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 AUGUST 31, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number 0-12132
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SILVERADO GOLD MINES LTD.
(Exact name of registrant as specified in its charter)
British Columbia, Canada 98 -0045034
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer I.D. No.)
Suite 505, 1111 West Georgia Street
Vancouver, British Columbia, Canada V6E 4M3 (604) 689-1535
(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 October 1, 1999
(Common stock (npv)) 14,516,557
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<TABLE>
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SILVERADO GOLD MINES LTD.
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN U.S. DOLLARS) (UNAUDITED) As at
August 31, November 30,
1999 1998
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<S> <C> <C>
Assets
Current Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 269 $ -
Gold inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,847 23,448
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . 1,540 3,760
10,656 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. . . . . . . . . . . . . . . . . . . . . (1,510,639) (1,289,883)
1,597,299 1,824,902
Deferred Financing Fees (net of amortization of $180,038: 1998-$161,438) - 24,562
$ 3,207,955 $ 3,476,672
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Liabilities and Shareholders' Equity
Current Liabilities
Bank indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 4,396
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . 1,021,740 904,568
Loans payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,000 -
Mineral claims payable . . . . . . . . . . . . . . . . . . . . . . . . 338,500 342,000
Convertible debenture. . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,000,000
3,515,240 3,250,964
Shareholders' Equity
Share capital
Authorized: 100,000,000 common shares
Issued and outstanding:. . . . . . . . . . . . . . . . . . . . . . . . 44,347,955 44,074,920
August 31, 1999 - 14,516,557 shares
Deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44,655,240) (43,849,212)
(307,285) 225,708
$ 3,207,955 $ 3,476,672
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</TABLE>
See accompanying notes to consolidated financial statements.
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<TABLE>
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SILVERADO GOLD MINES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND ACCUMULATED DEFICIT
(EXPRESSED IN U.S. DOLLARS) (UNAUDITED)
NINE MONTH ENDED
AUGUST 31, AUGUST 31,
1999 1998
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<S> <C> <C>
Revenue from gold sales . . . . . . . . . . . . $ 15,859 $ 99,857
Less mining and processing costs. . . . . . . 14,601 118,883
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Loss from Operations. . . . . . . . . . . . . . 1,258 (19,026)
Mineral properties and development expenditures 258,213 -
Administrative expenditures . . . . . . . . . . 549,073 3,147,159
Loss for the period . . . . . . . . . . . . . . (806,028) (3,166,185)
Accumulated deficit at beginning of the period. (43,849,212) (26,910,309)
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Accumulated deficit at end of the period. . . . $ (44,655,240) $ (30,076,494)
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Loss per share. . . . . . . . . . . . . . . . . $ (0.062) (0.37)
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</TABLE>
See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31, AUGUST 31,
1999 1998
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<S> <C> <C>
Revenue from gold sales . . . . . . . . . . . . $ - $ 74,315
Less mining and processing costs. . . . . . . - 91,999
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Gain (loss) from Operations . . . . . . . . . . - (17,684)
Mineral properties and development expenditures 11,897 -
Administrative Expenditures . . . . . . . . . . 164,735 942,414
Loss for the period . . . . . . . . . . . . . . (176,632) (960,098)
Accumulated deficit at beginning of the period. (44,478,608) (29,116,396)
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Accumulated deficit at end of the period. . . . $ (44,655,240) $ (30,076,494)
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Loss per share. . . . . . . . . . . . . . . . . $ (0.013) (0.11)
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</TABLE>
See accompanying notes to consolidated financial statements.
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<TABLE>
<CAPTION>
SILVERADO GOLD MINES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN U.S. DOLLARS) (UNAUDITED) NINE MONTH ENDED
AUGUST 31, AUGUST 31,
1999 1998
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<S> <C> <C>
CASH PROVIDED BY (USED FOR):
Operations:
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . $ (806,028) $ (3,166,185)
Items not involving cash:
Employment contract expense . . . . . . . . . . . . . . . . . . - 828,313
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . 222,250 364,701
Amortization of deferred financing fees . . . . . . . . . . . . 24,562 27,900
Loss on disposal of buildings, plant and equipment. . . . . . . - 48,031
Changes in non-cash operating working capital:
Decrease (increase) in accounts receivable. . . . . . . . . . . 2,220 3,354
Decrease in gold inventory. . . . . . . . . . . . . . . . . . . 14,601 24,885
Increase in prepaid expenses paid to related parties. . . . . . - (372,410)
Decrease in mineral claim payable . . . . . . . . . . . . . . . (3,500) -
Increase in accounts payable and accrued liabilities. . . . . . 117,172 118,394
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(428,723) (2,123,017)
Financing:
Shares issued for cash. . . . . . . . . . . . . . . . . . . . . . 273,035 366,200
Shares issued for consulting services . . . . . . . . . . . . . . - 75,000
Decrease in secured advances to related parties . . . . . . . . . - 480,236
Increase in loans payable . . . . . . . . . . . . . . . . . . . . 155,000 -
Decrease in capital lease obligation. . . . . . . . . . . . . . . - (91,490)
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428,035 829,946
Investments:
Mineral claims and options expenditures, net of recoveries. . . . - 69,915
Deferred exploration and development expenditures . . . . . . . . - 600,036
Proceeds from sale of equipment . . . . . . . . . . . . . . . . . 5,353 611,300
Purchases of equipment. . . . . . . . . . . . . . . . . . . . . . - (6,729)
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5,353 1,274,522
Increase (decrease) in cash . . . . . . . . . . . . . . . . . . . . 4,665 (18,549)
Cash (bank indebtedness) at beginning of the period . . . . . . . . (4,396) 20,914
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Cash at end of the period . . . . . . . . . . . . . . . . . . . . . 269 $ 2,365
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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 - $ 289,200
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</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Silverado Gold Mines Ltd.
notes to consolidated financial statements
(expressed in U.S. dollars) (unaudited) August 31, 1999
1. Basis of Presentation
The financial information at August 31, 1999 and for the three month period
ended August 31, 1999 and August 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 nine month
period ended August 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 August 31, 1999 and August 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:
AUGUST 31, NOVEMBER 30,
1999 1998
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ACCOUNTS PAYABLE $ 585,740 $ 561,902
ACCRUED INTEREST 240,000 146,666
ACCRUED RECLAMATION EXPENSES 196,000 196,000
$ 1,021,740 $ 904,568
========== ========
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 August 31, 1999, amounting to $240,000 has been
recorded as a current liability.
<PAGE>
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 August 31, 1999, warrants for 500,000 common shares
exercisable until March, 2000 at an exercise price of $0.22; 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.
<PAGE>
Silverado Gold Mines Ltd.
notes to consolidated financial statements
(expressed in U.S. dollars) (unaudited) August 31, 1999
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.
NINE MONTHS 1999V. 1998
- --------------------------
The Company continued to engage in limited exploration activities during the
third 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 $258,213.
LIQUIDITY AND CAPITAL RESOURCES AT AUGUST 31, 1999
- ---------------------------------------------------------
During the first nine months of 1999 the Company received cash from a private
placement of 866,667 common shares, and from the execution of 2,052,000 warrants
for common shares previously issued. At August 31, 1999, the Company's cash
position remained relatively unchanged at $269 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 performed limited
operations for gold recovery during 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.
PART II - OTHER INFORMATION
ITEM 4
- -------
None.
ITEM 5 OTHER INFORMATION.
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None.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K.
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None.
<PAGE>
Silverado Gold Mines Ltd.
notes to consolidated financial statements
(expressed in U.S. dollars) (unaudited) August 31, 1999
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
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-START> DEC-01-1998
<PERIOD-END> AUG-31-1999
<CASH> 269
<SECURITIES> 0
<RECEIVABLES> 1540
<ALLOWANCES> 0
<INVENTORY> 8847
<CURRENT-ASSETS> 10656
<PP&E> 3107938
<DEPRECIATION> (1510639)
<TOTAL-ASSETS> 3207955
<CURRENT-LIABILITIES> 3515240
<BONDS> 0
0
0
<COMMON> 44347955
<OTHER-SE> (44655240)
<TOTAL-LIABILITY-AND-EQUITY> 3207955
<SALES> 15859
<TOTAL-REVENUES> 15859
<CGS> 14601
<TOTAL-COSTS> 14601
<OTHER-EXPENSES> 807286
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (806028)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (806028)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
