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 September 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
9,805,352
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
September 30, 1996
(Unaudited)
September 30, December 31,
1996 1995
ASSETS
CURRENT ASSETS
Cash $ 265,164 $ 2,780
Prepaid expenses and other 10,165 7,640
Total current assets 275,329 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 (2,753,317) (2,736,074)
6,782,830 6,800,073
OTHER ASSETS:
Investments - certificates
of deposit 133,000 133,000
Inventories 397,264 408,589
530,264 541,589
$ 7,588,423 $ 7,352,082
-3-
September 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) 328,000 508,500
Accrued interest payable 3,017,469 2,848,489
Due to officers and directors 11,525 6,351
Notes payable-other 100,000 100,000
Accounts payable 295,936 307,324
Accrued expenses 107,094 146,871
Capital lease obligations (Note 3) 782,486 741,824
Total current liabilities 5,082,510 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 September 30, 1996, 9,805,352 and
December 31, 1995, 8,953,571
shares 9,805,352 8,953,571
Additional paid-in capital 8,450,682 8,457,949
18,256,034 17,411,520
Accumulated deficit (15,850,121) (15,349,797)
Total stockholders' equity 2,405,913 2,061,723
$ 7,588,423 $ 7,352,082
See Notes to Financial Statements.
-4-
Part I
LEADVILLE CORPORATION
STATEMENTS OF OPERATIONS
Nine months ended September 30, 1996 and 1995
(Unaudited)
Three Months Nine Months
ended September 30, ended September 30,
1996 1995 1996 1995
Operating revenue $ - $ - $ - $ -
Operating costs and expenses:
General and
administrative 84,089 39,182 169,504 122,218
Depreciation 751 212 17,243 636
Total operating
expenses 84,840 39,394 186,747 122,854
Operating loss (84,840) (39,394) (186,747) (122,854)
Financial income and expense:
Interest income 1,597 453 4,422 2,403
Other income 315 56,261 1,515 57,461
Interest expense (94,704) (103,407) (319,514) (308,800)
Total financial income
(expense) (92,792) (46,693) (313,577) (248,936)
Net loss $(177,632) $ (86,087) $(500,324) $(371,790)
Net loss per capital
share $ (.02) $ (.01) $ (.05) $ (.04)
Weighted average number of
capital shares outstanding
(total shares) 9,555,352 8,953,571 9,115,499 8,953,571
See Notes to Financial Statements.
-5-
LEADVILLE CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months ended September 30, 1996
(Unaudited)
September 30, 1996 December 31, 1995
Shares Amount Shares Amount
Capital Stock 9,805,352 $ 9,805,352 8,953,571 $ 8,953,571
Additional Paid-In
Capital 8,450,682 8,457,949
Accumulated deficit,
December 31, 1995 (15,349,797) (15,349,797)
2,906,237 $ 2,061,723
Net Loss,
September 30, 1996 (500,324)
$ 2,405,913
See Notes to Financial Statements.
- 6 -
LEADVILLE CORPORATION
STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1996 and 1995
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (500,324) $ (371,790)
Adjustments to reconcile net loss
to net cash provided by (used) in
operating activities:
Depreciation 17,243 636
Change in assets and liabilities:
(Increase) decrease in:
Prepaid expenses (2,525) (2,531)
Inventories 11,325 -
Increase (decrease) in:
Accounts payable (11,388) 6,064
Accrued expenses (39,777) (90,378)
Officer payables 5,174 22,038
Accrued interest 281,496 300,812
Capital lease obligations 40,662 40,619
Net cash provided by (used
in) operating activities (198,114) (94,530)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing, related
parties 45,000 102,500
Proceeds from sale of stock 508,000 -
Repayment of loans and interest (92,502) -
Net cash provided by financing
activities 460,498 102,500
Increase (decrease) in cash and
cash equivalents 262,384 7,970
Cash and cash equivalents:
Beginning 2,780 -
Ending $ 265,164 $ 7,970
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 $ 336,515 $ -
See Notes to Financial Statements.
-7-
LEADVILLE CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 are continuing to negotiate the terms
of a final joint-venture agreement and have agreed to extend
the date for completing the agreement. Both parties are
optimistic that agreement will be reached. Upon execution of
the joint venture agreement, Canuc is responsible for carrying
the costs of the Diamond-Resurrection property.
At September 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 September 30, 1996, has a working
capital deficiency of approximately $4,807,000 which
includes $3,797,000 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 September 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
its 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 September 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 or early 1997.
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:
September 30, December 31,
1996 1995
Notes payable, at 10%, to
stockholders and/or officers/
directors, due dates range from
September 1996 through
December 1996. $ 328,000 $ 508,500
Notes payable-other, at 10% due
dates ranging from September 1996 to
December 1996. $ 100,000 $ 100,000
The above notes payable and accrued interest 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:
September 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 nine
months of 1996, the Company accrued an additional $40,600 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 or as of the date of this
report.
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 September 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
$3,797,000 at September 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 September 30, 1996, the Company owed the
firm approximately $10,700 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.
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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 stock at $1.00 per
share which shares were issued during August, 1996. 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 parties are continuing to negotiate terms of
the Agreement as of the date of this report.
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 Leadville/Canuc 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 third 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 50,343 shares were issued in these
transactions. Subsequent to September 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 prior to earning
any interest in the Diamond-Resurrection property.
As of September 30, 1996, Leadville is obligated to Mining
Equipment, Inc. in the amount of $782,500, 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
through the date of this report.
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
third 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)
November 15, 1996
Dated:
- 17 -<PAGE>
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