NORTH LILY MINING CO, S-8, 1997-10-02

NORTH LILY MINING CO
S-8, 1997-10-02
METAL MINING

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As filed with the Securities And Exchange Commission on October 2, 1997

Registration No.________
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

NORTH LILY MINING COMPANY
-------------------------------------------------
(Exact name of registrant as specified in its charter)

Utah 87-0159350
---- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

1800 Glenarm Place, Suite 210, Denver, Colorado 80202
----------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)

AMENDED EMPLOYMENT AGREEMENT (STEPHEN E. FLECHNER)
AND
AMENDED EMPLOYMENT AGREEMENT (W. GENE WEBB)
- --------------------------------------------------------------------------------
(Full titles of the plans)

Stephen E. Flechner, Chief Executive Officer and President
North Lily Mining Company
1800 Glenarm Place, Suite 210
Denver, Colorado 80202
- --------------------------------------------------------------------------------
(Name and address of agent for service)

(303) 294-0427
-----------------------------------------------------------
(Telephone number, including area code, of agent for service)

Copy to:

Alan L. Talesnick, Esq.
Andrew J. Creighton, Esq.
Bearman Talesnick & Clowdus Professional Corporation
1200 Seventeenth Street, Suite 2600
Denver, Colorado 80202
(303) 572-6500

CALCULATION OF REGISTRATION FEE

- --------------------------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities To Be Amount To Be Offering Price Aggregate Amount Of
Registered Registered Per Unit (1) Offering Price Registration Fee (1)

- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.10 par value 1,610,000 shares $.50 $805,000 $244
- --------------------------------------------------------------------------------------------------
</TABLE>

(1) The Proposed Maximum Offering Price Per Unit shown was calculated pursuant
to Rule 457(h) based upon the price at which shares of common stock, $.10
par value (the "Common Stock"), of North Lily Mining Company (the
"Company") will be issued to two employees pursuant to each of their
respective employment agreements with the Company.

<PAGE>

THE PLANS

This Registration Statement relates to an aggregate of 1,610,000 shares of
Common Stock of the Company to be issued to two employees of the Company
pursuant to their respective employment agreements with the Company. Stephen E.
Flechner, the President and Chief Executive Officer of the Company, will be
issued 805,000 shares of Common Stock pursuant to the Amended Employment
Agreement between Mr. Flechner and the Company effective as of October 1, 1997
(the "Flechner Agreement"). W. Gene Webb, the Executive Vice President and
Corporate Secretary of the Company, will be issued 805,000 shares of Common
Stock pursuant to the Amended Employment Agreement between Mr. Webb and the
Company effective as of October 1, 1997 (the "Webb Agreement").

Each of the Flechner Agreement and the Webb Agreement provide as follows:
(A) the Company will pay Mr. Flechner and Mr. Webb, respectively, a gross salary
equal to at least $120,000 per year, and benefits, which will include keyman
life insurance and retirement plan; (B) each of Mr. Flechner and Mr. Webb,
respectively, has performed services for the Company, and in conjunction
therewith has accrued $402,500 of salary that has not been paid as of September
30, 1997; (C) each of Mr. Flechner and Mr. Webb, respectively, shall waive all
right to the compensation owed to that person but unpaid as of September 30,
1997 in consideration of 805,000 shares of Common Stock; and (D) if the employee
terminates his employment on or before June 30, 1998, then the employee will
forfeit substantially all of the shares of Common Stock except to the extent the
Company issues a certain number of shares of Common Stock at certain prices as
specified in the Agreement; (E) during the month of May 1998, the Company shall
have the right to notify the employee that the Company has elected to pay
employee cash on July 1, 1998 for all shares that at that time remain subject to
the risk of forfeiture as of June 29, 1998 at fifty cents per share, if the
employee has not terminated his employment with the Company on or before June
30, 1998 and (F) the employee may not sell, without the prior approval of the
Company, more than 10,000 shares of the Common Stock in any month during the
period from October 1, 1997 until September 30, 1998.

This Registration Statement also relates to the resale of the aggregate of
1,610,000 shares of Common Stock to be acquired by Mr. Flechner and Mr. Webb
pursuant to the Flechner Agreement and the Webb Agreement, respectively. The
portion of this Registration Statement which relates to the resale of the
aggregate of 1,610,000 shares of Common Stock is found at pages 4 through 13 of
this Registration Statement.

<PAGE>

PROSPECTUS

1,610,000 Shares

NORTH LILY MINING COMPANY

Common Stock

The 1,610,000 shares of common stock, $.10 par value (the "Common Stock"),
of North Lily Mining Company (the "Company") offered hereby consist of shares
which have been acquired by two employees of the Company ("Prospective Selling
Shareholders") pursuant to their respective employment agreements with the
Company. See "PROSPECTIVE SELLING SHAREHOLDERS". None of the proceeds from any
resale of these shares will be received by the Company.

The Common Stock of the Company is traded in the Nasdaq SmallCap Market
("Nasdaq") under the symbol "NLMC". On September 29, 1997, the last reported
sale price for the Company's Common Stock as reported by Nasdaq was $.25 per
share.

---------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

---------------

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A
HIGH DEGREE OF RISK. SEE "DISCLOSURE REGARDING
FORWARD-LOOKING STATEMENTS AND CAUTIONARY STATEMENTS".

---------------

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933.

The date of this Prospectus is October 2, 1997.

<PAGE>

AVAILABLE INFORMATION

This Prospectus constitutes a part of a Registration Statement on Form S-8
(herein together with all amendments thereto referred to as the "Registration
Statement") filed by the Company with the Securities And Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). This Prospectus does not contain all the information set forth in the
Registration Statement and exhibits thereto, and statements included in this
Prospectus as to the content of any contract or other document referred to are
not necessarily complete. For further information, reference is made to the
Registration Statement and to the exhibits and schedules filed therewith. All
these documents may be inspected at the Commission's principal office in
Washington, D.C. without charge, and copies of them may be obtained from the
Commission upon payment of prescribed fees. Statements contained in this
Prospectus as to the contents of any contract or other document filed as an
exhibit to the Registration Statement are not necessarily complete, and in each
instance reference is hereby made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the following Regional Offices of the Commission: 7 World Trade Center, Suite
1300, New York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained at prescribed
rates by writing to the Commission, Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549. In addition, such materials filed electronically
by the Company with the Commission are available at the Commission's World Wide
Web site at http://www.sec.gov.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents that previously were, or are required in the future
to be, filed with the Commission (File No. 0-16740) pursuant to the Exchange Act
are incorporated herein by reference:

(i) the Company's Annual Report on Form 10-K/A for the year ended December
31, 1996;

(ii) the Company's Quarterly Reports on Form 10-QSB for each of the
quarters ended March 31, 1997 and June 30, 1997;

(iii) the Company's Current Reports on Form 8-K dated each of April 1,
1997, April 10, 1997 and August 8, 1997;

(iv) the Company's Proxy Statement dated September 18, 1996 concerning the
Company's Annual Meeting of Shareholders held on October 25, 1996; and

(v) all documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering made hereby.

<PAGE>

Any statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that such statement is modified or replaced by a statement contained in
this Prospectus or in any other subsequently filed document that also is or is
deemed to be incorporated by reference into this Prospectus. Any such statement
so modified or superseded shall not be deemed, except as so modified or
replaced, to constitute a part of this Prospectus. The Company will provide
without charge to each person to whom a copy of this Prospectus has been
delivered, upon the written or oral request of any such person, a copy of any or
all of the documents referred to above that have been or may be incorporated in
this Prospectus by reference, other than exhibits to such documents. Written or
oral requests for such copies should be directed to W. Gene Webb, Corporate
Secretary, North Lily Mining Company, 1800 Glenarm Place, Suite 210, Denver,
Colorado 80202, telephone (303) 294-0427

<PAGE>

TABLE OF CONTENTS

Page
----

AVAILABLE INFORMATION.......................................... 5

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................ 5

THE COMPANY.................................................... 8

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
AND CAUTIONARY STATEMENTS ............................. 9

PROSPECTIVE SELLING SHAREHOLDERS................................ 11

PLAN OF DISTRIBUTION............................................ 12

DESCRIPTION OF COMMON STOCK..................................... 12

LEGAL MATTERS................................................... 13

EXPERTS......................................................... 13

INDEMNIFICATION................................................. 13

<PAGE>

THE COMPANY

The Company was incorporated in Utah in 1916 and was a subsidiary of
Anaconda Company from 1925 until 1949. During this period, the Company produced
gold, silver, lead, zinc and copper from the North Lily Mine in the Tintic
Mining District, Utah. From 1949 to 1987, the Company was primarily engaged in
the acquisition, exploration, and development of mining properties. From 1988 to
1991, International Mahogany Corp. ("Mahogany"), a subsidiary of the Company at
that time, placed into production the Jolu Mine in Northern Saskatchewan,
Canada, jointly with International Corona and produced approximately 204,000
ounces of gold. Mahogany had a 70 percent working interest in the Jolu Mine. In
1991, the Company and Mahogany acquired the Tuina copper property in Chile,
South America. From 1991 to 1993, the Company and Mahogany had jointly been
developing the Tuina copper project. In 1993, however, all mining operations at
the Tuina project were suspended. The Company and Mahogany have operated a small
heap leach tailing recovery operation at the Silver City mine in Utah which has
produced approximately 33,000 ounces of gold and gold equivalent since 1988.
Operations were ceased at the Silver City mine in 1993 and the site is now in
the reclamation stage. The Company currently has a 41 percent interest in an
exploration gold property in Bolivia. The Company also plans to negotiate with
the Kazakstan government to privatize three gold mines that were held by
Kazakstan Goldfields Corporation under their management agreement with the
government. There is not, however, any assurance that those negotiations will be
consummated. Historically, the Company's principal mineral target has been gold.

Pursuant to a letter agreement dated August 6, 1993, the Company sold, to
Baja Gold, Inc. ("Baja"), all the Company's equity investment in Mahogany.
Consideration received from Baja included cash of $500,000; a note issued by
Baja in the amount of $500,000, which was sold at face value on December 22,
1993 to reduce amounts owing to Mahogany; and 650,000 common shares of Baja,
valued, for financial statement purposes, at $680,000, based on the August 6,
1993 closing stock market price of Baja.

On April 12, 1995, the Company and Mahogany executed an agreement
concerning the restructuring of the ownership interests of the Tuina project. In
settlement of the Company's outstanding debt to Mahogany of $797,481, the
Company has reduced its effective interest in the Tuina project from 50 percent
to 41 percent. The agreement also contains provisions in which the Company may
be required to further reduce its interest in the Tuina project and, in certain
circumstances, recapture the interest relinquished.

Effective December 8, 1996, the Company implemented a one-for-ten reverse
split on the outstanding shares of Common Stock. All the per share amounts in
this Prospectus have been restated to reflect this reverse stock split.

At December 31, 1996, the Company owned all the outstanding equity interest
in two subsidiaries: Minera Northern Resources S.A. ("Northern"), a Chilean
limited liability company; and Tenhard Resources, Inc., a Montana corporation.
Northern owns (i) 41 percent of the equity interest in Compania Minera Phoenix
S.A. (formerly Compania Minera San Martin S.A..), a Chilean limited liability
company; and (ii) 50 percent of Minera San Lorenzo Limitada, a Chilean limited
liability company.

<PAGE>

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS AND
CAUTIONARY STATEMENTS

Forward-Looking Statements
- --------------------------

This Prospectus, including the documents incorporated herein by reference,
include "forward-looking" statements within the meaning of Section 27A of the
Securities Act, Section 21E of the Exchange Act. All statements other than
statements of historical facts included in this Prospectus regarding the
Company's financial position, business strategy, and plans and objectives of
management of the Company for future operations and capital expenditures, are
forward-looking statements. Although the Company believes that the expectations
reflected in the forward-looking statements, and the assumptions upon which the
forward-looking statements are based, are reasonable, it can give no assurance
that such expectations and assumptions will prove to have been correct.
Additional statements concerning important factors that could cause actual
results to differ materially from the Company's expectations ("Cautionary
Statements") are disclosed below in the "Cautionary Statements" section and
elsewhere in this Prospectus. All written and oral forward-looking statements
attributable to the Company or persons acting on its behalf subsequent to the
date of this prospectus are expressly qualified in their entirety by the
Cautionary Statements.

Cautionary Statements
- ---------------------

In addition to the other information contained in this Prospectus, the
following Cautionary Statements should be considered when evaluating the
forward-looking statements contained in this prospectus.

Losses From Past Operations, Negative Net Worth, And Doubt About The
Company's Ability To Continue As A Going Concern. The Company incurred losses
from operations of $662,557, $922,032 and $2,071,147 during 1996, 1995 and 1994,
respectively. The Company incurred a loss from operations of $209,497 for the
six months ended June 30, 1997. The Company had a negative working capital
deficiency of $427,803 as of June 30, 1997.

During 1993 the Company ceased operations at its Silver City mine and
suspended mining operations at its Tuina project. As a result the Company has no
operating cash flow to meet ongoing obligations. The Company has been selling
non-essential Company assets to fund ongoing operations 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 it marketable security investments, mineral properties, or through the
issuance of its Common Stock. 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. As a result of these factors, the audit report of the Company's
independent auditors with respect to the year ended December 31, 1996 indicates
that there is substantial doubt about the Company's ability to continue as a
going concern.

Business Risks. The mineral activities in which the Company engages,
including exploration, extraction, and processing, is a speculative business and
involves a high degree of risk. There is no assurance that the expenditures made
by the Company on its mineral properties will result in the production of
commercial quantities of ore.

The Company's revenues also depend on its level of success in acquiring or
finding additional reserves. Except to the extent that the Company acquires
properties containing proved reserves or conducts successful exploration and
development activities, or both, the proved reserves of the Company will decline
as reserves are produced. There can be no assurance that the Company's planned
exploration and development projects will result in significant additional
reserves.

<PAGE>

Operational And Environmental Risks; Reclamation Obligations. Mining
operations generally involve a high degree of risk. Hazards such as
environmental exposures, industrial accidents, labor disruptions and unusual or
unexpected geological formations and other conditions may be encountered. Such
risks could result in damage to or destruction of mineral properties or
producing facilities, personal injury, environmental damage, delays in mining,
monetary losses and possible legal liability. The Company may become subject to
liability for environmental pollution, cave-ins or hazards against which it
cannot insure or against which it may elect not to insure because of high
premium costs or other reasons. The occurrence of a significant event that is
not fully insured could have a material adverse effect on the Company's
financial position.

All of the Company's operations are subject to reclamation, site
restoration and closure requirements. Reclamation requirements vary depending on
the location and the managing regulatory agency, but they are similar in that
they aim to minimize long-term effects of exploration and mining disturbance by
requiring the operating company to control possible deleterious effluents and to
re-establish to some degree predisturbance landforms and vegetation. The Company
calculates its estimate of its ultimate reclamation liability based on current
laws and regulations and the expected future costs to be incurred in reclaiming,
restoring and closing its operating mine sites. It is reasonably possible that
the Company's estimate of its ultimate reclamation liability will increase in
the near term due to possible changes in laws and regulations and changes in
cost estimates.

Market Factors And Volatility. The marketability of mineral resources which
may be acquired or discovered by the Company will be affected by numerous
factors beyond the control of the Company. These factors include market
fluctuations in the prices of minerals sought, which are highly volatile, the
proximity and capacity of natural resources markets and processing equipment,
and government regulations, including regulations relating to prices, taxes,
royalties, land tenure, land use, importing and exporting of minerals, and
environmental protection. The effect of these factors cannot be accurately
predicted, but may result in the Company not receiving an adequate return on
invested capital. Prices of certain minerals have fluctuated widely,
particularly in recent years, and are affected by numerous factors beyond the
control of the Company. Future mineral prices cannot be accurately predicted. A
severe decline in the price of a mineral being produced or expected to be
produced by the Company would have a material adverse effect on the Company, and
could result in the suspension of mining operations by the Company.

Competition And International Business Risks. The Company competes in the
areas of mineral exploration, production, development and transportation with
other companies, many of which may have substantially greater financial and
other resources. The Company is presently engaged in activities with respect to
properties located in each of Chile and Bolivia. International operations are
subject to certain risks, including expropriation of assets, governmental
changes in applicable law, policies and contract terms, foreign governmental
approvals, political instability, guerilla activity, payments delays, and
currency exchange and repatriation losses.

Government Regulation And Environmental Risks. Mining operations and
exploration activities are subject to a variety of federal, state and local
government regulations including regulation concerning the discharge of
materials into the environment, pollution, permits for mining operations, mine
safety, reports concerning operations, and various other matters including
taxes. Environmental legislation is evolving in a manner which will require
stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed properties
and a heightened degree of responsibility for companies and their officers,
directors and employees. Although the Company believes it is in substantial
compliance with applicable environmental and other governmental laws and
regulations, there can be no assurance that significant costs for compliance
will not be incurred in the future.

<PAGE>

Estimates Of Reserves And Mineral Deposits. Documents that are incorporated
in this Prospectus, including the Company's Form 10-K/A for the year ended
December 31, 1996, contain estimates of reserves and mineral deposit figures.
The estimates are based largely on current costs and on the projected prices and
demand for the minerals based upon factors relevant to each mine. Ore reserves
are based on calculations of geological reserves provided to the Company by the
operator of the property. The Company has reviewed but has not independently
confirmed those calculations. These amounts are estimates only and no assurance
can be given that any particular level of recovery of metals from ore reserves
will in fact be realized. The grade of ore ultimately mined may differ from that
indicated by drilling results. Material changes in ore reserves, grades,
stripping ratios or recovery rates may affect the economic viability of
projects. Also, the commercial viability of mineral deposits of the kind located
and believed to be located on the Company's properties is dependent upon a
number of factors, including particularly the quality, size, grade and other
attributes of the deposits and the proximity to, and availability of
infrastructure necessary to develop and exploit minerals on a commercial scale.

PROSPECTIVE SELLING SHAREHOLDERS

This Prospectus relates to an aggregate of 1,610,000 shares of Common Stock
of the Company issued to two employees of the Company pursuant to their
respective employment agreements with the Company. Stephen E. Flechner, the
President and Chief Executive Officer of the Company, was issued 805,000 shares
of Common Stock pursuant to the Amended Employment Agreement between Mr.
Flechner and the Company effective as of October 1, 1997 (the "Flechner
Agreement"). W. Gene Webb, the Executive Vice President and Corporate Secretary
of the Company, was issued 805,000 shares of Common Stock pursuant to the
Amended Employment Agreement between Mr. Webb and the Company effective as of
October 1, 1997 (the "Webb Agreement"). The shares of Common Stock issued
pursuant to each of the Flechner Agreement and the Webb Agreement are covered by
a Registration Statement on Form S-8, of which this Prospectus is a part, filed
by the Company with the Commission.

Each of the Flechner Agreement and the Webb Agreement provide as follows:
(A) that if the employee terminates his employment on or before June 30, 1998,
then the employee will forfeit substantially all of the shares of Common Stock
except to the extent that the Company issues a certain number of shares of
Common Stock at certain prices as specified in each of the Agreements; (B)
during the month of May 1998, the Company shall have the right to notify the
employee that the Company has elected to pay employee cash on July 1, 1998 for
all shares that at that time remain subject to the risk of forfeiture as of June
29, 1998 at fifty cents per share, if the employee has not terminated his
employment with the Company on or before June 30, 1998, and (C) the employee may
not sell, without the prior approval of the Company, more than 10,000 shares of
the Common Stock in any month during the period from October 1, 1997 until
September 30, 1998. Until the risk of forfeiture and the Company's right to
repurchase the Common Stock has lapsed with respect to any of the shares issued
pursuant to each of the Flechner Agreement and the Webb Agreement, the
certificate representing those shares will bear a legend concerning the
forfeiture provision and the right of repurchase provision. The foregoing
description concerning each of the Flechner Agreement and the Webb Agreement
does not purport to be complete. Reference is made to each of those agreements,
which are filed as exhibits to this Registration Statement, for a more complete
description of those agreements.

The following table sets forth the number of shares of Common Stock owned
as of the date of this Prospectus by the Prospective Selling Shareholders
(including shares which may be acquired pursuant to the exercise of outstanding
options), the number of shares covered hereby, and the number of shares owned
and the percentage owned assuming the sale of all of the shares offered hereby.

<PAGE>
<TABLE>
<CAPTION>
Prior To After Offering
Offering --------------
--------- Number Of
Number Of Shares
Number Of Shares Owned
Position With Shares Covered By After The
Name The Company Owned Prospectus Offering Percent

<S> <C> <C> <C> <C> <C>
Stephen E. Flechner President, Chief 893,000(1) 805,000 88,000 2.9%
Executive Officer
and a Director

W. Gene Webb Executive Vice 890,000(2) 805,000 85,000 2.7%
President, Corporate
Secretary and a
Director
</TABLE>

(1) The number indicated includes 85,000 shares underlying options that
currently are exercisable and 3,000 shares owned by Mr. Flechner's minor
daughter for which Mr. Flechner's spouse is the custodian. Pursuant to Rule
16a-1(a)(4) under the Exchange Act, Mr. Flechner disclaims ownership of the
shares owned by his minor daughter.

(2) The number indicated includes 85,000 shares underlying options that
currently are exercisable.

PLAN OF DISTRIBUTION

The 1,610,000 shares covered by this Prospectus will be offered, if at all,
by the Prospective Selling Shareholders, and not by the Company. If any of these
shares are sold by a Prospective Selling Shareholder, they will be sold on
behalf of that person and it is anticipated that the shares may be offered
pursuant to direct sales to private persons and in open market transactions. The
Prospective Selling Shareholders may offer the shares to or through registered
broker-dealers who will be paid standard commissions or discounts by the
Prospective Selling Shareholders. The Company has no agreements with brokers to
sell any or all of the shares which may be offered hereby.

DESCRIPTION OF COMMON STOCK

Each share of the Common Stock is entitled to share equally with each other
share of Common Stock in dividends from sources legally available therefore,
when, as, and if declared by the Board of Directors and, upon liquidation or
dissolution of the Company, whether voluntary or involuntary, to share equally
in the assets of the Company that are available for distribution to the holders
of the Common Stock. Each holder of Common Stock of the Company is entitled to
one vote per share for all purposes, except that in the election of directors,
each holder shall have the right to cast one vote per share for each nominee for
director. Cumulative voting shall not be allowed in the election of directors or
for any other purpose, and the holders of Common Stock have no preemptive

<PAGE>

rights, redemption rights or rights of conversion with respect to the Common
Stock. All outstanding shares of Common Stock will be fully paid and
nonassessable by the Company. The Board Of Directors is authorized to issue
additional shares of Common Stock within the limits authorized by the Company's
Certificate Of Incorporation and without stockholder action.

LEGAL MATTERS

Bearman Talesnick & Clowdus Professional Corporation, Denver, Colorado, has
acted as counsel for the Company in connection with the Registration Statement
of which this Prospectus is a part and has rendered an opinion concerning the
validity of the Common Stock covered hereby.

EXPERTS

The Consolidated Financial Statements of North Lily Mining Company
appearing in the Company's Annual Report on Form 10-K/A for the year ended
December 31, 1996 and December 31, 1995 have been audited by Wheeler Wasoff
P.C., independent public accountants, and Coopers & Lybrand, independent public
accountants, respectively, as set forth in their respective reports included
therein and incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such report and upon the
authority of such firm as experts in auditing and accounting.

INDEMNIFICATION

Pursuant to Utah law, the Company's Board Of Directors has the power to
indemnify officers and directors, present and former, for expenses incurred by
them in connection with any proceeding they are involved in by reason of their
being or having been an officer or director of the Company. The person being
indemnified must have acted in good faith and in a manner he or she reasonably
believed to be not opposed to the best interests of the Company. The Company's
Certificate Of Incorporation and Bylaws grant this indemnification to the
Company's officers and directors.

In addition to the general indemnification section, Utah law permits the
Company to provide in either its Certificate Of Incorporation or Bylaws a
provision eliminating and limiting certain personal liability of a director for
monetary damages for breaches of the director's fiduciary duty of care under
certain circumstances. The Company's Certificate Of Incorporation provides for
this elimination and limitation of certain personal liability of a director.

Insofar as indemnification for liability arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that, in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.

<PAGE>

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation Of Documents By Reference.
- ------- ----------------------------------------

The documents listed in (a) through (e) below are incorporated by reference
in the Registration Statement. All documents subsequently filed by the
Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in the
Registration Statement and to be part thereof from the date of the filing of
such documents.

(a) The Company's Annual Report on Form 10-K/A for the year ended December
31, 1996.

(b) The Company's Quarterly Reports on Form 10-QSB for each of the quarters
ended March 31, 1997 and June 30, 1997.

(d) The Registrant registered the Registrant's Common Stock under Rule
12(g) under the Exchange Act in a registration statement on Form 8-B filed with
the Commission on September 18, 1989 (File No. 0-16740). That Form 8-B
incorporated by reference a description of the Common Stock from a registration
statement of the Registrant on Form S-1 filed with the Commission on August 9,
1989 (File No. 33-23491). In accordance with the Commission's rules restricting
the incorporation by reference to a document that incorporates by reference from
another document, the Registrant does not incorporate the description of the
Common Stock in the Form 8-B by reference. A description of the Common Stock is
instead provided in this Registration Statement on Form S-8.

(e) The Company's Proxy Statement dated September 18, 1996 concerning the
Company's Annual Meeting of Shareholders held on October 25, 1996.

Item 4. Description Of Securities.
- -----------------------------------

Not applicable.

Item 5. Interest Of Named Experts And Counsel.
- -----------------------------------------------

Not applicable.

Item 6. Indemnification Of Officers And Directors.
- ---------------------------------------------------

<PAGE>

Item 7. Exemption From Registration Claimed.
- ---------------------------------------------

Not applicable.

Item 8. Exhibits.
- ------------------

4.1 Specimen Common Stock Certificate.
5.1 Opinion Regarding Legality.
10.1 Employment Agreement between Stephen E. Flechner and the
Registrant dated April 10, 1996.(1)
10.2 Amended Employment Agreement between Stephen E. Flechner and the
Registrant effective as of October 1, 1997.
10.3 Employment Agreement between W. Gene Webb and the Registrant
dated April 10, 1996.(1)
10.4 Amended Employment Agreement between W. Gene Webb and the
Registrant effective as of October 1, 1997.
23.1 Consent of Wheeler Wasoff, P.C.
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Bearman Talesnick & Clowdus Professional Corporation
(included in Exhibit 5).

(1) Incorporated by reference from the Registrant's Annual Report on Form 10-K
filed with the Commission on April 15, 1997.

Item 9. Undertakings.
- ----------------------

(a) The undersigned Registrant hereby undertakes:

1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

(i) to include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) to reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;

<PAGE>

(iii)to include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 and are incorporated by reference to the Registration Statement.

2. That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.

(b) For purposes of determining any liability under the Securities Act of 1933,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plans annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising out of the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liability (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Denver, State of Colorado, on the 1st day of October,
1997.

NORTH LILY MINING COMPANY

By: /s/ Stephen E. Flechner
---------------------------------------------
Stephen E. Flechner
President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.

Signature Title Date

/s/ Stephen E. Flechner President, Chief Executive October 1, 1997
- -------------------------- Officer, and Director
Stephen E. Flechner

/s/ W. Gene Webb Executive Vice President, October 1, 1997
- -------------------------- Corporate Secretary,
W. Gene Webb and Director

/s/ Nick DeMare Principal Financial And October 1, 1997
- --------------------------- Accounting Officer and
Nick DeMare Treasurer

/s/ Theodore E. Loud Director October 1, 1997
- ---------------------------
Theodore E. Loud

October 1, 1997

North Lily Mining Company
1800 Glenarm Place, Suite 210
Denver, Colorado 80202

Gentlemen and Ladies:

We have acted as counsel for North Lily Mining Company (the "Company") in
connection with the registration on Form S-8 under the Securities Act of 1933,
as amended, of the issuance of 1,610,000 shares of the Company's $.10 par value
common stock (the "Common Stock").

We have examined the Certificate Of Incorporation and the Bylaws of the
Company, as amended, together with the record of its corporate proceedings
concerning the registration described above. In addition, we have examined such
other certificates, agreements, documents and papers, and we have made such
other inquiries and investigations of law as we have deemed appropriate and
necessary in order to express the opinion set forth in this letter. In our
examinations, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, photostatic, or
conformed copies and the authenticity of the originals of all such latter
documents. In addition, as to certain matters we have relied upon certificates
and advice from various state authorities and public officials, and we have
assumed the accuracy of the material and the factual matters contained herein.

Subject to the foregoing and on the basis of the aforementioned
examinations and investigations, it is our opinion that the 1,610,000 shares of
Common Stock, the issuance of which is being registered by the Company, if and
when sold and delivered as described in the Company's Registration Statement on
Form S-8 (the "Registration Statement"), will have been duly authorized and
legally issued, and will constitute fully paid and nonassessable shares of the
Company's Common Stock.

We hereby consent (a) to be named in the Registration Statement and in the
prospectus that constitutes a part of the Registration Statement as the
attorney's passing, on behalf of the Company, upon the validity of the issuance
of the Common Stock, and (b) to the filing of this opinion as an exhibit to the
Registration Statement.

This opinion is to be used solely for the purpose of the registration of
the Common Stock and may not be used for any other purpose.

Very truly yours,

/s/ Bearman Talesnick & Clowdus
-------------------------------------
BEARMAN TALESNICK & CLOWDUS
Professional Corporation

AMENDMENT
TO
EMPLOYMENT AGREEMENT

THIS AMENDMENT TO EMPLOYMENT AGREEMENT is executed this 1st day of October,
1997 by and between NORTH LILY MINING COMPANY ("North Lily") and STEPHEN E.
FLECHNER ("Employee").

RECITALS

Employee and North Lily executed an Employment Agreement dated April 1,
1996. From May 1994 through September 30, 1997 Employee has performed services
for North Lily and in conjunction therewith has accrued $402,500 of salary that
has not been paid to date. Pursuant to prior understandings, as referenced in
notes to North Lily's financial statements, Employee has agreed from time to
time to defer demand for payment and has now agreed with the Board of Directors
to waive his claim for such salary in consideration of the receipt of 805,000
shares of common stock of North Lily. Said shares are subject to a risk of
forfeiture as provided for herein.

IN CONSIDERATION OF the premises and the mutual covenants set forth herein,
the parties hereto do hereby agree as follows:

1. Waiver of Compensation Claim. Upon issuance of the shares described in
Section 2 below, Employee hereby agrees to waive all of his right to the
$402,500 of compensation due him but unpaid as of September 30, 1997. Employee
does not waive any other amounts of compensation or claims for compensation.

2. Shares. Upon the filing of a Form S-8 Registration Statement covering
issuance and resale of the shares to be issued, North Lily shall issue Employee
805,000 shares of the common stock of North Lily. If the Registration Statement
has not been filed by January 1, 1998, Employee at his discretion may request
that the shares be issued nonetheless. Said shares shall be duly issued, fully
paid and non-assessable.

3. Risk of Forfeiture.

(a) If Employee Terminates his Employment by North Lily, or an
affiliate thereof, on or before June 30, 1998, Employee shall forfeit 805,000 of
the shares of North Lily common stock received pursuant hereto, except to the
extent that the shares have become non-forfeitable as provided for herein:

<PAGE>

Aggregate Number of
Event Nonforfeitable Shares
----- ---------------------

North Lily issues, subsequent to the date hereof,
shares of its common stock for not less than
$200,000 at an average price per share of not less
than $0.25 210,000

North Lily issues, subsequent to the date hereof,
shares of its common stock for not less than
$1,550,000 at an average price per share of not
less than $0.41 (taking into account any share
issuance referred to in the preceding paragraph
for purposes of determining both the total issue
amount and the average price) 385,000

North Lily issues, subsequent to the date hereof,
shares of its common stock for not less than
$2,550,000 at an average price per share of not
less than $0.42 (taking into account any share
issuance referred to in the preceding two
paragraphs for purposes of determining both the
total issue amount and the average price) 495,000

North Lily issues, subsequent to the date hereof,
shares of its common stock for not less than
$5,350,000 at an average price per share of not
less than $0.43 (taking into account any share
issuance referred to in the preceding three
paragraphs for purposes of determining both the
total issue amount and the average price) 805,000

(b) "Terminates" shall mean the resignation of Employee without cause
or the refusal of Employee without cause to continue his Employment and the
termination of Employee by North Lily for cause, but shall exclude the
termination of Employee's Employment as a result of death, disability,
Employee's resignation for cause or refusal to continue employment for cause or
a termination by North Lily without cause. "Terminates" shall also exclude a
change in Employee's title or position with North Lily.

(d) In determining the amount for which shares have been issued, it
shall be assumed that all warrants and options lapse unexercised and convertible
debt instruments are not converted, unless and until any warrants or options are
exercised or debt instruments converted. The price per share shall be the lowest
price obtained by varying all assumptions as to whether warrants and options
lapse or are exercised and convertible debt instruments or convertible preferred
shares are not converted or are converted.

- 2 -

<PAGE>

4. Cash in Lieu of Shares.
--------------------------

(a) During the month of May 1998 Employer shall have the right to notify
Employee that Employer has elected to pay Employee cash on July 1, 1998 for all
shares that remained subject to the risk of forfeiture, as provided in section
3, as of June 29, 1998. The obligation to pay cash shall exist only if Employee
has not Terminated his Employment by North Lily on or before June 30, 1998. The
amount of cash shall be fifty cents ($.50) per share that remained subject to
the risk of forfeiture.

(b) Upon receiving a timely notice from Employer as provided in paragraph
(a), Employee shall have twenty (20) days to elect either to accept cash in lieu
of shares or to extend all time periods in section 3 and this section 4 by six
(6) months. An election to accept cash shall be accompanied by stock
certificates, duly endorsed, for the forfeitable shares. If Employee elects to
extend, then the notice set forth in paragraph (a) shall be of no further
effect, but Employer shall have the right to provide another notice six (6)
months later with respect to all shares that remain forfeitable, and Employee
shall have the right to extend again.

(c) The Employer's rights in paragraph (a) and the Employee's rights in
paragraph (b) shall be repeated every six months until (i) Employer refrains
from electing to pay cash, (ii) Employee refrains from electing to extend, or
(iii) the Employment of Employee Terminates.

5. Loan. North Lily acknowledges that, under Section 83 of the Internal
Revenue Code of 1986, Employee will recognize income for federal and state
income tax purposes relative to such shares, either as Employee elects to be
taxed currently notwithstanding the risk of forfeiture or as the risk of
forfeiture lapses. In order to induce Employee to accept shares of stock subject
to a risk of forfeiture in lieu of cash compensation, North Lily agrees to loan
Employee an amount equal to forty per cent (40%) of any income Employee
recognizes with respect to said shares as provided in this section 4, which
excludes income recognized on a sale of the shares. Said loan shall be a
recourse loan, shall bear interest at a rate equal to the prime rate quoted by
the Wall Street Journal from time to time, and shall be secured by Employee's
shares of North Lily common stock that are issued hereunder.

6. Stock Legend. Until the risk of forfeiture has lapsed with respect to
any shares of common stock of North Lily, said shares shall bear the following
legend.

The shares of stock represented by this certificate are
subject to an Agreement dated as of October 1, 1997
between North Lily Mining Company and Stephen E. Flechner. A
copy of that Agreement and any amendments thereto is on file
at the principal office of the corporation. Such Agreement
provides for the forfeiture of said shares under certain
conditions. The forfeiture provisions are binding upon any
holder of the shares regardless of how acquired.

As the risk of forfeiture lapses with respect to any shares, Employee may
deliver the legended certificate to North Lily and North Lily shall issue a new
certificate without such legend. In addition, such certificate shall bear such
securities legend as may be required by North Lily.

7. Miscellaneous. Employee's Employment Agreement, as amended hereby, sets
forth the entire agreement among the parties with respect to its subject matter.
No provision of this Amendment to Employment Agreement may be waived, amended or
revoked except by an instrument in writing signed by North Lily and Employee.
This Amendment to Employment Agreement shall be governed by the laws of the
State of Colorado in all respects. This Amendment to Employment Agreement shall
extend and be binding upon the successors, assigns and legal representatives of
Employee.

- 3 -

<PAGE>

IN WITNESS WHEREOF the parties hereto have caused this Amendment to
Employment Agreement to be duly executed on the date and year first above
written.

NORTH LILY MINING COMPANY

By: /s/ GENE WEBB /s/ STEPHEN E. FLECHNER
-------------------------------- ----------------------------------
Executive Vice President STEPHEN E. FLECHNER

-4-

AMENDMENT
TO
EMPLOYMENT AGREEMENT

THIS AMENDMENT TO EMPLOYMENT AGREEMENT is executed this 1st day of October,
1997 by and between NORTH LILY MINING COMPANY ("North Lily") and W. GENE WEBB
("Employee").

RECITALS

Employee and North Lily executed an Employment Agreement dated April 1,
1996. From May 1994 through September 30, 1997 Employee has performed services
for North Lily and in conjunction therewith has accrued $402,500 of salary that
has not been paid to date. Pursuant to prior understandings, as referenced in
notes to North Lily's financial statements, Employee has agreed from time to
time to defer demand for payment and has not agreed with the Board of Directors
to waive his claim for such salary in consideration of the receipt of 805,000
shares of common stock of North Lily. Said shares are subject to a risk of
forfeiture as provided for herein.

IN CONSIDERATION OF the premises and the mutual covenants set forth herein,
the parties hereto do hereby agree as follows:

3. Risk of Forfeiture.

(a) If Employee Terminates his Employment by North Lily, or an
affiliate thereof, on or before June 30, 1998, Employee shall forfeit 785,000 of
the shares of North Lily common stock received pursuant hereto, except to the
extent that the shares have become non-forfeitable as provided for herein:

<PAGE>

Aggregate Number of
Event Nonforfeitable Shares
----- ---------------------

North Lily issues, subsequent to the date hereof,
shares of its common stock for not less than
$200,000 at an average price per share of not less
than $0.25 190,000

(b) "Terminates" shall mean the resignation of Employee without cause
or the refusal of Employee without cause to continue his Employment and the
termination of Employee by North Lily for cause, but shall exclude the
termination of Employee's Employment as a result of death, disability,
Employee's resignation for cause or refusal to continue employment for cause, or
a termination by North Lily without cause. "Terminates" shall also exclude a
change in Employee's title or position with North Lily.

- 2 -

<PAGE>

4. Cash in Lieu of Shares.
--------------------------

5. Loan. North Lily acknowledges that, under Section 83 of the Internal
Revenue Code of 1986, Employee will recognize income for federal and state
income tax purposes relative to such shares, either as Employee elects to be
taxed currently notwithstanding the risk of forfeiture or as the risk of
forfeiture lapses. In order to induce Employee to accept shares of stock subject
to a risk of forfeiture in lieu of cash compensation, North Lily agrees to loan
Employee an amount equal to forty per cent (40%) of any income Employee
recognizes with respect to said shares as provided in this section 5, which
excludes income recognized on a sale of the shares. Said loan shall be a
recourse loan, shall bear interest at a rate equal to the prime rate quoted by
the Wall Street Journal from time to time, and shall be secured by Employee's
shares of North Lily common stock that are issued hereunder.

6. Stock Legend. Until the risk of forfeiture has lapsed with respect to
any shares of common stock of North Lily, said shares shall bear the following
legend.

The shares of stock represented by this certificate are
subject to an Agreement dated as of October 1, 1997
between North Lily Mining Company and W. Gene Webb. A copy
of that Agreement and any amendments thereto is on file at
the principal office of the corporation. Such Agreement
provides for the forfeiture of said shares under certain
conditions. The forfeiture provisions are binding upon any
holder of the shares regardless of how acquired.

- 3 -

<PAGE>

IN WITNESS WHEREOF the parties hereto have caused this Amendment to
Employment Agreement to be duly executed on the date and year first above
written.

NORTH LILY MINING COMPANY

By: /s/ STEPHEN E. FLECHNER /s/ W. GENE WEBB
------------------------------- ----------------------------------
President W. GENE WEBB

- 4 -

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement of
North Lily Mining Company on Form S-8 of our report dated April 5, 1997
appearing in the Annual Report on Form 10-K/A of North Lily Mining Company for
the year ended December 31, 1996 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.

WHEELER WASOFF, P.C.

/s/ Wheeler Wasoff, P.C.
- -------------------------

Denver, Colorado
October 1, 1997

CONSENT OF COOPERS & LYBRAND L.L.P.

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-8) and related Prospectus pertaining to the
Amended Employment Agreement between Stephen E. Flechner and North Lily Mining
Company (the " Company") effective as of October 1, 1997, and the Amended
Employment Agreement between W. Gene Webb and the Company effective as of
October 1, 1997, and to the incorporation by reference therein of our report
dated April 17, 1996 with respect to the financial statements of the Company
included in its Annual Report (Form 10-K/A).

COOPERS & LYBRAND L.L.P.

/s/Coopers & Lybrand L.L.P.
- ----------------------------

San Francisco, California
October 1, 1997