UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report under Section 13 or 15(d)of the Securities
Exchange Act of 1934 For Quarterly period ended June 30, 1996
Transaction report under section 13 or 15(d) of the exchange act
For the transition period from to
Commission file number 0-1519
LEADVILLE CORPORATION
(Exact Name or Registrant as Specified in its Charter)
COLORADO 84-0388216
(State of Incorporation) (I.R.S. Employer Identification No.)
2851 S. PARKER ROAD, SUITE 610, AURORA, COLORADO 80014
(Address of Principal Executive Office) (Zip Code)
(303) 671-9792
(Issuer's telephone number)
N/A
(Former name, address and former fiscal year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act during the preceding 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
9,254,999
State the number of Shares of the issuer's classes
of common equity, as of the latest practicable date:
Transitional Small Business Disclosure Format (Check one):
Yes No X
LEADVILLE CORPORATION
INDEX TO FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION
PART I - FINANCIAL INFORMATION Page
FINANCIAL STATEMENTS
Balance sheets 3 - 4
Statements of operations 5
Statements of stockholders' equity 6
Statements of cash flows 7
Notes to financial statements 8 - 12
PLAN OF OPERATION 13
PART II - OTHER INFORMATION
Legal proceedings 14 - 15
Exhibits and reports on Form 8-K 16
-2-
PART I
ITEM 1. FINANCIAL STATEMENTS
LEADVILLE CORPORATION
Balance Sheets
June 30, 1996
(Unaudited)
June 30, December 31,
1996 1995
ASSETS
CURRENT ASSETS
Cash $ 12,748 $ 2,780
Prepaid expenses and other 2,590 7,640
Total current assets 15,338 10,420
PROPERTY AND EQUIPMENT, at cost
(Notes 2 and 3)
Mining properties, including assets
acquired under capital leases 7,356,979 7,356,979
Buildings and equipment:
Mine, including assets acquired
under capital leases 1,219,564 1,219,564
Mill 829,032 829,032
Other 108,143 108,143
Land 22,429 22,429
9,536,147 9,536,147
Less accumulated depreciation and
depletion including amortization
applicable to assets acquired under
capital leases (2,752,567) (2,736,074)
6,783,580 6,800,073
OTHER ASSETS:
Investments - certificates of
deposit 133,000 133,000
Inventories 397,264 408,589
530,264 541,589
$ 7,329,182 $ 7,352,082
-3-
June 30, December 31,
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Related parties: (Note 4)
Convertible debentures (Note 3) $ 440,000 $ 531,000
Notes payable, stockholders (Note 3) 363,000 508,500
Accrued interest payable 3,016,841 2,848,489
Due to officers and directors 23,346 6,351
Notes payable-other 100,000 100,000
Accounts payable 308,419 307,324
Accrued expenses 168,185 146,871
Capital lease obligations (Note 3) 768,932 741,824
Total current liabilities 5,188,723 5,190,359
SETTLEMENT OF LITIGATION (Note 3) 100,000 100,000
LONG-TERM DEBT:
Related parties - -
Other - -
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY
Capital stock, par value $1 per share;
authorized 15,000,000 shares; issued and
outstanding June 30, 1996, 9,254,999 and
December 31, 1995, 8,953,571
shares 9,254,999 8,953,571
Additional paid-in capital 8,457,949 8,457,949
17,712,948 17,411,520
Accumulated deficit (15,672,489) (15,349,797)
Total stockholders' equity 2,040,459 2,061,723
$ 7,329,182 $ 7,352,082
See Notes to Financial Statements.
-4-
Part I
LEADVILLE CORPORATION
STATEMENTS OF OPERATIONS
Six months ended June 30, 1996 and 1995
(Unaudited)
Three Months Six Months
ended June 30, ended June 30,
1996 1995 1996 1995
Operating revenue $ - $ - $ - $ -
Operating costs and expenses:
General and
administrative 24,254 29,358 85,415 83,036
Depreciation 250 212 16,492 424
Total operating
expenses 24,504 29,570 101,907 83,460
Operating loss (24,504) (29,570) (101,907) (83,460)
Financial income and expense:
Interest income 1,455 1,066 2,825 1,950
Other income 1,200 1,200 1,200 1,200
Interest expense (118,132) (102,525) (224,810) (205,393)
Total financial income
(expense) (115,477) (100,259) (220,785) (202,243)
Net loss $(139,981) $(129,829) $(322,692) $(285,703)
Net loss per capital
share $ (.02) $ (.02) $ (.04) $ (.04)
Weighted average number of
capital shares outstanding
(total shares) 9,054,047 8,953,571 8,970,317 8,892,621
See Notes to Financial Statements.
-5-
LEADVILLE CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months ended June 30, 1996
(Unaudited)
June 30, 1996 December 31, 1995
Shares Amount Shares Amount
Capital Stock 9,254,999 $ 9,254,999 8,953,571 $ 8,953,571
Additional
Paid-In Capital 8,457,949 8,457,949
Accumulated deficit,
December 31, 1995 (15,349,797) (15,349,797)
2,363,151 $ 2,061,723
Net Loss,
June 30, 1996 (322,692)
$ 2,040,459
See Notes to Financial Statements.
- 6 -
LEADVILLE CORPORATION
STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1996 and 1995
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (322,692) $ (285,703)
Adjustments to reconcile net loss
to net cash provided by (used) in
operating activities:
Depreciation 16,492 424
Change in assets and liabilities:
(Increase) decrease in:
Prepaid expenses 5,050 5,046
Inventories 11,325 -
Increase (decrease) in:
Accounts payable 1,095 2,095
Accrued expenses 23,280 23,774
Officer payables 16,995 14,350
Accrued interest 188,315 168,931
Capital lease obligations 27,108 27,080
Net cash provided by (used
in) operating activities (33,032) (44,003)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing, related parties 35,000 47,500
Proceeds from sale of stock 8,000 -
Net cash provided by financing
activities 43,000 47,500
Increase (decrease) in cash and
cash equivalents 9,968 3,497
Cash and cash equivalents:
Beginning 2,780 -
Ending $ 12,748 $ 3,497
Supplemental disclosures of non-cash
investing and financing activities:
Capital stock issued for forgiveness
of notes payable, convertible
debentures and other liabilities to
stockholders and/or officers $ 293,428 $ -
See Notes to Financial Statements.
-7-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
Nature of Business and Significant Accounting Policies:
Nature of Business - Leadville Corporation (the Company) is
engaged in the development and mining of hard rock
mineral properties in Lake and Park Counties, Colorado.
Inventories - Inventories are stated at the lower of cost
(average method) or market value. Inventories consist of
operating and maintenance supplies. In 1995, the Company began
amortizing, as necessary, the carrying value of
inventory to recognize declining useful life and obsolescence for
those items which are not anticipated to be used in the
foreseeable future.
Property and Equipment - Mining properties consist primarily of
patented and unpatented mining claims. Mining
properties include the cost of acquisition and accumulated
exploration and development expenditures incurred in the
pre-production stage.
In the event such mining properties are developed into producing
properties, depletion of these related costs will be
computed on the unit-of-production method, based on estimated
tons of recoverable ore reserves. If the properties are
determined to be incapable of producing commercial quantities of
ore, the costs will be charged to operations in the
period in which the determination is made.
The Company provides for depreciation of buildings and equipment
on the straight-line method, to apportion costs over
the estimated useful lives of the assets which range principally
from five to twenty years. During 1995, the Company
began to recognize depreciation on fixed assets which are not in
service and which are not anticipated to be placed in
service in the foreseeable future, in order to recognize the
declining useful life of such assets.
Income Taxes - The Company accounts for income taxes under the
liability method, whereby deferred tax assets and
liabilities are recorded for the expected future tax consequences
of events that have been included in the financial
statements or tax returns. Under this method, deferred tax
assets and liabilities are determined based on the difference
between the financial statements and tax bases of assets and
liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse.
Net Income (Loss) Per Capital Share - The net income (loss) per
capital share is based on the weighted average number
of shares outstanding during the period. Convertible debt has
not been included in the computation of fully diluted
earnings per share because its effect would be anti-dilutive.
Capitalization of Interest - The Company capitalizes interest
expense as part of the historical cost of acquiring certain
assets which require an extended period of time to prepare them
for their intended use (see Note 3). Subsequent to 1988,
interest has been expensed due to the suspension of development
activities.
Use of Estimates - The preparation of the Company's consolidated
financial statements in conformity with generally
accepted accounting principles requires the Company's management
to make estimates and assumptions that affect the
amounts reported in these financial statements and accompanying
notes. The Company makes significant assumptions
concerning the realizability of its investment in property and
equipment, and the ultimate liabilities associated with
asserted claims (see Note 5). Management believes that the
interim financial statements include all adjustments
necessary in order to make the financial statements not
misleading.
- 8 -
Continuing operations:
On August 15, 1996, the Company signed a Letter of Intent to form
a joint-venture with Canuc Resources Corporation
("Canuc") of Toronto, Ontario, for developing and operating
Leadville's Diamond-Resurrection property. Under terms
of the proposed joint venture arrangement, Canuc has the right
to earn up to a 51% interest in the property in
consideration for advancing the property's development and
settling certain of the Company's obligations. Canuc has
purchased 500,000 shares of Leadville stock providing the Company
with needed working capital. Canuc has also agreed
to purchase up to $1,000,000 of Leadville stock at Leadville's
request or Canuc's option, if the joint-venture agreement
is executed.
Leadville and Canuc have agreed to negotiate and, if agreeable
to both parties, sign a formal joint-venture agreement
within sixty days of signing the Letter of Intent. Upon
execution of the joint venture agreement, Canuc is responsible
for carrying the costs of the Diamond-Resurrection property.
At June 30, 1996, the Company has a significant investment in
non-producing mining properties, including the
Diamond-Resurrection property, recovery of which is dependent
upon the production of ore reserves in commercial
quantities or sale of these properties at an amount equal to or
in excess of cost. The Company has suffered recurring
losses from operations and at June 30, 1996, has a working
capital deficiency of approximately $5,173,000 which includes
approximately $3,843,000 due to related parties. The Company
also has significant inventories, which management
believes will be used by the proposed joint-venture activities on
the Diamond-Resurrection and maintenance operations
on the Company's other properties. All real properties are
collateral for convertible debentures. The Company has
no property or liability insurance coverage at June 30, 1996, or
as of the date of this report.
The Company has negotiated a decrease in the amount of its EPA
settlement obligation from $3,000,000 to $500,000.
The final form of the agreement is anticipated to be signed in
the near future. In consideration, Leadville has agreed
to allow EPA to use certain dirt and rock materials from
Leadville's property. The Company is continuing its efforts
to lessen the EPA burden on its properties.
The Company believes a substantial portion of the convertible
debentures, notes payable, accrued interest and certain
other obligations may at some future time be converted into
capital shares. If such obligations are not converted to
stock, the Company will be required to raise significant amounts
of outside capital to liquidate the obligations. If the
Company does not execute a joint-venture agreement with Canuc,
significant financing from other sources will be
required in order for the Company to successfully restructure it
debt, satisfactorily resolve its current litigation and
obtain working capital to continue as a going concern. The
financial statements do not include any adjustments which
might result from the outcome of these uncertainties.
Mining Properties:
At June 30, 1996, the Company owns two mining properties, the
Sherman-Hilltop Consolidation and the Diamond-
Resurrection Consolidation.
Activity at the Diamond-Resurrection property, primarily a gold
property, has been suspended since 1989, due to
insufficient cash resources to finance further exploration and
development work. The Company expects that execution
of a joint-venture agreement with Canuc will result in the
re-starting of mining related activity on the property in late
1996.
Since May of 1987 and continuing into 1996, Leadville's
activities at the Sherman Mine, primarily a silver property,
have been limited to care, maintenance and permit related work,
due to continuing low silver prices. During 1985, the
Sherman Mine was placed in temporary cessation due to suspension
of mining activities. During 1995, the temporary
cessation period expired and Leadville will be required to
conduct a program of study, exploration and sampling to
maintain existing regulatory permits. In the event the required
work is not performed, the Company may be required
to reclaim the Sherman Mine site. The Company maintains a
reclamation bond, in the amount of $128,000, which
relates to the Sherman and Stringtown Mill sites.
- 9 -
3. Notes Payable and Convertible Debentures:
The notes payable are summarized as follows:
June 30, December 31,
1996 1995
Notes payable, at 10%, to
stockholders and/or officers/
directors, due dates range from
June 1996 through
December 1996. $ 363,000 $ 508,500
Notes payable-other, at 10% due
dates ranging from June 1996 to
December 1996. $ 100,000 $ 100,000
The above notes payable are convertible to the Company's capital
stock at the option of note holders at conversion prices
of $.80 to $1.00 per share during the term of the notes.
The convertible debentures are summarized as follows:
June 30, December 31,
1996 1995
10% convertible debentures,
interest and principal due December 1996,
convertible to the Company's Capital
Stock at the option of the debenture
holders at a conversion price of $1
per share, collateralized by mining
properties. $ 440,000 $ 531,000
Of the $440,000, $340,000 is due to stockholders. During 1995,
the Company secured extended due dates for the
debentures to December 1996.
3. Commitments and Contingencies:
Lease Commitment Litigation - In December 1988, the Company sold
and leased back certain equipment from an
unrelated entity. Proceeds of $415,000 were recorded as a
capital lease obligation. In addition, the Company leases
several other pieces of mining equipment which are classified as
capital leases. The Company was delinquent on certain
of its lease obligation payments, and the lessor has asserted
that the Company was in default. In January 1991, the
lessor won a summary judgment in the amount of approximately
$642,000, which represents all unpaid past and future
- 10 -
capital lease obligations (including interest). During 1994, in
an appeal, the judgment amount of $642,000 was upheld,
and additional attorneys fees and interest of approximately
$46,000 were awarded the lessor. During the first six months
of 1996, the Company accrued an additional $27,000 of interest
expense on this obligation. During 1992, the lessor also
won a summary judgment for possession of leased equipment with a
net book value of $525,000 and for interest and
penalty charges on the unpaid summary judgments. The lessor has
also asserted that it has a lien on all the real
property of the Company and that this lien should be foreclosed.
The lessor has repossessed approximately $402,000
of the leased equipment. Approximately $123,000 of equipment the
lessor has not repossessed remains recorded as an
asset of the Company.
Environmental Litigation - The Company has been named as one of
several defendants in certain legal actions involving
environmental matters. The plaintiffs in these actions, the
State of Colorado and the Federal Government, have alleged
that the defendants are liable under the Comprehensive
Environmental Response, Compensation and Liability Act of
1980 (CERCLA) in connection with mining and property ownership
positions in the California Gulch Superfund Site
near Leadville, Colorado.
The Company has answered the complaints and has vigorously
defended the consolidated action. Further, the Company
and litigation counsel believe they have substantial and
meritorious defenses to the claims being made. However, in an
effort to expedite a conclusion and to minimize legal costs, the
Company agreed to a settlement of the cases.
During August 1993, a consent decree was entered by the Federal
District Court in Colorado whereby the United States
agreed to settle the Company's alleged liability, with the
exception of natural resources damages, if any, in consideration
for $3,000,000. Under the original terms of the consent decree,
a total of $250,000 was to be paid by the Company over
15 years, with a contingent liability of $2,750,000 to be paid
based on profitable operations or sale of properties.
Minimum cash payments are to be $10,000 for years 1-5, $15,000
for years 6-10, and $25,000 for years 11-15.
During October 1995, the Company reached agreement, in principle,
with the United States to reduce the consent decree
obligation amount of $3,000,000 to $500,000, with minimum annual
cash payments to begin after the revised consent
decree terms are approved by the Court. In effect, the
contingent liability of $2,750,000 was reduced to $250,000. In
consideration, the Company agreed to provide to the United States
certain dirt and rock material for use by the
Environmental Protection agency (EPA) in remedial action work at
the Superfund site. During late 1995, the EPA
began to use the dirt material and the Company's management
anticipates that a final agreement modifying the consent
decree will be signed in the near future. The Company has
accrued a $110,000 environmental settlement liability, which
was the present value of the $250,000 future minimum payments.
During 1993, the Company initiated a suit against its insurance
company, seeking defense costs of $400,000 and
indemnification of the Company's exposure under the EPA agreement
associated with the environmental litigation
described above. The insurance company counterclaimed for its
previously advanced $65,000 and defense costs. On
May 31, 1994, the court ruled against the Company, and ordered
the Company to repay the $65,000 advanced defense
costs. During 1995, the Company and the insurance Company
settled the obligation for $10,000 and as a result, the
Company recorded an extraordinary gain from settlement of debt of
$53,208.
Contract Mining Litigation - During March 1990, a subcontractor
of the Company filed an action in Lake County
District Court for non-payment of approximately $35,000 for
mining services, plus associated costs. Leadville has filed
a counter-claim against the plaintiff for approximately $185,000
relating to the same contract. No action has occurred
in the case since 1993 and the Court has ordered a status report
on the issues by August 1996.
Certificates of Deposit - The Company is required by the Mined
Lands Reclamation Board to maintain certificates of
deposit for future reclamation costs. No future reclamation
costs have been accrued as of June 30, 1996.
- 11 -
4. Related Party Transactions:
Certain officers, directors and stockholders have provided
significant loans and advanced expenses to the Company in
recent years. The aggregate indebtedness, including accrued
interest and other payables, amounted to approximately
$3,843,000 at June 30, 1996. Substantially all of that
indebtedness is convertible in the Company's Capital Stock at a
price of $1.00 per share.
The Company leases office space on a month-to-month basis from an
officer for $125 per month. This officer is a
principal in an accounting firm which performs bookkeeping,
accounting and other administrative services for the
Company. As of June 30, 1996, the Company owed the firm
approximately $16,000 for accrued fees and expenses.
5. Income Taxes:
At December 31, 1995, the Company has available tax net operating
loss carryforwards of approximately $8,030,000,
which can be utilized to offset future taxable income.
Utilization of these loss carryforwards may be limited due to
changes in ownership of the Company, and expire from 1997 through
2010.
- 12 -
ITEM 2. PLAN OF OPERATION
On August 15, 1996, Leadville and Canuc Resources Corporation
("Canuc") signed a Letter of Intent to form a joint-
venture for developing and operating the Diamond-Resurrection
property. Under terms of the Letter of Intent, Canuc
has the right to earn up to a 51% interest in the property in
consideration for advancing the development of the property
and satisfying certain of Leadville's obligations. Canuc has
purchased 500,000 shares of Leadville restricted stock at
$1.00 per share. Proceeds from the sale will provide working
capital for the Company. Additionally, Canuc has agreed
to purchase at Leadville's request or Canuc's option up to
$1,000,000 of Leadville stock after a formal joint-venture
agreement is executed.
The Company earned no operating revenues during 1995 and 1994 and
incurred net losses in those years of $670,277
and $684,221, respectively. Management does not anticipate that
any operating revenues will be generated during the
year 1996. The Company's most viable prospect for generating
income from operations is by achieving production at
the Diamond-Resurrection property through the proposed
joint-venture with Canuc. The property should be primarily
a gold producer. In order to achieve production from the Diamond
property additional mine development must occur
and milling capabilities re-established. Raising required
capital for the Diamond has been complicated by the location
of the Diamond-Resurrection property within the California Gulch
Superfund site. Management is continuing its efforts
to lift the burden of Superfund from its properties, including
financial obligation reductions and lifting the Superfund
designation from its properties.
Since exhausting its cash reserves in 1989, the Company has met
substantially all of its cash requirements from the
issuance of unsecured promissory notes to officers, directors and
shareholders of the Company. Management anticipates
that sources of funding to meet cash requirements during the
course of the next twelve months will be available from
existing commitments from Canuc in forming the joint-venture and
from issuance of stock.
The Company continues to incur significant interest charges
associated with the outstanding notes and debentures
payable. Management believes that a substantial amount of the
note, debenture and associated accrued interest
obligations will be converted to Capital Stock by the holders.
The holders of these instruments have the right to convert
principal and accrued interest to Capital Stock at a prices of
$.80 to $1.00 per share. Substantially all holders of the
notes and debentures payable are stockholders of the Company. If
any holders do not convert their obligations to stock,
Leadville will be required to raise financing from outside
sources to settle the obligation.
The proposed joint-venture intends to initiate an exploration
program on the Diamond properties. The objective of the
exploration program is to identify reserves in addition to the
700,000 tons already identified at the Diamond-
Resurrection. In anticipation of settling the environmental
litigation, Leadville conducted two studies of the Diamond
property during late 1992 and early 1993. One study included
verification of known mineralization and an evaluation
of mine development. The second study included surface
geo-physics intended to indicate potential exploration targets.
Conclusions of the studies are encouraging and provide additional
evidence that the Diamond property may hold
significant deposits of gold, silver and base metals.
Full production at the Diamond Mine will require a significant
capital expenditure to acquire surface plant and
underground equipment. Realizing operating revenues from the
Diamond Mine production will require that the
proposed joint-venture re-establish milling capabilities at the
Stringtown Mill site, construct a new milling facility or
make other milling arrangements. Management does not anticipate
that there will be an significant change in the
number of Company employees, until such time as the joint-venture
agreement is executed and activity begins at the
Diamond Mine.
During the second quarter of 1996, certain holders of the
Company's notes payable, debentures payable and other
expenses elected to convert their debt instruments to stock.
Approximately 293,423 shares were issued in these
transactions. Additionally, the Company issued 8,000 shares of
restricted stock at a price of $1.00 per share during the
second quarter. Subsequent to June 30, 1996, the Company reached
agreement with certain other debt holders to
convert their obligations to Capital Stock.
- 13 -
PART II
Item 1. LEGAL PROCEEDINGS
UNITED STATES (ENVIRONMENTAL PROTECTION AGENCY)
In 1983, Leadville was named as one of several defendants in an
action (United States of America vs. Apache Energy
and Mineral Company, et al) brought by the United States in
Federal District Court in Colorado under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA") in connection with the
approximately 11.5 square mile California Gulch Superfund site in
Lake County, Colorado. In 1986, Leadville was also
named as a third party defendant in a suit (State of Colorado vs.
Asarco, Inc., et al) involving the same site. The cases
were subsequently consolidated.
From 1983 through 1988, Leadville negotiated with the United
States to have its involvement in the consolidated case
dismissed or settled on a de minimis basis. That effort was
ultimately unsuccessful. During the years 1989 and
continuing into 1993, Leadville attempted to negotiate a
settlement of its alleged liability to the United States.
Management believed that financing might be obtained by Leadville
if the claims asserted by the United States were
settled and the financial exposure limited.
During August, 1993, a consent decree was entered by the Federal
District Court in Colorado whereby the United States
agreed to settle Leadville's alleged liability, with the
exception of natural resources damages, if any, in consideration
for $3,000,000. Under the original terms of the consent decree,
a total of $250,000 was to be paid by Leadville over 15
years, with a contingent liability of $2,750,000 to be paid based
on profitable operations or sale of properties. Minimum
cash payments are to be $10,000 for years 1-5, $15,000 for years
6-10 and $25,000 for years 11-15.
During October 1995, Leadville reached agreement, in principle,
with the United States to reduce the consent decree
obligation amount of $3,000,000 to $500,000, with minimum annual
cash payments to begin after the revised terms are
approved the Court. In effect, the contingent liability of
$2,750,000 was reduced to $250,000. In consideration,
Leadville agreed to provide to the United States certain dirt and
rock material for use by the Environmental Protection
Agency (EPA) in remedial action work at the Superfund site.
During late 1995, the EPA began to use the dirt material
and Leadville management anticipates a final agreement modifying
the consent decree will be signed in the near future.
MINING EQUIPMENT, INC.
During December 1988, Leadville raised financing for operations
through the sale and lease back of certain mining and
milling equipment. In late 1989, due to Leadville's inability to
raise financing, scheduled payments under the agreement
could not be made and the lessor of the equipment sued in the
District Court of Lake County, Colorado to obtain
financial relief and possession of the equipment. (Mining
Equipment, Inc. vs. Leadville Corporation).
In October 1994, Leadville and Mining Equipment, Inc. reached an
agreement to settle the case for $678,000. The
plaintiff has obtained possession of substantially all mining and
milling equipment subject to the lease agreements, with
the exception of the Diamond Mine hoist and certain other
equipment. The plaintiff's right to possession of the hoist
is subordinate to Leadville's debenture holders' first mortgage
position. Plaintiff intends to obtain possession of the
other equipment in 1996. Under terms of the Letter of Intent
signed by Leadville and Canuc on August 15, 1996,
Canuc has agreed to satisfy the obligation as part of the
consideration for earning an interest in the Diamond-
Resurrection property.
As of June 30, 1996, Leadville is obligated to Mining Equipment,
Inc. in the amount of $769,000, including accrued
interest. The plaintiff asserts that it has the right to
foreclose on Leadville's properties to satisfy the obligation.
Leadville contests such assertions and, to date, the plaintiff
has not initiated any foreclosure action.
- 14 -
COWIN & COMPANY, INC.
In 1990, Cowin & Company, Inc. Mining Engineers and Contractors
filed suit against Leadville in Lake County,
Colorado District Court asserting that Leadville was obligated
to Cowin & Company, Inc. for approximately $45,000
for contract mining fees. Cowin & Company, Inc. is requesting
damages, equipment possession and general relief
relating to a contract mining agreement entered into March 3,
1987.
Leadville counter-claimed for damages resulting from improper
construction of the Diamond Mine shaft and damages
resulting from Cowin & Company activities at the site. No action
has been taken in the case since October 1993 and
the Court has ordered a Status Report be filed on the matter by
August 30, 1996.
UNITED STATES FIDELITY & GUARANTY COMPANY
During 1993, Leadville filed a lawsuit against its former
insurance carrier seeking to recover defense costs and obtain
indemnification for issues related to environmental litigation.
The insurance company counter-claimed for $65,000 in
defense costs advanced. In May 1994, the Court ruled against
Leadville's claims and awarded the insurance company
the $65,000 in costs advanced. Leadville appealed the decision
and lost. During August 1995, Leadville settled the
insurance company's claim for $10,000 and recorded the residual
judgment amount due as "Extraordinary Gain" on
the Company's Statements of Operations.
- 15 -
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed herewith or incorporated by reference to
previous filings with the Securities and Exchange Commission.
Exhibit
Number Description
(2) Plan of Acquisition, reorganization, arrangement,
liquidation or succession
(3) Articles of Incorporation and By-laws
(4) Instruments defining the rights of security
holders, including indentures
(9) Voting Trust Agreement
(10) Material Contracts
(11) Statement Regarding Computation of Earning Per
Share is not required since the information is
ascertainable from Leadville's financial
statements filed herewith.
(13) Annual Report to security holders, Form 10-Q or
quarterly report to security holders
(16) Letter re: change in accounting principles
(19) Documents not previously filed
(21) Subsidiaries of the Registrant
(22) Published report regarding matters submitted to vote
of security holders
(23) Consents of experts and counsel
(24) Power of Attorney
(27) Financial Data Schedule
(28) Information from reports furnished to state
insurance authorities
(29) Additional Exhibits
___________________
(3) The Articles of Incorporation of Leadville were filed with
its Form 10-K on May 6, 1965; the By-laws of Leadville
were filed with its Report on Form 10-K for the year ended
December 31, 1980.
(4) Filed with Form 10-K for year ended December 31, 1987.
(28) Consent Decree, State of Colorado vs. Asarco, Inc., et al,
Defendants and Third Party Plaintiffs vs. Leadville
Corporation, et al, Third Party Defendants: United States of
America vs. Apache Energy and Minerals Company, et al.
(b) Reports on Form 8-K filed during the Registrant's first
quarter of 1996. NONE
- 16 -
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
LEADVILLE CORPORATION
(Registrant)
Daniel F. Nibler
Daniel F. Nibler, Vice President,
Secretary-Treasurer, (Principal
Financial and Accounting Officer)
Dated: August 19, 1996
- 17 -
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