<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _______________
Commission file number 0-4846-3
-----------------------------------------------
CONSIL CORP.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Idaho 82-0288840
- ---------------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 500, 625 Howe Street
Vancouver, British Columbia, Canada V6C 2T6
- ---------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
604-331-0844
- ----------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for at least the
past 90 days. Yes XX . No .
---- ----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding April 30, 1996
- --------------------------------------- --------------------------
Common stock, par value $0.10 per share 9,449,757 shares
<PAGE> 2
CONSIL CORP.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
I N D E X
PAGE
PART I. - Financial Information
Item 1 - Consolidated Balance Sheets - March 31,
1996 and December 31, 1995 3
- Consolidated Statements of Operations and
Accumulated Deficit - Three Months Ended
March 31, 1996 and 1995 4
- Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995 5
- Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. - Other Information
Item 1 - Legal Proceedings 10
Item 6 - Exhibits and Reports on Form 8-K 10
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<PAGE> 3
PART I - FINANCIAL INFORMATION
CONSIL CORP.
Consolidated Balance Sheets (Unaudited)
(U.S. Dollars)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 151,676 $ 588,787
Accounts receivable 3,829 1,410
Income tax refund receivable 71,163 46,344
Deferred income taxes 33,000 33,000
Other current assets 18,263 7,957
----------- ----------
Total current assets 277,931 677,498
----------- ----------
Property, plant and equipment:
Plant, equipment and facilities 19,445 5,434
Less - Accumulated depreciation (1,220) (494)
----------- ----------
18,225 4,940
Deferred income taxes 74,351 66,000
----------- ----------
Total assets $ 370,507 $ 748,438
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - Hecla Mining Company $ 37,449 $ 279,598
Accounts payable and accrued expenses 3,755 3,069
----------- ----------
Total current liabilities 41,204 282,667
----------- ----------
Stockholders' equity:
Preferred stock; 1996 and 1995 - $0.25 par value;
authorized, 10,000,000 shares; issued and
outstanding, none
Common stock; $0.10 par value; authorized,
20,000,000 shares; issued 9,455,689 shares 945,569 945,569
Discount on common stock (190,709) (190,709)
Capital surplus 1,356,815 1,356,815
Accumulated deficit (1,778,911) (1,645,880)
Less: Common stock reacquired at cost; 1996 -
5,932 shares; 1995 - 6 shares (3,461) (24)
----------- ----------
Total stockholders' equity 329,303 465,771
----------- ----------
Total liabilities and stockholders' equity $ 370,507 $ 748,438
=========== ==========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
-3-
<PAGE> 4
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
Consolidated Statements of Operations and Accumulated Deficit (Unaudited)
(U.S. Dollars)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, March 31,
1996 1995
----------- -----------
<S> <C> <C>
Revenue:
Rental income $ - - $ 1,500
Transfer fees 152 196
Interest 2,711 9,673
Miscellaneous income - - 520
----------- -----------
Total revenue 2,863 11,889
----------- -----------
Expenses:
General and administrative expenses 79,371 22,094
Exploration 99,421 - -
Depreciation 726 - -
----------- -----------
Total expenses 179,518 22,094
----------- -----------
Loss before income tax benefit (176,655) (10,205)
Income tax benefit (43,624) (1,551)
----------- -----------
Net loss (133,031) (8,654)
Accumulated deficit at beginning of period (1,645,880) (1,131,149)
----------- -----------
Accumulated deficit at end of period $(1,778,911) $(1,139,803)
=========== ===========
Net loss per share of common stock $ (0.01) $ (Nil)
=========== ===========
Cash dividends per share $ - - $ - -
=========== ===========
Weighted average number of common
shares outstanding 9,452,772 8,205,683
========= =========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
-4-
<PAGE> 5
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
Consolidated Statements of Cash Flows (Unaudited)
(U.S. Dollars)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31,
1996 1995
---------- ----------
<S> <C> <C>
Operating activities:
Net loss $ (133,031) $ (8,654)
Noncash elements included in net loss:
Depreciation 726 - -
Deferred income tax benefit (8,351) - -
Change in:
Accounts receivable (2,419) (500)
Income tax refund receivable (24,819) (1,581)
Other current assets (10,306) (2,611)
Accounts payable and accrued expenses (241,463) 9,120
---------- ---------
Net cash used by operating activities (419,663) (4,226)
---------- ---------
Investing activities:
Additions to property, plant and equipment (14,011) - -
Acquisition of treasury stock (3,437) - -
---------- ---------
Net cash used by investing activities (17,448) - -
---------- ---------
Net decrease in cash and cash equivalents (437,111) (4,226)
Cash and cash equivalents at beginning of period 588,787 753,486
---------- ---------
Cash and cash equivalents at end of period $ 151,676 $ 749,260
========== =========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
-5-
<PAGE> 6
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The notes to the consolidated financial statements as of December 31,
1995, as set forth in ConSil Corp.'s (the Company or ConSil) 1995
Annual Report on Form 10-K, substantially apply to these interim
consolidated financial statements and are not repeated here. All
amounts are in U.S. dollars unless otherwise indicated.
Note 2. The financial information given in the accompanying unaudited interim
consolidated financial statements reflects all adjustments which are,
in the opinion of management, necessary to a fair statement of the
results for the interim periods reported. All such adjustments are of
a normal recurring nature. All financial statements presented herein
are unaudited. However, the balance sheet as of December 31, 1995,
was derived from the audited consolidated balance sheet described in
Note 1 above. Certain consolidated financial statement amounts have
been reclassified to conform to the 1996 presentation. These
reclassifications had no effect on the net loss or accumulated deficit
as previously reported.
Note 3. The components of the income tax benefit for the three months ended
March 31, 1996 and 1995 are as follows (in thousands):
1996 1995
-------- --------
Current:
State income tax benefit $ (7,252) $ - -
Federal income tax benefit (28,021) (1,551)
-------- --------
Total current benefit (35,273) (1,551)
Deferred benefit (8,351) - -
-------- --------
Total $(43,624) $ (1,551)
======== ========
Note 4. At March 31, 1996, the Company had 9,449,757 common shares outstanding
of which Hecla Mining Company (Hecla, the majority shareholder of the
Company) owned 7,418,300 shares or 78.503% of the outstanding shares.
Pursuant to an agreement between the Company's wholly owned
subsidiary, Minera ConSil, S.A de C.V. (Minera ConSil) and Hecla
Mining Company's wholly owned subsidiary, Minera Hecla, S.A. de C.V.
(Minera Hecla), the Company recorded first quarter 1996 exploration
expense totaling $88,049 in connection with services performed by
Minera
-6-
<PAGE> 7
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
Hecla under the direction of the management of Minera ConSil at the
Ojo Caliente project.
In addition to the above transactions, the Company incurred general
and administrative expenses charged by Hecla of $8,494 and $3,695 in
the first quarters of 1996 an 1995, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Except for the historical information contained herein, the matters
discussed that are forward-looking statements involve risks and
uncertainties, including the timely development of future projects
(such as the Ojo Caliente and Sombrerete projects), the impact of
metals prices, changing market conditions and regulatory environment,
and other risks detailed from time to time in the Company's Form 10-K
and Form 10-Qs filed with the Securities and Exchange Commission.
Actual results may differ materially from those projected. Forward-
looking statements included herein represent the Company's judgment as
of the date of this filing. The Company disclaims, however, any
intent or obligation to update these forward-looking statements.
The Company incurred a net loss of $133,031, or $0.01 per share, for
the quarter ended March 31, 1996, compared to a net loss of $8,654 for
the quarter ended March 31, 1995. The increase in the net loss was
due to a $157,424 increase in expenses consisting primarily of (1)
$99,421 for exploration expense, principally for the Ojo Caliente
exploration project, and (2) $57,277 for general and administrative
expenses, partly offset by a $42,073 increase in the income tax
benefit resulting from the utilization of net operating losses.
As of March 31, 1996, assets totaled $370,507 and shareholders' equity
totaled $329,303. Cash and cash equivalents decreased from $588,787
at December 31, 1995 to $151,676 at March 31, 1996. Operating
activities for the first three months of 1996 required $419,663
primarily due to (1) decreased accounts payable principally due to
payments to Hecla and Minera Hecla ($241,463); (2) the net loss for
the period after noncash elements included in the net loss ($140,646);
(3)
-7-
<PAGE> 8
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
increased income tax refund receivable ($24,819); and (4) increased
other current assets ($10,306).
The Company's investing activities required cash of $17,448 in the
first three months of 1996 due to (1) additions to property, plant and
equipment ($14,011) and (2) the acquisition of treasury stock
($3,437).
Working capital decreased from $394,831 at December 31, 1995 to
$236,727 at March 31, 1996. The decrease in working capital was
primarily the result of the decline in cash and cash equivalents, as
previously discussed, partially offset by a $241,463 reduction in
current liabilities.
The Company completed its preliminary investigation of the Sombrerete
silver mine, and on May 13, 1996, informed Grupo Catorce, S.A. de
C.V., that it intends to exercise its right to enter into an option to
purchase the property. The option agreement will require the Company,
on the signing of the agreement, to pay Grupo Catorce, S.A. de C.V.
$4,000 per month for care and maintenance of the property. During the
option period, the Company can exercise its option to purchase the
property for $1 million payable over a three-year period with $100,000
at the end of each of the first and second year following the
commencement of the option period and $800,000 on the exercise of the
option. The option can be extended for up to five years with the
payment of an additional $150,000 preproduction royalty for each year
the option is extended, which preproduction royalties are recoupable
from the Net Smelter Returns (NSR) Royalty discussed below. ConSil's
cumulative minimum work commitments are $200,000 for the first six
months following commencement of the option period, $500,000 within 12
months and $1,500,000 within 24 months, plus $200,000 in exploration
work during any option extension year. Grupo Catorce will retain a 4%
NSR in all of the project property, which the Company can reduce to a
2% NSR by paying $1 million to Grupo Catorce. The purchase would
include certain plant and equipment assets, encompassing a 400 tons
per day flotation mill, two operating shafts and related mining
equipment and infrastructure. If the property proves economically
viable, management intends to put the mine back into production.
However, there can be no assurances this will occur.
-8-
<PAGE> 9
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
The Company's exploration strategy is to focus its efforts on the Ojo
Caliente and Sombrerete projects in Mexico. Exploration expenditures
for the balance of 1996 are estimated to be approximately $1.2 million
to $1.6 million.
The Company intends to finance planned expenditures through a
combination of (1) existing cash and cash equivalents and (2) other
financing arrangements which management is investigating. Other
financing arrangements that management is investigating include the
issuance of common or preferred stock or obtaining a loan from Hecla
Mining Company, a major shareholder of the Company. However, there
are no assurances that these alternatives will be completed nor that
management will be successful in raising additional funds.
-9-
<PAGE> 10
PART II - OTHER INFORMATION
CONSIL CORP.
ITEM 1. LEGAL PROCEEDINGS
There are no pending legal proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
Report on Form 8-K dated February 13, 1996, related to the option
to purchase the Sombrerete silver mine.
Items 2, 3, 4 and 5 of Part II are omitted from this report as inapplicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the under-
signed thereunto duly authorized.
CONSIL CORP.
------------------------------------
(Registrant)
Date: May 15, 1996 By /s/ Gerald G. Carlson
---------------------------------
Gerald G. Carlson, President
Date: May 15, 1996 By /s/ Stanley E. Hilbert
---------------------------------
Stanley E. Hilbert, Principal
Accounting Officer
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 151,676
<SECURITIES> 0
<RECEIVABLES> 74,992
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 277,931
<PP&E> 19,445
<DEPRECIATION> (1,220)
<TOTAL-ASSETS> 370,507
<CURRENT-LIABILITIES> 41,204
<BONDS> 0
0
0
<COMMON> 945,569
<OTHER-SE> (616,266)
<TOTAL-LIABILITY-AND-EQUITY> 370,507
<SALES> 0
<TOTAL-REVENUES> 2,863
<CGS> 0
<TOTAL-COSTS> 179,518
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (176,655)
<INCOME-TAX> 43,624
<INCOME-CONTINUING> (133,031)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (133,031)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> 0
</TABLE>
