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SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
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FORM 8-K
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported): June 28, 1996
ConSil Corp.
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(Exact name of registrant as specified in its charter)
Idaho
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(State or other jurisdiction of incorporation)
0-4846-3 82-0288840
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(Commission File Number) (IRS Employer Identification No.)
500 - 625 Howe Street
Vancouver, British Columbia CANADA V6C 2T6
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(Address of principal executive offices) (Zip Code)
(208) 769-4100
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(Registrant's Telephone Number)
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Item 5. Other Events.
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On June 28th, 1996, the Registrant entered into that certain Loan
Agreement with Hecla Mining Company ("Hecla"), a copy of which is attached
hereto as Exhibit A, which is incorporated herein by this reference (the "Loan
Agreement"). Hecla owns approximately 78% of the issued and outstanding stock
of Registrant. Under the Loan Agreement Hecla shall provide a line of credit
to Registrant for cash advances not exceeding a total of five hundred thousand
dollars ($500,000), until December 31, 1996. Registrant's performance of the
terms of the Loan Agreement is secured by an assignment to Hecla Mining
Company of Registrant's interest in the Sombrerete Project, a silver-bearing
resource located in the State of Zacatecas, Mexico.
Item 7. Financial Statements, Proforma Financial Information and Exhibits.
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Exhibit A - Loan Agreement dated June 28, 1996.
SIGNATURE
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Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CONSIL CORP.
By /s/ Nathaniel K. Adams
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Name: Nathaniel K. Adams
Title: Secretary
Dated: July 10, 1996
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EXHIBIT INDEX
Exhibit Description
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A Loan Agreement dated June 28, 1996
<PAGE> 1 EXHIBIT A
LOAN AGREEMENT
This Loan Agreement is made and effective this 28th day of
June, 1996, by and between Hecla Mining Company, a Delaware
corporation, whose address is 6500 Mineral Drive, Coeur d'Alene,
Idaho 83814-8788 (hereinafter referred to as "Hecla"), and
ConSil Corp., an Idaho corporation, whose address is 500-625 Howe
Street, Vancouver, British Columbia, V6C 2T6 (hereinafter
referred to as "ConSil").
RECITALS AND DEFINITIONS
WHEREAS, ConSil wishes to borrow certain funds described
below from Hecla, and Hecla wishes to loan certain funds to
ConSil, all on the terms and conditions contained in this Loan
Agreement;
WHEREAS, in order to secure the loan of funds described
herein, ConSil shall cause its wholly-owned Mexican subsidiary,
Minera ConSil, S.A. de C.V. ("Minera ConSil"), to grant to
Hecla's wholly-owned Mexican subsidiary, Minera Hecla, S.A. de
C.V., an assignment of the rights of Minera ConSil in that
certain Letter Agreement dated February 9, 1996, by and between
ConSil Corp. and Grupo Catorce, S.A. de C.V. (hereinafter
referred to as the "Sombrerete Agreement");
NOW, THEREFORE, in consideration of the foregoing and the
following mutual promises, covenants, considerations and
conditions, the parties, intending to be legally bound, do hereby
agree as follows:
AGREEMENT
1. PRINCIPAL AMOUNT OF LOAN; INTEREST; TERM: Until further
notice, and on the condition that ConSil not be in default with
respect to any of the terms of this Loan Agreement, or with
respect to any outstanding note evidencing any advance made
hereunder, Hecla shall make available to ConSil a loan not to
exceed FIVE HUNDRED THOUSAND DOLLARS ($500,000) (hereinafter
referred to as the "Principal Sum"), on which Principal Sum
ConSil shall pay interest thereon from the date of advancement of
such funds, at the prime rate of interest specified in the Wall
Street Journal, plus one and one-half percent (1.5%) per year
until paid, (hereinafter referred to as the "Loan"), which Loan
shall be repaid on demand by Hecla, but in no event later than
December 31, 1996.
2. RESTRICTIONS ON CONSIL. ConSil shall not, without the
prior, express, and written consent and approval from Hecla,
which consent and approval shall be in Hecla's sole and absolute
discretion, do, cause or suffer to be done, on its behalf or by
any of its subsidiary companies, any of the following described
actions:
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(a) Assets; Assign, mortgage, pledge or otherwise convey
any part of ConSil's assets, interests in any real property or
real property rights, agreements, mining claims, mining
concessions or rights with respect thereto.
(b) Indebtedness; Borrow any money, except from Hecla, or
incur any indebtedness, including indebtedness on purchase of
assets, nor guarantee, or indorse or become contingently liable
on any obligation, except in the ordinary course of business, nor
further secure any existing liability as of the date of this
agreement. It is understood and agreed that any individual
advancing money to ConSil in the form of a loan must be willing
to execute a subordination agreement indicated that Hecla has the
preferred position with respect to this indebtedness of ConSil.
Hecla shall provide necessary subordination agreement forms to
ConSil to comply with the foregoing.
(c) Distribution of ConSil's assets; Declare or pay any
dividend upon its outstanding capital stock nor otherwise
distribute any of its assets to any of its shareholders, whether
in purchase or retirement of stock, or otherwise.
(d) Increases in compensation; Increase any of the present
salaries or other compensation of any of its officers or
directors, nor pay any bonus to any employee, except compensation
by grant of stock options to members of the Board of Directors,
subject to (i) approval of such stock option grants in accordance
with the plans governing such grants, (ii) the approval of the
shareholders of ConSil of such stock option plans, and (iii)
approval or qualification pursuant to the rules, laws and
regulations of all regulatory agencies having jurisdiction over
ConSil's activities, and those stock exchanges on which ConSil's
is listed.
(e) Loans or advances; Make any loans or advances to any
of its shareholders, directors or employees.
(f) Change of capital stock; Issue any additional capital
stock or reclassify its presently outstanding capital stock or
enter into any merger, acquisition of assets, or any other
similar transaction or reorganization.
(g) Initiation or expansion of business; Enter into or
initiate any new type of business other than the business being
performed by it as of the effective date of this Loan Agreement
or expand the existing business to include any new properties
other than those being explored by it as of the effective date of
this Loan Agreement.
(h) Hiring new employees; Hire or agree to hire any new
employee at an annual compensation in excess of twenty five
thousand dollars ($25,000).
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3. REPRESENTATIONS AND WARRANTIES: As an additional
inducement to Hecla to make the Loan, ConSil hereby represents
and warrants to Hecla that as of the date hereof, and during the
entire time that any amount shall be owing from ConSil to Hecla:
(a) ConSil is a corporation duly organized and validly
existing under the laws of the state of Idaho.
(b) ConSil is authorized to transact business in all states
and provinces where the nature of its business requires such
authorization.
(c) Minera ConSil is a corporation duly organized and
validly existing under the laws of the nation of Mexico.
(d) Minera ConSil is authorized to transact business in all
states where the nature of its business requires such
authorization.
(e) ConSil owns all of the outstanding capital stock of
Minera ConSil.
(f) Minera ConSil is not in default of, and has not
received any notice of any default pursuant to the terms of the
Sombrerete Agreement or any other material agreement to which it
is a party.
(g) Neither ConSil nor Minera ConSil is in default with
respect to any existing indebtedness, and the making and
performance of this Loan Agreement, the Note, the Assignment and
any other document associated herewith, will not immediately or
with the passage of time, or the giving of notice, or both:
(i) Violate the articles of incorporation or bylaws of
ConSil, or violate any laws or result in a default under any
contract, agreement, or agreement to which ConSil or any
subsidiary of ConSil is a party or by which ConSil or any
subsidiary of ConSil is bound;
(ii) Result in the creation or imposition of any
security interest in, or lien or encumbrance on, any of the
assets of ConSil, except in favor of Hecla.
(h) ConSil has the power and authority to enter into and
perform this Loan Agreement, the Note, the Assignment, and any
other agreement delivered in connection with this Loan Agreement,
and to incur such obligations, and has taken all corporate action
necessary to authorize the execution, delivery, and performance
of this Loan Agreement, the Note, the Assignment, and any other
agreement delivered in connection with this Loan Agreement.
(i) This Loan Agreement, the Note, the Assignment and any
other agreement delivered in connection with this Loan Agreement
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when executed and delivered shall be valid, binding and
enforceable in accordance with their respective terms.
(j) There is no pending order, notice, claim, litigation,
proceeding or investigation against or affecting ConSil or any
subsidiary, whether or not covered by insurance, that would
involve payment in excess of ten thousand dollars ($10,000) or
materially and adversely affect the business or prospects of
ConSil or any subsidiary if adversely determined.
(k) ConSil and its subsidiaries have good and marketable
title to all of their assets, which are not subject to any
security interest, encumbrance, lien, or claim of any third
person except for liens incurred in the ordinary course of the
passage of time such as taxes, and which are not currently
enforceable.
(l) All financial statements, including any schedules and
notes pertaining thereto, have been prepared in accordance with
generally accepted accounting principals consistently applied,
and fully and fairly present the financial condition of ConSil
and its subsidiaries at the dates thereof and the results of
operations for the periods covered thereby, and there have been
no material adverse changes in the consolidated financial
condition or business of ConSil or its subsidiaries from January
1, 1996, to the date hereof.
(m) As of the date of this Loan Agreement, ConSil and its
subsidiaries have no material indebtedness of any nature,
including, but not limited to, liabilities for taxes and any
interest or penalties relating thereto, or any material
indebtedness of any nature not fully reflected and reserved
against ConSil's current financial statements.
(n) ConSil and its subsidiaries have filed all federal,
state and local tax returns and other reports they are required
by law to file prior to the effective date hereof and reports
they are required by law to file prior to the effective date of
this Loan Agreement, and that are material to the conduct of
their respective businesses; have paid or caused to be paid all
taxes, assessments, and other governmental charges which are due
and payable prior to the effective date thereof; and have made
adequate provision for the payment of such taxes, assessments, or
other charges accruing but not yet payable; and borrower has no
knowledge of any deficiency or additional assessment in a
materially important amount in connection with any taxes,
assessments, or charges, not provided for on its books.
(o) Except to the extent that the failure to comply would
not materially interfere with the conduct of the business of
ConSil or any of its subsidiary companies, ConSil and its
subsidiaries have complied and are in compliance with all
applicable laws with respect to the conduct of their respective
businesses and the use,
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maintenance and operation of the real and personal properties
owned or leased by them in the conduct of their respective
businesses.
(p) No representation or warranty by ConSil contained
herein or in any certificate or other document furnished by
ConSil pursuant hereto contains any untrue statement of material
fact or omits to state a material fact necessary to make such
representations or warranties not misleading in light of the
circumstances under which it was made.
(q) All of the representations and warranties set forth in
this Loan Agreement shall survive until all obligations are
satisfied in full.
4. CONDITIONS PRECEDENT: The obligation of Hecla to make
the loan specified herein is subject to the following conditions
precedent:
(a) Documents required for closing; ConSil shall have
delivered to Hecla, prior to the disbursement of the loan, the
following:
(i) A note payable in the form attached hereto as
Exhibit A (herein referred to as the "Note"); and
(ii) An undated, fully-executed assignment of Minera
ConSil's interest in the Sombrerete Agreement in
the form attached hereto as Exhibit B (herein
referred to as the "Assignment").
(b) A certified copy of resolutions of borrower's board of
directors authorizing the execution, delivery and performance of
this Loan Agreement, the note, the assignment of the Sombrerete
Agreement, and each other document to be delivered pursuant to
this Loan Agreement.
(c) All representations and warranties set forth in this
Loan Agreement are true, accurate and correct as of the date of
the loan.
(d) A certificate of ConSil's corporate secretary
certifying that:
(i) the individuals executing this Loan Agreement and
all documents delivered in accordance herewith
were the duly appointed officers of ConSil,
authorized to execute and deliver the same; and
(ii) all representations, warranties and conditions
precedent set forth in this Loan Agreement are
true, accurate, correct and fulfilled as of the
date of the delivery thereof.
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5. ACCELERATION OF INDEBTEDNESS. The Principal Sum and any
interest owing under any indebtedness made and arising under this
Loan Agreement shall immediately become due and payable without
notice, presentment, demand, protest, or notice of protest of any
kind, all of which are expressly waived by ConSil in the event
that:
(a) ConSil, without the prior express and written consent
of Hecla, which consent may be withheld by Hecla in its sole and
absolute discretion, defaults in the performance or observance of
any of the agreements contained in this Loan Agreement;
(b) Any sum payable on account of principal or interest
shall not be paid within ten (10) days after it becomes due and
after notice of default has been given in accordance with this
Loan Agreement;
(c) ConSil makes a general assignment for the benefit of
creditors or files a petition in voluntary bankruptcy or a
petition or answer seeking reorganization of ConSil or a
readjustment of its indebtedness under the federal Bankruptcy
Code, or consents to the appointment of a receiver or trustee of
its properties;
(d) ConSil shall be adjudged bankrupt or insolvent, or a
petition or proceedings for bankruptcy or for reorganization
shall be filed against it and it shall admit the material
allegations, or an order, judgment, or decree shall be made
approving such petition, and such order, judgment or decree shall
not be vacated or stayed within twenty (20) days of its entry, or
a receiver or trustee shall be appointed for ConSil or it
properties, or any part thereof, and remain in possession for
twenty (20) days.
6. DEFAULT. Hecla shall provide in writing to ConSil, by
registered mail, notice of any default or violation of this Loan
Agreement and allow ConSil ten (10) days to take necessary
corrective action or pay any existing indebtedness to Hecla and
remove its then outstanding loan balance.
7. EXECUTION OF NOTES AND ASSIGNMENTS. ConSil shall
execute such notes or other evidences of indebtedness and
assignments of interests in the Sombrerete Agreement as shall be
reasonably required by Hecla.
8. PREPAYMENT. ConSil, without penalty or premium, may
prepay the principal of the Loan in who or, form time to time, in
part, any partial payment to be made in the sum of ten thousand
dollars ($10,000) or an integral multiple thereof.
9. FINANCIAL STATEMENTS. ConSil shall deliver to Hecla
monthly financial statements, which shall include reports
regarding all accounts receivable and projected cash demands.
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10. MODIFICATION. The waiver by Hecla or its consent to
modification of this Loan Agreement in a particular instance
shall not constitute a waiver by Hecla or represent its consent
for any other modifications not distinctly contemplated in each
particular instance.
11. EXPENSES OF HECLA. ConSil, on demand, shall reimburse
Hecla for all expenses, including the reasonable fees and
expenses of legal counsel for Hecla, incurred by Hecla in
connection with the preparation, administration, amendment,
modification or enforcement of this Loan Agreement and the
collateral documents, and the collection or attempted collection
of the note, or the registration or attempted registration of the
Assignment of the Sombrerete Agreement.
12. WAIVER AND RELEASE BY CONSIL. To the maximum extent
permitted by applicable laws, ConSil and each subsidiary of
ConSil:
(a) Waive (i) protest of all commercial paper at any time
held by Hecla on which ConSil or any subsidiary is in any way
liable; and (ii) notice of acceleration and of intention to
accelerate, and notice and opportunity to be heard, after
acceleration in the manner provided in this Loan Agreement,
before exercised by Hecla of the remedies of self-help, set off,
or of other summary procedures committed by any applicable laws
or by any agreement with ConSil or any subsidiary, and, except
when required hereby or by any applicable laws, notice of any
other action taken by Hecla; and
(b) Release Hecla, its officers, directors, shareholders
and employees form all claims for loss or damage caused by any
act or omission on the part of any of them, except willful
misconduct.
13. GOVERNING LAW. This Loan Agreement shall be governed
by, construed and enforced in accordance with the laws of the
State of Idaho.
14. BINDING EFFECT. This Loan Agreement shall inure to the
benefit of, and shall be binding on, the respective successors
and permitted assigns of the parties.
15. ASSIGNMENT. The rights of ConSil under this Loan
Agreement are personal to ConSil, and ConSil may not assign or
transfer any of its rights or obligations under this Loan
Agreement without the prior, express and written consent of
Hecla, which consent shall be in Hecla's sole and absolute
discretion, and any purported assignment or transfer shall be
void.
16. ENTIRE AGREEMENT. This Loan Agreement shall constitute
the entire agreement between the parties with respect to the
transactions contemplated herein, and any prior understanding or
representation of any kind preceding the date of this Loan
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Agreement shall not be binding on either party except to the
extent incorporated in this Loan Agreement.
17. MODIFICATION OF LOAN AGREEMENT. Any modification of
this Loan Agreement or additional obligation assumed by either
party in connection with this Loan Agreement shall not be binding
unless evidenced in writing and signed by each party's duly
authorized representative.
18. ATTONREY'S FEES. In the event of any claim, suit or
action is filed or brought in relation to this Loan Agreement,
the unsuccessful party in the action shall pay to the successful
party, in addition to all sums which either party may be called
on to pay, a reasonable sum for the successful party's attorney's
fees and costs of court.
19. PARAGRAPH HEADINGS. The titles to the paragraphs of
this Loan Agreement are solely for the convenience of the parties
and shall not be used to explain, modify, simplify or aid in the
interpretation of the provisions of this Loan Agreement.
20. SEVERABILITY. If any provision of this Loan Agreement
shall be held invalid under any applicable laws, such invalidity
shall not affect any other provision of this Loan Agreement which
can be given effect without the invalid provision, and, to this
end, the provisions of this Loan Agreement are severable.
21. CURRENCY. All references to currency in this Loan
Agreement shall be deemed to refer to legal tender of the United
States of America.
22. COUNTERPARTS. This Loan Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute but one
and the same instrument.
CONSIL CORP. HECLA MINING COMPANY
By /s/ Ralph R. Noyes By /s/ John P. Stilwell
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Ralph R. Noyes John P. Stilwell
Chairman Vice President
ATTEST: ATTEST:
/s/ Nathaniel K. Adams /s/ Michael B. White
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Nathaniel K. Adams Michael B. White
Secretary Secretary
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STATE OF IDAHO )
) ss.
COUNTY OF KOOTENAI )
On this 28th day of June in the year of 1996, before me, the
undersigned, a Notary Public in and for the State of Idaho,
personally appeared John P. Stilwell and Michael B. White, known
or identified to me to be the Vice President and the Secretary,
respectively, of HECLA MINING COMPANY, the officers who executed
the instrument on behalf of said corporation, and acknowledged to
me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my notarial seal the day and year in this certificate first above
written.
/s/ Narda Lee Anthony
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Notary Public
Residing at Athol, Idaho
My Commission Expires 8/5/2000
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STATE OF IDAHO )
) ss.
COUNTY OF KOOTENAI )
On this 28th day of June in the year of 1996, before me, the
undersigned, a Notary Public in and for the State of Idaho,
personally appeared Ralph R. Noyes and Nathaniel K. Adams, known
or identified to me to be the Chairman and the Secretary,
respectively, of ConSil Corp., the officers who executed the
instrument on behalf of said corporation, and acknowledged to me
that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my notarial seal the day and year in this certificate first above
written.
/s/ Narda Lee Anthony
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Notary Public
Residing at Athol, Idaho
My Commission Expires 8/5/2000
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