U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
OMB Approval
OMB Number:xxxx-xxxx
Expires: Approval Pending
Estimated Average Burden Hours Per Response: 1.0
(Mark One)
x Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997
Transition report under Section 13 or 15(d) of the
Exchange Act
For the transition period from to
Commission File Number 1-1761
CHIEF CONSOLIDATED MINING COMPANY
(Exact name of Small Business Issuer as Specified in Its
Charter)
Arizona 87-0122295
(State if other jurisdiction of incorporation or
organization)(I.R.S. Employer ID. No.)
500 Fifth Avenue, Suite 1021, New York, NY 10110-1099
(Address of Principal Executive Offices)
212-354-4044
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15 (d) of the Securities and
Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such
reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
6,050,609
Number of shares of Common Stock, par value $.50,
outstanding September 30, 1997
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements.
CHIEF CONSOLIDATED MINING COMPANY
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
September
30, 1997
(Unaudited)
Current Assets:
Cash $
53,134
U.S. treasury bills (at cost which
approximates market value)
321,293
Accounts receivable
16,578
Other current assets
39,800
Total Current Assets
430,805
Investments in Affiliates:
Tintic Utah Metals LLC
3,975,873
Other entities
79,961
Advances
25,150
Total Investments
4,080,984
Property, Plant and Equipment:
Mining claims and properties
2,421,839
Machinery and equipment
61,844
Accumulated depletion and
depreciation
(853,927)
Net Property, Plant and Equipment
1,629,756
Other Assets
18,924
$
6,160,469
=========
See Notes to Condensed Consolidated Financial Statements.
CHIEF CONSOLIDATED MINING COMPANY
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, 1997
(Unaudited)
Current Liabilities:
Accounts payable and accrued liabilities
$ 29,154
Minority Interest
42,029
Shareholders' Equity:
Preferred stock, authorized 1,500,000
shares of $.50 par value; issued and outstanding
5,200 shares.
2,600
Common stock, authorized 20,000,000
shares of $.50 par value; issued and outstanding
6,050,609 shares;
3,025,305
Additional paid-in capital
11,773,194
Deferred compensation
(27,339)
Notes receivable from shareholders
(87,500)
Accumulated deficit
(8,596,974)
Total shareholders' equity
6,089,286
$ 6,160,469
=========
See Notes to Condensed Consolidated
Financial Statements.
CHIEF CONSOLIDATED MINING COMPANY
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the Three Months Ended
For the Nine Months Ended
Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1997
Sept. 30, 1996
Revenues:
Sale of real estate $30,620 $ -
$37,690 $ -
Interest 6,224 11,000 18,226
64,461
Other income 2,550 20,781 8,249
26,189
Total revenues 39,394 31,781 64,165
90,650
Expenses:
Mining properties costs &
exploration costs 39,358
268,512 225,452 763,092 General &
administrative 140,472 138,607 350,108
474,849 Taxes other than income taxes 8,225
5,207 20,535 29,455
Total expense 188,055
412,326 596,095 1,267,396
Net Loss $(148,661) $(380,545)
$(531,930) $(1,176,746)
======= =========
======== ========
Net loss per common share $(.02) $(.06)
$(.09) $(.20)
======== =========
======== =========
Weighted average common
shares outstanding 6,050,609 5,988,109
6,016,029 5,911,186
========= ======== ========
========
See Notes to Condensed Consolidated Financial Statements.
CHIEF CONSOLIDATED MINING COMPANY
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the
nine months ended
Sept. 30, 1997
Sept. 30, 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (531,930)
$(1,176,746)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 13,350
15,147 Amortization of deferred
compensation 18,750
18,750
Change in Assets and Liabilities:
Decrease (increase) in accounts receivable
(13,587) 15,437
Increase in other current assets -
( 994)
Decrease (increase) in other assets
(10,451) 4,219
Decrease in accounts payable
and accrued liabilities
(10,109) (174,419)
Net cash used in operating activities
(533,977) (1,298,606)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in U.S. treasury bills, net
299,921 1,726,702
Mining property development costs
and acquisitions of machinery and equipment
(2,060) (1,051,917)
Increase in investments and advances to affiliates
- - (4,000)
Net cash provided by investing activities
297,861 670,785
CASH FLOWS FROM FINANCING ACTIVITIES:
525,000
Net increase (decrease) in cash
1,384 (102,821)
Cash at beginning of period 52,250
160,045
Cash at end of period
$53,634 $57,224
========
========
See Notes to Condensed Consolidated Financial Statements.
CHIEF CONSOLIDATED MINING COMPANY
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements
included herein have been prepared by registrant, without
audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations, although registrant believes the
following disclosures are adequate to make the information
presented not misleading. In the opinion of management, all
adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been
included. Results of operations for interim periods are not
necessarily indicative of results for the full year. These
condensed financial statements and notes thereto should be
read in conjunction with registrant's financial statements
and notes thereto, included in the registrant's Form 10-KSB
for the year ended December 31, 1996. See "Item 2.
Management's Discussion and Analysis or Plan of Operation"
for current information concerning Tintic Utah Metals LLC.
Acquisition of South Standard Mining Company
Registrant's condensed consolidated financial statements
reflect the acquisition of South Standard Mining Company
effective June 28, 1996 which was accounted for under the
pooling-of-interests method of accounting. Accordingly, the
accompanying financial statements reflect the combined
financial position and results of operations for both
entities for all periods presented.
Tintic Utah Metals LLC Joint Venture
On July 17, 1996, registrant entered into a joint venture
agreement with Akiko Gold Resources, Ltd. ("Akiko") and a
wholly owned subsidiary of Korea Zinc Co., Ltd. ("Korea
Zinc") and formed Tintic Utah Metals LLC ("Tintic"). In
connection with this transaction, registrant transferred
approximately 9,000 acres of its mining claims, properties,
vehicles and machinery with historical net book values on
that date of approximately $3,975,000 to Tintic. The
historical cost bases of the properties contributed have
been classified in the September 30, 1997 balance sheet as
investment in affiliates: Tintic Utah Metals LLC. No gain
recognition or step-up in basis resulted from this
transaction. The investment in Tintic is being accounted
for under the equity method of accounting as registrant
owned 50% of Tintic at December 31, 1996 and 75% of Tintic
September 30, 1997. Under the provisions of the joint
venture Operating Agreement, losses are allocated to the
members based upon the use of assets that generated the
losses. Substantially all losses of the joint venture
through September 30, 1997 are attributable to the use of
cash contributed by Korea Zinc, Ltd. Accordingly, the
accompanying condensed consolidated financial statements do
not reflect any losses from the joint venture.
In connection with registrant's increase in ownership to 75%
of Tintic on October 2, 1997 (See "Item 2, Management's
Discussion and Analysis or Plan of Operation"), the
investment in Tintic will be accounted for as a majority
owned consolidated subsidiary as of that date.
Rehabilitation Costs Capitalized
Registrant has capitalized $381,355 related to the
rehabilitation of its Chief Number 2 shaft located on
registrant's property and related buildings and equipment as
of September 30, 1997. All underground drilling and related
costs have been expensed as exploration costs.
Recent Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board
released Statement of Financial Accounting Standards No. 128
"Earnings Per Share" (SFAS No.128). This statements
specifies the computation, presentation, and disclosure
requirements for earnings per share (EPS) for financial
statements issued for all periods ending after December 15,
1997. SFAS No.128 simplifies the standards for computing
EPS previously found in APB Opinion No. 15 and replaces the
presentation of Primary EPS and Fully Diluted EPS. When the
Company incurs a loss, common stock equivalents are not
included in the calculation of the weighted average number
of shares outstanding as they would be anti-dilutive.
Accordingly, the adoption of SFAS No.128 is not expected to
have a significant impact on the Company's calculation of
net loss per common share.
Item 2. Management's Discussion and Analysis or Plan of
Operation.
(A) PLAN OF OPERATION.
Registrant hereby incorporates by reference "Item 6.
Management's Discussion and Analysis or Plan of Operation -
(a) Plan of Operation. " and "Item 1. Description of
Business." contained in registrant's Annual Report dated
March 28, 1997 on Form 10-KSB for the fiscal year ended
December 31, 1996 (hereinafter "1996 Form 10-KSB".)
See "Item 1. Description of Business - Operating Agreement -
Capital Contributions - Initial Capital Contributions" of
1996 Form 10-KSB for information concerning Korea Zinc's and
Akiko's obligations to each pay $3,000,000 to Tintic Utah
Metals LLC ("Tintic") as its initial capital contribution.
Korea Zinc paid its full $3,000,000 initial capital
contribution and earned a vested 25% membership interest in
Tintic. On August 15, 1997 Akiko failed to pay its initial
$1,000,000 installment due on account of its capital
contribution obligation. As a result of Akiko's failure to
pay, Korea Zinc had a right under the Operating Agreement,
as amended on March 11, 1997, to increase its membership
interest by 8-1/3% by contributing an additional $1,000,000
to the capital of Tintic by October 2, 1997. Korea Zinc did
not make such payment. As a result, registrant's vested
membership interest increased to 75%. Korea Zinc's
membership interest is now fixed at 25% and Akiko no longer
has the right to acquire any membership interest in Tintic.
RESULTS OF OPERATION:
Registrant had no revenues from mining operations during the
year 1996 or during the first nine months of 1997.
Registrant had income from sales of surface real estate of
$37,690 during the first nine months of 1997 of which
$30,620 was sold during the third quarter of 1997. No
surface real estate was sold during the first nine months of
1996.
Registrant's net loss for the nine months ended September
30, 1997 as compared to Registrant's net loss for the nine
months ended September 30, 1996 decreased by $644,816.
Registrant's net loss for the three months ended September
30, 1997 as compared to registrant's net loss for the three
months ended September 30, 1996 decreased by $231,884. The
decrease in net loss for both periods resulted primarily
from the transfer of the financial responsibility for
rehabilitation and exploration activities on its East Tintic
operational area properties in Utah to Tintic Utah Metals
LLC, and the completion of the drilling program on
Registrant's Main Tintic District properties in the second
quarter of 1997.
Registrant expects to continue funding its operating
overhead for the balance of 1997 and the first nine months
of 1998 utilizing income from sales of surface real estate
and other sources, in addition to its cash and U.S. Treasury
Bills on hand and, if required, through the private
placement of its common shares.
Registrant anticipates that during the remainder of 1997, it
will continue its efforts to further the development of the
Trixie Mine and Main District Mines on its own or by
contributing it to Tintic Utah Metals LLC pursuant to the
terms of the operating agreement, or by seeking a joint
venture partner. In addition, registrant will continue to
work with Tintic Utah Metals LLC on the development of the
Burgin Mine.
Registrant, based on increasing interest in its buildable
real estate holdings in Utah, will continue to pursue the
possibility of real estate sales or joint venture
development of its real estate in areas that are suitable
for residential or commercial building.
This report, including registrant's Form 10-KSB for the year
ended December 31, 1996 incorporated in this Report by
reference, contains forward-looking information and
therefore it necessarily involves risks and uncertainties.
Factors that could cause actual events to differ materially
from these forward-looking statements include, but are not
limited to, the following: Tintic Utah Metal's ability to
obtain approval of the permitting application for the Burgin
Mine by the Utah Division of Water Quality; obtaining of an
acceptable feasibility study; and Tintic Utah Metal's
ability to obtain financing to fund a mining operation at
the Burgin Mine. These and other risks are described in the
Company's filings with the Securities and Exchange
Commission, including the registrant's Annual Report on Form
10-KSB for the year ended December 31, 1996.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant had duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
CHIEF CONSOLIDATED MINING COMPANY
(Registrant)
November 13, 1997 /s/LEONARD WEITZ
(Signature and Title)
Leonard Weitz
Chairman of the Board of Directors, and
Principal Executive Officer
November 13, 1997 /s/EDWARD R. SCHWARTZ
(Signature and Title)
Edward R. Schwartz
Director, Treasurer,
Principal Financial Officer and
Principal Accounting Officer
