SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTER ENDED May 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number 0-12132
SILVERADO MINES LTD.
(Exact name of registrant as specified in its charter)
British Columbia, Canada
(State or other jurisdiction of incorporation or organization)
98 -0045034
(I.R.S. Employer I.D. No.)
Suite 505, 1111 West Georgia Street
Vancouver, British Columbia, Canada V6E 4M3
(Address of Principal Executive Offices)
(604) 689-1535
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 13(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for a 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.
Class: Outstanding at May 31, 1996
45,056,493
(Common stock (npv))
1
<PAGE>
SILVERADO MINES LTD.
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN U.S. DOLLARS)
As at
May 31 November 30
1996 1995
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 858,862 $ 155,849
Gold inventory (Note 2) 310,002 389,119
Accounts receivable 8,265 1,010
Prepaid expenses 31,515 72,005
------------ ------------
1,208,644 617,983
Mineral Properties and Development
Claims and options 1,815,811 1,755,811
Deferred exploration and
development expenditures 10,385,130 10,084,116
------------ ------------
12,200,941 11,839,927
Less accumulated amortization (1,260,834) (1,260,834)
------------ ------------
10,940,107 10,579,093
Building, Plant and Equipment 3,709,482 3,806,350
Deferred Financing Fees
(net of amortization of $68,438;
1995 - $49,838) 117,562 136,162
------------ ------------
$ 15,975,795 $ 15,139,588
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued
liabilities (Note 4) $ 488,600 $ 527,352
Loans payable secured by gold inventory 140,052 176,568
Unsecured loan 100,000 --
Current portion of mineral claims payable 119,000 330,000
Capital lease obligations - current 169,023 203,203
Payable to related parties 21,887 851,610
------------ ------------
1,038,562 2,088,733
Long Term Liabilities
Mineral claims payable 200,000 200,000
Capital lease obligations 144,576 194,569
Convertible debenture (Note 6) 2,000,000 2,000,000
------------ ------------
2,344,576 2,394,569
Shareholders' Equity
Share capital (Note 5)
Authorized: 75,000,000 common shares
Issued and outstanding:
May 31, 1996 - 45,056,493 shares 33,150,211 28,775,211
November 30, 1995 - 37,431,493 shares
Capital surplus 46,352 46,352
Deficit (20,603,906) (18,165,277)
------------ ------------
12,592,657 10,656,286
------------ ------------
$ 15,975,795 $ 15,139,588
============ ============
See accompanying notes to consolidated financial statements
2
<PAGE>
SILVERADO MINES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(EXPRESSED IN U.S. DOLLARS)
Six Months Ended May 31
1996 1995
------------ ------------
Revenue from gold sales $ 98,648 $ 1,520,173
------------ ------------
Operating costs
Mining and processing costs 79,118 1,519,573
Amortization of property and development costs -- 186,268
------------ ------------
Net Gain (Loss) 19,530 (185,668)
Miscellaneous Revenue -- 46,518
Administrative expenditures 2,458,159 1,219,868
Loss for the period (2,438,629) (1,359,018)
Accumulated deficit at beginning of period (18,165,277) (14,070,722)
------------ ------------
Accumulated deficit at end of period $(20,603,906) $(15,429,740)
============ ============
Loss per share $ (0.060) $ (0.039)
============ ============
See accompanying notes to consolidated financial statements
3
<PAGE>
SILVERADO MINES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN U.S. DOLLARS)
Six Months Ended May 31,
1996 1995
----------- -----------
CASH PROVIDED BY (USED FOR):
Operations:
Net earnings (loss) for the year $(2,438,629) $(1,359,018)
Items not involving cash:
Contracted services 1,656,778 399,763
Depreciation 100,281 83,336
Amortization of deferred financing fees 18,600 18,600
Changes in non-cash operating working capital (38,178) 45,012
----------- -----------
(701,148) (812,307)
Financing:
Shares issued for cash 2,830,000 298,350
Loans payable secured by gold inventory
and forward sales (36,516) 140,000
Increase in unsecured loan 100,000 --
Decrease in payable to related parties (829,723) 554,009
Decrease in mineral claims payable (211,000) --
Decrease in capital lease obligation (84,173) (94,429)
----------- -----------
1,768,588 897,930
Investments:
Mineral claims and options (60,000) (24,900)
Deferred exploration and development
expenditures (301,014) (203,917)
Purchases of equipment (3,413) (45,904)
----------- -----------
(364,427) (274,721)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 703,013 (189,098)
Cash and cash equivalents:
Beginning of period 155,849 190,724
End of period 858,862 1,626
----------- -----------
Supplemental cash flow information
Interest paid $ 80,000 $ --
=========== ===========
See accompanying notes to consolidated financial statements
4
<PAGE>
SILVERADO MINES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed In U.s. Dollars) May 31, 1996
(Unaudited)
1. Basis of Presentation
The financial information at May 31, 1996 and for the six month periods
ended May 31, 1996 and May 31, 1995 included herein is unaudited; however,
such information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management, necessary
for a fair statement of results for the interim periods. These consolidated
financial statements are presented in accordance with generally accepted
accounting principles in the United States. The results of operations for
the six month period ended May 31, 1996 are not necessarily indicative of
the results to be expected for the full year.
2. Inventories
Gold inventory is valued at the lower of weighted average cost or estimated
net realizable value.
3. Deferred Production Expenditures
Costs associated with waste removal and preparation for gold recovery are
deferred and charged to production on a unit of production basis.
4. Accounts Payable
Accounts payable and accrued liabilities consists of:
May 31, November 30,
1996 1995
============ ============
Accounts payable 272,348 360,941
Accrued interest 66,520 66,411
Accrued contract services (Note 5) 71,449 --
Accrued reclamation expenses 78,283 100,000
============ ============
$ 488,600 $ 527,352
============ ============
5. Share Capital
(a) Increase in Authorized Shares. At the Company's Annual Meeting on May
13, 1996, the shareholders approved an increase in the Company's
authorized capital from 50,000,000 shares to 75,000,000 shares.
(b) Employee Options. From time to time the Company issues options for the
purchase of common shares to selected part time employees as sole
compensation for contracted services in accordance with the terms and
conditions of its April 20, 1994, Stock Option and Stock Bonus Plan.
On January 7, 1996, the Company's directors increased the number of
shares authorized under this plan from 3,250,000 to 7,600,000; to
9,100,000 shares on April 19, 1996; and to 12,100,000 shares on May
28, 1996. At May 31, 1996, 9,655,250 shares had been exercised.
(c) Directors Options. The Company has reserved 3,475,000 shares for
issuance in accordance with the terms and conditions of its December
12, 1994, Stock Option Plan. No changes have occurred in this original
authorization.
(d) Other Share Transactions. The Company has reserved 400,000 shares for
issuance with respect to its purchase of the Marshall Dome property;
and has reserved 1,000,000 shares for issuance upon the potential
conversion of a convertible debenture.
6. Convertible Debenture
In July, 1994, the Company issued an 8% convertible callable debenture
which is unsecured and is due July 2, 1999, subject to prior redemption or
conversion. The debenture may be converted in whole or in part by the
holder into common shares of the Company at a Conversion Price of $2.00
U.S. per share (the Conversion Price). In addition, the Company may require
the holder to convert the debenture at the Conversion Price, in whole or in
part, if the average market price of the Company's shares has exceeded 125%
of the Conversion Price for a period of 20 consecutive trading days.
Financing fees paid related to the debenture have been deferred and are
being amortized on a straight line basis over the five year term of the
debenture.
5
<PAGE>
7. Commitments and Contingencies
The Company has a lease agreement for office premises for a term of 10
years commencing April 1, 1994, with an approximate annual rate of $120,000
(Cdn.) including operating costs.
8. Subsequent Events
On June 10, 1996, the Company amended its Purchase and Sale Agreement for
the Marshall Dome property by making a cash payment of $200,000.00 in lieu
of the issuance of 400,000 shares of its stock.
6
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain factors which
have significantly affected the Company's financial position and operating
results during the period included in the accompanying condensed consolidated
financial statements.
Six Months 1996 v. 1995
- - -----------------------
Revenue during the first six months of 1996 was derived from continued sales of
gold from the Company's gold inventory. Administrative expenses increased
primarily as a function of the increase in the expense of contracted services
(see Note 5). Current assets showed an overall reduction attributable to a
reduction in the Company's gold inventory, though the cash portion of current
assets showed a substantial increase. Current liabilities were reduced as a
result of a reduction in accounts payable and a reduction in payables to related
parties. Long term liabilities remained relatively unchanged.
Liquidity and Capital Resources at May 31, 1996
- - -----------------------------------------------
At May 31, 1996, the Company's cash position was significantly greater than at
November 30, 1995. Funds were received from sales of gold inventory, and through
the exercise of options.
Results of Operations
- - ---------------------
(a) Ester Dome Gold Project
At Ester Dome, near Fairbanks, Alaska, the Company continued a number of
geophysical surveys on gold-bearing target areas selected from previous
data the Company developed on the project. The Company is presently
preparing a summer drilling program at this site and is seeking the
financing necessary to bring this project into production, though there is
no commitment for such financing at this time.
(b) Marshall Dome Gold Project
At Marshall Dome, also near Fairbanks, Alaska, the Company has continued
reconnaissance and surface exploration, initially commenced in 1995, which
have disclosed areas of gold and arsenic mineralization in the soils, and
gold mineralization in the rock.
(c) Nolan Gold Project
At the Nolan Gold Project in northern Alaska, the Company plans to continue
its production efforts based upon the expanded base of knowledge it
developed from previous years operations.
(d) Hammond Property
This property, located adjacent to the Company's Nolan Gold Project in
northern Alaska, has a history of gold production and the Company
anticipates that it will add to the potential for developing additional
gold reserves. The property also has lode gold and antimony potential.
7
<PAGE>
OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders *
- - --------------------------------------------------------------
The Annual Meeting of Shareholders was held on May 13, 1996. Results of voting
were as follows:
(a) Election of Directors
---------------------
In Favor Against Withheld
---------- ---------- ----------
Garry L. Anselmo 22,706,978 48,095 47,403
J.P. Tangen 22,693,603 52,670 56,203
K. Maxwell Fleming 22,724,528 51,145 26,803
James F. Dixon 22,725,928 50,145 26,403
(b) KPMG Peat Marwick Thorne as Auditors
------------------------------------
In Favor Against Withheld
---------- ---------- ----------
23,103,338 390,205 8,728
(c) Increase Authorized Shares to 75,000,000
----------------------------------------
In Favor Against Withheld
---------- ---------- ----------
21,176,242 2,209,826 32,403
* 18,309,200 Shares Not Voted
Item 5 Other Information.
- - ---------------------------
None.
Item 6 Exhibits and Reports on Form 8-K.
- - -------------------------------------------
(a) Exhibit 3.(i)(b) Articles of Amendment filed herewith.
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.
SILVERADO MINES LTD.
/J.P. Tangen/
- - -------------
President / CEO / CFO
8
FORM 20(Section 371)
Certificate of
Incorporation No. 57126
COMPANY ACT
ORDINARY RESOLUTION
The following ordinary resolution was passed by the undermentioned company on
the date stated:
Name of company: SILVERADO MINES LTD.
Date resolution passed: MAY 13, 1996
Resolution:
"RESOLVED, as an Ordinary Resolution, that the Memorandum of the Company be
altered by increasing the authorized capital from 50,000,000 shares without
par value to 75,000,000 shares without par value".
The Memorandum As Altered Is Attached As Schedule A.
CERTIFIED A TRUE COPY THE 13TH DAY OF MAY, 1996.
/S. Morrow/
Signature
Relationship to Company: Solicitor
9
<PAGE>
SCHEDULE A
Attached to the Ordinary Resolution of Silverado Mines Ltd. passed by the
Members on the 13th day of May, 1996.
MEMORANDUM
(Altered)
of
SILVERADO MINES LTD.
1. The name of the Company is "SILVERADO MINES LTD."
2. The Company is restricted from carrying on all businesses except the
following:
(a) To acquire by purchase, lease, hire, discovery, location or otherwise,
and hold mines, mineral claims, mineral leases, mining lands,
prospects, licenses and mining rights of every description, and to
work, develop, operate, turn to account, sell, or otherwise dispose
thereof.
(b) To dig, drill, or bore for, raise crush, wash, smelt, reduce, refine,
amalgamate, assay, analyse, and otherwise treat gold, silver, copper,
lead, iron, coal, petroleum, natural gas, and any other ore, deposit,
metal, or mineral whatsoever, whether belonging to the Company or not,
and to render the same merchantable, and to buy, sell, and deal in the
same or any product thereof.
(c) To engage in any branch of mining, smelting, milling, and refining
minerals.
(d) To acquire by purchase, lease, hire, exchange, or otherwise timber
lands, leases, or claims, rights to cut timber, surface rights and
rights-of-way, water rights and privileges, patents, patent rights and
concessions, and other real or personal property.
(e) To acquire by purchase, lease, hire, exchange, or otherwise, and to
construct, operate, maintain, or alter, trails, roads, ways, tramways,
reservoirs, dams, flumes, race and other ways, water-courses, canals,
aqueducts, pipe-lines, wells, tanks, bridges, wharves, piers, mills,
pumping plants, factories, foundries, furnaces, coke-ovens, crushing
works, smelting-works, concentrating works, refining works, hydraulic,
electrical, and other works and appliances, power devices and plants
of every kind, laboratories, warehouses, boarding houses, dwellings,
buildings, machinery, plant, and other works and conveniences, and to
buy, sell, manufacture, and deal in all kinds of goods, stores,
provisions, implements, chattels, and effects.
(f) To build, purchase, lease, hire, charter, navigate, use and operate
cars, wagons, and other vehicles, boats, ships, and other vessels.
(g) To sell or otherwise dispose of ore, metal, oil, gas, or mineral
product, and to take contracts for mining work of all kinds, and to
accept as the consideration shares, stock, debentures, or other
securities of any limited company, whatsoever incorporated and
carrying on any business, directly or indirectly, conductive to the
objects of a specially limited company, if such shares (except the
shares of a company having non-personal liability), stock, debentures,
or other securities are fully paid up, and to sell or to otherwise
dispose thereof.
3. The authorized capital of the Company consists of 75,000,000 shares without
par value.
10
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