
---------- ----------
Net Profit (Loss) from Nonoperating
Activities 228,369 180,453
---------- ----------
Total Net Profit (Loss) 194,082 139,030
========== ==========
-3-
<PAGE>
Shoshone Silver Mining Company
Statement of Cash Flows
Six Months Ended June 30, 2000
Audited
December 31, 1999 June 30, 2000
----------------- -------------
Sources and Uses-Operating Activities
Mining Related Income 44,377 1,000
All Other Income 2,790 478
Operating Expenses Paid (81,426) (47,901)
---------- ----------
Net Cash Provided (Used) by Operating
Activities (34,259) (46,423)
Sources and Uses-Investing Activities
Gain on Sale of investment Securities 210,245 165,183
Option Proceeds 20,014 13,463
Investment Income-Interest & Dividends 1,848 1,388
Margin and Investment Expenses (3,738) (419)
Increase in Depletable Assets Basis (144,870) -
Increase in Other Investments (341,573) (166,701)
Received from other Investments - 129,933
---------- ----------
Net Cash Provided (Used) by Investing
Activities (258,074) 142,847
Sources and Uses- Financing Activities
Sale of Additional Stock 59,629 1,000
Purchase of Treasury Stock (7,000) -
Increase in Accounts Payable 50,000 -
---------- ----------
Net Cash Provided (Used) by Financing Activities 102,629 1,000
Total Net Cash Provided (Used) (189,704) 97,424
Cash and Cash Equilavents-Start of Year 509,320 319,616
---------- ----------
Cash and Cash Equivilants-End of Year 319,616 417,040
========== ==========
-4-
<PAGE>
<TABLE>
Shoshone Silver Mining Company
Statement of Changes in Owners Equity
Year Ended -December 31, 1999
And Six Months Ended-June 30, 2000
Common Additional Retained Treasury Total
Stock Paid in Earnings Stock
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Start of Year, 1999 850,737 1,590,125 (172,248) (58,733) 2,209,881
Net Income (Loss) 194,082 194,082
Sales of Additional Stock 52,329 7,300 59,629
Purchase of Treasury Stock (7000) (7,000)
Other Adjustments -0-
---------- ---------- ---------- ---------- ----------
December 31, 1999 903,066 1,597,425 21,834 (65,733) 2,456,592
Six Months Ending June 30, 2000
Net Income (Loss) 134,030 134,030
Issue of Additional Stock 500 500 1,000
Other Adjustments (37,620) (37,620)
---------- ---------- ---------- ---------- ----------
June 30, 2000 903,566 1,597,925 118,244 (65,733) 2,554,002
========== ========== ========== ========== ==========
</TABLE>
-5-
<PAGE>
Shoshone Silver Mining Company
Notes to the Financial Statements
December 31, 1999
Note 1 - Summary of Significant Accounting Policies:
a. Business Activity - the Company was incorporated under the laws of
the state of Idaho on August 4, 1969, under the name of Sunrise
Mining Company and is engaged in the business of raining. On January
22, 1970, the Company's name was changed to Shoshone Silver Mining;
Company. ht addition to mining activities, the Company has become an
active trader of stocks and securities,
b. Basis of Accounting -the financial statements .arc prepared on the
accrual basis of accounting, Under this method of accounting, revenues
are recognized when earned and expenses when incurred, regardless of
the date actual receipt or payment occurs.
c. Cash anal Cash Equivalents - Cash and Cash Equivalents have been
defined to include all cash in bank accounts, investment money
management accounts and stocks and securities held by the company in
its stock portfolio, currently with BB Graham and Company. These
stocks and securities are traded frequently by the Company, and the
Company has incurred significant short gains and losses from these
transactions. For the year ended December 31, 1999, the Company had
total sales proceeds from stocks and securities of approximately $
1,092,979. The; nest gain realized on these transactions was
approximately $ 210,245, not including proceeds from the sale of
options.
d. Investments Stock Portfolio - the investments held by the Company have
been actively traded arid the value of the stock portfolio is stated
at mark to market. Thus, the portfolio is valued as of the last day of
the year market prices. These values are provided by 133E Graham and
Company on the December 1999 monthly statement. These items have been
defined to be cash equivalents, see paragraph c above.
c. Property, Plant and Equipment - values for the mining properties and
depreciable assets represent acquisition costs, fair market value of
common stock issued in exchange for assets at. the time of issue, par
value of common stock issued, or fair market value of assets received.
f. Depreciation - the cost of equipment is capitalized and written off
using the straight line method and accelerated methods over the
following estimated lives.
Building 12-15 Years
Equipment 3-10 Years
g. Other Assets - Other assets include investments in mining operations
and acquisition of various patented and un-patented mining claims and
investments held by the Company not used for trading, but are being
held for long; term investments.
-6-
<PAGE>
Shoshone Silver Mining Company
Notes to the Financial Statements
December 31, 1999
Note 2 - Mining Operations
a. The Company owns five patented and thirty un-patented contiguous lode
mining claims situated in the St Joe Mining; District, acquired by the
issuance of 1,500,000 shares of capital stock to Irvin Scheller and
member of his family. The five paternal claims were acquired in 1970
from Violet Hanson for $ 1,000 in cash and 100,000 shares of the
Company's stock.
h. The values of the mining properties were: restated in the in 1.998 to
reflect their cost at the time of acquisition, rather than par value
of stocks. The additional values are recorded as stock values in
excess of par value. The total amount of these adjustments are $
715,242.
c. The Company has acquire. for 150,000 shares, six patented and five
un-patented lode mining claims located in the Lakeview Mining;
District, Bonner County; Idaho.
Note 3 - Capital Stock
The Company was originally incorporated for 5,000,000 shares of ten cent
par value stock. The shareholders amended the; Articles of Incorporation on
April 1, 19$3 and increased the authorized capital stock to 10,000,000
shares of ten cent par value stock. The shareholders again amended the
Articles of Incorporation on April 1, 1998 and increased the authorized
shares to 20,000,000 shares of teal cent par value stock.
Note 4 - Net Operating; Loss Carryforward
The Company has a not operating; loss carryforward to 1999 from prior
years. These net operating; loss carryforwards will, if unused; will expire
between 1996 and 2008.
Note 5 - Un-patented Mining Claims
Due to changes in the mining; laws in 1995, the Company elected to abandon
un-patented mining claims which were not considered essential to their
operations or potential operations, rather than incur the costs associated
with holding; them. These claims were not carried at significant value and
therefore, were not charged to expenses. '
Note 6 - Capital Gains, Losses and Call Options
During the year 1999, the Company actively traded stock and realized not
capital gains oh approximately $ 210,245 on the sale of approximately $
1,092,979. In addition, the Company received approximately $ 20,013 in
proceed from various call options sold during the year. During 1999 the
Company did not have any of its various options called. All of the options
expired, thus, the Company received additional income in the amount of the
call options. At the close of 1999, the company had three unexpired
options, and these options also lapsed without being; exercised.
<PAGE>
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.
Shoshone Silver Mining Co. Inc.
Date: October 30, 2000 By /s/ James I. Scheller
----------------------------
James I. Scheller, President
