SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Horn Silver Mines, Inc.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Page P. Blakemore, Sr., Chairman of the Board,
President, Chief Executive Officer and Treasurer
----------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the Appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and O-11.
1) Title of each class of securities to which
transaction applies:
--------------------------------------------------
2) Aggregate number of securities to which transaction
applies:
--------------------------------------------------
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule O-11
(set forth the amount on which the filing fee is
calculated and state how it was determined:
---------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------
5) Total fee paid:
----------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule O-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------
2) Form Schedule or Registration Statement No.:
----------------------------------------------------
3) Filing Party:
----------------------------------------------------
4) Date Filed:
-----------------------------------------------------
<PAGE>
HORN SILVER MINES, INC.
701 Clift Building
10 West Broadway
Salt Lake City, Utah 84101
-------------
PROXY STATEMENT
Information Concerning Solicitation and Voting
General
The enclosed Proxy is solicited on behalf of the Board of
Directors of Horn Silver Mines, Inc. (the "Company") for use at
its Annual Meeting of Shareholders to be held Friday, December
20, 1996 at 10:00 a.m. local time, or at any adjournment thereof.
The purposes of the meeting are set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders. The
Annual Meeting will be held at the Red Lion Hotel, 255 South West
Temple, Salt Lake City, Utah. The Company will bear the cost of
this solicitation.
Record Date
Shareholders of record at the close of business on November
15, 1996, are entitled to notice of and to vote at the meeting.
At the record date, 121,679,316 shares of the Company's Common
Stock, no par value, were issued and outstanding and entitled to
be voted at the meeting.
Revocation of Proxies
Shareholders may revoke any appointment of proxy given
pursuant to this solicitation by delivering the Company a written
notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person. An
appointment of proxy is revoked upon the death or incapacity of
the Shareholder if the Secretary or other officer of the Company
authorized to tabulate votes receives notice of such death or
incapacity before the proxy exercises its authority under the
appointment.
Voting and Solicitation
Each shareholder will be entitled to one vote for each
share of Common Stock held at the record date. Assuming a quorum
is present, a plurality of votes cast by the shares entitled to
vote in the election of directors will be required to elect each
director. To approve the proposed amendments to the Company's
Articles of Incorporation, the number of votes cast in favor of
the proposed amendments must exceed the number of votes opposing
the amendments. It is estimated that the proxy materials will be
mailed to shareholders of record on or about November 29, 1996.
The principal executive offices of the Company are located at 701
Clift Building, 10 West Broadway, Salt Lake City, Utah 84101.
The Company will bear the cost of solicitation of proxies. In
addition to the use of the mail, proxies may be solicited
personally, by telephone, or by facsimile, and the Company may
reimburse brokerage firms and other persons holding shares in the
Company in their names or those of their nominees for their
reasonable expenses in forwarding soliciting materials to the
beneficial owners.
ELECTION OF DIRECTORS
Nominees
The Company's Bylaws currently provide for up to six
directors, and it is contemplated that a Board of six directors
will be elected at the meeting. The Board of Directors
recommends that the shareholders vote "FOR" the director nominees
listed below. Assuming a quorum is present, a plurality of votes
cast by the shares entitled to vote in the election of directors
will be required to elect each director. Unless otherwise
instructed, the proxy holders will vote the proxies received by
them for management's six nominees named below, all of whom are
presently directors of the Company. In the event that any
management nominee is unable or declines to serve as a director
at the time of the annual meeting, the proxies will be voted for
any nominee who shall be designated by the present Board of
Directors to fill the vacancy. In the event that additional
persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them in such a
manner as will ensure the election of as many of the nominees
listed below as possible. It is not expected that any nominee
will be unable or will decline to serve as a director. The term
of office of each person elected as a director will continue
until the next annual meeting of shareholders, or until such
person's successor has been elected and qualified. Officers are
appointed by the Board of Directors and serve at the discretion
of the Board.
In September 1996, the Board approved increasing the number
of Board positions from five to six. John P. Bogdanich was
appointed to fill the newly-created position effective in
September 1996.
The name of and certain information regarding each nominee
is set forth below. See also "Certain Relationships and Related
Transactions."
<TABLE>
<CAPTION>
Director or Position with
Name Age Officer Since the Company
- ---- --- ------------- -----------------
<S> <C> <C> <C>
Page P.
Blakemore, Sr. 77 November 1971 Chairman of the
Board, President,
Chief Executive
Officer, and
Treasurer
Murray C.
Godbe, III 70 July 1984 Vice President
and Director
Warren M.
Blakemore 42 June 1983 Secretary and
Director
Walter Hoppe 87 June 1978 Director
Randall A.
Mackey 50 July 1981 Director
John P.
Bogdanich 43 September 1995 Director
</TABLE>
The following is a description of the business experience
of each of the nominee directors.
Page Blakemore has been President and Treasurer since July
1984 and a director of Horn Silver since November 1971. From
1971 to 1984, he served as the Vice President and a director of
Horn Silver. Mr. Blakemore has also been the President since
1970 of Basin and Range Exploration Company, which engages in
mineral exploration work in the western United States. He has
been the President since 1988 of Basin and Range International
Exploration Ltd., which engages the exploration and development
of gold and silver. He is also the President of Constitution
Petroleum, Inc. and has served in that capacity since 1970.
Constitution Petroleum is engaged in oil and gas exploration in
Ohio and Pennsylvania. Mr. Blakemore has also been the President
of Cameron Mining Company since 1956, which engages in the mining
and drilling contracting business. He has also been Vice
President and a director since January 1991 of Con-Coyle Oil
Field Tool Company, which manufactures oil field tools. Finally,
Mr. Blakemore is a director of Alta United Mines Company.
Murray C. Godbe, III has been the Vice President and a
director of Horn Silver since July 1984. He has been the
President since 1974 of M.C. Godbe Consultants, Inc. which has
performed geological consulting work for a number of mining
companies. From 1969 to 1974, he was the President of East Utah
Mining Company, a Utah mining and oil and gas company. Mr. Godbe
received a B.Sc. degree in geology from the University of Utah in
1948 where he also did graduate work in geology in 1949.
Warren Blakemore, a son of Mr. Page Blakemore, has been the
Secretary of Horn Silver since January 1985 and a director since
June 1983. He received a B.S. degree in geological engineering
from the University of Utah in 1978. He has also been the
Production Supervisor of Constitution Petroleum, Inc. since 1977
and President of Constitution Gas Transport, Inc., a public
utility located in the State of Ohio since 1986. Constitution
Petroleum is engaged in oil and gas exploration in Ohio and
Pennsylvania. Mr. Blakemore has been the Secretary and a
director of Cameron Mining Company since 1978, which engages in
the mining and drilling contracting business. He has been
Secretary and a director of Con-Coyle Oil Field Tool Company
since January 1991, which manufactures oil field tools.
Walter Hoppe has been a director of Horn Silver since 1978.
He has worked as an independent mine consultant at Alta, Utah
since 1970. From 1952 to 1977 Mr. Hoppe was the Vice President
and a director of Alta United Mines Company. From 1964 to 1969,
he was a director of the old Horn Silver Mines Company. Mr.
Hoppe is also a director of Gunsite Oil & Gas Company. From 1933
to 1939 and from 1946 to 1952, Mr. Hoppe was an independent mine
operator at Alta, Utah. From 1942 to 1945, Mr. Hoppe was on loan
from the U.A. Army to the U.S. Bureau of Mines while he served on
an exploration team for strategic minerals at Alta, Utah.
Randall A. Mackey has been a director of Horn Silver since
July 1981. He has been a shareholder in the Salt Lake City law
firm of Mackey Price & Williams since May 1989. From 1979 to
1989, he practiced law with the Salt Lake City law firm of Fabian
& Clendenin, where he was a shareholder and director of the firm
from 1982 to 1989. From 1977 to 1979, Mr. Mackey was associated
with the Washington, D.C. law firm of Hogan & Hartson. Mr.
Mackey received a Bachelor of Science degree in Economics from
the University of Utah in 1968, a Master in Business
Administration degree from Harvard University in 1970, a Juris
Doctor degree from Columbia University in 1975, and a Bachelor of
Civil Law degree from Oxford University in 1977. Mr. Mackey is
also a director of Paradigm Medical Industries, Inc., which
develops and manufactures ophthalmic surgical systems.
John P. Bogdanich has been a director of Horn Silver since
September 1995. He has been President since 1981 of PAB Oil &
Mining, Inc., which engages in the mining and oil and gas
business.
All directors of the Company hold office until the next
annual meeting of the stockholders and until their successors
have been duly elected and has qualified. All of the officers
serve at the pleasure of the Board of Directors.
The Board of Directors of Horn Silver held three meetings
during the fiscal year ended December 31, 1995. Each of the
directors attended at least 75% of the aggregate number of
meetings of the Board.
No officer or director of Horn Silver has, within the past
five years, been involved in any insolvency, criminal or
securities violations proceedings.
Security Ownership of Management and Others
The following table sets forth security ownership
information as of October 31, 1996 (i) for persons known by the
Company to own beneficially more than 5% of the Company's Common
Stock, (ii) for each director or nominee for director, and (iii)
for all officers and directors of the Company as a group:
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned
Number of Percent of
Name and Address of Shares Total
Beneficial Owner
- -------------------- --------- ----------
<S> <C> <C>
Page P. Blakemore, Sr. 30,011,493<F1> 24.7%
4735 Naniloa Drive
Salt Lake City, Utah 84117
Murray C. Godbe, III 3,635,500 3.0%
807 Fifth Avenue
Salt Lake City, Utah 84102
Randall A. Mackey 3,230,000 2.7%
1474 Harvard Avenue
Salt Lake City, Utah 84105
Walter Hoppe 2,400,000 2.0%
650 South 300 East, Apt. 403
Salt Lake City, Utah 84111
Warren M. Blakemore 2,025,000 1.7%
422 L Street
Salt Lake City, Utah 84105
John P. Bogdanich 500,000 *
2267 East Capricorn Way
Salt Lake City, Utah 84124
All directors and officers 41,802,293 34.4%
as a group (6 persons)
- ----------------------------
* Represents less than 1%.
<FN>
<F1> Includes 1,540,000 shares owned by Basin and Range
Exploration, a Utah corporation, of which Page P. Blakemore, Sr.
is the President; and 3,000,000 shares owned by Cameron Mining
Company, a Utah corporation, of which Mr. Blakemore is the
President. Mr. Blakemore has sole voting and investment power
with respect to the shares owned by Basin and Range Exploration
Company and Cameron Mining Company.
</TABLE>
Executive Compensation
The following table shows the cash compensation paid to all
officers and directors of the Company as a group for the year
ended December 31, 1995. It should be noted that none of the
officers or directors have received cash from the Company as a
form of compensation for performing their duties.
<TABLE>
<CAPTION>
Name of Individual Capacities in Cash
or Number in Group Which Served Compensation<F1>
- ------------------ ------------- ---------------
<S> <C> <C>
All executive officers
and directors as a
group (6 persons) $-0-
<FN>
<F1> Does not include 2,000,000 shares of the Company's Common
Stock issued to Page P. Blakemore, Sr. in consideration for his
services during 1995 as President, Chief Executive Officer and
Treasurer of the Company, nor does it include 500,000 shares of
the Company's Common Stock issued to each of the directors,
except for Mr. Blakemore, in consideration for serving as a
director during 1995. None of the officers or directors have
ever received cash as compensation for performing their duties.
</TABLE>
Horn Silver has no other employee profit sharing, pension,
or retirement plans.
Director's Fees
Directors of the Company, except for Page P. Blakemore,
Sr., are paid a director's fee in the form of the Company's
Common Stock and are reimbursed for any travel expenses incurred
in attending Board meetings. No additional amounts are paid by
the Company for committee participation or special assignments.
Each of the directors, except for Mr. Blakemore, was issued
500,000 shares of the Company's Common Stock for serving as a
director during 1995. The directors have not ever received cash
as compensation for performing their duties.
Certain Relationships and Related Transactions
In October 1996, the Company entered into an Option
Agreement (the "Agreement") with PAB Oil & Mining, Inc. ("PAB")
which grants to PAB the right to purchase up to 75% of the
outstanding shares of the Company's Common Stock for the sum of
$850,000. Page P. Blakemore, Sr., the President, Chief Executive
Officer and Treasurer of the Company, served as a director of PAB
from September 1993 to September 1996. John P. Bogdanich, a
director of the Company, currently serves as President and Chief
Executive Officer of PAB.
In 1990, the Company entered into a joint exploration
agreement with Cameron Mining Company ("Cameron") and PAB Oil &
Mining, Inc. ("PAB") to conduct exploration work on mining
properties in which the Company has a carried working interest in
the Taylor Mining District, White Pine County, Nevada. Cameron
and PAB were required to make lease payments to the Company in
the amount of $150 each month. The agreement was terminated in
December 1994. Mr. Blakemore, the President, Chief Executive
Officer and Treasurer of the Company, currently serves as
President of Cameron and served as a director of PAB from
September 1993 to September 1996.
Randall A. Mackey, a director of the Company, is President
and a shareholder of the law firm of Mackey Price & Williams,
which has rendered legal services to the Company. Legal fees and
related costs paid to the firm for the year ended December 31,
1994 totaled $4,190. There were no legal fees paid to the firm
during fiscal 1995 although the firm rendered legal services for
the Company during that period.
PROPOSED OPTION AGREEMENT WITH PAB OIL & MINING, INC.
On October 8, 1996, the Company entered into an Option
Agreement with PAB Oil & Mining, Inc. Upon execution of the
Agreement, PAB paid $25,000 to the Company to be used for general
and administrative expenses, including expenses related to a
shareholders meeting to approve the Agreement. If the Agreement
is not approved at the shareholders meeting, the Company has no
obligation to PAB to repay the $25,000 payment.
Under the terms of the Agreement, PAB is granted the right
to purchase shares of the Company's Common Stock, in
consideration for the payment of $175,000, so that after the
issuance of the shares, PAB will own 25% of the Company's issued
and outstanding Common Stock. PAB is required to exercise this
initial option within 18 months from the date of the Agreement,
or on or before April 7, 1998.
In the event that PAB exercises the initial option by
paying $175,000 to the Company, the Company is required to use
the funds, to the extent of not more than $100,000, to
rehabilitate the main access shaft of the Horn Silver Mine
located on the Company's mining properties in Milford, Utah, and
the main 600 foot haulage level, including the installation of an
approved double-drum hoist, rehabilitation of the existing
headframe, installation of piping for water and compressed air in
the shaft and the main 650 foot haulage level, replacement of the
underground track where needed, replacing any timbering in the
main 650 foot haulage level where required, and whatever
additional work is required to place the shaft and the main 650
foot haulage level in an operable condition. The required work
to rehabilitate the main access shaft of the Horn Silver Mine
must be performed by reputable independent mining contractors
selected on the basis of experience, ability and estimated costs
by the Company's Board of Directors.
The Agreement also grants to PAB a second option to
purchase from the Company additional shares of the Company's
Common Stock, in consideration for the payment to the Company of
$650,000, so that after the issuance of the initial shares to PAB
and these additional shares of the Company's Common Stock PAB
will hold 75% of the Company's issued and outstanding Common
Stock. This additional option must be exercised within 66 months
from the date of the Agreement, or on or before April 7, 2002.
The Agreement further provides that PAB may make partial
payments toward the second option and PAB shall be issued, on a
quarterly basis, shares of the Company's Common Stock
commensurate with the degree to which PAB has provided the
entirety of the option payment. All shares of the Company's
Common stock issued to PAB under the two options shall be
restricted and issued for investment purposes only, with each
certificate issued to PAB bearing an appropriate legend to that
effect.
As PAB makes payments to the Company under the second
option, the Company is required to use the funds to further
explore and develop the Horn Silver Mine properties. Finally,
the terms of the Agreement allow PAB to appoint at least two of
the six members of the Company's Board of Directors, one of whom
shall also be named as an officer of the Company. This right
shall continue throughout the option periods unless PAB elects to
terminate the Agreement.
The Board of Directors recommends a vote "for" the Option
Agreement with PAB, in which PAB is granted (i) an option to
purchase, for the sum of $200,000, shares of the Company's Common
Stock so that after the issuance of such shares PAB will then own
25% of the total issued and outstanding shares of the Company's
Common Stock, and (ii) a second option to purchase, for the sum
of $650,000, additional shares of the Company's Common Stock so
that after the issuance of such shares PAB will then own 75% of
the issued and outstanding shares of the Company's Common Stock.
PROPOSED REVERSE STOCK SPLIT
The proposed 1-for-20 reverse stock split will decrease the
number of outstanding shares of the Company's Common Stock from
121,779,362 shares to 6,088,966 shares. The reverse stock split
is a required condition in the Agreement with PAB. Paragraph 6
of the Agreement requires the Company to use as much of the
$25,000 initial payment as necessary to hold a shareholders
meeting to approve the Agreement with PAB and to effect a reverse
split of the shares of Company's Common Stock then outstanding on
the basis of one share for each twenty shares then so
outstanding.
The Board of Directors recommends a vote "for" the 1-for-20
reverse stock split of the Company's Common Stock.
PROPOSED AMENDMENTS TO THE ARTICLES OF INCORPORATION
The proposed amendment would revise the Articles of
Incorporation to reduce the number of authorized shares of Common
Stock from 200,000,000 shares to 30,000,000 shares and to change
the par value of Common Stock from no par value to $.001 par
value.
The reduction in the number of authorized shares is
proposed on account of the 1-to-20 reverse stock split that will
decrease the number of outstanding shares of the Company's Common
Stock from 121,779,362 shares to 6,088,966 shares. In addition,
paragraph 6 of the Agreement with PAB requires the number of
authorized shares of the Company's Common Stock to be in an
amount sufficient to allow for the issuance of the Company's
Common Stock to PAB as provided in the Agreement. If PAB elects
to exercise both options under the Agreement, the Company must
issue a total of 18,266,898 shares of its Common Stock to PAB in
order for PAB to then own 75% of the issued and outstanding
shares of the Company's Common Stock. To allow for the issuance
of these shares to PAB following the reverse stock split,
management recommends that the Articles of Incorporation be
amended to provide for the authorization of 30,000,000 shares of
Common Stock.
The change in the par value of the Company's Common Stock
from no par value to $.001 par value is proposed to reduce the
annual fees the Company must pay in Utah and Nevada where it is
doing business, as well as in other states the Company may elect
to do business in the future. Annual fees to transact business
in various states are ordinarily based on the outstanding shares
of a Company's stock and the stock's par value. Stock having a
no par value is often defined to be a value well in excess of a
$.001 par value for purposes of determining the amount of annual
fees to be paid. Thus, changing the par value of the Company's
Common Stock to $.001 will result in a cost savings to the
Company.
The Board of Directors recommends a vote "for" the
amendments to the Articles of Incorporation as follows: (i) to
reduce the authorized shares of Common Stock from 200,000,000
shares to 30,000,000 shares, and (ii) to change the par value of
Common Stock from no par value to $.001 par value.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accounting firm of Tanner & Co. has
been the Company's independent auditor since fiscal year 1992.
The Board of Directors has appointed Tanner & Co. to audit the
consolidated financial statements of the Company for the fiscal
year ending December 31, 1996, and recommends that shareholders
vote "FOR" ratification of such appointment. Such appointment
shall be approved if more votes are cast in favor of the
appointment than are cast against it. Representatives of Tanner
& Co. are expected to be present at the meeting, and will have
the opportunity to make a statement if they so desire, and are
expected to be available, to respond to appropriate questions.
FINANCIAL INFORMATION
The Company's financial statements and related financial
information are incorporated by reference in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 as filed
with the Securities and Exchange Commission. A copy of the
Company's Annual Report on Form 10-K for the year ended December
31, 1995 will be mailed to the shareholders together with the
Proxy Statement and Proxy.
OTHER MATTERS
The Company knows of no other matters to be submitted to
the meeting. If any other matters properly come before the
meeting, it is the intention of the persons named in the enclosed
form of proxy to vote the shares they represent as the Company
may recommend.
By the Order of Board of Directors
---------------------------------
Page P. Blakemore, Sr.
Chairman of the Board, President,
Chief Executive Officer and
Treasurer
DATED: November 29, 1996.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
[ ] 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 0-9739
Horn Silver Mines, Inc.
(Name of small business issuer in its Charter)
UTAH 87-0299832
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
701 Clift Building, 10 West Broadway
Salt Lake City, Utah 84111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (801) 322-5193
Securities registered pursuant to Section 12(d) of the Act:
Name of each exchange
Title of each Class on which registered
------------------- ---------------------
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, no par value
(Title of Class)
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
YES X NO
------- -------
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form,
and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. (X)
The approximate aggregate market value of the voting stock
held by non-affiliates of the registrant is $3,828,000 calculated
using a per share price of $.05 as of March 31, 1996. For
purposes of this calculation, the registrant has only included
the number of shares held by its officers and directors in
determining the shares held by non-affiliates. As of March 31,
1996, 117,279,316 shares of Common Stock were outstanding.
<PAGE>
HORN SILVER MINES, INC.
INDEX-FORM 10-K
PART I
Page
Item 1. Business. . . . . . . . . . . . . . . . . . . . . 1
Organization and General Development . . . . . . 1
Ore Occurrences and Possible Metallurgical
Treatment Methods . . . . . . . . . . . . . . . . 2
Exploration and Development Activities in 1989. . 3
Exploration and Development Activities in 1990. . 3
Exploration and Development Activities in 1991. . 4
Exploration and Development Activities in 1992. . 4
Exploration and Development Activities in 1993. . 5
Exploration and Development Activities in 1994. . 5
Exploration and Development Activities in 1995. . 6
Competition . . . . . . . . . . . . . . . . . . . 6
Government Regulations . . . . . . . . . . . . . 7
Employees . . . . . . . . . . . . . . . . . . . . 7
Item 2. Properties. . . . . . . . . . . . . . . . . . . . 8
General . . . . . . . . . . . . . . . . . . . . . 8
Horn Silver Mine Properties, Milford County,
Utah . . . . . . . . . . . . . . . . . . . . . . 8
The Horn Silver Mine. . . . . . . . . . . . . . . 8
Mine Development. . . . . . . . . . . . . . . . . 8
The Cactus Mine . . . . . . . . . . . . . . . . . 8
Geology . . . . . . . . . . . . . . . . . . . . . 8
Osage Oil Field, Osage County, Oklahoma . . . . . 9
Title to Mining Properties. . . . . . . . . . . . 9
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . 10
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters . . . . . . . . . . . . . . . 10
Item 6. Selected Financial Data . . . . . . . . . . . . . 11
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . 11
Liquidity and Capital Resources . . . . . . . . . 11
Results of Operations . . . . . . . . . . . . . . 11
Year Ended December 31, 1995 Compared
to Year Ended December 31, 1994 . . . . . . . 11
Year Ended December 31, 1994 Compared
to Year Ended December 31, 1993 . . . . . . . 12
Item 8. Financial Statements and Supplementary Data . . . 12
Item 9. Changes in and Disagreements on Accounting and
Financial Disclosure. . . . . . . . . . . . . . . 12
<PAGE>
PART III
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . . . 12
Item 11. Executive Compensation . . . . . . . . . . . . . . 14
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . 14
Item 13. Certain Relationships and Related Transactions . . 15
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K. . . . . . . . . . . . . . . . . . . . 15
Index to Financial Statements and Schedules . . . . . . . . . 17
Signatures
<PAGE>
PART I
ITEM 1. Business
Organization and General Development
Horn Silver Mines, Inc. (hereinafter referred to as "Horn
Silver" or the "Company") engages principally in mining and in
the acquisition, exploration, and development of interests in
mineral properties located primarily in Utah and Nevada. In
addition, Horn Silver has a royalty interest in developed oil and
gas properties located in Oklahoma. Horn Silver was incorporated
under the laws of the State of Utah in 1971. The executive
offices of the Company are located at 701 Clift Building, 10 West
Broadway, Salt Lake City, Utah 84111.
From the time of its incorporation in 1971 until mid 1974,
Horn Silver was essentially inactive. During that period of
time, negotiations were carried out to acquire mining properties,
but none of the transactions was concluded. In July, 1974, Horn
Silver negotiated the acquisition of two mining contracts to mine
and operate the old Horn Silver Mine properties consisting of 244
patented mining claims located near Frisco, Utah, in the San
Francisco Mining District in Beaver County, Utah (the "Horn
Silver Mine properties") from Cameron Mining Company ("Cameron"),
an affiliated corporation. Cameron agreed to transfer its
contract rights to operate these properties consisting of
approximately 4,100 acres and the results of its exploration
efforts to Horn Silver in exchange for the issuance of 1,500,000
shares of Horn Silver's Common Stock.
The Horn Silver Mine properties were formerly owned 60% by
Tintic Mineral Resources, Inc. ("Tintic"), a Utah corporation,
and 40% by Wangenheim and Wanger, a California limited
partnership. Horn Silver obtained an option to purchase the
Wangenheim's 40% interest in the properties for $200,000 and used
the proceeds from a public offering of the Company's Common Stock
in August, 1980, to exercise the option. Horn Silver acquired
the remaining 60% interest in the properties from Tintic as a
result of a merger with Tintic which was completed in June, 1983.
Horn Silver purchased milling equipment and a right to
lease a patented millsite adjoining the Horn Silver Mine
properties from Tintic in 1974. Horn Silver also acquired the
right to use a mineshaft in an adjoining mine owed by Tintic to
the 800 foot level where a crosscut provides access to the old
Horn Silver Mine. In exchange for these rights, Horn Silver
issued 2,000,000 shares to Tintic.
On August 12, 1980, Horn Silver completed a Regulation A
offering of its Common Stock. Horn Silver sold the entire
offering of 50,000,000 shares at a price of $0.02 per share.
From this offering, the net cash proceeds to Horn Silver, after
deducting underwriting commissions and other expenses of the
offering, was $815,800. Horn Silver used $200,000 of the net
proceeds to exercise the option to purchase a 40% interest in 244
mining claims from Wangenheim & Wanger.
On June 30, 1983, the stockholders of Horn Silver approved
a proposed merger between Horn Silver and Tintic. As a result of
the approval of the merger, Tintic was merged into Horn Silver.
Horn Silver became the surviving corporation and, under the terms
of the Merger Agreement, the holders of Tintic Common Stock
became entitled to five shares of Horn Silver Common Stock for
each of their shares of Tintic Common Stock. The principal asset
of Tintic was a 60% interest in the Horn Silver Mine properties.
On November 10, 1988, Horn Silver entered into a Mining
Lease with Frisco Rock, Inc. ("Frisco"), which provides for the
exploration, development, and mining for marble, limestone, and
structural or decorative stone on seven patented mining claims
situated in the San Francisco Mining District in Beaver County,
Utah. The lease is for a term of 20 years. The lease requires
Frisco to pay minimum royalty payments to Horn Silver in the
amount of $200 each month during the first year of the lease;
thereafter, beginning on December 1, 1989, and continuing during
the remainder of the lease, the royalty payments shall be in the
amount of $400 each month. The lease also requires Frisco to pay
a production royalty to Horn Silver in the amount of $1.50 for
each ton of rock removed from the mining properties.
On December 5, 1988, Horn Silver entered into a Mining
Lease and Operating Agreement with Arapahoe Mining Corporation
("Arapahoe"), a Canadian mining company, which provides for the
exploration and, if warranted, the development and mining on the
patented mining claims which comprise the Horn Silver Mine
properties. On February 1, 1991, Horn Silver entered into an
Amended Mining Lease and Operating Agreement with Arapahoe, the
terms of which are identical in most respects to the initial
agreement. Horn Silver terminated the Amended Mining Lease and
Operating Agreement as of September 1, 1992, due to Arapahoe's
failure to make the required lease payments to Horn Silver
thereunder. During the period from December 5, 1988 to September
1, 1992, Arapahoe expended over $1,200,000 for exploration and
development work on the Horn Silver Mine properties. See "Item
1. Business - Mining Lease and Operating Agreement with Arapahoe
Mining Corporation," "Exploration and Development Activities in
1989," "Exploration and Development Activities in 1990," and
"Exploration and Development Activities in 1991."
In 1989, Horn Silver acquired a one-half interest in the
Imperial Mine and adjacent patented mining claims that adjoin the
Horn Silver Mine properties and located approximately 200 new
mining claims covering approximately 4,000 acres which are
contiguous to the Horn Silver Mine properties. The Imperial Mine
consists of seven patented mining claims covering 105 acres. In
1990, Horn Silver located an additional 25 new mining claims
covering approximately 500 acres which are also contiguous to the
Horn Silver Mine properties. See "Item 1. Business - Exploration
and Development Activities in 1989" and "Exploration and
Development Activities in 1990."
With the addition of the mining claims that were located in
1989 and 1990, there were approximately 8,600 acres comprising
the Horn Silver Mine properties and adjoining properties.
However, as of August 1993, the Company abandoned approximately
230 of its unpatented mining claims, thereby reducing the total
acres of patented and unpatented mining claims comprising the
Horn Silver Mine properties to approximately 6,000 acres. There
are no proven or probable reserves on any of the Company's
properties.
In 1990, Horn Silver acquired a 30% carried working
interest in 81 unpatented mining claims covering approximately
1,620 acres in the Taylor Mining District in White Pine County,
Nevada. Horn Silver subsequently entered into a joint
exploration agreement with Cameron Mining Company ("Cameron") and
Pab Oil & Mining, Inc. ("Pab") to conduct exploration work on the
mining properties. Exploration and development activities were
conducted on these properties through December 1994 when the
joint exploration agreement was terminated by Cameron and Pab,
and the properties were returned to the owner. See "Item 1.
Business - Exploration and Development Activities in 1994."
On December 19, 1991, Horn Silver entered into a joint
venture agreement with Arapahoe and Great Basin Exploration &
Mining Co. ("Great Basin"), a Nevada mining company, which
provided Great Basin with the exclusive right to conduct
exploration and development activities for metallic ores on the
Horn Silver Mine properties and to acquire a 70% interest in the
Amended Mining Lease and Operation Agreement from Arapahoe by
making $400,000 in direct payments to Arapahoe and by expending
in excess of $2.0 million over a five-year period for exploration
and development activities on the Horn Silver Mines properties.
This joint venture agreement was terminated on September 1, 1992,
on account of Horn Silver having terminated the Amended Mining
Lease and Operating Agreement with Arapahoe as of that date. See
"Item 1. Business - Exploration and Development Activities in
1992."
On April 28, 1994, Horn Silver Mine entered into a mining
lease with Dotson Exploration Company ("Dotson Exploration"), a
Utah mining company, which conveyed to Dotson Exploration the
right to conduct exploration and, if warranted, development and
mining activities on 13 patented lode mining claims covering 219
acres located in Beaver Lake Mining District. In the event any
ores are mined from the mining properties, Dotson Exploration
agrees to pay to Horn Silver a 5% royalty on all ores mined from
the properties. Dotson Exploration also agrees to pay Horn
Silver $10,000 in advance royalties upon execution of the lease,
with annual payments thereafter of $7,500 per year. The lease
was subsequently transferred by Dotson Exploration to Centurion
Mines Corporation ("Centurion"). Centurion conducted an
extensive drilling program on the mining properties in 1994 and
1995. See "Item I. Business - Exploration in 1994" and "Item I.
Business - Exploration in 1995."
In addition to the Horn Silver Mine and adjoining
properties and the carried working interest in undeveloped
properties located in Nevada, Horn Silver owns a royalty interest
in developed oil and gas properties in Oklahoma. See "Item 2.
Properties - Osage Oil Field, Osage County, Oklahoma."
Ore Occurrences and Possible Metallurgical Treatment Methods
The principal property of Horn Silver is a wholly-owned
interest in the Horn Silver Mine properties located in Beaver
County, Utah, which includes the Horn Silver and Cactus Mines, as
well as several smaller mines that were productive in the past.
These mines have produced significant amounts of silver, lead,
copper, zinc and gold. These minerals, which have been mined in
the past from the properties, exist in both the oxidized and
sulfide state. Treatment of a given mineral is dependent upon
its physical and chemical character.
Silver ores, together with lead, zinc and copper ores, have
been produced in the past from several localities on the Horn
Silver Mine properties. The sulfide lead-silver ores, such as
those previously mined in the hypogene portion of the properties,
are ordinarily ground in a mill, after which the lead and zinc
are separated by selective flotation with the silver often
accompanying the lead. The oxidized lead-silver ores are sent
directly to smelters. Benification of oxidized lead-silver ores
generally result in low recovery and known hydrometallurgical
methods are complex and expensive.
Crude non-sulfide zinc ores are not directly saleable,
except to lead smelters having a fuming plant where crude ore is
charged with hot slag. Various hydrometallurgical procedures
have been suggested by the U.S. Bureau of Mines; however, such
processes are thus far only employed in smelters located in
Europe and Japan.
In the past, gold ores occurring in lead-silver ores have
been shipped to lead smelters for processing, whereas siliceous
gold-silver ores have been shipped to copper smelters for
processing. Where the siliceous gold-silver ores are free of
cyanicides, they are treated by cyanidation in which most of the
silver contents in the ores are also recovered.
Copper ores have been mined at the Cactus locality in
Copper Gulch. The only copper mineral known to exist in the past
in commercial quantities and grade is chalcopyrite or copper iron
sulfide, which is recoverable by grinding and flotation. The
flotation concentrates are then sold to a copper smelter. There
is presently considerable demand for copper concentrates and the
prevailing price of copper, primarily due to foreign imports,
renders many domestic operations non-economic.
Exploration and Development Activities in 1989
During 1989, Arapahoe expended over $700,000 for
exploration and development activities on the south end of the
Horn Silver Mine properties. This work included the preparation
of new topographic and aerial maps, the construction of several
miles of new roads, drill site preparations, the excavation of
test trenches, drilling, geophysical exploration and sampling.
New mining properties covering approximately 4,000 acres were
located by Horn Silver contiguous to the Horn Silver Mine
properties. These mining properties consisted at the time of
approximately 200 unpatented mining claims and two Utah State
mineral leases. These new properties have been included with the
mining claims which are subject to the Amended Mining Lease and
Operating Agreement with Arapahoe.
The drilling that was performed by Arapahoe in 1989
occurred on a series of five geophysical anomalies. The holes
totalled over 1,500 feet in cumulative length. More than 1,000
surface and underground samples were taken and analyzed. The
most promising drilling results were obtained from the holes
drilled in the Washington-Double Barrel Tunnel vicinity where
mineralization of up to 365 feet in thickness was found
containing several intercepts of commercial lead zinc silver ore
up to 20 feet thick. This discovery was made in the Frisco
Silver area about one mile west of the Horn Silver Mine.
The two holes drilled by Arapahoe in the limestone footwall
of the Horn Silver Mine failed to intersect any significant
mineralization. It is management's opinion that the holes were
bottomed at an insufficient depth to encounter the bedded ore
expected. These holes have been left open for possible re-entry
and deepening at a later time.
One additional major development in 1989 was the
acquisition by Horn Silver for cash of a one-half interest in the
Imperial Mine and adjacent patented mining claims. This group of
claims is enclosed by the Horn Silver Mine properties and
contains large reserves of sulfide copper ore, as well as
important tunnel sites which provide an opportunity to initiate
bulk mining operations into the adjoining Horn Silver Mine
properties. The new road that was constructed by Arapahoe links
the Horn Silver Mine with the Imperial Mine and adjacent claims
affording access and drill sites on properties previously
accessible only by horseback.
Exploration and Development Activities in 1990
During 1990, Arapahoe expended over $350,000 for
exploration and development activities on the Horn Silver Mine
properties. The work included continued preparation of
topographic and aerial maps, drill site preparations, excavation
of test trenches, drilling, geophysical exploration and sampling,
and the construction of a new road. The new road is from the
Frisco town site over the Frisco summit south of Frisco Peak to
the access road near the Cactus Mine. The new road crosses an
area where there is a significant magnetic low. While
constructing the new road, Arapahoe discovered an extensive
mineralized area of altered quartz monzonite with many of the
surface expressions which are typical of sulfide porphyry.
Several drill holes are planned in 1991 for the purpose of
exploring this mineralized area.
New mining properties covering approximately 500 acres were
located in 1990 by Horn Silver contiguous to the Horn Silver Mine
properties. These new mining properties consist of 25 unpatented
mining claims. These new properties have been included with the
mining claims which are subject to the Amended Mining Lease and
Operating Agreement. As a result of the new mining properties,
Horn Silver's claim-acreage has increased to approximately 8,600
acres.
The drilling that was performed by Arapahoe during 1990
consisted of a series of shallow inclined holes in the breccia
zone at the south end of the Horn Silver Mine properties. Five
of the holes drilled intersected commercial grade mineralization,
three of which penetrated a gold bearing breccia pipe. The next
phase of the drilling program planned by Arapahoe in 1991 will
consist of additional drilling at the south end of the Horn
Silver Mine properties and of drilling in the Cactus Mine area
and in the mineralized area which was discovered when the new
road was constructed.
Other exploration activities during 1990 included drilling
and surface mapping of the Washington claim, which contains a
large amount of wollastonite (fibrous calcium silicate). The
claim was delineated and found to contain in excess of one
million tons of wollastonite. Wollastonite is now in
considerable demand as a substitute for asbestos.
Exploration and Development Activities in 1991
During 1991, Arapahoe expended over $150,000 for
exploration and development activities on the Horn Silver Mine
properties. The work included preparation of geological maps,
drill site preparations, excavation of test trenches, extensive
geochemical sampling, and construction of a new road. In
addition, Page Blakemore, President of Horn Silver, personally
spent an additional $10,000 for the preparation of four drill
sites and for the drilling of three rotary holes in the altered
intrusive area east of the Cactus ore body (at the northwest
corner of the Horn Silver Mine properties). This work was
performed at Mr. Blakemore's expense without reimbursement by the
Company. All three of the holes which were drilled exhibited
large amounts of pyrite and were anomalous in copper, zinc, gold,
silver and other heavy metals, but contained no commercial grade
mineralization.
In constructing the new road from Frisco Pass south to
Indian Grave Peak, numerous structures were cut which eventually
will be explored. These new structures contain copper and gold
mineralization in quartz veins, veins of specularite, bodies of
jasperoid in limestone and considerable amounts of contact
metamorphic rocks developed between blocks of limestone and the
late intrusive quartz monzonite. None of these exposures had
previously been mapped because of the vegetation and scree. The
new road will give access to several previously discovered but
unexplored mineralized breccia pipes which are planned as
drilling targets during 1992.
No additional properties were acquired by Horn Silver
during 1992. Exploration activities, including sampling, were
conducted on the Taylor (Cheney) claims in White Pine County,
Nevada by Goldfield Mining Company through a farm-out
arrangement. Horn Silver holds a 30% carried working interest in
these claims. This work resulted in the discovery of a large
area of gold mineralization with several surface samples of
commercial grade.
Exploration and Development Activities in 1992
During 1992, Great Basin Exploration & Mining Co., Inc.
("Great Basin") drilled two deep diamond core holes on properties
located on the east side of the San Francisco Range on the Horn
Silver Mine properties. These holes were drilled in order to
establish the presence of a different and separate intrusive on
the properties. The core analysis revealed that the properties
which were drilled are anomalous in copper, lead, zinc, silver
and gold, but the analysis did not reach ore grade in any of the
metals. The Company's management regards the results of the
drilling as very favorable but not conclusive. In addition to
drilling, Great Basin completed geochemical sampling and
geological mapping on the properties during this period.
Exploration work was also completed in 1992 by Crown
Resources Corp. on properties located on the west side of the San
Francisco Range known as the Loeber Gulch area. As a result of
these exploration activities by Crown Resources, an important
gold and silver anomaly was discovered in the Washington shaft
area. During the same period, Great Basin also drilled and
abandoned the Shauntee Hills claims, located southwest of the San
Francisco Range on the Horn Silver Mine properties, and Gold
Fields Consolidated drilled and abandoned the Hidden Treasure
claims, located south of the Shauntee Hills claims.
Exploration and Development Activities in 1993
During 1993, Horn Silver conducted exploration work on its
mining properties in the Beaver Lake Mining District and the San
Francisco Mining District. The exploration activities conducted
in the Beaver Lake Mining District included construction of
approximately three miles of access roads, preparation of four
drill sites, stripping of various copper bearing outcrops, and
drilling of a hole about 500 feet in depth. The hole was drilled
in order to establish the presence of copper on the properties.
The core analysis revealed copper mineralization from the surface
to about 500 feet in depth. The exploration activities conducted
in the San Francisco Mining District included the rehabilitation
of the two main trans-montane roads that cross the San Francisco
Mountain Range, which had been damaged by the winter weather.
Also in 1993, Dotson Exploration Company ("Dotson
Exploration"), which has performed exploration and development
work on the Horn Silver Mine properties in the past for Arapahoe,
performed exploration work on the mining properties in the Beaver
Lake Mining District. Included among the exploration activities
by Dotson Exploration during this period was the construction of
about three miles of access roads to an otherwise inaccessible
group of mining claims, and the drilling of three holes three
miles northwest of the OK Copper Mine. All three of the holes
that were drilled exhibited copper mineralization.
In addition to exploration activities in the Beaver Lake
Mining District, Horn Silver conducted excavation work during
1993 at the north end of the open pit area on the Horn Silver
Mine properties, which is located near the King David Mine shaft.
The excavation work revealed a flat fault that displaced the
mineral zone to the north and east suggesting the possible
existence of near surface mineralization, which has been
previously undiscovered.
Exploration activities were also conducted in 1993 on the
mining properties in the Taylor Mining District, White Pine
County, Nevada, in which Horn Silver has a 30% carried working
interest. Great Basin Exploration & Mining Co., Inc., which held
a leasehold interest in the properties in 1993, drilled five
holes during the period. The results of the drilling indicated
gold mineralization on the properties. The Company's management
regards the results of this drilling as favorable; however, no
commercial grade mineralization has yet been discovered.
In addition to the above exploration activities, the
Company has also examined more than 50 gold prospects in the
states of Arizona, Nevada and California in 1993. Horn Silver
desires to acquire additional mining properties at favorable
terms which can, in turn, be leased or sold to major mining
companies, with Horn Silver receiving advanced payments and
retaining a royalty interest. Negotiations are currently in
process to obtain leases under such terms and conditions on two
mining properties the Company had examined in Mohave County,
Arizona. Metallurgical testing was conducted during 1993 on ores
from the Horn Silver Mine properties and on the ore samples
gathered from the various properties examined in Arizona, Nevada
and California.
Exploration and Development Activities in 1994
During 1994, exploration work continued on the Company's
mining properties in the Beaver Lake Mining District. The
Company entered into a mining lease with Dotson Exploration
covering certain patented lode mining claims owned by the Company
within this mining district. Under this lease, Dotson
Exploration was granted the right to perform exploration and
development work on the mining properties covered by the lease.
The lease was subsequently assigned by Dotson Exploration to
Centurion Mines Corporation ("Centurion"). After conducting an
extensive drilling program on the mining properties covered by
the lease, as well as on properties surrounding the Company's
other mining properties in the Beaver Lake Mining District,
Centurion announced a major discovery of ore in the form of a
copper porphyry deposit. The discovery is reported to be a large
ore body open in several directions. Centurion also announced
plans to conduct a leaching operation to extract the ore using a
solvent extraction-electrowinning method to produce high grade
copper from the mine.
The Company conducted very limited exploratory and
development activities during 1994 on the Horn Silver Mine
properties. This decrease in activity was due to the limited
funds available to the Company. The Company has also discovered
what may be a near surface faulted segment of original, high
grade lead silver ore at the north end of the caved surface area
of the Horn Silver Mine properties. However, no additional work
was accomplished on these properties during 1994 due to limited
resources.
Although gold properties have been excavated from mining
properties in White Pine County, Nevada, in which the Company has
a 30% carried working interest, these properties have been
returned to the land owner. The reason for the return of these
gold properties was that the mining company performing the
exploratory and development work on the properties was unable to
discover persistent gold mineralization, and the cost of
maintaining the large block of unpatented mining claims had risen
under new federal mining regulations, making the operation
unprofitable.
In addition to the above activities, the Company continued
examining various properties for gold prospects in the states of
Arizona, Nevada, and California in 1994. The Company is also
presently negotiating with different companies interested in the
zinc deposits on the Horn Silver Mine properties, the
wollastonite deposits in Loeber Gulch, the marble quarry owned by
the Company, and the copper porphyry possibilities southeast and
northwest of the Cactus Mine. The Company is actively seeking
joint venture opportunities with other companies interested in
developing the mining properties owned by the Company.
Exploration and Development Activities in 1995.
During 1995, Centurion continued its development drilling
program on the Company's mining properties in the Beaver Lake
Mining District including the OK Copper Mine as well as on other
properties surrounding the Company's Beaver Lake mining
properties. The Company's mining properties on which Centurion
continued its drilling activities are covered by the lease
originally entered into with Dotson Exploration that was later
assigned to Centurion. As a result of Centurion's drilling
program, Centurion has announced the discovery of a major
porphyry ore body on its properties in the Beaver Lake Mining
District containing more than 50 million pounds of copper. Also
during 1995, Centurion continued with its plans to construct a
treatment plant on its Beaver Lake mining properties to extract
copper from the ore using a solvent extraction-electrowinning
method to produce high grade copper. Centurion has filed
applications with federal and state agencies to obtain the
requisite permits in connection with the construction of the
proposed treatment plant.
The Company was unable to conduct any exploratory or
development activities on its other properties during 1995 on
account of the limited funds the Company has available for any
further exploration or development activities. The Company
continued to examine various properties for gold prospects in the
states of Arizona, Nevada and California in 1995. The Company
continues to actively seek joint venture opportunities with other
companies interested in developing the mining properties owned by
the Company.
Competition
There is considerable competition for mining prospects on
federal lands due to recent major discoveries of gold deposits,
particularly in Nevada. Costs of mining, milling,
transportation, labor and other costs have risen dramatically.
These costs would be a factor in determining whether the
discovery of minerals, if any, would be commercial or not, and
could render a discovery unprofitable, even if made.
Commencing in 1972, various federal, state and local
environmental laws and regulations began to have a significant
impact on the mining industry in Utah, where the Horn Silver Mine
properties are located, and elsewhere in the Western States. At
the present time, there is only one smelter in the Western
States, which is operating at full capacity. Several smelters,
which had been buyers of custom mineralization from independent
mines located in Utah, are now closed. Thus, there presently
exists no nearby market for the types of ore which Horn Silver is
seeking to develop.
In addition to the uncertainty surrounding the eventual
development of commercial mineralization on Horn Silver's
properties, the success of any mining operation which might be
conducted is dependent upon the price of minerals on the domestic
and world markets, which is subject to fluctuation, in part as a
result of actions by central banks and government policies.
Government Regulation
Any exploration, rehabilitation, and development programs
of Horn Silver, as well as any commercial production which might
be warranted, will be subject to extensive federal, state and
local laws and regulations controlling not only the exploration
for viable minerals in the ground, the condition of the shafts
and the nature of milling and leaching operations, but also the
possible environmental effects of water and particle contaminant
discharges resulting from Horn Silver's activities. No
environmental impact studies have been performed by Horn Silver,
and there is no assurance that environmental or safety standards
more stringent than those presently in effect will not be imposed
in the future. At present, in the opinion of Horn Silver, the
current and immediately proposed activities of Horn Silver are
such that no compliance problems are anticipated.
Employees
As of March 31, 1996, Horn Silver has one part-time
employee, a secretary, who performs clerical work for the
Company. All other work, legal and accounting, is performed on
a fee basis. Horn Silver's activities in connection with the
acquisition, exploration and development of mining and other
mineral properties and the negotiation with potential joint
venture partners are conducted principally by Page P. Blakemore,
Sr., President and Treasurer of Horn Silver and a geologist, who
also serves as President of Constitution Petroleum, Inc.,
President of Cameron Mining Company, and President of Basin and
Range International Exploration Ltd. See "Item 10. Directors
and Executive Officers of the Registrant." Murray C. Godbe, III,
Vice President and a director of the Company, assists Mr.
Blakemore from time to time in negotiations with potential joint
venture partners. Mr. Blakemore has never been paid a salary by
Horn Silver, but has been issued shares of the Company's Common
Stock pursuant to a compensation plan adopted by the Board of
Directors. See "Item 11. Executive Compensation." Horn Silver
presently has no plans to expand its staff.
ITEM 2. Properties
General
Horn Silver currently owns 244 patented mining claims and
approximately 20 unpatented mining claims covering approximately
6,000 acres located in Beaver County, Utah. The claims comprise
most of the San Francisco Mining District. The two principal
mines on the properties, which were productive in the past, are
the Horn Silver and Cactus Mines. The Horn Silver Mine, which
represents a very small part of the overall acreage, shipped
silver, gold, copper and lead from one breccia pipe and was one
of the largest producers of silver in the United States until
about 1930. The Cactus Mine, with a production history dating
from 1910, shipped significant amounts of copper, gold and silver
until about 1913. The Company also owns a one-half interest in
the Imperial Mine, a once productive mine, and adjacent patented
mining claims located in the San Francisco Mining District. In
addition to the foregoing mining properties, the Company has a
carried working interest in undeveloped mining properties located
in Nevada and a royalty interest in developed oil and gas
properties located in Oklahoma. There are no proven reserves on
any of the Company's properties.
Horn Silver Mine Properties, Milford County, Utah
The Horn Silver Mine properties consist of patented and
unpatented mining claims, which are currently wholly owned by
Horn Silver. The properties are located in the San Francisco
Mining District, in Beaver County, Utah, approximately 15 miles
west of the town of Milford. The San Francisco Mining District
was formed in the 1880's. It consists of a mountain range about
15 miles long and three to five miles wide trending in a
north-south direction located some 230 miles south of Salt Lake
City, Utah, and about 15 miles west of Milford, Utah. Horn
Silver's primary property interests are located in this district
and were originally mined for their silver, gold, lead, zinc and
copper content. Production lasted from the 1880's until about
the early 1920's when economic circumstances stopped production.
Less significant production occurred after that time on an
intermittent basis and during World War II when metals were
produced under government subsidies. No significant production
has occurred since 1947.
The Horn Silver Mine
The San Francisco Mining District was organized in 1871,
but attracted little attention until the discovery of the Horn
Silver Mine by James Ryan and Samuel Hawkes in 1875. Ryan and
Hawkes subsequently sold the mine to Campbell, Cullen, Ryan and
Byram. They extracted 25,000 tons of high grade lead silver ore
and had developed the mine to a depth of about 280 feet. They
then sold the mine to Horn Silver Mining Company which was
incorporated under Utah law in 1879. Two smelters were
constructed near Frisco, a townsite near the mine. The mine
operated continuously until 1885, with the mineralization
material being smelted at the two plants.
In 1885, a cave-in from the 700 foot level to the surface
caused considerable damage, requiring that a new shaft be sunk to
a depth of 1,600 feet, unfortunately again in the volcanic rocks
east of the ore zone. The mine was operated through the new
shaft until 1919 when the mine was closed for economic reasons.
In 1929, the mine was leased to Albert E. Kipps who began
a program of rehabilitation of the underground workings to
develop the lower levels. This program led to discovery of
substantial tonnages of ore. In 1944, Mr. Kipps assigned his
lease to Metal Producers, Inc. The 1,600 foot production shaft
had to be abandoned due to subsidence of the hanging wall of the
vein structure. A connection was then driven from the existing
King David mine shaft located in the stable limestone footwall
about 900 feet in distance to connect with the 650 foot level of
the mine.
Mine Development
The mine is presently served by the 816 foot King David or
Knight timbered shaft sunk in the limestone footwall some 1,200
feet from the old mineral deposit and an interior shaft sunk to
the 1,100 foot level from the 700 foot level. All other shafts
fitted for hoisting ore or waste were sunk in the highly altered
volcanic hanging wall and have caved in many years ago. A manway
serving as an escape route is open in the south end of the
mineralized zone.
The mine has been explored along the fault line to the
1,600 foot level, but only very limited lateral work has been
attempted below the 1,100 foot level or into the limestone
footwall for any significant distance. Minable ore bottomed in
the main fault zone and only insignificant amounts of mineralized
material have been discovered below the 1,000 foot level.
The Cactus Mine
The Cactus Mine is located on Horn Silver's patented claims
near the northern boundary of the properties. It was discovered
in 1870. During the 1880's, a French company constructed a
charcoal fired smelter near the outcrop which produced an unknown
amount of blister copper. The ore was mainly primary sulfides
with refractory achieved at the relatively low temperatures,
leading to abandonment of the operation.
In 1900, the mine was acquired by Samuel Newhouse, who
built an 1,000 ton per day concentrator, and mined and treated
nearly one million tons of ore mined underground from the
timbered square-set stopes. The mine was developed to the 900
level. Ore was mined from an elongate breccia pipe enclosed in
the main granodiorite stock. The breccia filling consisted of
quartz, tourmaline, siderite, specularite and chalcopyrite, the
latter constituting the only commercial mineral as an ore of
copper containing minor amounts of gold and silver.
The Cactus Mine has not been operated since 1913. Due to
the caved condition of the timbered stopes, it is impossible to
estimate the tonnage and grade of any mineralized material left
in the stopes in prior operations, or to examine any blocks of
mineralized material left unmined, if any. No proven reserves of
commercial mineralized rock are known to exist in the Cactus
Mine.
Geology
The San Francisco Mountains form a small north-south
mountain range in West Central Utah. The range is typical of
Great Basin mountain ranges with Paleozoic carbonates and
quartzite intruded by a granitic stock. The limestone is host
for numerous mineral deposits of various types. Faults with
considerable displacement particularly on the range's east side
bring volcanic flow rocks in contact with both intrusive and
sedimentary rocks of the range proper. Also, the area is in part
overlain by several ages of other flow rocks. In the process of
mountain building through the folding and faulting, the various
layers or strata have been disrupted. There are several fault
systems apparent in the San Francisco Mountains. Moreover,
vulcanism in the area has resulted in extensive flows of molten
rocks and ash.
The principal mineral deposits in the range are lead,
silver, zinc, copper and gold deposits occurring as fault
fissure, breccia filing, stratabound limestone replacements
deposits, pipe-like deposits emplaced at the intersection of
fissures and favorable beds, gold mineralized breccia pipes in
limestone, tungsten deposits in sharn, copper deposits in quartz,
and tourmaline filled breccia pipes in intrusive rocks.
Mineralization in the San Francisco Mountains has been
largely contemporaneous with the cooling of molten rocks which
have intruded into various strata. The minerals are localized in
close relationship with areas where faulting and fracturing have
allowed mineralized solutions access to favorable host rocks.
All known mineralization of the area is associated with fissures
and favorable bed intersections in the sedimentary rocks or in
breccia pipes. Fissure intersections particularly influence
localization of minerals whether in sediments, flow rocks or
intrusive rocks.
The Horn Silver Mine is located on the Horn Silver Fault.
The fault is on the east side of the range and brings flow rocks
in contact with the limestone. Limestone replacement formations
of this type have frequently been found to be favorable areas for
exploration for lead and silver. The fault is traced from Squaw
Springs Pass northerly for nearly two miles where it is concealed
just north of the Horn Silver Mine. It is apparent that in
addition to the Horn Silver Fault at least two thrust faults
exist in the area which are as yet unmapped in detail and aerial
photographs reveal the existence of a second north-south fault of
considerable magnitude.
Osage Oil Field, Osage County, Oklahoma
On February 6, 1981, Horn Silver acquired a working
interest in two developed oil and gas leases in Osage County,
Oklahoma. On September 1, 1986, Horn silver entered into an
agreement with Golden Oil Company to exchange its working
interest in the leases for a 1-1/2% overriding royalty interest
in all oil and gas production from the leases. The two leases
are named the Long-B lease and the Reed lease. The Long-B lease
covers approximately 160 gross acres (20 net acres) and contains
four producing walls. The Reed lease also covers approximately
160 gross acres (20 net acres) and contains five producing wells.
Horn silver paid $20,000 and issued 500,000 shares of its common
stock for its working interests in the leases.
The leases are for a term of five years commencing in 1972.
However, if production is established, the leases continue so
long as oil or gas or other minerals are produced in commercial
quantities. The leases are subject to a landowner's royalty
interest of 16-2/3%, increasing to 21% in the event producing
wells average 100 or more barrels per well per day. Horn silver
is not aware of any current plans for drilling of any additional
oil and gas wells on the properties.
Horn Silver has not undertaken an evaluation of the oil and
gas properties in order to determine the estimated net proved
reserves of oil or gas and the future net revenue attributable
thereto. In management's opinion, the revenues received from
Horn Silver's interest in the oil and gas properties and the
estimated total value of its interest are not substantial enough
to warrant the expenditure necessary to provide a disclosure of
proved oil and gas reserves. From January 1, 1995 to December
31, 1995, Horn Silver received $699 in production payments from
its royalty interest in the leases. Horn Silver received $761 in
production payments in fiscal 1994 from the leases.
Title to Mining Properties
Horn Silver's most important property interest at the
present time consists of its ownership of the Horn Silver Mine
properties. The patented claims involved were originally
obtained by deed from the federal government. Horn Silver's
ownership rights in the properties is dependent upon the validity
of title to the claims which is vested in other entities and upon
the validity of the Company's contracts with the entities holding
such title. The Company has not received any warranties of
title, title opinions nor policies of title insurance. The
Company now owns the claims through its purchase of the
Wangenheim's 40% interest in 1980 and its acquisition of Tintic's
60% interest as a result of a merger with Tintic in 1983.
The validity of all unpatented mining claims is dependent
upon the inherent uncertainties and conditions that may prevent
a fee title in the usual sense from existing or vesting.
Unpatented claims when properly located, staked and posted
according to regulation give the claimant possessory right only.
Possessory title to an unpatented claim, when validly initiated,
endures unless lost through abandonment or through a forfeiture
which results from an adverse location made while the prior
location is in default with respect to the performance of annual
assessment work. Because many of these factors involve findings
of fact, title validity cannot be determined solely from an
examination of the record.
The continuing validity of Horn Silver's unpatented claims
is subject to many contingencies, including the availability of
land for location at the time location is made, the making of
valid mineral discoveries within the boundary of each claim, the
compliance with all regulations, both state and federal, for
locating claims, and the performance of annual assessment work
which is currently in the amount of $100 per claim. Failing
satisfaction of these requirements, the claims are subject to
cancellation by the United States upon a finding of no valid
discovery and, perhaps, upon failure to perform annual assessment
work. Failure to perform annual work subjects the claimant to
the risk of forfeiture of rights through valid subsequent
locations by others or through cancellation by the government
agency involved.
ITEM 3. Legal Proceedings
Horn Silver is not aware of any threatened or pending
litigation.
ITEM 4. Submission of Matters to a Vote of Security Holders
Horn Silver has not submitted any matter to a vote of
security holders during the quarter for which this report is
filed.
PART II
ITEM 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
The Common Stock of Horn Silver is traded in the
over-the-counter market. The following table sets forth the
range of high and low closing bid prices of the Common Stock as
reported by Wilson-Davis & Company, which is located in Salt Lake
City, Utah, for the calendar years 1994 and 1995, and by Paulson
Investment Company, Inc., formerly known as Covey & Company,
Inc., which is located in Salt Lake City, Utah, for calendar year
1993.
<TABLE>
<CAPTION>
Period Bid Price
<S> <C> <C>
Calendar Year Low High
1993
First Quarter .01 .0125
Second Quarter .0075 .0125
Third Quarter .005 .01
Fourth Quarter .005 .01
1994
First Quarter .01 .01
Second Quarter .005 .015
Third Quarter .01 .027
Fourth Quarter .01 .015
1995
First Quarter .01 .045
Second Quarter .01 .035
Third Quarter .01 .035
Fourth Quarter .001 .03
</TABLE>
The bid prices represent quotations between dealers without
retail markups, markdowns or commissions and do not necessarily
represent actual transactions. At March 31, 1996, there were
4,369 record holders of the Company's Common Stock.
Horn Silver has never paid a cash dividend on its Common
Stock. The Company currently anticipates that any earnings will
be retained for use in the operation of the business and does not
intend to pay any cash dividends on its Common Stock in the
foreseeable future.
ITEM 6. Selected Financial Data
<TABLE>
<CAPTION>
Year Ended December 31
<S> <C> <C> <C>
1993 1994 1995
-------- -------- --------
Net revenue <F1> $ 8,260 $ 18,884 $ 17,149
Net income (loss) (53,438) (39,611) (34,518)
Net income (loss)
per share <F2> (.00) (.00) (.00)
Total assets $ 42,816 $ 25,894 $ 20,844
<F1> The Company has not had any significant revenue from
operations.
<F2> Earnings per share information is based on the weighted
average outstanding shares of the Company each year.
</TABLE>
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
Cash decreased by $4,693 during the 1995 fiscal year. The
principal loss of cash during 1995 was from the net loss from
operations of $34,518. The Company is currently unable to
finance its operations from its operating revenues and cash flow.
In addition, the Company has no credit facility with a lending
institution. There remains only $18,637 in cash as of December
31, 1995 from the proceeds of the Company's 1980 Regulation A
stock offering.
The Company does not anticipate spending any of its
remaining cash reserves during the 1996 fiscal year for
exploration or development activities. In addition, the Company
has no concrete plans or commitments relative to any such
activities during 1996. However, the Company plans to continue
to actively seek joint ventures for exploration and development
activities during 1996.
Results of Operations
Year Ended December 31, 1995 Compared to Year Ended
December 31, 1994
Revenues decreased by $1,735, or 9.2%, in the year ended
December 31, 1995, as compared to the year ended December 31,
1994. Mineral royalties decreased by $1,300, or 7.6%, in fiscal
1995 over fiscal 1994. The decrease was primarily due to a
reduction in the royalty payments the Company received under the
mining lease that was entered into with Dotson Exploration on
April 28, 1994, and subsequently assigned to Centurion Mines
Corporation. The $15,900 in mineral royalties in 1995 included
$11,100 in advance royalty payments from the mining lease
assigned to Centurion and $4,800 in royalty payments from the
mining lease with Frisco Rock, Inc.
Interest income from investment of funds decreased by $373,
or 40.4%, in fiscal 1995 over fiscal 1994 due to a decrease in
the amount of funds invested at lower interest rates than in the
preceding year. The Company received $699 in other income in
fiscal 1995 representing royalty payments from its interest in
two oil and gas leases in Osage County, Oklahoma. These payments
represented a decrease of $62, or 8.1%, in the royalty payments
the Company received in fiscal 1995 over fiscal 1994 due to a
reduction in production from the oil wells on the leases.
Expenses decreased by $6,828, or 17.1%, in the year ended
December 31, 1995, as compared to the year ended December 31,
1994. Contributing to this reduction in expenses was a $1,724
decrease in general and administrative expenses. The reduction
in general and administrative expenses reflected the reduced
level of the Company's mining activities in fiscal 1995.
Year Ended December 31, 1994 Compared to Year Ended
December 31, 1993
Revenues increased by $10,624, or 128.6%, in year ended
December 31, 1994, as compared to the year ended December 31,
1993. Mineral royalties increased by $11,320, or 192.5%, in
fiscal 1994 over fiscal 1993. This increase was primarily due to
the advance royalty payments the Company received from Dotson
Exploration under the mining lease that was entered into on April
28, 1994 with Dotson Exploration and subsequently assigned to
Centurion. The $17,200 in mineral royalties in 1994 included
$12,400 in advance royalty payments from the mining lease
assigned to Centurion and $4,800 in royalty payments from the
mining lease with Frisco Rock, Inc.
Interest income from investment of funds decreased by $635,
or 40.8%, in fiscal 1994 over fiscal 1993 due to a decrease in
the amount of funds invested at lower interest rates than in the
preceding year. The Company received $761 in other income in
fiscal 1994 representing royalty payments from its interest in
two oil and gas leases in Osage County, Oklahoma. The payments
represented a decrease of $61, or 7.4% in the royalty payments
the Company received in fiscal 1994 over fiscal 1993 due to a
reduction in production from the oil wells on the leases.
Expenses decreased by $3,203, or 5.2%, in the year ended
December 31, 1994, as compared to the year ended December 31,
1993. Contributing to this decrease in expenses was a $7,294
decrease in general and administrative expenses. The decrease in
general and administrative expenses reflected the reduced level
of the Company's mining activities in fiscal 1994. Carry costs
for mineral leases increased by $4,091 in fiscal 1994 over fiscal
1993 due to the additional costs of maintaining the Company's
unpatented mining claims under new federal mining regulations.
ITEM 8. Financial Statements and Supplementary Data
The response to this item is submitted as a separate
section of this report. See Index to Financial Statements and
Schedules on page 17.
ITEM 9. Changes in and Disagreements on Accounting and Financial
Disclosure
None.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
The Company's Board of Directors consists of five persons.
The following table sets forth certain information with respect
to the directors and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Page P. Blakemore, Sr.<F1> 77 Chairman of the Board,
President, Chief
Executive Officer and
Treasurer
Murray C. Godbe, III 70 Vice President and
Director
Warren M. Blakemore<F1> 42 Secretary and Director
Walter Hoppe 87 Director
Randall A. Mackey 50 Director
John P. Bogdanich 43 Director
___________________________________
<F1> Page P. Blakemore, Sr. is the father of Warren M.
Blakemore.
</TABLE>
The following is a description of the business experience
of each of the directors and executive officers.
Mr. Page Blakemore has been President, Treasurer and a
director of Horn Silver since July 1984. From 1971 to 1984, he
served as the Vice President and a director of Horn Silver. Mr.
Blakemore has also been the President since 1970 of Basin and
Range Exploration Company, which engages in mineral exploration
work in the western United States. He has been the President
since 1988 of Basin and Range International Exploration Ltd.,
which engages the exploration and development of gold and silver.
He is also the President of Constitution Petroleum, Inc. and has
served in that capacity since 1970. Constitution Petroleum is
engaged in oil and gas exploration in Ohio and Pennsylvania. Mr.
Blakemore has also been the President of Cameron Mining Company
since 1956, which engages in the mining and drilling contracting
business. He has also been Vice President and a director since
January 1991 of Con-Coyle Oil Field Tool Company, which
manufactures oil field tools. Finally, Mr. Blakemore is a
director of Alta United Mines Company and Pab Oil & Mining, Inc.
Mr. Godbe has been the Vice President and a director of
Horn Silver since July 1984. He has been the President since
1974 of M.C. Godbe Consultants, Inc. which has performed
geological consulting work for a number of mining companies.
From 1969 to 1974, he was the President of East Utah Mining
Company, a Utah mining and oil and gas company. Mr. Godbe
received a B.Sc. degree in geology from the University of Utah in
1948 where he also did graduate work in geology in 1949.
Mr. Warren Blakemore, a son of Mr. Page Blakemore, has been
the Secretary of Horn Silver since January 1985 and a director
since June 1983. He received a B.S. degree in geological
engineering from the University of Utah in 1978. He has also
been the Production Supervisor of Constitution Petroleum, Inc.
since 1977 and President of Constitution Gas Transport, Inc., a
public utility located in the State of Ohio since 1986.
Constitution Petroleum is engaged in oil and gas exploration in
Ohio and Pennsylvania. Mr. Blakemore has been the Secretary and
a director of Cameron Mining Company since 1978, which engages in
the mining and drilling contracting business. He has been
Secretary and a director of Con-Coyle Oil Field Tool Company
since January 1991, which manufactures oil field tools.
Mr. Hoppe has been a director of Horn Silver since 1977.
He has worked as an independent mine consultant at Alta, Utah
since 1970. From 1952 to 1977 Mr. Hoppe was the Vice President
and a director of Alta United Mines Company. From 1964 to 1969,
he was a director of the old Horn Silver Mines Company. Mr.
Hoppe is also a director of Gunsite Oil & Gas Company. From 1933
to 1939 and from 1946 to 1952, Mr. Hoppe was an independent mine
operator at Alta, Utah. From 1942 to 1945, Mr. Hoppe was on loan
from the U.A. Army to the U.S. Bureau of Mines while he served on
an exploration team for strategic minerals at Alta, Utah.
Mr. Mackey has been a director of Horn Silver since July
1981. He has been a shareholder in the Salt Lake City law firm
of Mackey Price & Williams since May 1989. From 1979 to 1989, he
practiced law with the Salt Lake City law firm of Fabian &
Clendenin, where he was a shareholder and director of the firm
from 1982 to 1989. From 1977 to 1979, Mr. Mackey was associated
with the Washington, D.C. law firm of Hogan & Hartson. Mr.
Mackey received a Bachelor of Science degree in Economics from
the University of Utah in 1968, a Master in Business
Administration degree from Harvard University in 1970, a Juris
Doctor degree from Columbia University in 1975, and a Bachelor of
Civil Law degree from Oxford University in 1977. Mr. Mackey is
also a director of Paradigm Medical Industries, Inc., which
develops and manufactures ophthalmic surgical systems.
Mr. Bogdanich has been a director of Horn Silver since
September 1995. He has been President since 1981 of PAB Oil &
Mining, Inc., which engages in the mining and oil and gas
business.
All directors of the Company hold office until the next
annual meeting of the stockholders and until their successors
have been duly elected and has qualified. All of the officers
serve at the pleasure of the Board of Directors.
The Board of Directors of Horn Silver held three meetings
in 1995. Each of the directors attended at least 75% of the
aggregate number of meetings of the Board.
No officer or director of Horn Silver has, within the past
five years, been involved in any insolvency, criminal or
securities violations proceedings.
ITEM 11. Executive Compensation
(a) Compensation
------------
The following table shows the cash compensation paid to all
officers and directors of the Company as a group for the year
ended December 31, 1995. It should be noted that none of the
officers or directors have received cash from the Company as a
form of compensation for performing their duties.
<TABLE>
<S> <C> <C>
Name of Individual Capacities in Cash
or Number in Group Which Served Compensation<F1>
------------------ ------------- ----------------
All executive officers
and directors as a group
(5 persons) $-0-
<F1> Does not include 2,000,000 shares of the Company's Common
Stock that were approved for issuance but not yet issued to Page
Blakemore in consideration for his services during 1995 as
President of the Company, nor does it include 350,000 shares of
the Company's Common Stock that were approved for issuance but
not yet issued to each of the directors, except for Mr.
Blakemore, in consideration for their serving as a director
during 1995. None of the officers or directors have ever
received cash as compensation for performing their duties.
</TABLE>
Horn Silver has no other employee profit sharing, pension,
or retirement plans.
(b) Indebtedness of Management
--------------------------
No officer or director of Horn Silver has been indebted to
the Company during the last fiscal year.
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth, as of March 31, 1996, the
beneficial ownership of the Company's Common Stock by each person
known by the Company to be the beneficial owner of more than five
percent of the Company's Common Stock, by each director, and by
all directors and officers as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
<S> <C> <C>
Page P. Blakemore, Sr. 28,011,493<F1> 23.9%
4735 Naniloa Drive
Salt Lake City, Utah 84117
Murray C. Godbe, III 3,135,500 2.7%
807 Fifth Avenue
Salt Lake City, Utah 84102
Randall A. Mackey 2,730,000 2.3%
1474 Harvard Avenue
Salt Lake City, Utah 84105
Walter Hoppe 1,900,000 1.6%
650 South 300 East, Apt. 403
Salt Lake City, Utah 84111
Warren M. Blakemore 1,525,000 1.3%
422 L Street
Salt Lake City, Utah 84105
John P. Bogdanich -- --
2267 East Capricorn Way
Salt Lake City, Utah 84124
All directors and officers 37,302,293 31.8%
as a group (6 persons)
<F1> Includes 1,540,000 shares owned by Basin and Range
Exploration, a Utah corporation, of which Page P. Blakemore, Sr.
is the President; and 3,000,000 shares owned by Cameron Mining
Company, a Utah corporation, of which Mr. Blakemore is the
President. Mr. Blakemore has sole voting and investment power
with respect to the shares owned by Basin and Range Exploration
Company and Cameron Mining Company.
</TABLE>
ITEM 13. Certain Relationships and Related Transactions
In 1990, the Company entered into a joint exploration
agreement with Cameron Mining Company ("Cameron") and Pab Oil &
Mining, Inc. ("Pab") to conduct exploration work on mining
properties in which Horn Silver has a carried working interest in
the Taylor Mining District, White Pine County, Nevada. Cameron
and Pub were required to make lease payments to Horn Silver in
the amount of $150 each month. The agreement was terminated in
December 1994. Page P. Blakemore, Sr., the President of Horn
Silver, also serves as President of Cameron and a director of
Pab. See "Item 1. Business - Organization and General
Development."
Randall A. Mackey, a director of the Company, is a
shareholder of the law firm of Mackey Price & Williams, which has
rendered legal services to the Company. Legal fees and related
costs paid to the firm for the year ended December 31, 1995
totaled $4,190. There were no legal fees paid to the firm during
fiscal 1995 although the firm rendered legal services for the
Company during that period.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a) Financial Statements Filed
Report of Independent Accountants
Balance Sheet - December 31, 1995
Statement of Operations - Years Ended December 31,
1994, and 1995
Statement of Stockholders Equity - January 1, 1994 to
December 31, 1995
Notes to Financial Statements
(b) Exhibits
3. A.* Articles of Incorporation (Exhibit 3A to
Registration Statement on Form S-14, No
2-78284, filed March 29, 1983)
B.* Bylaws (Exhibit 3A to Registration
Statement on Form S-14, No 2-78284, filed
March 29, 1983)
C.* Specimen Stock Certificate (Exhibit 3A to
Registration Statement on Form S-14, No
2-78284, filed March 29, 1983)
10. A.* Mining Lease with Frisco Rock, Inc.
(Exhibit 10B to Annual Report on Form
10-K, No. 0-9739, July 7, 1989)
B.* Mining Lease with Dotson Exploration
Company (Exhibit 10B to Annual Report on
Form 10-K, No. 0-9739, November 24, 1995)
* Exhibits so marked have heretofore been
filed with the Securities and Exchange
Commission as part of the filing
indicated and are incorporated herein by
this reference.
(c) Reports on Form 8-K
Horn Silver has not filed any report on Form
8-K during the quarter for which this report is
filed.
<PAGE>
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<S> <C>
Page
----
Independent Auditor's Report . . . . . . . . . . . . F-1
Balance Sheet, December 31, 1995 . . . . . . . . . . F-2
Statement of Operations for the two years ended
December 31, 1995 . . . . . . . . . . . . . . . F-3
Statement of Stockholders' Equity, for the two
years ended December 31, 1995 . . . . . . . . . F-4
Statement of Cash Flows for the two years ended
December 31, 1995 . . . . . . . . . . . . . . F-5
Notes to Financial Statements . . . . . . . . . . . F-6
</TABLE>
<PAGE>
HORN SILVER MINES, INC.
December 31, 1995
Financial Statements
<PAGE>
HORN SILVER MINES, INC.
Index to Financial Statements
<TABLE>
<S> <C>
Page
----
Independent auditors' report F-1
Financial statements:
Balance sheet, December 31, 1995 F-2
Statement of operations for the years ended
December 31, 1995 and 1994 F-3
Statement of stockholders' deficit for the
years ended December 31, 1995 and 1994 F-4
Statement of cash flows for the years ended
December 31, 1995 and 1994 F-5
Notes to financial statements F-6
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Stockholders
of Horn Silver Mines, Inc.
We have audited the balance sheet of Horn Silver
Mines, Inc., as of December 31, 1995, and the related statements
of operations, stockholders' deficit and cash flows for the years
ended December 31, 1995 and 1994. 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 in accordance with generally
accepted auditing standards. Those standards 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. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the financial
position of Horn Silver Mines, Inc., as of December 31, 1995, and
the results of operations and cash flows for the years ended
December 31, 1995 and 1994, in conformity with generally accepted
accounting principles.
Salt Lake City, Utah
April 17, 1996
F-1
<PAGE>
HORN SILVER MINES, INC.
Balance Sheet
December 31, 1995
<TABLE>
<CAPTION>
Assets
------
<S> <C>
Current assets - cash $ 18,637
---------
Property and equipment:
Leasehold improvements 5,634
Structures and equipment 8,441
---------
14,075
Less accumulated depreciation
and amortization 13,439
---------
Net property and equipment 636
Other assets 1,571
---------
Total assets $ 20,844
==========
Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Accounts payable $ 22,422
Accrued liabilities due to related parties 29,279
----------
Total current liabilities 51,701
----------
Commitments -
Stockholders' deficit:
Common stock, no par value. 200,000,000 shares
authorized; 117,279,316 shares issued and
outstanding 1,627,573
Accumulated deficit (1,658,430)
-------------
Total stockholders' deficit (30,857)
-------------
Total liabilities and
stockholders' deficit $ 20,844
============
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE>
HORN SILVER MINES, INC.
Statement of Operations
<TABLE>
<CAPTION>
Years Ended
December 31,
----------------------
1995 1994
---- ----
<S> <C> <C>
Revenue:
Mineral royalties $ 15,900 17,200
Interest 550 923
Other income 699 761
-------- ------
Total revenue 17,149 18,884
-------- ------
Expenses:
General, administrative
and exploration 51,310 53,034
Carrying costs for mineral leases - 5,104
Depreciation 357 357
-------- ------
Total expenses 51,667 58,495
-------- ------
Net loss $(34,518) (39,611)
======== ========
Loss per common share $(.00) (.00)
========= =======
Weighted average number of
shares outstanding 116,707,337 112,442,004
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
HORN SILVER MINES, INC.
Statement of Stockholders' Deficit
<TABLE>
<CAPTION>
Common Stock
------------ Retained
Shares Amount Deficit Total
------ ------ ------- -----
<S> <C> <C> <C> <C>
Balance, January
1, 1994 110,444,641 $1,582,293 (1,584,301) (2,008)
Common stock
issued for
officers'
compensation
and directors'
fee valued at
approximately
$.0066 per share 3,400,000 22,525 - 22,525
Common stock
issued as
contingent
consideration
for assets
valued at
approximately
$.0066 per share
(see note 7) 24,050 159 - 159
Net loss - - (39,611) (39,611)
----------- --------- ---------- --------
Balance, December
31, 1994 113,868,691 1,604,977 (1,623,912) (18,935)
Common stock
issued for
officers'
compensation
and directors'
fee valued at
approximately
$.0066 per share 3,400,000 22,525 - 22,525
Common stock
issued as
contingent
consideration
for assets
valued at
approximately
$.0066 per share
(see note 7) 10,625 71 - 71
Net loss - - (34,518) (34,518)
----------- ---------- ----------- --------
Balance, December
31, 1995 117,279,316 $1,627,573 (1,658,430) (30,857)
=========== ========== =========== ========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
HORN SILVER MINES, INC.
Statement of Cash Flows
<TABLE>
<CAPTION>
Years Ended
December 31,
------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $(34,518) (39,611)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation 357 357
Stock issued for services 22,596 22,684
(Increase) decrease in:
Accounts receivable - 215
Increase (decrease) in:
Accounts payable 6,329 -
Accrued liabilities 543 5
------- -------
Net cash used in
operating activities (4,693) (16,350)
------- -------
Cash flows from investing activities - -
------- -------
Cash flows from financing activities - -
------- -------
Net decrease in cash (4,693) (16,350)
Cash, beginning of year 23,330 39,680
------- -------
Cash, end of year $ 18,637 23,330
======= =======
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
HORN SILVER MINES, INC.
Notes to Financial Statements
December 31, 1995 and 1994
(1) Summary of Significant Accounting Policies
------------------------------------------
Organization
The Company was incorporated in 1971 under the laws
of the State of Utah. The Company is a "junior" natural resource
Company whose activities are primarily acquisition, exploration
and development of natural resources.
Cash and Cash Equivalents
For financial statement purposes, the Company
considers all instruments with a maturity of less than three
months to be cash equivalents.
Property, Equipment and Mining Costs
Expenditures for exploration of mineral properties
are charged against income as incurred. Property acquisition
costs and mine development costs incurred to expand capacity of
operating mines, develop new ore bodies or develop new areas
substantially in advance of current production are capitalized
and charged to operations on the units-of-production method.
Capitalized costs of abandoned projects or impaired properties
are charged to operations in the year of abandonment.
Corporate property and equipment are stated at cost.
Acquisitions having a useful life in excess of one year are
capitalized. Maintenance and repairs are expensed in the year
incurred. Capitalized assets are depreciated by the
straight-line method over estimated useful lives of the related
assets, ranging from three to ten years.
Income Taxes
Deferred income taxes are provided in amounts
sufficient to give effect to temporary differences between
financial and tax reporting, principally related to accounting
for mining properties.
Loss Per Common Share
Losses per common share are calculated based on the
weighted average number of shares of common stock outstanding
during the period. Common stock equivalents which would be
antidilutive are not included in the calculation.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity
with generally accepted accounting principles 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 date of the financial statements
and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those
estimates.
F-6
<PAGE>
HORN SILVER MINES, INC.
Notes to Financial Statements - Continued
(2) Mineral Properties
------------------
No amounts have been recorded for mineral properties
in the financial statements since management has not been able to
obtain sufficient information to support the ultimate recovery of
these costs. The following is a brief summary of the significant
mineral properties in which the Company has an interest as of
December 31, 1995.
The Company currently owns approximately 244 patented
mining claims and approximately 20 unpatented mining claims
covering approximately 6,000 acres located in Beaver County,
Utah. The claims comprise most of the San Francisco Mining
District. The two principal mines on the properties, which were
productive in the past, are the Horn Silver and Cactus Mines.
The Horn Silver Mine, which represents a very small part of the
overall acreage, shipped silver, gold, copper and lead until
about 1930. The Cactus Mine, with a production history dating
from 1910, shipped significant amounts of copper, gold and silver
until about 1913. The Company also owns a one-half interest in
the Imperial Mine, a once productive mine, and adjacent patented
mining claims located in the San Francisco Mining District.
(3) Commitments
-----------
The Company has entered into various cancelable
mining leases and royalty agreements as a lessee and lessor.
Future minimum lease and royalty payments received and paid under
the Company's current agreements are minimal. In addition to the
lease payments required above, certain leases also require
minimum work requirements of approximately $100 per claim.
Certain leases also have provisions allowing the Company to
purchase all rights to the properties thereby reducing future
commitments for royalty payments. The leases are cancelable at
the Company's option at any time which would terminate any
further lease payments or work commitments. The lease agreements
also provide that the lease will remain in effect as long as
exploration or development is being conducted with reasonable
diligence or production continues in commercial quantities.
The Company leases its office facilities under an
operating lease which requires payments of approximately $3,000
per year through January, 1997.
F-7
<PAGE>
HORN SILVER MINES, INC.
Notes to Financial Statements - Continued
(4) Related Party Transactions
--------------------------
The Company has paid fees to a law firm in which one
of its directors is a shareholder of approximately $3,778 for the
year ended December 31, 1994.
At December 31, 1995, the Company recorded a
liability for officers compensation and directors fees and
expense reimbursements to officers of approximately $29,000.
(5) Income Taxes
------------
The difference between income taxes at statutory
rates for 1995 and 1994 and the amount presented in the financial
statements is the increase in the tax valuation allowance, which
offsets the income tax benefit of the operating loss.
Deferred tax assets at December 31, 1995 is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Operating loss carryforwards $ 490,400 480,000
Valuation allowance (490,400) (480,000)
--------- --------
$ - -
========= ========
</TABLE>
The company has net operating loss carryforwards of
approximately $1,654,500, which begin to expire in the year 2000.
The amount of net operating loss carryforward that can be used in
any one year will be limited by significant changes in the
ownership of the Company and by the applicable tax laws which are
in effect at the time such carryforward can utilized.
(6) Supplemental Cash Flow Disclosure
---------------------------------
Operations reflect actual amounts paid for interest
and income taxes as follows for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Interest $ - -
====== ======
Income taxes $ - -
====== ======
</TABLE>
F-8
<PAGE>
HORN SILVER MINES, INC.
Notes to Financial Statements - Continued
(7) Common Stock Issued for Assets
------------------------------
During 1983, the Company acquired the assets of
another mining company by offering to exchange Company shares of
common stock for the common stock of this company. At the time
this transaction was entered into, the other mining company could
not produce a complete listing of all shareholders. Therefore,
the exact number of shares to be issued could not be determined.
However, management believes that any shares not exchanged when
the transaction was originally entered into are not significant.
During 1995 and 1994, 10,625 shares and 24,050 shares were issued
to newly identified shareholders of this Company, respectively.
F-9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 in Salt Lake City, Utah, on this 4th
day of September, 1996.
HORN SILVER MINES, INC.
By: Page P. Blakemore, Sr.
President
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Page P. Blakemore, Sr. Chairman of the September 4, 1996
Board, President,
Treasurer and
Director (Principal
Executive, Financial
and Accounting Officer)
Murray C. Godbe, III Vice President and
Director September 4, 1996
Warren M. Blakemore Secretary and
Director September 4, 1996
Walter Hoppe Director September 4, 1996
Randall A. Mackey Director September 4, 1996
John P. Bogdanich Director September 4, 1996
</TABLE>
PROXY HORN SILVER MINES, INC. PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
COMMON STOCK
The undersigned common stockholder of Horn Silver Mines,
Inc. acknowledges receipt of the Notice of Annual Meeting of the
Stockholders to be held on December 20, 1996, at the Red Lion
Hotel, 255 South West Temple, Salt Lake City, Utah, at 10:00 a.m.
local time, and hereby appoints Messrs. Page P. Blakemore, Sr.
and Murray C. Godbe, III, or either of them, each with full power
of substitution, as Attorneys and Proxies to vote all the shares
of the undersigned at said Annual Meeting of stockholders and at
all adjournment(s) or postponement(s) thereof, hereby ratify and
confirm all that said Attorneys and Proxies may do or cause to be
done by virtue hereof. The above-named Attorneys and Proxies are
instructed to vote all of the undersigned's shares as follows:
1. To elect the six (6) directors to be voted upon by the common
stockholders:
[ ] FOR all nominees listed below (except as marked to the
contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
below.
(INSTRUCTION: to withhold authority to vote for any individual
nominee, strike a line through that nominee's name in the list
below.)
Page P. Blakemore, Sr., Murray C. Godbe, III, Warren M.
Blakemore, Walter Hoppe, Randall A. Mackey and John P.
Bogdanich.
2. To approve the Option Agreement with PAB Oil & Mining, Inc.
("PAB"), in which PAB is granted (i) an option to purchase, for
the sum of $200,000, shares of the Company's Common Stock so that
after the issuance of such shares PAB will then own 25% of the
total issued and outstanding shares of the Company's Common
Stock, and (ii) a second option to purchase, for the sum of
$650,000, additional shares of the Company's Common Stock so that
after the issuance of such shares PAB will then own 75% of the
issued and outstanding shares of the Company's Common Stock.
3. To approve a 1-for-20 reverse stock split of the Company's
Common Stock;
4. To amend the Company's Articles of Incorporation as follows:
(i) to reduce the authorized shares of Common Stock from
200,000,000 shares to 30,000,000 shares, and (ii) to change the
par value of Common Stock from no par value to $.001 par value.
5. To approve the appointment of Tanner & Co. as the auditors of
the Company for the fiscal year ending December 31, 1996; and
6. To transact such other business as may properly come before
the meeting or any adjournment(s) thereof.
(Continued on Other Side)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN PROPOSAL 1
ABOVE AND FOR PROPOSALS 2 THROUGH 6.
Dated this day of , 1996
--- ------------
- --------------------------------------
Signature
- ---------------------------------------
Signature
Please sign your name exactly as it appears on your share
certificate. If shares are held jointly, each holder should
sign. Executors, trustees, and other fiduciaries should so
indicate when signing. Please sign, date, and return this Proxy
Card immediately.
NOTE: Securities Dealers or other representatives please state
the number of shares voted by this Proxy.
<PAGE>
HORN SILVER MINES, INC.
701 Clift Building
10 West Broadway
Salt Lake City, Utah 84101
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 20, 1996
NOTICE IS HEREBY GIVEN that an Annual Meeting of
Shareholders of Horn Silver Mines, Inc., a Utah corporation (the
"Company"), will be held at the Red Lion Hotel, 255 South West
Temple, Salt Lake City, Utah on Friday, December 20, 1996 at
10:00 a.m., local time, for the following purposes:
1. To elect six (6) directors for the ensuing year
or until their successors are elected;
2. To approve the Option Agreement with PAB Oil &
Mining, Inc. ("PAB"), in which PAB is granted (i) an option to
purchase, for the sum of $200,000, shares of the Company's Common
Stock so that after the issuance of such shares PAB will then own
25% of the total issued and outstanding shares of the Company's
Common Stock, and (ii) a second option to purchase, for the sum
of $650,000, additional shares of the Company's Common Stock so
that after the issuance of such shares PAB will then own 75% of
the issued and outstanding shares of the Company's Common Stock.
3. To approve a 1-for-20 reverse stock split of
the Company's Common Stock;
4. To amend the Company's Articles of
Incorporation as follows: (i) to reduce the authorized shares of
Common Stock from 200,000,000 shares to 30,000,000 shares, and
(ii) to change the par value of Common Stock from no par value to
$.001 par value.
5. To approve the appointment of Tanner & Co. as
the auditors of the Company for the fiscal year ending December
31, 1996; and
6. To transact such other business as may properly
come before the meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on
November 15, 1996 as the record date for determining shareholders
entitled to notice of, and to vote at, the Annual Meeting.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE
MEETING IN PERSON. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE
MEETING, YOU ARE URGED TO MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE-PREPAID
ENVELOPE ENCLOSED FOR THAT PURPOSE. ANY SHAREHOLDER ATTENDING
THE MEETING MAY VOTE IN PERSON EVEN IF SUCH SHAREHOLDER HAS
PREVIOUSLY RETURNED A PROXY.
By Order of the Board of
Directors
----------------------------
Page P. Blakemore, Sr.
Chairman of the Board,
President, Chief Executive
Officer and Treasurer
Salt Lake City, Utah, November 29, 1996
HORN SILVER MINES, INC.
701 Clift Building, 10 West Broadway
Salt Lake City, Utah 84101
Dear fellow Shareholder:
Lack of funds and the high cost of mailing has
unfortunately limited correspondence with shareholders during the
past several years. An excerpt is included in this report that
has been extracted from your Company's Form 10-K report filed
with the U.S. Securities and Exchange Commission for the year
ended December 31, 1995, which outlines the Company's recent
business activities.
It has become necessary for the Company to undertake a
reorganization in order to continue progress on its patented
mining claims in Beaver County, Utah. Officers and directors of
the Company have engaged in negotiations for several years in an
effort to secure operating agreements with major mining
companies, junior companies and individuals without significant
success. During the past six months, however, we have been
negotiating with PAB Oil & Mining Inc. ("PAB"), a local mining
company which is already familiar with our properties, is
adequately financed, and managed by well known and reputable
staff.
In the event the results of the accompanying proxy
solicitation are successful, it is my intention to resign as your
Company's President, Chief Executive Officer and Treasurer,
effective January 1, 1996. Subject to my being re-elected as a
director at the December 20, 1996 Shareholders meeting, I will
continue to serve at least as a director. I will be 78 years of
age in January 1997 and have served as President and Chief
Executive Officer since 1984 and as an officer of the Company
since 1971.
The terms of the proposed Option Agreement with PAB in
which PAB may purchase up to 75% of the outstanding shares of
Company's Common Stock for the sum of $850,000, are described in
the accompanying Proxy Statement. For your information, PAB's
principal asset is the Buffalo Valley group of unpatented mining
claims located in Nevada. PAB's prior operations included gold
heap leaching of surface gold ores on these properties by a
mining company resulting in approximately $1.0 million in
production royalties paid to PAB. These activities were halted
due to litigation. PAB has since arranged a lease-purchase
agreement with a Canadian mining company which makes annual
payments of $200,000 to PAB. The Canadian company has conducted
an extensive drilling program on the properties resulting in
discovery of more than one million ounces of gold in ore of a
grade well above commercial requirements. Only a small
proportion of the total 8,500 acres comprising the claim block
has been tested.
The proposed agreement with PAB as outlined in the Proxy
Statement was finalized after several months of negotiations.
Each of your directors contributed to the final document and they
unanimously recommend a favorable vote of the agreement. We ask
a prompt return in the accompanying envelope, postage paid.
Yours very truly,
--------------------------
Page P. Blakemore Sr.
Chairman of the Board,
President, Chief Executive
Officer and Treasurer
