FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTER ENDED February 28, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
Commission file number 0-12132
SILVERADO GOLD MINES LTD.
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(Exact name of registrant as specified in its charter)
British Columbia, Canada
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(State or other jurisdiction of incorporation or organization)
98 -0045034
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(I.R.S. Employer I.D. No.)
Suite 505, 1111 West Georgia Street Vancouver, British Columbia, Canada V6E 4M3
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(Address of Principal Executive Offices)
(604)689-1535
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(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 April 1, 1999
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(Common stock (npv)) 12,077,557
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<TABLE>
<CAPTION>
SILVERADO GOLD MINES LTD.
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN U.S. DOLLARS) (UNAUDITED) As at
February 28, November 30,
1999 1998
------------ ------------
<S> <C> <C>
Assets
Current Assets
Cash $ 3,865 $ --
Gold inventory 8,847 23,448
Accounts receivable 7,843 3,760
Prepaid expenses paid to related parties 269,307 363,667
------------ ------------
289,862 390,875
Mineral Properties and Development 2,667,335 2,667,335
Less accumulated amortization (743,586) (743,586)
------------ ------------
1,923,749 1,923,749
Buildings, Plant and Equipment 3,107,938 3,114,784
Less accumulated depreciation (1,365,576) (1,289,882)
------------ ------------
1,742,362 1,824,902
Deferred Financing Fees (net of amortization of $170,738: 1998-$161,438) 15,262 24,562
------------ ------------
$3,971,235 $4,164,088
============= ===========
Liabilities and Shareholders' Equity
Current Liabilities
Bank indebtedness $ -- $ 4,396
Accounts payable and accrued liabilities (Note 5) 905,595 904,568
Loans payable 88,795 --
Mineral claims payable 342,000 342,000
Convertible debenture 2,000,000 2,000,000
------------ ------------
3,336,390 3,250,964
Shareholders' Equity
Share capital
Authorized: 100,000,000 common shares
Issued and outstanding: February 28, 1999 - 11,864,557 shares 44,204,520 44,074,920
November 30, 1998 - 10,997,890 shares
Deficit (43,569,675) (43,161,796)
------------ ------------
634,845 913,124
------------ ------------
$ 3,971,235 $4,164,088
============= ===========
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
SILVERADO GOLD MINES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND ACCUMULATED DEFICIT Three month ended
(EXPRESSED IN U.S. DOLLARS) (UNAUDITED)
February 28, February 28,
1999 1998
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<S> <C> <C>
Revenue from gold sales $ 15,859 $ 13,723
Less mining and processing costs 14,601 16,232
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Gain (loss) from Operations 1,258 (2,509)
Exploration and development expenditures 175,011 --
Administrative expenditures 234,126 521,676
Loss for the period (407,879) (524,185)
Accumulated deficit at beginning of the period (43,161,796) (26,910,309)
-----------------------------
Accumulated deficit at end of the period $(43,569,675) $(27,434,494)
-----------------------------
Loss per share $ (0.035) $ (0.10)
-----------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
SILVERADO GOLD MINES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN U.S. DOLLARS) (UNAUDITED) Three month ended
February 28, February 28,
1999 1998
<S> <C> <C>
CASH PROVIDED BY (USED FOR):
Operations:
Loss for the year $ (407,879) $ (524,185)
Items not involving cash:
Employment contract expense -- 63,994
Depreciation 75,694 121,567
Amortization of deferred financing fees 9,300 9,300
Loss on disposal of buildings, plant and equipment -- 22,115
Changes in non-cash operating working capital:
Increase in accounts receivable (4,083) (3,557)
Decrease in gold inventory 14,601 16,233
Decrease (increase) in prepaid expenses paid to related parties 94,360 (14,916)
Increase in accounts payable and accrued liabilities 1,027 85,621
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(216,980) (223,828)
Financing:
Shares issued for cash 129,600 258,500
Increase in loans payable 88,795 60,000
Decrease in capital lease obligation -- (18,208)
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218,395 300,292
Investments:
Mineral claims and options expenditures, net of recoveries -- 71,325
Deferred exploration and development expenditures -- (423,483)
Proceeds from sale of equipment 6,846 290,300
Purchases of equipment -- (1,220)
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6,846 (63,078)
Increase (decrease) in cash 8,261 13,386
Cash (bank indebtedness) at beginning of the period (4,396) 20,914
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Cash at end of the period $ 3,865 $ 34,300
=========== ===========
Supplemental cash flow information
Interest paid $ -- $ 20,000
=========== ===========
Issue of shares for purchase of mineral property, a non-cash
investing activity not reflected in the Statements of Cashflows $ -- $ 250,000
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
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SILVERADO GOLD MINES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN U.S. DOLLARS) (UNAUDITED) FEBRUARY 28, 1999
1. Basis of Presentation
The financial information at February 28, 1999 and for the three month
period ended February 28, 1999 and February 28, 1998 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 three month period ended February
28, 1999 are not necessarily indicative of the results to be expected for
the full year.
2. Gold Inventory
Gold inventory is valued at the lower of weighted average cost or estimated
net realizable value. At February 28, 1999 and February 28, 1998, gold is
valued at net realizable value.
3. Mineral Properties and Development
Costs of acquiring mineral claims and options are capitalized until such
time as the properties are placed into production. Exploration and
development expenditures are expensed as incurred.
4. Buildings Plant and Equipment
Buildings, plant and equipment are stated at cost. Depreciation is provided
on buildings, plant and equipment using the straight-line method based on
estimated lives of 3 to 20 years.
5. Accounts Payable
Accounts payable and accrued liabilities are delineated in the following
table:
FEBRUARY 28, NOVEMBER 30,
1998 1998
Accounts payable $522,929 $561,902
Accrued interest 186,666 146,666
Accrued reclamation expenses 196,000 196,000
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$905,595 $904,568
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6. Convertible Debenture
In July, 1994, the Company issued a convertible callable debenture with
interest payable at the rate of 8.0% per annum on December 31 and June 30
each year. The debenture 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 $18.57 U.S. per share (the "Conversion Price"). In addition,
conversion of the debenture may be called by the Company provided that the
average trading
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price of the Company's common stock has exceeded 125% of the Conversion
Price for the 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 debenture term of 60 months. The Company was
granted a deferral of these payments based on monthly progress updates
until financing is in place. Total interest payable at February 28, 1999,
amounting to $186,666 has been recorded as a current liability.
7. Share Capital
(a) Common Shares. Authorized: 100,000,000 common shares, without par
value.
(b) Directors Options. The Company has reserved 4,000,000 common shares for
issuance, exercisable until August 14, 2004, in accordance with the terms
and conditions of its December 12, 1994, Stock Option Plan; and 48,462
common shares for issuance for issuance exercisable until June 1, 2002, in
accordance with the terms and conditions of its June 1, 1992, Stock Option
Plan. The Company accounts for stock compensation arising from options to
directors in accordance with APB 25, "Accounting for Stock Issued to
Employees".
(c) Employee Options. From time to time the Company issues options for the
purchase of common shares to selected part time independent contract
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. The Company accounts for compensation arising from these
options in accordance with Statement of Financial Standards No. 123,
"Accounting for Stock Based Compensation". Under this statement, stock
compensation cost to contract employees is measured at the grant date of
the stock option based on the value of the award and is recognized over the
service period.
(d) Warrants. In connection with the private placement of common shares the
Company has outstanding at February 28, 1999, warrants for 866,667 common
shares exercisable until December 2000.
(e) Other Share Transactions. The Company has reserved 107,701 common
shares for issuance upon the potential conversion of a convertible
debenture; and 110,000 common shares for issuance with respect to a
potential purchase of property.
8. 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.
9. Litigation
A former employee of the Tri-Con Group has initiated a claim against that
company for wrongful dismissal/breach of contract in the amount of
$150,000. The Company has been named as a co-defendant in the suit. No
provision for this litigation has been made in these financial statements
and the amount of the loss, if any, for this lawsuit, would be accounted
for prospectively.
10. Subsequent Events
On March 31, 1999, the Company entered into an agreement with a warrant
holder to amend amounts, prices and dates. The warrant holder exercised
213,000 share purchase warrants, exercisable at $0.07 per common shares for
gross proceeds of $14,910.
<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.
Three Months 1999 v. 1998
The Company continued to engage in mining activities during the first quarter of
1999. Revenues were received from sales of existing gold inventory. In preparing
for gold recovery, expenditures were made towards exploration and development.
Current assets decreased due to the decrease of prepaid expenses during the
quarter. Current liabilities increased as a function of an increase in accounts
payable, and short-term loans. The Company's $2 million convertible debenture is
due July 1999 and the Mineral claims payable remained unchanged. Administrative
expenses were reduced, reflecting the reduced level of activity within the
Company.
Liquidity and Capital Resources at February 28, 1999
During the first three months of 1999, the Company received cash from a private
placement of common shares, sale of gold, sale of equipment and short-term
loans. At February 28, 1999, the Company's cash position was minimal. The
Company plans to continue to raise capital through private placements and
warrant issues and/or through the completion of property ventures on its
Fairbanks properties. The arctic Nolan gold recovery from winter production is
set to begin after the thaw of snow in May-June and the Company expects gold
sales to supplement financing activities.
Results of Operations
(a) Nolan Gold Project: At the 100% owned Nolan property in arctic Alaska, the
Company has resumed its mining activities on known gold bearing zones defined in
exploration and development programs conducted in 1998. The Company is
continuing these activities and is preparing operations for gold recovery
beginning with the thaw of snow in late May and early June.
(b) Other Properties: The Company continued to maintain its other properties in
good standing, pending further exploration and development, subject to the
availability of financing.
OTHER INFORMATION
Item 5 Other Information.
Subsequent to quarter end, the Company entered into an agreement with a warrant
folder to amend amounts, prices and dates. The warrant holder exercised 213,000
share purchase warrants, exercisable at $0.07 per common shares for gross
proceeds of $14,910.
Item 6 Exhibits and Reports on Form 8K
During the quarter ended February 28, 1999, the Company filed a Form 8-K on
December 9, 1998. No financial statements were filed with this report.
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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 GOLD MINES LTD.
/s/ G.L. Anselmo
G.L. Anselmo
President / CEO / CFO
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with legend, if applicable)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Nov-30-1998
<PERIOD-START> Dec-1-1998
<PERIOD-END> Feb-28-1999
<CASH> 3,865
<SECURITIES> 0
<RECEIVABLES> 277,150
<ALLOWANCES> 0
<INVENTORY> 8,847
<CURRENT-ASSETS> 289,862
<PP&E> 3,107,938
<DEPRECIATION> (1,365,576)
<TOTAL-ASSETS> 3,971,235
<CURRENT-LIABILITIES> 3,336,390
<BONDS> 0
0
0
<COMMON> 44,204,520
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,971,235
<SALES> 15,859
<TOTAL-REVENUES> 15,859
<CGS> 14,601
<TOTAL-COSTS> 14,601
<OTHER-EXPENSES> 409,137
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (407,879)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (407,879)
<EPS-PRIMARY> (0)
<EPS-DILUTED> 0
</TABLE>
