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 May 31, 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 (604) 689-1535
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(Address of Principal Executive Offices) (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 July 1, 1999
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(Common stock (npv)) 13,916,557
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<TABLE>
SILVERADO GOLD MINES LTD.
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN U.S. DOLLARS) (UNAUDITED) As at
May 31, November 30,
1999 1998
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<CAPTION>
<S> <C> <C>
Assets
Current Assets
Cash $ 1,827 $ --
Gold inventory 8,847 23,448
Accounts receivable 1,690 3,760
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12,364 27,208
Mineral Properties and Development 1,600,000 1,600,000
Buildings, Plant and Equipment 3,107,938 3,114,785
Less accumulated depreciation (1,441,412) (1,289,883)
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1,666,526 1,824,902
Deferred Financing Fees (net of amortization of $180,038: 1998-$161,438) 5,962 24,562
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$ 3,284,852 $ 3,476,672
============== =============
Liabilities and Shareholders' Equity
Current Liabilities
Bank indebtedness $ -- $ 4,396
Accounts payable and accrued liabilities 942,005 904,568
Loans payable 135,000 --
Mineral claims payable 338,500 342,000
Convertible debenture 2,000,000 2,000,000
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3,415,505 3,250,964
Shareholders' Equity
Share capital
Authorized: 100,000,000 common shares
Issued and outstanding: May 31, 1999 - 13,916,557 shares 44,347,955 44,074,920
November 30, 1998 - 10,997,890 shares
Deficit (44,478,608) (43,849,212)
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(130,653) 225,708
$ 3,284,852 $ 3,476,672
============== ==============
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
SILVERADO GOLD MINES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND ACCUMULATED DEFICIT Six month ended
(EXPRESSED IN U.S. DOLLARS) (UNAUDITED)
May 31, May 31,
1999 1998
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<CAPTION>
<S> <C> <C>
Revenue from gold sales ..................................... $ 15,859 $ 25,542
Less mining and processing costs .......................... 14,601 26,884
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Loss from Operations ........................................ 1,258 (1,342)
Mineral properties and development expenditures ............. 246,316 --
Administrative expenditures ................................. 384,338 2,204,745
Loss for the period ......................................... (629,396) (2,206,087)
Accumulated deficit at beginning of the period .............. (43,849,212) (26,910,309)
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Accumulated deficit at end of the period .................... $ (44,478,608) $ (29,116,396)
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Loss per share .............................................. $ (0.048 $ (0.27)
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See accompanying notes to consolidated financial statements.
Three Months Ended
May 31, May 31,
1999 1998
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Revenue from gold sales ..................................... $ -- $ 11,819
Less mining and processing costs .......................... -- 10,652
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Gain (loss) from Operations ................................. -- 1,167
Mineral properties and development expenditures ............. 71,305 --
Administrative Expenditures ................................. 150,212 1,683,069
Loss for the period ......................................... (221,517) (1,681,902)
Accumulated deficit at beginning of the period .............. (44,257,091) (27,434,494)
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Accumulated deficit at end of the period .................... $ (44,478,608) $ (29,116,396)
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Loss per share .............................................. $ (0.017) $ (0.20)
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See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
SILVERADO GOLD MINES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN U.S. DOLLARS) (UNAUDITED) Six month ended
May 31, May 31,
1999 1998
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CASH PROVIDED BY (USED FOR):
<CAPTION>
<S> <C> <C>
Operations:
Loss for the year .................................................... $ (629,396) $ (2,206,087)
Items not involving cash:
Employment contract expense .................................... -- 448,315
Depreciation ................................................... 153,029 243,134
Amortization of deferred financing fees ........................ 18,600 18,600
Loss on disposal of buildings, plant and equipment ............. -- 51,715
Changes in non-cash operating working capital:
Decrease (increase) in accounts receivable ..................... 2,070 (1,703)
Decrease in gold inventory ..................................... 14,601 24,885
Increase in prepaid expenses paid to related parties ........... -- (314,885)
Decrease in mineral claim payable .............................. (3,500) --
Increase in accounts payable and accrued liabilities ........... 37,437 36,215
--------------- ---------------
(407,159) (1,699,811)
Financing:
Shares issued for cash ......................................... 273,035 258,500
Decrease in payable to related parties ......................... -- 464,041
Increase in loans payable ...................................... 135,000 75,000
Decrease in capital lease obligation ........................... -- (91,490)
--------------- ---------------
408,035 706,051
Investments:
Mineral claims and options expenditures, net of recoveries ..... -- 61,241
Deferred exploration and development expenditures .............. -- 317,547
Proceeds from sale of equipment ................................ 5,347 611,300
Purchases of equipment ......................................... -- (1,220)
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5,347 988,868
Increase (decrease) in cash .......................................... 6,223 (4,892)
Cash (bank indebtedness) at beginning of the period .................. (4,396) 20,914
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Cash at end of the period ............................................ $ 1,827 $ 16,022
=============== ===============
Supplemental cash flow information
Interest paid .................................................. $ -- $ 80,000
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Issue of shares for purchase of mineral property, a non-cash
investing activity not reflected in the Statements of Cashflows $ -- $ 384,000
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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) MAY 31, 1999
1. Basis of Presentation
The financial information at May 31, 1999 and for the three month period
ended May 31, 1999 and May 31, 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 May 31, 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 May 31, 1999 and May 31, 1998, gold is valued at
net realizable value.
3. Mineral Properties and Development
Mineral claims and options are valued at the net realizable value.
Exploration and development expenditures are expensed as incurred. The
Company has allowed the French Peak property claims to lapse.
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:
MAY 31, NOVEMBER 30,
1999 1998
-------------- -------------
Accounts payable $ 519,339 $ 561,902
Accrued interest 226,666 146,666
Accrued reclamation expenses 196,000 196,000
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$ 942,005 $ 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 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 May 31, 1999, amounting to $226,666 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 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 on May 31, 1999, warrants for 55,000 common shares
exercisable until September, 1999 at an exercise price of $0.17; warrants
for 500,000 common shares exercisable until March, 2000 at an exercise
price of $0.22; warrants for 556,667 common shares exercisable until June,
2000 at an exercise price of $0.07; warrants for 866,667 common shares
exercisable until December, 2000 at an exercise price of $0.20
(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
The Company's convertible callable debenture for $2,000,000 with interest
of $240,000 vested on July 2, 1999. The Company is currently in
negotiations to restructure its obligation.
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Item 2. 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 1999 vs. 1998
The Company continued to engage in limited exploration activities during the
second quarter of 1999 It received some revenue from sales of existing gold
inventory, but received most of its cash from issuance of common shares. Current
assets decreased to reflect the decrease in inventory during the quarter, while
Buildings, Plant and Equipment were reduced reflecting the sale of equipment.
Current liabilities increased as a function of an increase in short-term
borrowing. Administrative expenses were reduced reflecting the reduced level of
activity. Current expenditures on property development amounted to $246,316.
Liquidity and Capital Resources at May 31, 1998
During the first six months of 1998 the Company received cash from a private
placement of 800,000 common shares, and from the execution of 2,052,000 warrants
for common shares previously issued. At May 31, 1999, the Company's cash
position remained relatively unchanged at $1,827 as it continued to incur
limited expenses.
Results of Operations
(a) Nolan Gold Project
At the 100% owned Nolan Gold Project in northern Alaska, the Company has resumed
its mining activities on known gold bearing zones defined in exploration and
development programs conducted in 1998. The Company has prepared operations for
gold recovery for the third quarter of this year.
(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.
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PART II - OTHER INFORMATION
Item 4
None.
Item 5 Other Information.
None.
Item 6 Exhibits and Reports on Form 8-K.
During the quarter ended May 31, 1999, the Company filed a Form 8-K on May
3,1999, for an Item 9 Sales of Equity Securities Pursuant to Regulation S. 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with legend, if applicable)
</LEGEND>
<CIK> 0000731727
<NAME> Silverado Gold Mines Ltd.
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Nov-30-1999
<PERIOD-START> Dec-1-1998
<PERIOD-END> May-31-1999
<CASH> 1,827
<SECURITIES> 0
<RECEIVABLES> 1,690
<ALLOWANCES> 0
<INVENTORY> 8,847
<CURRENT-ASSETS> 12,364
<PP&E> 3,107,938
<DEPRECIATION> (1,441,412)
<TOTAL-ASSETS> 3,284,852
<CURRENT-LIABILITIES> 3,415,505
<BONDS> 0
0
0
<COMMON> 44,347,955
<OTHER-SE> (44,478,608)
<TOTAL-LIABILITY-AND-EQUITY> 3,284,852
<SALES> 15,859
<TOTAL-REVENUES> 15,859
<CGS> 14,601
<TOTAL-COSTS> 14,601
<OTHER-EXPENSES> 630,654
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (629,396)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (629,396)
<EPS-BASIC> (0)
<EPS-DILUTED> 0
</TABLE>
