<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 SEPTEMBER 30, 1997
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.)
6500 Mineral Drive
Coeur d'Alene, Idaho 83815-8788
- ------------------------------------------ ---------------------
(Address of principal executive offices) (Zip Code)
208-769-4100
- -------------------------------------------------------------------
(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 September 30, 1997
- ------------------------------ ------------------------------
Common stock, no par value 9,449,757 shares
<PAGE> 2
CONSIL CORP.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
I N D E X
---------
Page
----
PART I. - Financial Information
Item l - Consolidated Balance Sheets -
September 30, 1997 and December 31, 1996 3
- Consolidated Statements of Operations and
Accumulated Deficit - Three Months and Nine
Months Ended September 30, 1997 and 1996 4
- Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1997
and 1996 5
- Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. - Other Information
Item 1 - Legal Proceedings 12
Item 6 - Exhibits and Reports on Form 8-K 12
<PAGE> 3
PART I - FINANCIAL INFORMATION
CONSIL CORP.
Consolidated Balance Sheets (Unaudited)
(U.S. Dollars)
-----------
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 49,900 $ 120,216
Accounts receivable - - 4,185
Other receivables 64,274 66,446
Income tax refund receivable 23,253 210,816
Prepaid and deferred expenses - - 3,022
---------- ----------
Total current assets 137,427 404,685
---------- ----------
Equipment (net of accumulated
depreciation of $6,241 in 1996) - - 38,603
Deferred stock offering costs - - 29,682
---------- ----------
Total assets $ 137,427 $ 472,970
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable - Hecla Mining Company $ 297,356 $ 362,802
Accounts payable - trade - - 2,683
Accrued liabilities 22,005 40,261
Accrued interest payable -
Hecla Mining Company 59,531 17,901
Note payable - Hecla Mining Company 700,000 500,000
---------- ----------
Total current liabilities 1,078,892 923,647
---------- ----------
Stockholders' deficit:
Preferred stock; $0.25 par value; authorized,
10,000,000 shares; issued and outstanding, none - - - -
Common stock; 1997 - no par value; 1996 - $0.10
par value; authorized: 1997 - 100,000,000 shares;
1996 - 20,000,000 shares; issued 9,455,689 shares 2,111,675 945,569
Discount on common stock - - (190,709)
Capital surplus - - 1,356,815
Accumulated deficit (3,049,679) (2,558,891)
Less: Common stock reacquired at cost;
1997 and 1996 - 5,932 shares (3,461) (3,461)
---------- ----------
Total stockholders' deficit (941,465) (450,677)
---------- ----------
Total liabilities and stockholders'
deficit $ 137,427 $ 472,970
========== ==========
</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 Nine Months Ended
--------------------------- ---------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue:
Transfer fees $ - - $ - - $ - - $ 152
Interest 71 186 207 3,418
------------ ------------ ------------ ------------
71 186 207 3,570
------------ ------------ ------------ ------------
Expenses:
General and administrative 120,177 102,886 337,066 266,272
Exploration and acquisition 54,596 292,648 106,646 476,852
Depreciation 1,014 1,528 4,495 3,782
Interest 14,979 5,442 41,630 5,442
Loss on sale of equipment - - - - 1,158 - -
------------ ------------ ------------ ------------
190,766 402,504 490,995 752,348
------------ ------------ ------------ ------------
Loss before income tax benefit (190,695) (402,318) (490,788) (748,778)
Income tax benefit - - 25,625 - - 101,110
------------ ------------ ------------ ------------
Net loss (190,695) (376,693) (490,788) (647,668)
Accumulated deficit at
beginning of period (2,858,984) (1,916,855) (2,558,891) (1,645,880)
------------ ------------ ------------ ------------
Accumulated deficit at
end of period $ (3,049,679) $ (2,293,548) $ (3,049,679) $ (2,293,548)
============ ============ ============ ============
Net loss per share of
common stock $ (0.02) $ (0.04) $ (0.05) $ (0.07)
============ ============ ============ ============
Cash dividends per share $ - - $ - - $ - - $ - -
============ ============ ============ ============
Weighted average number of
common shares outstanding 9,449,757 9,449,757 9,449,757 9,450,970
============ ============ ============ ============
</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>
Nine Months Ended
------------------------------
September 30, September 30,
1997 1996
------------- -------------
<S> <C> <C>
Operating activities:
Net loss $ (490,788) $ (647,668)
Noncash elements included in net loss:
Depreciation 4,495 3,782
Deferred income tax provision - - 13,381
Prepaid and deferred legal and
financing costs expensed 32,704 - -
Loss on sale of equipment 1,158 - -
Change in:
Accounts and other receivables 6,357 (4,054)
Income tax refund receivable 187,563 (78,853)
Accounts payable and accrued
liabilities (71,731) (81,468)
Accrued interest payable 41,630 - -
Other current assets - - (24,965)
------------ ------------
Net cash used by operating activities (288,612) (819,845)
Investing activities: ------------ ------------
Proceeds from sale of equipment 18,296 - -
Purchase of property, plant
& equipment - - (23,660)
Net cash provided (used) ------------ ------------
by investing activities 18,296 (23,660)
Financing activities: ------------ ------------
Borrowing on Hecla Note Payable 369,699 500,000
Repayments on Hecla Note Payable (169,699) - -
Acquisition of treasury stock - - (3,437)
Net cash provided by financing ------------ ------------
activities 200,000 496,563
Net decrease in cash ------------ ------------
and cash equivalents (70,316) (346,942)
Cash and cash equivalents at
beginning of period 120,216 588,787
Cash and cash equivalents at ------------ ------------
end of period $ 49,900 $ 241,845
============ ============
</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, 1996, as set forth in ConSil Corp.'s (the Company
or ConSil) 1996 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 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, 1996, 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 1997 presentation. These
reclassifications have no effect on the net loss or
accumulated deficit as previously reported.
Note 3. The components of the income tax benefit for the nine months
ended September 30, 1996 are as follows (in thousands):
Current:
State income tax benefit $ 28,970
Federal income tax benefit 85,521
--------
Total current benefit 114,491
Deferred provision (13,381)
--------
Total $101,110
========
Note 4. At September 30, 1997, the Company had 9,449,757 common shares
outstanding of which Hecla Mining Company (Hecla, the majority
stockholder 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
Mexican subsidiary, Minera ConSil, S.A de C.V. (Minera ConSil)
and Hecla Mining Company's wholly owned Mexican subsidiary,
Minera Hecla, S.A. de C.V. (Minera Hecla), the Company
received a credit against exploration expenses incurred in
1996 and through the first quarter of 1997 of $57,364. Actual
-6-
<PAGE> 7
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
exploration expense for the first nine months of 1997 in
connection with services performed by Minera Hecla under the
direction of the management of Minera ConSil was $13,767;
expenses for the first nine months of 1996 were approximately
$351,000.
Certain general and administrative expenses are incurred by
Hecla and reimbursed by the Company. These expenses totaled
$11,705 for the first nine months of 1997 compared to $19,836
for the first nine months of 1996. In addition, the Company
reimbursed Hecla for $24,179 of exploration expenses in the
first nine months of 1996. On September 30, 1997, the Company
sold its remaining fixed assets at book value ($14,655) to
Hecla in partial settlement of amounts due.
On June 28, 1996, ConSil and Hecla entered into a loan
agreement whereby Hecla agreed to make available to ConSil a
loan not to exceed $500,000, due in its entirety on or before
December 31, 1996. On February 19, 1997 the Company and Hecla
amended the Loan Agreement to increase the amount available to
$700,000 with a due date of April 30, 1997. On
April 16, 1997, the Loan Agreement - Second Amendment extended
the date of repayment to no later than August 1, 1997. On
August 1, 1997 the Loan Agreement - Third Amendment extended
the date of repayment to September 30, 1997, and effective
October 1, 1997 the Loan Agreement - Fourth Amendment extended
the repayment to March 31, 1998. As of October 31, 1997,
$700,000 was payable to Hecla under the Loan Agreement. Hecla
and ConSil are working towards a plan to repay this debt.
Note 5. The Company prepares its consolidated financial statements in
accordance with generally accepted accounting principles
("GAAP") in the United States. The Company also has
regulatory reporting requirements in Canada. There are no
differences between U.S. GAAP and Canadian GAAP with respect
to stockholders' deficit or net loss at September 30, 1997 and
the nine months then ended. For the nine months ended
September 30, 1996, the net loss would be reduced by $13,381
and stockholders' deficit would be reduced by $85,619 under
Canadian GAAP.
Note 6. The Company received a notice letter dated June 26, 1997 from
the United States and the Coeur d'Alene Indian Tribe notifying
the Company that it may be added as a defendant in the
-7-
<PAGE> 8
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
Coeur d'Alene River Basin natural resource damage litigation
pending under the Superfund law in Federal District Court in
Idaho. (Filed on Form 8-K dated July 4, 1997.) On
August 21, 1997, the United States Environmental Protection
Agency (EPA) stated that it would not name ConSil as a
defendant in the Coeur d'Alene River Basin Litigation. (Filed
on Form 8-K dated September 3, 1997).
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ---------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
INTRODUCTION
------------
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, 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 United States Securities and Exchange
Commission. Actual results may differ materially from those
projected or implied. 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.
On July 22, 1996, the Company entered into a Letter of Intent
with Minas La Colorada, S.A. de C.V. (MLC) which was replaced
by a Heads of Agreement dated December 19, 1996 for the
acquisition of a 100% interest in the assets of MLC. The
final Master Agreement was signed effective June 2, 1997.
Pursuant to this Agreement, ConSil was required to raise a
minimum of $6 million prior to August 1, 1997. However, due
to depressed silver prices and a poor market environment for
precious metals companies, ConSil was unable to raise the
required funds. Accordingly, effective August 2, 1997, Minas
La Colorada terminated ConSil's exclusive right to purchase
the assets.
On September 23, 1997 the Company announced that Mr. Ralph
Noyes, President and Chairman of the Board of ConSil, had
tendered his resignation effective September 30, 1997. On
October 8, 1997, the Board appointed Mr. George R. Johnson as
President and Chairman of the Board, effective
-8-
<PAGE> 9
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
October 1, 1997. Mr. Johnson is also Vice President - Metal
Mining for Hecla Mining Company. In other changes to the
Board of Directors, Mr. R. Stuart Angus tendered his
resignation effective October 14, 1997.
RESULTS OF OPERATIONS
---------------------
FIRST NINE MONTHS OF 1997 COMPARED TO FIRST NINE MONTHS OF
----------------------------------------------------------
1996
----
The Company reported a net loss of $490,788 or $0.05 per
share, for the first nine months of 1997 compared to a net
loss of $647,668 ($0.07 per share) in the same period in 1996.
The decrease in the net loss is a result of the termination of
all exploration programs, due to lack of funds, resulting in a
decrease in expenses of $461,000. This was partially offset
by an increase in general and administrative costs of $71,000,
acquisition costs of $91,000, interest expense of $36,000, a
net exploration credit of $27,000, and a decrease in the
income tax benefit of $101,000. Interest income declined by
$3,400. The increase in general and administrative expenses
is primarily due to increases in legal fees and investor
relations expenses associated with the Company's reporting
requirements to securities regulators and stockholders.
Acquisition expenses relating to the proposed Minas La
Colorada purchase were $133,243 for the first nine months of
1997, and $42,344 in the same period of 1996. Interest
expense in the 1997 and 1996 periods relate to the note
payable to Hecla which was initiated June 28, 1996.
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS
------------------------------------------------------------
ENDED SEPTEMBER 30, 1996
------------------------
The Company reported a net loss of $190,695 or $0.02 per share
in the third quarter of 1997, comparable to a net loss of
$376,693 ($0.04 per share) in the third quarter of 1996. The
components of each year's net loss are primarily general and
administrative expenses with a reduction of exploration
expense in 1997 of $250,300 offset by an increase in
acquisition expense ($12,200), interest expense ($9,500) and
the lack of income tax benefits ($25,625 in 1996).
-9-
<PAGE> 10
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
FINANCIAL CONDITION AND LIQUIDITY
---------------------------------
At September 30, 1997, assets totaled $137,427 and
stockholders' deficit totaled $941,465. Cash and cash
equivalents decreased by $70,316 to $49,900 at September 30,
1997 from $120,216 at December 31, 1996. Operating activities
used $303,266 of cash during the first nine months of 1997.
The primary uses of cash for operating activities were for
administrative expenses and acquisition expenses.
Working capital decreased $422,503 during the first nine
months of 1997, from a negative $518,962 at December 31, 1996
to a negative $941,465 at September 30, 1997. The decrease in
working capital is primarily the result of funding operating
losses associated with general and administrative expenses and
acquisition expenses.
ConSil's extension on all provisions of the agreement with
Grupo Catorce on the Sombrerete properties in Zacatecas,
Mexico, including a suspension of all required expenditures
and payments to Grupo Catorce, expired August 31, 1997 and was
not extended, due to lack of funds.
Any further exploration projects, potential acquisitions or
even limited operations are subject to ConSil being able to
raise funds from external sources. If other sources of funds
are unavailable, Hecla has committed to fund the reasonable
minimum financial requirements of the Company through
March 31, 1998. Existing cash and cash equivalents are
sufficient to fund these limited expenditures.
NEW ACCOUNTING PRONOUNCEMENT
----------------------------
In February 1997, Statement of Financial Accounting Standards
No. 128 (SFAS 128), "Earnings per Share" was issued. SFAS 128
establishes standards for computing and presenting earnings
per share (EPS) and simplifies the existing standards. This
standard replaces the presentation of primary EPS with a
presentation of basic EPS. It also requires the dual
presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. SFAS 128 is
-10-
<PAGE> 11
PART I - FINANCIAL INFORMATION (Continued)
CONSIL CORP.
effective for financial statements issued for periods ending
after December 15, 1997, including interim periods and
requires restatement of all prior-period EPS data presented.
The Company does not believe the application of this standard
will have a material effect on the presentation of its earning
per share disclosures.
-11-
<PAGE> 12
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
10.6 - Loan Agreement - Third Amendment
10.7 - Loan Agreement - Fourth Amendment
(b) Reports on Form 8-K
Report on Form 8-K dated July 10, 1997, related to a
press release dated July 4, 1997 concerning notice from
the United States and the Coeur d'Alene Indian Tribe of
their intent to add ConSil as a defendant in the Coeur
d'Alene River Basin natural resource damage litigation.
Report on Form 8-K dated July 10, 1997, related to a
press release dated July 9, 1997 concerning signing of
detailed purchase agreements with Minas la Colorada S.A.
de C.V. for the purchase of MLC's assets.
Report on Form 8-K dated September 3, 1997, related to a
press release dated September 3, 1997 concerning notice
received from the United States Environmental Protection
Agency that it would not name ConSil as a defendant in
the Coeur d'Alene River Basin litigation.
Items 2, 3, 4 and 5 of Part II are omitted from this report as
inapplicable.
-12-
<PAGE> 13
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 undersigned thereunto duly authorized.
CONSIL CORP.
--------------------------------------
(Registrant)
Date: November 12, 1997 By: /s/ Michael B. White
-----------------------------------
Michael B. White
Vice President
Date: November 12, 1997 By: /s/ Cheryl Maher
-----------------------------------
Cheryl Maher
Vice President - Finance and
Controller (principal accounting
and financial officer)
-13-
<PAGE> 14
CONSIL CORP.
Form 10Q - Period Ending September 30, 1997
EXHIBIT LIST
Exhibit No. Description
----------- ------------------------------
27 Financial Data Schedule
10.6 Loan Agreement - Third Amendment
10.7 Loan Agreement - Fourth Amendment
-14-
<PAGE> 1
EXHIBIT 10.6
LOAN AGREEMENT - THIRD AMENDMENT
This Loan Agreement - Third Amendment (hereinafter referred to
as "Third Amendment") is made and effective as of the 1st day of
August, 1997, 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, which has an address at 500-625 Howe
Street, Vancouver, British Columbia, V6C 2T6 (hereinafter referred
to as "ConSil").
RECITALS AND DEFINITIONS
WHEREAS, Hecla and ConSil entered into that certain Loan
Agreement dated June 28, 1996, as amended February 19, 1997, and
April 16, 1997 (hereinafter referred to, as amended, as the
"Agreement") pursuant to which ConSil borrowed certain funds from
Hecla, and Hecla loaned certain funds to ConSil, all on the terms
and conditions contained in the Agreement;
WHEREAS, Hecla and ConSil wish again to amend the Agreement
with this Second Amendment, on the terms and conditions specified
herein;
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. AMENDMENT OF PRINCIPAL AMOUNT OF LOAN; INTEREST AND TERM:
Section 1 of the Agreement shall be deemed to read in its entirety
as follows:
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 SEVEN HUNDRED
THOUSAND DOLLARS ($700,000) (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
September 30, 1997.
2. EXECUTION OF REPLACEMENT NOTE, ASSIGNMENTS AND OTHER
CERTIFICATES. ConSil shall execute a replacement note
substantially in the form attached hereto as Exhibit A, together
with a certificate of its corporate Secretary certifying that:
Page 1 of 4
<PAGE> 2
(i) the individuals executing this Third Amendment 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 the Agreement are and remain true, accurate,
correct and fulfilled as of the date of the delivery of
this Third Amendment.
3. ENTIRE AGREEMENT. This Third Amendment and the Agreement
shall constitute the entire agreement between the parties with
respect to the transactions contemplated herein and therein, and
any prior understanding or representation of any kind preceding the
date of this Third Amendment shall not be binding on either party
except to the extent incorporated in this Third Amendment and the
Agreement.
4. CONSIDERATION. The consideration for this Third Amendment
shall be deemed to be the extension of additional credit and
additional time for repayment, all as specified in Section 1 of
this Third Amendment, the receipt and adequacy of which ConSil and
Hecla hereby expressly acknowledge.
5. LOAN AGREEMENT EFFECTIVE AND OTHERWISE UNAFFECTED. Hecla
and ConSil expressly acknowledge and agree that the Agreement is in
full force and effect, no default has occurred and except as
expressly amended by this Third Amendment, the Agreement shall
govern the terms and conditions of the transactions contemplated
herein and in the Agreement.
IN WITNESS WHEREOF duly authorized officers of the parties
executed this Third Amendment on the date first above written.
CONSIL CORP. HECLA MINING COMPANY
By /s/ Ralph R. Noyes By /s/ John P. Stilwell
------------------------- ---------------------------------
Ralph R. Noyes John P. Stilwell
Chairman Vice President
Chief Financial Officer
ATTEST: ATTEST:
/s/ Nigel Cave /s/ Michael B. White
- --------------------------- -------------------------------------
Nigel Cave Michael B. White
Secretary Secretary
Page 2 of 4
<PAGE> 3
STATE OF IDAHO )
) ss.
COUNTY OF KOOTENAI )
On this 18th day of August, in the year of 1997, 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
-------------------------------------
Notary Public
Residing at Rathdrum, Idaho
My Commission Expires 8/5/2000
STATE OF IDAHO )
) ss.
COUNTY OF KOOTENAI )
On this 18th day of August in the year of 1997, before me, the
undersigned, a Notary Public in and for the State of Idaho,
personally appeared Ralph R. Noyes, known or identified to me to be
the Chairman of ConSil Corp., the officer 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
-------------------------------------
Notary Public
Residing at Rathdrum, Idaho
My Commission Expires 8/5/2000
Page 3 of 4
<PAGE> 4
EXHIBIT A
PROMISSORY NOTE
---------------
$700,000 City of Coeur d'Alene
State of Idaho
On August 1, 1997, for value received, ConSil Corp., a
corporation duly organized and existing under the laws of the State
of Idaho, promises to pay to Hecla Mining Company, of 6500 Mineral
Drive, Coeur d'Alene, Idaho 83814-8788, at its offices, the
principal amount of seven hundred thousand dollars ($700,000), or
such other amount as may be outstanding pursuant to that certain
Loan Agreement dated June 28, 1996, as amended by the certain Loan
Agreement Amendment dated February 19, 1997 and further amended by
that certain Loan Agreement - Second Amendment dated April 16,
1997, and again further amended by that certain Loan Agreement
Third Amendment of even date herewith between ConSil Corp. and
Hecla Mining Company, as calculated and determined by Hecla Mining
Company, with 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,
payable upon the demand of authorized representatives of Hecla
Mining Company.
If default is made in the payment upon demand, then the entire
amount of principal, interest and any and all costs of collection
shall become immediately due and payable at the option of the
holder of this note, without notice. This note shall be governed
by and construed in accordance with the laws of the State of Idaho.
IN WITNESS WHEREOF, ConSil Corp. has caused this note to be
executed by its duly authorized officers as of the date first
mentioned above.
ConSil Corp.
By /s/ Ralph R. Noyes
----------------------------------
Ralph R. Noyes
Chairman
Attest:
/s/ Nigel Cave
-------------------------------------
Nigel Cave
Secretary
Page 4 of 4
<PAGE> 1
EHXIBIT 10.7
LOAN AGREEMENT FOURTH AMENDMENT
This Loan Agreement Fourth Amendment (hereinafter referred
to as "Fourth Amendment") is made and effective as of the 1st day
of October, 1997, by and between Hecla Mining Company, a Delaware
corporation, whose address is 6500 Mineral Drive, Coeur d'Alene,
Idaho 83815-8788 (hereinafter referred to as "Hecla"), and ConSil
Corp., an Idaho corporation, which has an address at 6500 Mineral
Drive, Coeur d'Alene, Idaho 83815-8788 (hereinafter referred to as
"ConSil").
RECITALS AND DEFINITIONS
WHEREAS, Hecla and ConSil entered into that certain Loan
Agreement dated June 28, 1996, as amended February 19, 1997, April
16, 1997, and August 1, 1997 (hereinafter referred to, as amended,
as the "Agreement") pursuant to which ConSil borrowed certain funds
from Hecla, and Hecla loaned certain funds to ConSil, all on the
terms and conditions contained in the Agreement;
WHEREAS, Hecla and ConSil wish again to amend the Agreement
with this Fourth Amendment, on the terms and conditions specified
herein;
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. AMENDMENT OF PRINCIPAL AMOUNT OF LOAN; INTEREST AND TERM:
Section 1 of the Agreement shall be deemed to read in its entirety
as follows:
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 SEVEN HUNDRED
THOUSAND DOLLARS ($700,000) (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
March 31, 1998.
2. EXECUTION OF REPLACEMENT NOTE, ASSIGNMENTS AND OTHER
CERTIFICATES. ConSil shall execute a replacement note
Page 1 of 4
<PAGE> 2
substantially in the form attached hereto as Exhibit A, together
with a certificate of its corporate Secretary certifying that:
(i) the individuals executing this Fourth Amendment 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 the Agreement are and remain true, accurate,
correct and fulfilled as of the date of the delivery of
this Fourth Amendment.
3. ENTIRE AGREEMENT. This Fourth Amendment and the Agreement
shall constitute the entire agreement between the parties with
respect to the transactions contemplated herein and therein, and
any prior understanding or representation of any kind preceding the
date of this Fourth Amendment shall not be binding on either party
except to the extent incorporated in this Fourth Amendment and the
Agreement.
4. CONSIDERATION. The consideration for this Fourth
Amendment shall be deemed to be the extension of additional credit
and additional time for repayment, all as specified in Section 1 of
this Fourth Amendment, the receipt and adequacy of which ConSil and
Hecla hereby expressly acknowledge.
5. LOAN AGREEMENT EFFECTIVE AND OTHERWISE UNAFFECTED. Hecla
and ConSil expressly acknowledge and agree that the Agreement is in
full force and effect, no default has occurred and except as
expressly amended by this Fourth Amendment, the Agreement shall
govern the terms and conditions of the transactions contemplated
herein and in the Agreement.
IN WITNESS WHEREOF duly authorized officers of the parties
executed this Fourth Amendment on the date first above written.
CONSIL CORP. HECLA MINING COMPANY
By By
----------------------- ---------------------------
Name: John P. Stilwell
Title: Vice President
Chief Financial Officer
ATTEST: ATTEST:
- --------------------------- -------------------------------
Nigel Cave Michael B. White
Secretary Secretary
Page 2 of 4
<PAGE> 3
STATE OF IDAHO )
) ss.
COUNTY OF KOOTENAI )
On this _____ day of October, in the year of 1997, 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.
-------------------------------------
Notary Public
Residing at ____________, Idaho
My Commission Expires:
STATE OF IDAHO )
) ss.
COUNTY OF KOOTENAI )
On this _____ day of October in the year of 1997, before me,
the undersigned, a Notary Public in and for the State of Idaho,
personally appeared Ralph R. Noyes, known or identified to me to be
the Chairman of ConSil Corp., the officer 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.
-------------------------------------
Notary Public
Residing at ______________, Idaho
My Commission Expires:
Page 3 of 4
<PAGE> 4
EXHIBIT A
PROMISSORY NOTE
---------------
$700,000 City of Coeur d'Alene
State of Idaho
On October 1, 1997, for value received, ConSil Corp., a
corporation duly organized and existing under the laws of the State
of Idaho, promises to pay to Hecla Mining Company, of 6500 Mineral
Drive, Coeur d'Alene, Idaho 83815-8788, at its offices, the
principal amount of seven hundred thousand dollars ($700,000), or
such other amount as may be outstanding pursuant to that certain
Loan Agreement dated June 28, 1996, as amended by the certain Loan
Agreement Amendment dated February 19, 1997 and further amended by
that certain Loan Agreement - Second Amendment dated April 16,
1997, and again further amended by that certain Loan Agreement
Third Amendment dated August 1, 1997, and again further amended by
that certain Loan Agreement Fourth Amendment of even date
herewith between ConSil Corp. and Hecla Mining Company, as
calculated and determined by Hecla Mining Company, with 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, payable upon the
demand of authorized representatives of Hecla Mining Company.
If default is made in the payment upon demand, then the entire
amount of principal, interest and any and all costs of collection
shall become immediately due and payable at the option of the
holder of this note, without notice. This note shall be governed
by and construed in accordance with the laws of the State of Idaho.
IN WITNESS WHEREOF, ConSil Corp. has caused this note to be
executed by its duly authorized officers as of the date first
mentioned above.
ConSil Corp.
By
----------------------------------
Name:
Title:
Attest:
-------------------------------------
Nigel Cave
Secretary
Page 4 of 4
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 49,900
<SECURITIES> 0
<RECEIVABLES> 87,527
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 137,427
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 137,427
<CURRENT-LIABILITIES> 1,078,892
<BONDS> 0
0
0
<COMMON> 2,111,675
<OTHER-SE> (3,049,679)
<TOTAL-LIABILITY-AND-EQUITY> 137,427
<SALES> 0
<TOTAL-REVENUES> 207
<CGS> 0
<TOTAL-COSTS> 449,365
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,630
<INCOME-PRETAX> (490,788)
<INCOME-TAX> 0
<INCOME-CONTINUING> (490,788)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (490,788)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> 0
</TABLE>
