<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999
Commission File No. 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)
Registrant's telephone number, including area code: 208-769-4100
---------------------
Securities registered pursuant to Section 12(g) of the Act:
Name of Each Exchange on
Title of Each Class Which Each Class is Registered
- ----------------------------- --------------------------
Common stock, no par value Vancouver Stock Exchange
OTC Bulletin Board
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ X ]
The aggregate market value of the registrant's voting common stock
held by nonaffiliates was $142,128 at March 15, 2000, based on the latest
trade date on the Vancouver Stock Exchange of February 11, 2000. As of
March 15, 2000, there were 9,449,707 shares of the registrant's common stock
outstanding.
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<PAGE> 2
PART I
-------
Item 1. Business
--------
(a) ConSil Corp. (ConSil), formerly Consolidated Silver Corporation, held
mineral properties in Shoshone County, Idaho known as the Silver Summit mine.
On November 14, 1995, ConSil's stockholders approved the sale of its interest in
the Silver Summit mine and adjacent mining properties located in Shoshone
County, Idaho to Sunshine Precious Metals, Inc. for a cash payment of $750,000
plus a variable production royalty tied to the price of silver.
Following the sale of ConSil's Silver Summit mine in 1995, ConSil was
actively involved in exploration and acquisition activities primarily in Mexico.
(See Note 2 of Notes to Consolidated Financial Statements.) ConSil was
unsuccessful in its exploration and acquisition activities and, since the fourth
quarter of 1997, ConSil has been inactive.
(b) No information is presented as to Industry Segments.
(c) ConSil has no patents, licenses, franchises or concessions which are
considered by ConSil to be of importance. The business is not of a seasonal
nature. Since the potential products (primarily silver) are traded on the open
market, ConSil has no control over the competitive conditions in the industry.
ConSil has spent no funds during the past four fiscal years on mineral
research activities relating to the development of new products or services or
the improvement of existing products or services. In 1997, ConSil incurred
exploration expenses of approximately $106,000. There were no exploration
expenses incurred in 1998 or 1999.
There are numerous federal, state and local laws and regulations in the
United States and Mexico related to environmental protection which have direct
application to mining and milling activities. The more significant of these
laws deal with mined land reclamation and wastewater discharge from mines and
milling operations. ConSil does not believe that these laws and regulations, as
presently enacted, will have a direct material adverse effect on its results of
operations, financial condition or cash flows.
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<PAGE> 3
ConSil currently has no employees. Certain administrative services are
provided by employees of Hecla Mining Company (Hecla), the majority stockholder
of ConSil.
(d) For geographic information, see Note 7 of Notes to Consolidated
Financial Statements.
Item 2. Property
--------
In 1995, stockholders approved the sale of all of ConSil's interest in the
Silver Summit mine, plant, equipment and all patented and unpatented mining
properties located in Shoshone County, Idaho, to Sunshine Precious Metals, Inc.
for a cash payment of $750,000 plus a variable production royalty tied to the
price of silver. The Silver Summit mine property is not currently producing
minerals such that ConSil would be entitled to production royalties from
Sunshine Precious Metals, Inc.
Following the sale of ConSil's Silver Summit mine in 1995, ConSil was
actively involved in exploration and acquisition activities primarily in Mexico.
(See Note 2 of Notes to Consolidated Financial Statements.) ConSil was
unsuccessful in its exploration and acquisition activities and, since the fourth
quarter of 1997, ConSil has been inactive.
Item 3. Legal Proceedings
-----------------
There are no pending legal proceedings.
Item 4. Matters Voted on by Security Holders
------------------------------------
Not applicable.
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<PAGE> 4
PART II
-------
Item 5. Market for the Registrant's Common Equity and Related Stockholder
-----------------------------------------------------------------
Matters
-------
The common stock of ConSil is traded on the over-the-counter market.
Quotations are published on the OTC Bulletin Board and in the National Quotation
Bureau "pink sheets" under the symbol CSLV. The common stock of ConSil was
listed for trading on the Vancouver Stock Exchange in Vancouver, British
Columbia, Canada, on April 2, 1996 under the symbol CS. There has not been an
active market for the common stock and the below-described quotations, when
available, do not constitute a reliable indication of the price that a holder of
the common stock could expect to receive upon sale of any particular quantity
thereof.
The following table sets forth the high and low bid prices for ConSil's
common stock as reported by the Spokane Quotation Service for the quarterly
periods indicated. The prices reported by the Spokane Quotation Service
represent prices between dealers which do not include retail markups, markdowns
or commissions and do not necessarily represent actual transactions.
Bid
---
High Low
---- ---
1999
First Quarter $ .15 $ .10
Second Quarter .10 .05
Third Quarter .03 .03
Fourth Quarter .03 .03
1998
First Quarter $ .55 $ .30
Second Quarter .48 .30
Third Quarter .30 .15
Fourth Quarter .20 .15
The number of holders of record of ConSil's common stock as of December 31,
1999 was 3,242. At December 31, 1999, Hecla held 7,418,300, or 78.503%, shares
of ConSil's outstanding common stock.
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<PAGE> 5
There have been no dividends declared or paid since ConSil's inception in
1969 and ConSil does not expect to declare dividends in the foreseeable future.
Item 6. Selected Financial Data(1)
-----------------------
<TABLE>
Years Ended December 31,
-----------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1995
--------- -------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Revenues $ 1,036 $ 11,434 $ 280 $ 3,678 $ 794,319
======== ======== ========= ========= =========
Net loss $(89,721) $(79,962) $(537,017) $(913,011) $(514,731)
======== ======== ========= ========= =========
Basic and diluted loss
per common share $ (0.01) $ (0.01) $ (0.06) $ (0.10) $ (0.06)
======== ======== ========= ========= =========
Total assets $ 19,657 $ 27,356 $ 114,838 $ 472,970 $748,438
======== ======== ========= ========== ========
Long-term debt $ - - $ - - $ - - $ - - $ - -
======== ======== ========= ========== ========
Note and interest
payable to Hecla $925,209 $847,250 $ 777,420 $ 517,901 $ - -
======== ======== ========= ========== ========
Accounts payable to
Hecla $248,650 $247,762 $ 318,865 $ 362,802 $279,598
======== ======== ========= ========== ========
Redeemable preferred
stock $ - - $ - - $ - - $ - - $ - -
======== ======== ========= ========== ========
Cash dividends $ - - $ - - $ - - $ - - $ - -
======== ======== ========= ========== ========
</TABLE>
(1) Following the sale of ConSil's Silver Summit mine in 1995,
ConSil was actively involved in exploration and acquisition
activities. ConSil was unsuccessful in its exploration and
acquisition activities and, since the fourth quarter of 1997,
ConSil has been inactive.
Item 7. 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 development of future projects, the impact of metals prices,
changing market conditions and regulatory environment, and other risks. Actual
results may differ materially from those projected or implied. Forward-looking
statements included herein represent ConSil's judgment as of the date of this
filing. ConSil disclaims, however, any intent or obligation to update these
forward-looking statements.
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<PAGE> 6
Following the sale of ConSil's Silver Summit mine in 1995, ConSil was
actively involved in exploration and acquisition activities, primarily in
Mexico. ConSil was unsuccessful in its exploration and acquisition activities
and, since the fourth quarter of 1997, ConSil has been inactive.
Mr. George Johnson resigned as President and Director of ConSil on
September 10, 1999 as a result of leaving his position with Hecla Mining
Company, ConSil's majority stockholder. Mr. Roger Kauffman has been appointed
by ConSil's Board of Directors to serve as the current President and as
Director. Mr. Kauffman also serves as Hecla's Executive Vice President and
Chief Operating Officer.
RESULTS OF OPERATIONS
- ---------------------
1999 vs. 1998
- -------------
ConSil reported a net loss of $89,721, or $0.01 per share, for the year
ended December 31, 1999 compared to a net loss of $79,962, or $0.01 per share,
in 1998. The increase in the net loss was primarily due to decreases in
interest and other revenue of $10,398 and increased general and administrative
expenses of $2,232. These unfavorable variances were partly offset by a
decrease in interest expense of $2,871 on the note payable to Hecla (see Note 4
of Notes to Consolidated Financial Statements).
1998 vs. 1997
- -------------
ConSil reported a net loss of $79,962, or $0.01 per share, for the year
ended December 31, 1998 compared to a net loss of $537,017, or $0.06 per share,
in 1997. The decrease in the net loss was primarily due to decreases in general
and administrative expenses of $329,182, decreased exploration and acquisition
expenses of $105,848, a decreased income tax provision of $16,687, and increased
interest and other revenue of $11,154. These decreases were partly offset by an
increase in interest expense of $10,311 on the note payable to Hecla (see Note 4
of Notes to Consolidated Financial Statements). The decrease in the net loss
can be attributed principally to ConSil terminating its exploration and
acquisition activities at the end of 1997.
FINANCIAL CONDITION AND LIQUIDITY
- ---------------------------------
At December 31, 1999, assets totaled $19,657 and stockholders' deficit
totaled $1,157,377. Cash and cash equivalents decreased by $27 to $11,209 at
December 31, 1999 from
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<PAGE> 7
$11,236 at December 31, 1998. Operating activities used $11,027 of cash during
the year ended December 31, 1999. The primary use of cash for operating
activities was for funding general and administrative expenses. This use of
cash was partly offset by an income tax refund received in 1999.
Financing activities provided $11,000 in cash during 1999. The $11,000 was
from additional proceeds on the note payable to Hecla Mining Company.
Working capital decreased by $89,721 during 1999, from a negative
$1,067,656 at December 31, 1998 to a negative $1,157,377 at December 31, 1999.
The decrease in working capital was primarily the result of funding general and
administrative costs.
ConSil's planned 2000 expenditures include the necessary expenditures to
maintain the current inactive status of ConSil. ConSil intends to finance these
planned expenditures partially through existing cash and cash equivalents and
additional borrowings under a loan agreement with Hecla. On February 9, 2000,
ConSil and Hecla entered into a seventh amendment to the loan agreement (see
Note 4 of Notes to Consolidated Financial Statements) which extended the due
date to no later than March 31, 2001. As of December 31, 1999, $711,000 was
payable to Hecla, excluding accrued interest of $214,209, under the loan
agreement. Any further exploration projects, potential acquisitions or even
limited operations are subject to ConSil being able to raise funds from external
sources.
The financial statements have been prepared on a going concern basis which
assumes realization of assets and liquidation of liabilities in the normal
course of business. Included in current liabilities is a $711,000 note payable
and related accrued interest due to Hecla which are due upon demand by
authorized representatives of Hecla, but in no event later than March 31, 2001.
If other sources of funds are unavailable, Hecla has committed to fund the
reasonable minimum financial requirements of ConSil through March 31, 2001.
YEAR 2000
- ---------
ConSil completed an assessment of its Year 2000 Compliance issues, and
based upon the limited activity of ConSil, ConSil does not believe any possible
future Year 2000 Compliance issues will be material to ConSil. To date, there
have been no Year 2000 related disruptions to ConSil's business.
-7-
<PAGE> 8
Item 7A. Quantitative and Qualitative Disclosures About Market
-----------------------------------------------------
Risk
----
At December 31, 1999, ConSil's note payable to Hecla (refer to Note 4 of
Notes to Consolidated Financial Statements) was subject to changes in market
interest rates. However, due to the short-term nature of the debt, ConSil's
management does not believe it is at material risk with respect to changes in
market interest rates.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
See Item 14 for index of Financial Statements and Supplemental Data filed
herewith.
Item 9. Changes in and Disagreements with Accountants on Accounting
-----------------------------------------------------------------
and Financial Disclosures
-------------------------
None.
-8-
<PAGE> 9
REPORT OF INDEPENDENT ACCOUNTANTS
----------------------------------
The Board of Directors and Stockholders of ConSil Corp.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, changes in stockholders' deficit and of
cash flows present fairly, in all material respects, the financial position of
ConSil Corp. and subsidiaries (the Company) at December 31, 1999 and 1998, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States. 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 audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
Spokane, Washington
February 18, 2000
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<PAGE> 10
CONSIL CORP.
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
(U.S. dollars)
-------------------
ASSETS
1999 1998
-------- ---------
Current assets:
Cash and cash equivalents $11,209 $11,236
Other receivables 148 120
Prepaid expenses 300 - -
Income tax refund receivable 8,000 16,000
-------- ---------
Total current assets 19,657 27,356
-------- ---------
Total assets $19,657 $27,356
======== =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 3,175 $ - -
Accounts payable - Hecla Mining
Company 248,650 247,762
Accrued interest payable - Hecla
Mining Company 214,209 147,250
Note payable - Hecla Mining Company 711,000 700,000
--------- ---------
Total current liabilities 1,177,034 1,095,012
========= =========
Commitments (Notes 2 and 4)
Stockholders' deficit:
Preferred stock; $0.25 par value;
authorized 10,000,000 shares;
issued and outstanding, none - - - -
Common stock; no par value;
authorized 100,000,000 shares;
issued 9,455,689 shares 2,111,675 2,111,675
Accumulated deficit (3,265,591) (3,175,870)
Less: Common stock reacquired at
cost; 1999 and 1998 -
5,982 shares (3,461) (3,461)
---------- ----------
Total stockholders' deficit (1,157,377) (1,067,656)
---------- ----------
Total liabilities and
stockholders' deficit $ 19,657 $ 27,356
========== ==========
The accompanying notes are an integral part
of the consolidated financial statements.
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<PAGE> 11
<TABLE>
CONSIL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 1999, 1998 and 1997
(U.S. dollars)
------------
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Interest $ 1,036 $ 6,206 $ 280
Other - - 5,228 - -
---------- ---------- ----------
1,036 11,434 280
---------- ---------- ----------
Expenses:
General and administrative 23,798 21,566 350,748
Exploration and acquisition - - - - 105,848
Depreciation - - - - 4,495
Interest expense on note payable
to Hecla Mining Company 66,959 69,830 59,519
---------- ---------- ----------
90,757 91,396 520,610
---------- ---------- ----------
Loss before income taxes (89,721) (79,962) (520,330)
Income tax provision - - - - 16,687
---------- ---------- ----------
Net loss $ (89,721) $ (79,962) $ (537,017)
========== ========== ==========
Basic and diluted loss per
common share $ (0.01) $ (0.01) $ (0.06)
========== ========== ==========
Weighted average number of
common shares outstanding 9,449,707 9,449,707 9,449,753
========== ========== ==========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
-11-
<PAGE> 12
<TABLE>
CONSIL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1999, 1998 and 1997
(U.S. dollars)
---------------
<CAPTION>
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
Operating activities:
Net loss $(89,721) $(79,962) $(537,017)
Noncash elements included in net loss:
Depreciation - - - - 4,495
Deferred income tax provision
(benefit) - - 8,000 (8,000)
Prepaid and deferred legal and
financing costs expense - - - - 32,704
Loss on sale of equipment - - - - 1,158
Change in:
Other receivables (28) 60,451 10,060
Prepaid expenses (300) - - - -
Income tax refund receivable 8,000 (8,000) 202,816
Accounts payable 4,063 (77,350) (65,980)
Accrued interest payable on note to
Hecla Mining Co. 66,959 69,830 59,519
--------- -------- ---------
Net cash used by operating
activities (11,027) (27,031) (300,245)
--------- -------- ---------
Investing activities:
Proceeds from sale of equipment - - - - 18,296
--------- -------- ---------
Net cash provided by
investing activities - - - - 18,296
--------- -------- ---------
Financing activities:
Proceeds from note payable
to Hecla Mining Co. 11,000 - - 369,999
Repayment of note payable
to Hecla Mining Co. - - - - (169,999)
--------- -------- ---------
Net cash provided by financing
activities 11,000 - - 200,000
--------- -------- ---------
Net decrease in cash and cash
equivalents (27) (27,031) (81,949)
Cash and cash equivalents at beginning
of year 11,236 38,267 120,216
--------- -------- ---------
Cash and cash equivalents at
end of year $ 11,209 $ 11,236 $ 38,267
========= ======== =========
Supplemental disclosure of cash
flow information:
Cash paid (received) for income
taxes $ (8,000) $ 30 $(178,129)
========= ======== =========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
-12-
<PAGE> 13
<TABLE>
CONSIL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Years Ended December 31, 1999, 1998 and 1997
(U.S. dollars)
-----------
<CAPTION>
Discount
Preferred Stock Common Stock on
-------------------- ------------------- Common Capital Accumulated Treasury
Shares Amount Shares Amount Stock Surplus Deficit Stock
-------- -------- ------- ------- -------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES,
December 31, 1996 - - $ - - 9,455,689 $ 945,569 $(190,709) $1,356,815 $(2,558,891) $(3,461)
Net loss (537,017)
Change in equity accounts
due to change to no par
value common stock - - 1,166,106 190,709 (1,356,815)
-------- -------- --------- --------- ------- ---------- ---------- ------
BALANCES,
December 31, 1997 - - - - 9,455,689 2,111,675 - - - - (3,095,908) (3,461)
Net loss (79,962)
------- -------- --------- --------- ------- ---------- ---------- ------
BALANCES,
December 31, 1998 - - - - 9,455,689 2,111,675 - - - - (3,175,870) (3,461)
Net loss (89,721)
------- -------- --------- --------- -------- ---------- ---------- ------
BALANCES,
December 31, 1999 - - $ - - 9,455,689 $2,111,675 $ - - $ - - $(3,265,591) $(3,461)
======= ======== ========= ========== ======== ========== =========== =======
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
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<PAGE> 14
CONSIL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
------------------------------------------
ConSil Corp. (ConSil), formerly Consolidated Silver Corporation, and its
wholly owned subsidiary, Minera ConSil, S.A. de C.V. (formed on December 20,
1995) currently have no operating properties. ConSil is currently inactive.
The accompanying consolidated financial statements include the accounts of
ConSil and its wholly owned subsidiary. All significant intercompany
transactions and accounts are eliminated in consolidation. The preparation of
consolidated financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
At December 31, 1999, ConSil had 9,449,707 common shares outstanding of
which Hecla Mining Company (Hecla, the majority stockholder of ConSil) owned
7,418,300 shares or 78.503% of the outstanding shares.
The financial statements have been prepared on a going concern basis which
assumes realization of assets and liquidation of liabilities in the normal
course of business. At December 31, 1999, ConSil had negative working capital
of $1,157,377 and a stockholders' deficit of $1,157,377. Included in current
liabilities is a $711,000 note payable and related accrued interest due to Hecla
which are due upon demand by authorized representatives of Hecla, but in no
event later than March 31, 2001. If other sources of funds are unavailable,
Hecla has committed to fund the reasonable minimum financial requirements of
ConSil through March 31, 2001.
Exploration
- -----------
Exploration costs are charged to operations as incurred.
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<PAGE> 15
Basic and Diluted Loss Per Common Share
- ---------------------------------------
Basic earnings per share (EPS) is calculated by dividing the net loss by
the weighted-average number of common shares outstanding for the year. Diluted
EPS reflects the potential dilution that could occur if potentially dilutive
securities were exercised or converted to common stock. Due to the losses in
1999, 1998 and 1997, potentially dilutive securities were excluded from the
calculation of diluted EPS as they were anti-dilutive. Therefore, there was no
difference in the calculation of basic and diluted EPS in 1999, 1998 and 1997.
Cash Equivalents
- ----------------
ConSil considers cash equivalents to be highly liquid investments purchased
with a remaining maturity of three months or less. ConSil's financial
instruments that are exposed to concentrations of credit risk consist primarily
of cash and cash equivalents. ConSil places its cash and temporary cash
investments with institutions of high credit-worthiness.
Income Taxes
- ------------
ConSil records deferred tax liabilities and assets for the expected future
income tax consequences of events that have been recognized in its financial
statements. Deferred tax liabilities and assets are determined based on the
temporary differences between the financial statement carrying amounts and the
tax bases of assets and liabilities using enacted tax rates in effect in the
years in which the temporary differences are expected to reverse.
Equipment
- ---------
Equipment is stated at the lower of cost or estimated net realizable value.
Maintenance, repairs and renewals are charged to operations. Betterments of a
major nature are capitalized. When assets are retired or sold, the costs and
related allowances for depreciation and amortization are eliminated from the
accounts and any resulting gain or loss is reflected in operations. Depreciation
is based on the estimated useful lives of assets and is computed using the
straight-line method.
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<PAGE> 16
Accounting for Stock Options
- ----------------------------
ConSil measures compensation cost for stock option plans using the
intrinsic value method of accounting prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees." ConSil also
provides the required disclosures of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (SFAS 123).
2. Mineral Rights
--------------
In December 1995, ConSil purchased from Hecla its interest in the Ojo
Caliente exploration project located near the town of Zacatecas in the state of
Zacatecas, Mexico, for $706,822.
ConSil had a commitment to spend minimum amounts on exploration and
development at the Ojo Caliente exploration project. On April 10, 1997, ConSil,
through its wholly owned subsidiary Minera ConSil, terminated its agreement with
Minera Portree regarding the Ojo Caliente project. The agreement provided that
Minera ConSil return all the concessions to Minera Portree upon such
termination. All such concessions have been returned.
On February 9, 1996, ConSil entered into a letter agreement (Sombrerete
Agreement) for a three-month, pre-option period to purchase a 100% interest in
the Sombrerete silver mine in the state of Zacatecas, Mexico, including all
related surface and underground mining rights, all related properties, permits
and authorizations, and all surface and underground equipment, buildings, and
infrastructure. In May 1996, ConSil completed its preliminary investigation of
the Sombrerete silver mine and informed Grupo Catorce that it intended to enter
into an option to purchase the property. The option agreement required ConSil
to pay Grupo Catorce for care and maintenance of the property. During the option
period, ConSil could exercise its option to purchase the property for $1 million
over a three-year period with $100,000 at the end of each of the first and
second year following commencement of the option period and $800,000 on the
exercise of the option. The option could be extended for up to five years with
the payment of additional funds. As of November 1996, ConSil had completed the
initial exploration program, spending in excess of required amounts. ConSil
obtained extensions on all provisions of the agreement, including suspensions on
all required expenditures and payments to Grupo Catorce. Nevertheless, ConSil's
option agreement with Grupo Catorce on the Sombrerete
-16-
<PAGE> 17
properties in Zacatecas, Mexico expired August 31, 1997 and was not further
extended due to lack of funds.
In conjunction with the Ojo Caliente and Sombrerete projects, ConSil's
wholly owned Mexican subsidiary, Minera ConSil, entered into an agreement with
Minera Hecla, S.A. de C.V. (Minera Hecla), a wholly owned subsidiary of Hecla,
whereby Minera Hecla carried out exploration activities on the projects for
which ConSil reimbursed Minera Hecla for its costs. In 1997, ConSil received a
net credit to exploration expense from Minera Hecla of approximately $30,000 and
there were no exploration expenses incurred in 1998 or 1999.
3. Income Taxes
------------
The components of ConSil's income tax provision (benefit) for the years
ended December 31, 1999, 1998 and 1997 were as follows:
1999 1998 1997
----------- ---------- -----------
Current:
Federal $ - - $ - - $ - -
State - - (8,000) 24,687
----------- ---------- -----------
- - (8,000) 24,687
----------- ---------- -----------
Deferred:
Federal - - - - - -
State - - 8,000 (8,000)
----------- ---------- -----------
- - 8,000 (8,000)
----------- ---------- -----------
Total $ - - $ - - $ 16,687
=========== ========= ===========
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<PAGE> 18
The income tax provision (benefit) for the years ended December 31, 1999,
1998 and 1997 differed from the amounts which would have been provided by
applying the statutory federal income tax rate to the loss before income taxes.
The reasons for the differences were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Computed "statutory"
benefit $(30,505) 34% $(27,187) (34)% $(176,912) (34)%
Effect of other
expenses - - - - - - - - (1,952) (1)
Change in valuation
allowance due to
uncertainty of
recovery of deferred
tax assets 30,505 34 27,187 34 216,244 42
Effect of state
income taxes - - - - - - - - (20,693) (4)
-------- --- -------- --- -------- ---
$ - - - - $ - - - - $ 16,687 (3)%
========= === ========= ==== ======== ===
</TABLE>
At December 31, 1999 and 1998, ConSil had the following deferred tax asset:
1999 1998
----------- -----------
Net operating loss carryforwards
and capitalized exploration
costs and other $ 727,072 $ 696,567
Valuation allowance (727,072) (696,567)
---------- ---------
Net deferred tax asset $ - - $ - -
========== =========
The change in the valuation allowance during the years ended December 31,
1999, 1998 and 1997 were as follows:
1999 1998 1997
-------- -------- --------
Balance,
beginning of year $696,567 $669,380 $453,136
Change due to
utilization/nonutilization
of net operating loss
carryforwards 30,505 27,187 216,244
-------- -------- --------
Balance, end of year $727,072 $696,567 $669,380
======== ======== ========
-18-
<PAGE> 19
ConSil recorded the above valuation allowance to reflect the estimated
amount of the deferred tax asset which may not be realized principally due to
limitation of the refunds available during the carryback period and the
uncertainty regarding the generation of future taxable income to utilize
reversing deductible items. The realization of ConSil's future deductible items
that are not recoverable through the refund of prior income taxes is dependent
upon ConSil's ability to generate future taxable income. If it becomes more
likely than not that ConSil will generate future taxable income, the valuation
allowance could be adjusted in the near term.
At December 31, 1999, ConSil had federal and state net operating loss
carryforwards of $690,000 substantially all of which will expire in the year
2012.
4. Note Payable
------------
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. Under
the terms of the loan agreement, ConSil agreed to pay interest on the
outstanding balance at the prime interest rate plus one and one-half percent.
The loan was payable upon demand by Hecla and was due in its entirety on or
before December 31, 1996. The loan agreement places certain restrictions on
ConSil including restrictions on assets, indebtedness, increases in
compensation, loans or advances to shareholders, directors, or employees,
capital stock, and hiring of new employees. These restrictions can be altered
with the prior consent of Hecla. This loan agreement was subsequently amended
on seven separate occasions, increasing the amount available to borrow to
$725,000 and extending the repayment date to March 31, 2001 with all other terms
remaining substantially identical to the original loan agreement. At December
31, 1999, ConSil was in compliance with the restrictions under the loan
agreement. At December 31, 1999, there was $711,000 outstanding under the loan
agreement with Hecla, having an interest rate of 10.0%, and accrued interest due
to Hecla totaling $214,209. Interest expense related to this note for the years
ended December 31, 1999, 1998 and 1997 was $66,959, $69,830 and $59,519,
respectively.
-19-
<PAGE> 20
5. Related Party Transactions
--------------------------
In addition to related party transactions described in Notes 2 and 4,
during the years ended December 31, 1998 and 1997, general and administrative
expenses of $279 and $16,387, respectively, were charged to ConSil by Hecla.
There were no charges for general and administrative expenses to ConSil by Hecla
in 1999. Also, during the year ended December 31, 1997, ConSil sold its
remaining fixed assets to Hecla at net book value ($14,655) in partial
settlement of amounts due to Hecla.
6. Fair Value of Financial Instruments
-----------------------------------
The following estimated fair value amounts have been determined using
available market information and appropriate valuation methodologies. However,
considerable judgment is required to interpret market data and to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts ConSil could realize in a current market
exchange.
The estimated fair values of financial instruments were as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------------
1999 1998
--------------------- ---------------------
Carrying Fair Carrying Fair
Amounts Value Amounts Value
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 11,209 $ 11,209 $ 11,236 $ 11,236
Other receivables 148 148 120 120
Income tax refund
receivable 8,000 8,000 16,000 16,000
Financial liabilities:
Current liabilities 466,034 466,034 395,012 395,012
Current note payable 711,000 711,000 700,000 700,000
</TABLE>
Due to the nature of cash and cash equivalents, receivables, and current
liabilities, the fair value approximates their carrying amounts. The fair value
of the note payable approximates its carrying value due to the term and variable
interest rate associated with the note.
-20-
<PAGE> 21
7. Geographic Segments
-------------------
The tables below present information about ConSil's single industry segment
(silver) as of and for the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
---------- --------- ---------
<S> <C> <C> <C>
Net income (loss)
United States $ (88,877) $ (86,603) $(428,319)
Mexico (868) 6,871 (105,848)
Canada 24 (230) (2,850)
--------- --------- ---------
$ (89,721) $ (79,962) $(537,017)
========= ========= =========
General corporate assets(1)
United States $ 17,669 $ 25,033 $ 48,010
Canada 1,515 1,870 6,563
Mexico 473 453 60,265
--------- --------- ---------
$ 19,657 $ 27,356 $ 114,838
========= ========= =========
</TABLE>
(1) General corporate assets consist primarily of cash and cash
equivalents and miscellaneous and income tax refund receivables.
8. Reconciliation of U.S. Generally Accepted Accounting Principles
---------------------------------------------------------------
(GAAP) to Canadian GAAP
-----------------------
ConSil prepares its consolidated financial statements in accordance with
generally accepted accounting principles as practiced in the United States.
There were no differences between U.S. CAAP and Canadian GAAP with respect to
stockholders' deficit at December 31, 1999 and 1998. The differences between
U.S. GAAP and Canadian GAAP with respect to the net loss for the years ended
December 31, 1999, 1998 and 1997 were as follows:
-21-
<PAGE> 22
1999 1998 1997
---------- ---------- ----------
Net loss for the year ended
December 31, per U.S. generally
accepted accounting principles $ (89,721) $ (79,962) $(537,017)
Adjustments to conform with Canadian
generally accepted accounting
principles:
Deferred income tax (provision)
benefit - - 8,000 (8,000)
---------- --------- ---------
Net loss for the year ended
December 31, per Canadian
generally accepted accounting
principles $(89,721) $ (71,962) $(545,017)
========== ========= =========
9. Basic and Diluted Loss Per Common Share
In accordance with SFAS 128, the following table presents a reconciliation
of the numerators (net loss) and denominators (shares) used in the basic and
diluted loss per common share computations for the years ended December 31,
1999, 1998 and 1997.
<TABLE>
<CAPTION>
1999 1998 1997
----------------------------------------------------------------------------------------------
Per Share Per Share Per Share
Net Loss Shares Amount Net Loss Shares Amount Net Loss Shares Amount
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net loss $(89,721) $(79,962) $(537,017)
Basic loss $(89,721) 9,449,707 $(0.01) $(79,962) 9,449,707 $(0.01) $(537,017) 9,449,753 $(0.06)
======== ========= ====== ======== ========= ====== ========= ========= ======
Effect of dilutive
securities (1)
Diluted loss $(89,721) 9,449,707 $(0.01) $(79,962) 9,449,707 $(0.01) $(537,017) 9,449,753 $(0.06)
======== ========= ====== ======== ========= ====== ========= ========= ======
</TABLE>
(1) Dilutive Securities
-------------------
As of December 31, 1999 and 1998, there were 120,000 and 180,000
shares, respectively, available for issue under granted stock options.
These options were not included in the computation of diluted loss per
common share as a loss was incurred in each of these years and their
inclusion would be antidilutive.
10. Stock Option Plans
------------------
At December 31, 1999, officers, key employees and directors had been
granted options to purchase common shares under stock option plans described
below. ConSil has adopted the disclosure-only provisions of SFAS 123. No
compensation expense was recognized under these plans in 1999, 1998 or 1997 for
options
-22-
<PAGE> 23
granted under the stock option plans. Had compensation cost for ConSil's stock
option plans been determined based on the fair value at the grant date for
awards consistent with the provisions of SFAS 123, ConSil's loss and per share
loss applicable to common shareholders for the year ended December 31, 1999,
1998 and 1997 would have been increased to the pro forma amounts indicated
below:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Loss applicable to common shareholders:
As reported $89,721 $79,962 $537,017
Pro forma $89,721 $79,962 $565,027
Loss applicable to common shareholders
per share:
As reported $ 0.01 $ 0.01 $ 0.06
Pro forma $ 0.01 $ 0.01 $ 0.06
</TABLE>
There were no options granted in 1999 or 1998. The fair market value of
each option granted in 1997 is estimated on the date of grant using the Black-
Scholes option-pricing model with the following weighted average assumptions:
Expected dividend yield 0.00%
Expected stock price volatility 93.23%
Risk-free interest rate 6.42%
Expected life of options 5.0 years
The grant date fair value of options granted in 1997 was $0.65.
In 1997, the shareholders of ConSil approved two stock option plans. The
ConSil Stock Option Plan provides for stock-based grants to selected officers,
directors and other key employees. The ConSil Corp. Incentive Stock Option Plan
provides for stock-based grants to participating employees. The option price of
stock options issued under the Incentive Stock Option Plan may not be less than
the fair market value on the date of grant. The terms of the options under
either plan shall be no longer than five years from the date of grant. During
1999 and 1998, there were no options granted under either plan. During 1997,
180,000 options to acquire shares were granted to ConSil's directors under the
ConSil Stock Option Plan. Of the options granted, 120,000 expired due to the
resignation of directors. Under the ConSil Corp. Incentive Stock Option Plan
335,000 options to acquire shares were granted to ConSil's officers.
Resignations of officers caused 275,000 of these options to expire. At December
31, 1999, there were 765,000 shares available for grant under the plans.
-23-
<PAGE> 24
Transactions concerning stock options pursuant to both of the above-
described plans are summarized as follows:
Exercise
Shares Price
--------- ---------
Outstanding, December 31, 1996 - - - -
Granted 515,000 $0.87
Expired (335,000) $0.87
--------
Outstanding, December 31, 1997 and 1998 180,000 $0.87
Expired (60,000) $0.87
--------
Outstanding, December 31, 1999 120,000 $0.87
========
All of the options outstanding as of December 31, 1999 are fully
exercisable and have a remaining life of 2.0 years. There were no amounts
charged to operations related to the plans in 1999 and 1998.
-24-
<PAGE> 25
PART III
---------
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
The information required by this item is incorporated herein by reference
to Item 12 of this report.
Item 11. Executive Compensation
----------------------
No executive compensation was paid during 1999, 1998, or 1997.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
(a) Security ownership of certain beneficial owners as of March 1, 2000:
Title Name and Amount and Percent
of Address of Nature of of
Class Beneficial Owner Beneficial Ownership Class
- ------- -------------------- -------------------- -----
Common Stock Hecla Mining Company
Coeur d'Alene, Idaho 7,418,300 shares 78.503
(b) Security ownership of management as of March 1, 2000:
<TABLE>
<CAPTION>
Common Shares
Year First Owned Beneficially,
Elected As Directly or Indirectly, Percent
Name Age A Director as of March 1, 2000 of Class (5)
---- --- ------------ ------------------------ ------------
<S> <C> <C> <C> <C>
Charles F. Asher (1) 78 1992 60,000 *
Director since 1992, Mr. Asher
is President of Plainview Mining
Company and has served as a
director of Merger Mines
Corporation and Verna Mae Mining
since 1987.
Nigel P.H. Cave 32 -0- *
Secretary since 1997.
Attorney at Law, Borden Ladner
Gervais since 1993.
Roger A. Kauffman (2) 56 1999 -0- *
President since September 10,
1999. Mr. Kauffman has
served as Vice President -
Chief Operating Officer of
Hecla Mining Company since 1996.
</TABLE>
-25-
<PAGE> 26
<TABLE>
<CAPTION>
Common Shares
Year First Owned Beneficially,
Elected As Directly or Indirectly, Percent
Name Age A Director as of March 1, 2000 of Class (5)
---- --- ---------- ----------------------- ------------
<S> <C> <C> <C> <C>
Michael B. White (3) 49 1989 61,000 *
Vice President since 1992 and
Secretary from 1982 to 1995.
Mr. White is Vice President-
General Counsel and Secretary of
Hecla Mining Company.
David F. Wolfe (4) 56 -0- *
Treasurer since 1993.
Mr. Wolfe is also Treasurer of
Hecla Mining Company.
All Officers and Directors as a Group (5 Individuals) 121,000 1.6%
</TABLE>
There are no family relationships between any of the executive officers and
directors.
* Less than one percent (1%) of the total issued and outstanding shares of
common stock.
(1) Consists solely of shares subject to options granted under ConSil's Stock
Option Plan issued at the rate of $0.87, expiring January 13, 2002.
(2) Additionally, Mr. Kauffman is the beneficial owner of 112,382 shares of
common stock of Hecla Mining Company, the majority shareholder of ConSil,
including 109,000 options currently exercisable. The exercise price of
these options is currently greater than the market price of Hecla Mining
Company's common stock.
(3) Includes 60,000 shares subject to options granted under ConSil's Stock
Option Plan issued at the rate of $0.87, expiring on January 13, 2002.
Additionally, Mr. White is the beneficial owner of 91,268 shares of common
stock of Hecla Mining Company, the majority shareholder of ConSil,
including 90,650 options currently exercisable. The exercise price of
these options is currently greater than the market price of Hecla Mining
Company's common stock.
(4) Additionally, Mr. Wolfe is the beneficial owner of 13,550 shares of common
stock of Hecla Mining Company, the majority shareholder of ConSil,
including 13,500 options currently exercisable. The exercise price of
these options is currently greater than the market price of Hecla Mining
Company's common stock.
-26-
<PAGE> 27
(5) In addition to the 9,449,707 shares of common stock currently outstanding,
the 120,000 shares subject to options granted under ConSil's Stock Option
Plan were deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the common stock owned by such
persons.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
Not Applicable.
-27-
<PAGE> 28
PART IV
--------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
----------------------------------------------------------------
(a) (1) Index to Consolidated Financial Statements:
Page
----
Report of Independent Accountants 9
Consolidated Balance Sheets at December 31, 1999
and 1998 10
Consolidated Statements of Operations for the
Years Ended December 31, 1999, 1998 and 1997 11
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1999, 1998 and 1997 12
Consolidated Statements of Changes in Stockholders'
Deficit for the Years Ended December 31, 1999,
1998 and 1997 13
Notes to Consolidated Financial Statements 14
(b) Reports on Form 8-K
None.
(c) Exhibits
The exhibit numbers in the following list correspond to the
numbers assigned to such Exhibits in Item 601 of Regulation S-K.
Number Description of Exhibits
------ -----------------------
10.1(a) Fifth Amendment to Loan
Agreement dated as of March 30,
1998 among Hecla Mining Company
and Registrant Attached
-28-
<PAGE> 29
Number Description of Exhibits
------ -----------------------
10.1(b) Sixth Amendment to Loan
Agreement dated as of December 31,
1998 among Hecla Mining Company
and Registrant Attached
10.1(c) Seventh Amendment to Loan
Agreement dated as of February 9,
2000 among Hecla Mining Company
and Registrant Attached
27 Financial Data Schedule
-29-
<PAGE> 30
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized, on March 28,
2000.
CONSIL CORP.
By: /s/ Roger A. Kauffman
-----------------------------
Roger A. Kauffman,
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Roger A. Kauffman 3/28/00 /s/ Michael B. White 3/28/00
- -------------------------------- ----------------------------------
Roger A. Kauffman Date Michael B. White Date
President, Chairman of the Vice President
Board and Director Director
(principal executive officer)
/s/ David F. Wolfe 3/28/00 /s/ Charles F. Asher 3/28/00
- ------------------------------- -----------------------------------
David F. Wolfe Date Charles F. Asher Date
Treasurer (principal accounting Director
and financial officer)
-30-
<PAGE> 31
LIST OF EXHIBITS TO BE FILED WITH THIS 10-K
Number Description of Exhibits
------ -----------------------
10.1(a) Fifth Amendment to Loan
Agreement dated as of March 30,
1998 among Hecla Mining Company
and Registrant Attached
10.1(b) Sixth Amendment to Loan
Agreement dated as of December 31,
1998 among Hecla Mining Company
and Registrant Attached
10.1(c) Seventh Amendment to Loan
Agreement dated as of February 9,
2000 among Hecla Mining Company
and Registrant Attached
27 Financial Data Schedule
-31-
<PAGE> 1
Exhibit 10.1(a)
LOAN AGREEMENT - FIFTH AMENDMENT
This Loan Agreement - Fifth Amendment (hereinafter referred
to as "Fifth Amendment") is made and effective as of the 30th day
of March, 1998, 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, August 1, 1997 and October 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 Fifth 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
TWENTY FIVE THOUSAND DOLLARS ($725,000) (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, 1999.
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:
(i) the individuals executing this Fifth 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 Fifth 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 Fifth Amendment
shall not be binding on either party except to the extent incorporated
in this Fifth Amendment and the Agreement.
-1-
<PAGE> 2
4. Consideration.
-------------
The consideration for this Fifth 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 Fifth 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 Fifth Amendment on the date first above written.
CONSIL CORP. HECLA MINING COMPANY
By /S/ Michael B. White By /S/ John P. Stilwell
-------------------------- ---------------------------
Name: Michael B. White John P. Stilwell
Title: Vice President Vice President
Chief Financial Officer
ATTEST:
/S/ Nathaniel K. Adams
-----------------------------------
Nathaniel K. Adams
Assistant Secretary
-2-
<PAGE> 3
STATE OF IDAHO )
) ss.
COUNTY OF KOOTENAI )
On this thirtieth day of March, in the year of 1998, before
me, the undersigned, a Notary Public in and for the State of
Idaho, personally appeared John P. Stilwell and Nathaniel K.
Adams, known or identified to me to be the Vice President and the
Assistant 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/ Tami D. Hansen
-----------------------------------
Notary Public
Residing at Newman Lake, Washington
My Commission Expires: 9/12/2003
STATE OF IDAHO )
) ss.
COUNTY OF KOOTENAI )
On this thirtieth day of March in the year of 1998, before
me, the undersigned, a Notary Public in and for the State of
Idaho, personally appeared Michael B. White, known or identified
to me to be the Vice President 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/ Tami D. Hansen
----------------------------------
Notary Public
Residing at Newman Lake, Washington
My Commission Expires: 9/12/2003
-3-
- 3 -
<PAGE> 1
Exhibit 10.1(b)
LOAN AGREEMENT - SIXTH AMENDMENT
This Loan Agreement - Sixth Amendment (hereinafter referred
to as "Sixth Amendment") is made and effective as of the 31st day
of December, 1998, 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, August 1, 1997, October 1, 1997 and March 30,
1998 (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 Sixth 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
TWENTY FIVE THOUSAND DOLLARS ($725,000) (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, 2000.
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:
(i) the individuals executing this Sixth 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 Sixth Amendment.
-1-
<PAGE> 2
3. Entire Agreement.
-----------------
This Sixth 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 Sixth Amendment
shall not be binding on either party except to the extent incorporated
in this Sixth Amendment and the Agreement.
4. Consideration.
-------------
The consideration for this Sixth Amendment shall be deemed
to be the extension of additional credit and additional time for
repayment, all as specified in Section 1 of this Sixth 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 Sixth 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 Sixth Amendment on the date first above written.
CONSIL CORP. HECLA MINING COMPANY
By /S/ Michael B. White By /S/ John P. Stilwell
-------------------------- -------------------------------
Name: Michael B. White John P. Stilwell
Title: Vice President Vice President
Chief Financial Officer
ATTEST:
/S/ Nathaniel K. Adams
--------------------------------
Nathaniel K. Adams
Assistant Secretary
-2-
<PAGE> 3
STATE OF IDAHO )
) ss.
COUNTY OF KOOTENAI )
On this thirty-first day of December, in the year of 1998,
before me, the undersigned, a Notary Public in and for the State
of Idaho, personally appeared John P. Stilwell and Nathaniel K.
Adams, known or identified to me to be the Vice President - Chief
Financial Officer and the Assistant 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/ Tami D. Hansen
----------------------------------
Notary Public
Residing at: Otis Orchards, Wash.
My Commission Expires: 9/12/2003
STATE OF IDAHO )
) ss.
COUNTY OF KOOTENAI )
On this thirty-first day of December in the year of 1998,
before me, the undersigned, a Notary Public in and for the State
of Idaho, personally appeared Michael B. White, known or
identified to me to be the Vice President 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/ Tami D. Hansen
-----------------------------------
Notary Public
Residing at Otis Orchards, Wash.
My Commission Expires: 9/12/2003
-3-
<PAGE> 1
Exhibit 10.1(c)
LOAN AGREEMENT - SEVENTH AMENDMENT
This Loan Agreement - Seventh Amendment (hereinafter
referred to as "Seventh Amendment") is made and effective as
of the 9th day of February, 2000, 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, August 1, 1997, October 1, 1997, March
30, 1998 and December 31, 1998 (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 Seventh 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
TWENTY FIVE THOUSAND DOLLARS ($725,000)
(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, 2001.
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:
-1-
<PAGE> 2
(i) the individuals executing this Seventh 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 Seventh Amendment.
3. Entire Agreement.
----------------
This Seventh 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 Seventh Amendment
shall not be binding on either party except to the extent
incorporated in this Seventh Amendment and the Agreement.
4. Consideration.
-------------
The consideration for this Seventh Amendment shall be deemed to be
the extension of additional credit and additional time for repayment, all
as specified in Section 1 of this Seventh 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 Seventh
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 Seventh Amendment on the date first
above written.
CONSIL CORP. HECLA MINING COMPANY
By: /S/ Michael B. White By: /S/ John P. Stilwell
-------------------------- -------------------------
Name: Michael B. White John P. Stilwell
Vice President Vice President -
Chief Financial Officer
ATTEST:
/S/ Nathaniel K. Adams
-----------------------------------
Nathaniel K. Adams
Assistant Secretary
-2-
<PAGE> 3
STATE OF IDAHO )
) ss.
County of Kootenai)
On this 9th day of February, in the year of 2000,
before me, the undersigned, a Notary Public in and for the
State of Idaho, personally appeared John P. Stilwell and
Nathaniel K. Adams, known or identified to me to be the Vice
President - Chief Financial Officer and the Assistant
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/ Tami D. Hansen
---------------------------------
Notary Public
Residing at: Otis Orchards, Washington
My Commission Expires: 9/12/2003
STATE OF IDAHO )
) ss.
County of Kootenai)
On this 9th day of February, in the year of 2000,
before me, the undersigned, a Notary Public in and for the
State of Idaho, personally appeared Michael B. White, known
or identified to me to be the Vice President 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/ Tami D. Hansen
-----------------------------------
Notary Public
Residing at: Otis Orchards, Washington
My Commission Expires: 9/12/2003
-3-
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