<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
--------------------
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
0-16740
-----------
(Commission File Number)
NORTH LILY MINING COMPANY
---------------------------
(Exact name of registrant as specified in its charter)
UTAH 87-0159350
-------- --------------
(State of Incorporation) (IRS Employer Identification No.)
SUITE 210, 1800 GLENARM PLACE, DENVER, COLORADO 80202
------------------------------------------------- -------
(Address of principal executive offices) (ZIP Code)
(303) 294-0427
------------------
(Registrant's telephone number, including area code)
N/A
-------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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
----- -----
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date: November 13, 1996
Common shares 30,052,233
<PAGE>
NORTH LILY MINING COMPANY
-------------------------
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
INDEX
-----
<TABLE>
<CAPTION>
<S> <C> <C>
Part I. Financial Information:
Item 1. - Condensed Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995.................................. 3
- Condensed Consolidated Statements of Cash Flow -
Nine Months Ended September 30, 1996 and 1995.............................. 4
- Condensed Consolidated Statements of Operations -
Nine Months Ended September 30, 1996 and 1995
and Three Months Ended September 30, 1996 and 1995......................... 5
- Condensed Consolidated Statements of Shareholder's Equity -
September 30, 1996 and December 31, 1995................................... 6
- Notes to Condensed Consolidated Financial Statements....................... 7
Item 2. - Management's Discussion and Analysis of
Financial Condition and Results of Operations.............................. 9
Part II. Other Information:
Item 6. - Exhibits and Reports on Form 8-K........................................... 11
Signatures................................................................. 12
</TABLE>
2
<PAGE>
NORTH LILY MINING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
$ $
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents 149,089 122,515
Marketable securities 45,141 448,800
Accounts receivable 168,492 44,687
Inventory 43,207 42,207
------------- ------------
Total Current Assets 405,929 659,209
Advances to Tamarine Ventures Ltd. 164,278 35,000
Plant and equipment, net 270,152 278,111
Mineral properties, net 3,158,505 3,121,943
Other assets 107,457 107,457
------------- ------------
Total Assets 4,106,321 4,201,720
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable 433,226 381,326
Accrued and other liabilities 6,420 38,000
Reclamation liabilities 131,926 220,001
Notes payable - 308,788
------------- ------------
Total Current Liabilities 571,572 948,115
Due to officers 565,000 385,000
------------- ------------
Total Liabilities 1,136,572 1,333,115
------------- ------------
Shareholers' Equity:
Common stock, $0.10 par value; authorized 30,000,000 shares;
issued 30,052,233 and 23,946,677 shares as of
September 30, 1996 and December 31, 1995, respectively 3,005,222 2,594,667
Additional paid-in capital 48,978,994 48,929,549
Accumulated deficit (49,010,829) (48,835,939)
Treasury stock, at cost, 144,830 shares as of
September 30, 1996 and December 31, 1995 (17,395) (17,395)
Marketable securities valuation adjustment 13,757 197,723
------------- ------------
Total shareholders' equity 2,969,749 2,868,605
------------- ------------
Total liabilities and shareholders' equity 4,106,321 4,201,720
============= ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
NORTH LILY MINING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the nine months ended:
-----------------------------
September 30, September 30,
1996 1995
------------- -------------
$ $
<S> <C> <C>
Cash flows from operating activities:
Net loss (174,890) (99,358)
Adjustments to reconcile net loss to net
cash provided from (used in) operating activities:
Amortization and depreciation 2,959 44,230
Gain on disposition of mineral properties (206,897) (309,970)
Net realized gain on sale of marketable securities and investments (118,883) (77,861)
Increase in accounts receivable (123,805) (10,683)
Decrease in inventory - 55,065
Decrease in other assets - 1,575
Increase in accounts payable and accrued liabilities 200,320 102,321
Decrease in reclamation liabilities (88,075) (94,682)
Decrease in due to former officers and directors - (156,250)
Increase (decrease) in note payable (308,788) 10,201
Other items 60,000 8,750
------------- -------------
Net cash used in operating activities (758,059) (526,662)
------------- -------------
Cash flows from investing activities:
Acquisition and exploration of mineral properties,
net of option payments received (44,957) 139,775
Advances to Tamarine Ventures Ltd. (129,278) -
Proceeds from sale of marketable securities and investments 338,576 133,540
Proceeds from sale of mineral properties 215,292 -
Proceeds from sale of mining and milling equipment 5,000 66,250
------------- -------------
Net cash provided by investing activities 384,633 339,565
------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock 400,000 -
Advances from International Mahogany Corp. - 148,508
Loan by related company - 74,532
------------- -------------
Net cash provided by financing activities 400,000 223,040
------------- -------------
Net increase in cash and cash equivalents 26,574 35,943
Cash and cash equivalents at beginning of period 122,515 38,954
------------- -------------
Cash and cash equivalents at end of period 149,089 74,897
============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
NORTH LILY MINING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the three months ended: For the nine months ended:
---------------------------------------------- -------------------------------------
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
--------------------- --------------------- ----------------- ---------------
$ $ $ $
<S> <C> <C> <C> <C>
Operating expenses:
General and administrative expenses 141,458 170,763 495,924 573,615
Exploration and property carrying costs 5,426 16,704 8,675 57,017
--------------------- -------------------- ----------------- ---------------
Operating loss (146,884) (187,467) (504,599) (630,632)
Other income:
Interest income (expense) 2,100 686 3,929 2,775
Net realized gain on sale
of marketable securities - 12,448 118,883 77,861
Other, net - 26,584 - 140,668
Gain on disposition of mineral
properties 206,897 - 206,897 309,970
--------------------- -------------------- ----------------- ---------------
Net income (loss) 62,113 (147,749) (174,890) (99,358)
===================== ==================== ================= ===============
Net income (loss) per common share 0.00 (0.01) (0.01) (0.01)
===================== ==================== ================= ===============
Weighted average common shares
outstanding 25,435,714 23,276,012 25,435,714 23,276,012
===================== ==================== ================= ===============
The accompanying notes are an integral part of the consolidated financial statements
</TABLE>
5
<PAGE>
NORTH LILY MINING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the periods ended December 31, 1995 and September 30, 1996
(unaudited)
<TABLE>
<CAPTION>
Marketable
Common Stock Additional Securities
-------------------------- Paid-In Accumulated Treasury Valuation
Shares Amount Capital Deficit Stock Adjustment Total
-------------- ---------- ----------- ------------- ---------- ---------- ----------
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 23,420,842 2,342,084 48,545,382 (47,913,907) (17,395) - 2,956,164
Net loss, year ended December 31, 1995 - - - (922,032) - - (922,032)
Common stock issued for services
rendered 70,000 7,000 7,000 - - - 14,000
Common stock issued on settlement of
debt 1,455,835 145,583 291,167 - - - 436,750
Company stock issued by private
placement 1,000,000 100,000 100,000 - - - 200,000
Share issue costs - - (14,000) - - - (14,000)
Marketable securities valuation
adjustment - - - - - 197,723 197,723
------------------------------------------------------------------------------------------
Balance, December 31, 1995 25,946,677 2,594,667 48,929,549 (48,835,939) (17,395) 197,723 2,868,605
Net loss, period ended September 30,
1996 - - - (174,890) - - (174,890)
Common stock issued for services
rendered 300,000 30,000 30,000 - - - 60,000
Common stock issued for finders fees 250,000 25,000 - - - - 25,000
Share issue costs - - (25,000) - - - (25,000)
Common stock issued by private placement 3,555,556 355,555 44,445 - - - 400,000
Marketable securities valuation
adjustment - - - - - (183,966) (183,966)
------------------------------------------------------------------------------------------
Balance, September 30, 1996 30,052,233 3,005,222 48,978,994 (49,010,829) (17,395) 13,737 2,969,749
==========================================================================================
The accompanying notes are an integral part of the condensed consolidated financial statements.
</TABLE>
6
<PAGE>
NORTH LILY MINING COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
GOING CONCERN
During 1995, 1994 and 1993 the Company incurred net losses of $922,032,
$2,071,147 and $6,271,619, respectively and at December 31, 1995 had a working
capital deficiency of $288,906. At September 30, 1996, the Company had a
working capital deficiency of $165,643.
During 1993 the Company ceased operations at its Silver City mine and suspended
mining operations at its Tuina mine. As a result the Company has no operating
cash flow to meet ongoing obligations. The Company has continually been selling
non-essential Company assets to fund ongoing operations and property commitments
over the past three years. The Company requires financing to fund its future
operations and will attempt to meet its ongoing liabilities as they fall due
through the sale of marketable securities or mineral properties. There can be
no assurance that the Company will be able to raise the necessary financing to
continue in operations or meet its liabilities as they fall due or be successful
in resolving its contingent liabilities. Should the Company be unable to
realize on its assets and discharge its liabilities in the normal course of
business, the Company may not be able to continue in operations and the net
realizable value of its assets may be materially less than the amounts recorded
on the consolidated balance sheets.
DISCLOSURES
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions for Rule 10-01 of Regulation S-
X. Accordingly, they do not include all the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The unaudited financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of results for interim
periods presented. All adjustments made in the preparation of interim period
results, for the nine month period ended September 30, 1996, are of a normal
recurring nature. The operating results for the nine month period ended
September 30, 1996 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996. For further information, refer
to the consolidated financial statements for the year ended December 31, 1995.
SETTLEMENT OF LEGAL PROCEEDING
In August 1994, George Holcomb filed a complaint against the Company in the
Superior Court for the County of Maricopa, Arizona. Mr. Holcomb sought vacation
pay which was not paid to him when his employment with the Company terminated,
together with interest thereon, treble damages, costs, and attorney fees.
During November, 1994, the Company paid $20,834 to Mr. Holcomb, representing the
Company's calculation of vacation pay owed. However, the Company disputed Mr.
Holcomb's computation, which is based on a higher rate of pay. The Company also
disputes any award for treble damages. Mr. Holcomb's motion for summary
judgment regarding the applicability of the statute which would award treble
damages was denied on April 3, 1995.
In July, 1996, the Company and Mr. Holcomb agreed to a settlement whereby Mr.
Holcomb received $15,000 and will receive either a further cash payment of
$80,000 or a parcel of undeveloped property. The Company is responsible for 50%
of the amount.
7
<PAGE>
NORTH LILY MINING COMPANY
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
PROPOSED SHARE EXCHANGE WITH TAMARINE VENTURES LTD.
The Company is in the final stages of its negotiation of an Agreement and Plan
of Share Exchange (the "Agreement") with Tamarine Ventures Ltd., a company
incorporated under the laws of British Columbia, Canada ("Tamarine"). Under the
terms of the Agreement the Company will be required to effect a one new for ten
old reverse stock split, whereby every ten shares of the Company's issued and
outstanding shares of Common Stock will be exchanged for one share of Common
Stock ("Post-Consolidated Share"). On closing, the Company will issue 300,000
Post-Consolidated Shares of the Company in exchange for all of the issued and
outstanding common shares of Tamarine, thereby making Tamarine a wholly-owned
subsidiary of the Company (the "Share Exchange"). The Company has also agreed
to issue up to 2,700,000 additional Post-Consolidated Shares (the "Performance
Shares") of its common stock to the shareholders of Tamarine, if during any four
consecutive calendar quarters, Tamarine achieves any of the following:
i) 700,000 Post-Consolidated Shares upon generating gross revenues of
$8,000,000, not later than December 31, 1997;
ii) 1,000,000 Post-Consolidated Shares upon generating gross revenues of
$20,000,000, not later than December 31, 1999; and
iii) 1,000,000 Post-Consolidated Shares upon achieving $2,750,000 in net
profits, after tax, not later than December 31, 1999.
Closing of the Share Exchange is subject to a number of conditions including
regulatory acceptance, approval by the shareholders of the Company and
satisfactory results of due diligence investigations conducted by the Company
and Tamarine. There can be no assurance that the necessary approvals will be
obtained, in which case the Agreement may be amended. The Agreement
contemplates that Tamarine will acquire other businesses and/or companies using
shares of the Company's Common Stock.
The Annual Meeting of Shareholders held on October 25, 1996 was adjourned to
November 22, 1996 as a quorum was not present as to the proposed Tamarine
acquisition as well as other items on the agenda. The Company expects to
receive a quorum on these items on November 22, 1996.
In January 1996, the Company issued 1,250,000 shares, at an ascribed price of
$0.20 per share, as partial consideration of a proposed acquisition of Atlay Cat
Sales and Services Pty Ltd. Subsequent to the issuance of the shares, the
proposed acquisition was not completed and the shares were returned to the
Company and held in treasury.
During 1995, the Company loaned Tamarine $35,000 pursuant to the issuance of a
promissory note by Tamarine. The promissory note bears interest at a rate of
10% compounded semi-annually, payable at maturity. The principal and interest
is payable in full on December 31, 1997. 100,000 common shares of Tamarine have
been pledged as collateral. In addition, the Company has advanced Tamarine an
additional $129,278 through September 30, 1996.
RESTRUCTURING OF TUINA OWNERSHIP
Effective April 12, 1995, the Company and Mahogany agreed to a restructuring of
the ownership interest of the Tuina Project. In settlement of the Company's
outstanding debt to Mahogany of $797,481, as at March 28, 1995, the Company
reduced its ownership interest in Compania Minera Phoenix S.A. ("Phoenix") from
50% to 41%. The Company also agreed to terms by which the Company's remaining
interest in the Tuina Project will be impacted. Subsequently, Mahogany
8
<PAGE>
agreed to sell its 59% interest in Phoenix to Yuma Gold Mines Limited ("Yuma").
The sale to Yuma was extended on several occasions and the terms subsequently
revised (the "Mahogany-Yuma Agreement").
By previous agreements entered into in 1995, on May 3, 1996 Yuma entered into a
revised agreement with the Company. In summary, the Company's remaining
interest in Phoenix will, subject to receipt of regulatory approvals and
completion of the Mahogany-Yuma Agreement, be impacted as follows:
i) Yuma will receive an additional 5% interest in Phoenix in exchange for
funded costs and the delivery of an independent bankable feasibility
study in respect of the Tuina Project;
ii) the Company would be required to sell a further 10% interest in Phoenix
to Yuma for an initial payment of $145,000, less deductions for
operating costs and the costs of securing the water rights for the Tuina
Project. In addition, Yuma is required to make two further payments to
the Company, due upon commencement of Tuina commercial production and
one year thereafter. These payments are to be calculated in relation to
the initial capital costs of the Tuina Project, from a high of $609,000
where the initial capital costs are less than $14,000,000 with
graduating payments decreasing as capital costs increase, and may be
made, at Yuma's election, in cash or shares of Yuma; and
iii) all participants will be responsible for contributing their share of
funding following completion and delivery of the Feasibility Study. The
failure of any participant to contribute its share of funding will
result in a dilution of that participant's interest in accordance with a
dilution formula. Once a participant's interest has been diluted to 10%,
then the ownership interest will convert to a 10% net profits interest.
Since April 13, 1995, Yuma has assumed all indebtedness of Phoenix, provided
funding for the preparation of the feasibility study, the costs of securing the
water rights for the Tuina Project and the ongoing costs of Phoenix. These
costs are partially recoverable by Yuma (the "Yuma Payments") from the Company
from the proceeds to be received from the sale of the 10% interest in Phoenix,
as noted in item (ii) above. Closing of the Mahogany-Yuma Agreement is subject
to regulatory approval and securing the water rights for the Tuina Project.
The Company and Mahogany have an agreement in principle to conduct the
activities of the Tuina Project on a joint venture basis. The Company expects
to enter into a definitive joint venture and operating agreement with Yuma after
closing of the Mahogany-Yuma Agreement.
The restructuring completed with Mahogany allows the Company to retain a
substantial interest in the Tuina Project while eliminating the most significant
debt of the Company.
This restructuring allows the Company to retain a substantial interest in the
Tuina project while eliminating the most significant debt of the Company as well
as providing an infusion of cash. The bankable feasibility study delivered to
the Company by Yuma was prepared by Union Minere (the "Union Minere Study"),
with additional information having been prepared by Krebs, Kilborn Engineering
and the operating company for the Tuina project. The Union Minere Study outlined
an increased mineable reserve of 4.53 million metric tonnes averaging 0.91%
copper oxide and l.16% total copper in the San Jose and the San Martin pits with
an additional 600,000 metric tonnes of similar grade on the Santa Rosa pit. The
Union Minere Study concludes that the Tuina project has the ability to produce
83.6 million pounds of copper over a seven year period which would generate an
estimated life of mine operating profit of $26 million based on copper prices at
$1.20. Subject to the closing of the purchase and the associated financing, Yuma
projects that the mine and SX-EW plant construction will commence within four
weeks with copper cathode production expected 12 to 15 months later. Barring any
unforseen complications this will allow the Company to seek project and equity
financing.
The completion of project and equity financing and the start of production on
the Tuina project will result in operating cash flow and enhance the Company's
assets. Yuma has announced that the water rights for the Tuina Mine have been
received from the Chilean government. While the Company expects that its
agreement with Yuma will close, there is no guarantee that it will. If the
agreement with Yuma does not close the Company will retain a 41% interest in the
Tuina project and the Company will be required to obtain alternate financing to
fund its carrying costs of the Tuina property and its general overhead costs.
9
<PAGE>
BOLIVIA - SAN SIMON GOLD PROJECT
The Company and Akiko Gold Resources Ltd. ("Akiko") finalized the acquisition of
properties in the San Simon gold project in northeastern Bolivia totalling 5,300
hectares on a 50/50 basis. The Company has a letter of understanding with Minera
American Barrick Bolivia S.A. ("Barrick") whereby Barrick commenced work on a
program starting in May which included geologic mapping and geochemical
sampling. Upon completion of the program Barrick will furnish the Company with
all the results. The letter of understanding does not obligate any of the
parties to enter into negotiations concerning the properties and the Company
will not be responsible for any costs. In addition, the Company conducted its
own work program on the properties with Akiko starting in June and included
surveying of the property boundaries and geochem sampling in those areas not
covered by the Barrick program.
The Company has completed this summer's field work which included geochem
sampling, enzyme leaching and the necessary required claim surveying complying
with the conditions of the contract with the land owner. Geochemical and enzyme
leaching data taken by the Company and Barrick are in the process of being
assayed and analyzed. Final results and reports will be received by the end of
November.
RESULTS OF OPERATIONS
The Company incurred losses of $62,113 and $174,890 for the three and nine month
periods ended September 30, 1996, compared to losses of $147,749 and $99,358 for
the same periods in 1995. There was no revenue, no depreciation and amortization
charges and no costs of sales for the three and nine month periods ending
September 30, 1996. The Company does not anticipate any revenue over the next
year from current properties.
During the three and nine month periods ended September 30, 1996, the Company
incurred $141,458 and $495,924 in general and administration expenses, compared
to $178,673 and $573,615 for the comparable periods in 1995. For the three and
nine month periods ended September 30, 1996, the Company incurred exploration
and property carrying costs of $5,426 and $8,675, respectively, and for the same
periods in 1995, incurred costs of $16,704 and $57,017. The reduced costs in
1996 are due primarily to reduced activities and the funding of the maintenance
costs in the Tuina project by Yuma.
Effective April 12, 1995 the Company and Mahogany restructured the ownership
interest of the Tuina project. The Company exchanged a 9% interest in Phoenix
for the outstanding debt to Mahogany. The transaction resulted in the Company
recognizing a gain of $309,970. See Restructuring of Tuina Ownership.
At September 30, 1996 the Company had a working capital deficiency of $165,643,
a decrease of $123,263 from its working capital deficiency of $288,906 at
December 31, 1995.
The Company reports a use of funds of $758,059 from operating activities for the
nine month period ended September 30, 1996. This compares to a use of funds of
$526,662 for the comparable period in 1995.
During the nine month period ended September 30, 1996, the Company was provided
cash of $384,633 from investment activities. The Company received net proceeds
of $338,576 from the sale of its marketable securities and $5,000 from the sale
of mining equipment. In addition, the Company recorded a gain of $206,897 from
the sale of its 75% interest in the Gray Eagle mineral property, in which the
Company received cash proceeds of $107,291 and recorded an amount receivable of
$108,000, with interest at 8.5% interest per annum, due in August, 1997.
$44,957 was incurred on exploration activities.
The Company raised $400,000 from the issuance of 3,555,556 common shares during
the nine month period ended September 30, 1996. A further 550,000 common shares
were issued, at an ascribed value of $85,000, for finder's fee and services
rendered.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
See discussion contained in notes to condensed consolidated financial
statements under "Legal Proceedings" (Part I. Item 1).
ITEM 5. OTHER INFORMATION
-----------------
The registrant incorporates by reference the information contained in
the news release, a copy of which is filed as an exhibit to this
report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) The following exhibits are filed with this report.
Regulation S-K Number Exhibit
--------------------- -------
20.1 News Release
20.2 News Release
27.1 Financial Data Schedule
(b) Reports on Form 8-K: none
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORTH LILY MINING COMPANY
By: /s/ Nick DeMare
--------------------------------------------
Nick DeMare November 13, 1996
Chief Financial Officer and Chief Accounting Officer
12
<PAGE>
TRADING SYMBOL: NLMC SEPTEMBER 19, 1996
WATER RIGHTS AND GOLD ZONE DRILLING
PROGRESS CHILE AND BOLIVIA PROJECTS
CHILE COPPER: North Lily Mining Company was informed by Yuma Gold Mines, Inc.,
- - -------------
that the water rights needed for the development of the Tuina Project were
approved by the Chilean government. International Mahogany Corp., and the
Company have contracted to sell a 74% aggregate interest in Tuina, leaving the
Company with a 26% participating interest. Yuma's news release of September 4,
1996 stated that a new feasibility study by Bateman E. and C. Division is
nearing completion for the annual production of 40,000 metric tonnes of copper
cathode at a central SX-EW plant site. Six of these 40,000 metric tonnes of
copper are "to be derived from the conversion into cathodes of copper sulphate
crystals produced at the Tuina solvent extraction - copper sulphate facility",
according to the news release. Yuma also stated that Bateman confirmed that
profitable financial parameters developed by Yuma for the 40,000 metric tonne
project during pre-feasibility were valid and should be confirmed in final
feasibility at current copper prices. The Company awaits documentation and
accounting from Yuma in order to pursue final definitive agreements and
proportionate project financing.
BOLIVIA GOLD: The Company and its partner recently completed successful claim
- - -------------
perfection work, along with geologic mapping, and rock-chip and soil geochemical
sampling on its San Simon property in the Bolivian Shield. The San Simon
Project consists of four claim blocks located in the heart of the district in
close proximity and on trend with known gold mineralization being drilled by
Eaglecrest Explorations, Ltd. For example, the most encouraging Eaglecrest
drill hole to date recently intersected very strong mineralization (110 feet
averaging 0.1 ounces gold per ton) in the Trinidad vein system. Based on
previous mapping by members of the British Geological Survey, it is currently
believed that part of the Trinidad vein system passes through the northern end
of the Company's adjacent Machetero I claim and may repeat on the Company's
Machetero II claim. The Company awaits assay and analysis from its geologists
of their recent geologic reconnaissance. Meanwhile, major mining companies
continue to visit and evaluate the district in which Eaglecrest indicates
potential of a multi-million ounce gold camp. San Simon has become part of the
Bolivian gold "exploration stampede" reported by the "Financial Times" on April
22, 1996. The Company is encouraged with its position, nearby exploration
progress, and interest expressed by other companies.
The Company is finalizing its proxy statement for its Annual Meeting.
Shareholders will be asked to approve a one for ten reverse stock split and the
possible acquisition of Tamarine Ventures Ltd., as well as other business
matters. The capital structure consolidation is an important step in order to
favorably position the Company and its shares in the investment community for
the purpose of seeking necessary financing for existing projects and
acquisitions of value.
For further information, please contact Steve Flechner or Gene Webb at
(303)294-0427
<PAGE>
TRADING SYMBOL: NASDAQ/NLMC NOVEMBER 7, 1996
NORTH LILY MINING COMPANY
HOLDING ANNUAL MEETING
On October 25, 1996, North Lily Mining Company commenced its annual
shareholders' meeting. Due to the absence of a quorum with regard to certain
matters on the meeting agenda, it was decided to adjourn completion of the
meeting to 10.00 a.m., Denver time, on November 22, 1996, at the Colorado
National Bank, 5th Floor, 918 17th Street, Denver, Colorado.
The Company did receive a quorum of proxies and requisite approval on certain
major items on the agenda. Some of the other important matters on the agenda
still require additional proxies for the quorum necessary to most favorably
position the reorganized Company for financing of existing projects and
potential acquisitions.
Therefore, shareholders, particularly those who hold stock in "street name", are
urged to turn in their proxies on all agenda items now. Meanwhile, Company
management is diligently pursuing joint venture opportunities and projects of
merit in order to seek to maximize shareholder value.
For further information, please contact Steve Flechner or Gene Webb at
(303) 294-0427.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 14,089
<SECURITIES> 45,141
<RECEIVABLES> 168,492
<ALLOWANCES> 0
<INVENTORY> 43,207
<CURRENT-ASSETS> 405,929
<PP&E> 6,387,282
<DEPRECIATION> 2,958,625
<TOTAL-ASSETS> 4,106,321
<CURRENT-LIABILITIES> 571,572
<BONDS> 565,000<F1>
0
0
<COMMON> 3,005,222
<OTHER-SE> (35,473)
<TOTAL-LIABILITY-AND-EQUITY> 4,106,321
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 174,890
<LOSS-PROVISION> (174,890)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (174,890)
<INCOME-TAX> 0
<INCOME-CONTINUING> (174,890)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (174,890)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
<FN>
<F1>Due to Officers
</FN>
</TABLE>
