UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission file no. 0-19502
SISKON GOLD CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA 68-0254824
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
350 Crown Point Circle, Suite 100
GRASS VALLEY, CA. 95945 (916) 273-4311
(Address of principal executive offices) (Zip Code) (Registrant's telephone
number)
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
CLASS A COMMON STOCK
(Title of Class)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934, during the past 12
months (or for such 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 .
As of August 12, 1996, the number of Class A common stock outstanding was
10,733,516, the number of Series 2 Class B common stock outstanding was
39,065.5 and the number of Series 1 Class B Common Stock outstanding was 638.
Transitional Small Business Disclosure Format (check one): Yes . No X .
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements 2
ITEM 2. Management's Discussion and Analysis 2
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings 5
ITEM 2. Changes in Securities 5
ITEM 3. Defaults Upon Senior Securities 5
ITEM 4. Submission of Matters to a Vote of Security Holders 5
ITEM 5. Other Information 5
ITEM 6. Exhibits and Reports on Form 8-K 5
SIGNATURES 6
FINANCIAL STATEMENTS 7
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
The Consolidated Interim Financial Statements of Siskon Gold Corporation are
attached at the end of this document and incorporated fully by this reference.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
(A) PLAN OF OPERATIONS
The Company's short term and long term liquidity position is dependent upon
profitable levels of production from the San Juan Mine and on the successful
development of the Company's other properties. The Company has historically
relied on debt and equity financing for property exploration and development
and operating requirements.
San Juan
The San Juan Mine produced 7,239 ounces of dor<e'> during the first six months
of 1996 and construction and development of the mine was completed in mid-May.
In January the unexpected high water flows encountered earlier were
successfully curtailed by the installation of a concrete plug. Additional
definition drilling of a section of the reserves to the west was completed in
March and the Company entered into a contract with the Doe Run Company to
provide management personnel, engineering, training and other technical and
systems services for the San Juan Mine. In mid-May the ventilation shaft and
permanent mine dewatering system were completed. With the completion of
construction and development activities and attainment of sustained levels of
production at the mine in mid-May, the Company commenced the recognition of
revenues, production costs, non-cash costs and royalties in operations.
During the six months ended June 30, 1996, 76,415 tons of ore were mined
producing 7,239 ounces of dor<e'> of which 17,978 tons yielding 1,739 ounces of
dor<e'> have been reflected in operations. Production for the period from mid-
May to June 30, 1996 averaged 601 tons and 60 ounces of dor<e'> per day which
resulted in an operating loss of $29,727. The Company is focusing on increasing
productivity and in July has increased production to 775 tons per day. Daily
production figures are based on five day weeks. As a forward looking statement,
the Company is anticipating achieving levels of production of 1,570 tons per
day yielding an average of 2,000 ounces of gold dor<e'> per month before the
end of its fiscal year. In making this statement, the Company is assuming the
following important factors are true: 1) the Company will not encounter further
delays in increasing the levels of production due to poor ground conditions,
unexpected increases in the flow of groundwater into the mine or the lack of
availability of experienced mining personnel; 2) the grade of the gold deposit
continues to meet or exceed the grade set forth in the Company's feasibility
and ore reserve study; and 3) the Company's mining permits will continue in
force and effect without modifications which would materially affect the level
of gold production.
In May the Board of Directors determined that the proceeds received in the
Vengold Inc. private placement in November 1995 had been fully expended, the
two directors appointed by Vengold resigned and the Board dissolved the Budget
Committee. Additionally, the Company borrowed $500,000 from Carl Seaman, a
shareholder and holder of a majority of existing convertible debt. The loan
will be secured by the San Juan and Big Horn mines, is due November 15, 1998
and bears interest at ten percent with the principle and interest convertible
into Class A common stock at $1.75 per share. In connection with the loan Mr.
Seaman was granted the right to convert $500,000 of the Seamans' existing
convertible debt into Class A common stock at $1.75 per share as well. If a
private placement is completed prior to November 15, 1998 at a price below
$1.75 per share, Mr. Seaman would have the right to change the conversion price
of his new note to the same as that under the private placement.
In July the Company sold for $450,000 cash the merchantable timber on the San
Juan property which must be harvested over the next three years.
Big Horn
The Company received the major air and water quality permits for the mine site
of the Big Horn Mine in 1995. Ore from the mine is proposed to be trucked to an
off site processing plant. Environmental permits will have to be obtained for
the mill site. A mill site located in the City of Adelanto was purchased in
March 1995 and the Company is currently evaluating other mill sites that may be
more appropriate before resuming environmental permitting. The Company is
presently considering various alternatives to expand the reserves at the mine
through further geology reviews and conducting additional drilling. The cash
requirements for this work would be met from additional debt or equity capital.
Exploration
The Company is reviewing historical data on properties in California that have
the same geology and characteristics as San Juan Mine and has identified
several potential deposits. In addition, the Company is investigating other
properties in the U.S., Mexico and South America.
General and Administrative
General and administrative expenses for the remainder of 1996 are estimated to
be $358,000 net of royalty and lease receipts and interest income. The Company
plans to meet these requirements from existing working capital and the proceeds
from production. The note receivable secured by the Comstock property amounting
to $275,326 is in default. The Company is negotiating with the payee to either
bring the note current or the Company will initiate foreclosure.
(b) FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR TO DATE COMPARISON
Siskon had cash on hand of $937,006 and $1,161,046 at June 30, 1996 and June
30, 1995 respectively.
For the six months ended June 30, 1996 cash used by operating activities
totalled $798,981 versus $657,029 for the same period in 1995.
Cash used in investing activities for 1996 totalled $2,674,309 as compared to
$3,092,803 for 1995. During 1996 $2,042,040 was expended on development costs,
$472,970 on equipment, $3,462 on land and $160,772 on bonds, as compared with
$2,571,874 for development, $457,022 for equipment, $127,588 on land and
$10,844 on bonds during 1995. Collections of notes receivable and sales of
equipment amounted to $4,935 during 1996, as compared with $74,525 during 1995
principly from the sale of USNGS property.
Pre-production development costs and related plant and equipment for the San
Juan Mine aggregated $2,437,752 net of gold recoveries of $1,993,170 during
1996 as compared to $2,923,055 net of gold recoveries of $603,808 for 1995.
Permitting and land acquisition costs at the Big Horn Mine amounted to $100,720
during 1996 versus $233,429 in 1995.
Cash provided by financing activities during 1996 totalled $159,264 as
compared to $666,180 during 1995. During 1996 $500,000 was received from
borrowing of convertible debt as compared to $1,000,000 during 1995. Payments
of capital lease obligations and long-term debt amounted to $296,619 as
compared to $333,820 during 1995. In 1996 $47,117 was expended on financing
costs for financing raised in November 1995 and May 1996.
Siskon incurred a net loss of $954,944 for the six months ended June 30, 1996,
compared to a net loss of $442,522 for the same period in 1995.
Commencing in mid-May 1996, revenues, production costs, non-cash costs and
royalties at the San Juan Mine were reflected in operations. During 1995
production costs were capitalized as the Company's operations were in the
development stage and gold revenues received were credited against capitalized
costs. During 1996 revenues of $609,343 resulted from 1,583 ounces of fine gold
at an average price of $385 per ounce. Production costs, non-cash costs and
royalty expense totalled $639,070, $211,792 and $12,152 respectively.
General and administrative expenses were $671,330 for 1996 as compared with
$620,925 during 1995, resulting primarily from compensation that was included
in general and administrative in 1996 versus deferred development costs in
1995.
Exploration costs were $40,913 for 1996 versus $51,409 during 1995.
The gain on sale of property and equipment was $3,370 during 1996 versus
$93,001 during 1995 related to the sale of the USNGS Beatty property.
Interest and miscellaneous income was $71,092 for 1996 as compared with $84,788
during 1995 reflecting higher cash balances during 1995. Interest expense in
1996 amounted to $101,279 reflecting commencement of production while such
costs were capitalized in 1995.
The Company believes that its business and operations were not materially
affected by inflation during 1996 and 1995.
QUARTER TO QUARTER COMPARISON
Siskon incurred a net loss of $703,838 for the second quarter of 1996 compared
to a net loss of $258,517 for the second quarter of 1995. The increased loss in
1996 compared to 1995 was primarily attributable to the recognition of
revenues, production costs, non-cash costs and royalties commencing in mid-May
1996.
General and administrative expenses were $358,390 in the second quarter of 1996
as compared with $314,873 during the second quarter of 1995 resulting from
compensation that was included in general and administrative in 1996 and
deferred development costs in 1995.
Exploration costs were $32,385 in the second quarter of 1996 versus $10,916 in
the second quarter of 1995 resulting primarily from increased activities in
California.
The gain on sale of property and equipment was $3,370 during 1996. There were
no sales during the same period in 1995.
Interest and miscellaneous income was $23,636 in the second quarter of 1996 as
compared with $31,263 in the second quarter of 1995 reflecting higher cash
balances during 1995. Interest expense in 1996 amounted to $101,279 reflecting
commencement of production while such costs were capitalized in 1995.
PART II
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 21, 1996, the Company held its Annual Meeting of Shareholders to elect
four directors and to approve an increase of 75,000 shares to the Directors'
Stock Grant Plan. The shareholders approved both proposals.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
NOMINEE FOR AGAINST ABSTAINED TOTAL
Timothy A. Callaway 9,432,033 81,969 62,297 9,576,299
Charles D. Snead, Jr. 9,435,924 33,551 62,297 9,531,772
Michael K. Epstein 9,436,193 35,017 62,297 9,533,508
Scott E. Bartel 9,436,227 34,103 62,297 9,532,628
PROPOSAL NO. 2 - APPROVAL OF AMENDMENT TO SISKONS' DIRECTORS STOCK GRANT
PLAN
6,418,689 354,344 78,925 6,851,957
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
10.26 Timber sales agreement
(B) REPORTS ON FORM 8-K
Not applicable.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SISKON GOLD CORPORATION
Dated August 14, 1996 /S/TIMOTHY A. CALLAWAY
Timothy A. Callaway, President,
CEO and Chairman of the Board
Dated August 14, 1996 /S/MICHAEL K. EPSTEIN
Michael K. Epstein, Vice-President
Finance and Chief Financial Officer
<PAGE>
FINANCIAL STATEMENTS
<PAGE>
FORM 10-QSB - ITEM 1
SISKON GOLD CORPORATION AND SUBSIDIARY
LIST OF FINANCIAL STATEMENTS
The following consolidated financial statements of the Company are included in
response to Item 1:
Consolidated Balance Sheets -
June 30, 1996 (Unaudited) and December 31, 1995 9
Consolidated Statements of Operations -
Six Months Ended June 30, 1996 and 1995 (Unaudited) 10
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995 (Unaudited) 11
Notes to Consolidated Financial Statements 12
<PAGE>
SISKON GOLD CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 (UNAUDITED) AND DECEMBER 31, 1995
1996 1995
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 937,006 $ 4,251,032
Accounts receivable 7,952 7,586
Inventories 314,250 240,605
Prepaid expenses and other 146,328 74,121
Total Current Assets 1,405,536 4,573,344
NOTES RECEIVABLE 286,488 288,053
PROPERTY, PLANT AND EQUIPMENT 27,670,030 24,753,240
OTHER ASSETS 367,675 257,416
TOTAL ASSETS $ 29,729,729 $ 29,872,053
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 601,881 $ 719,113
Capital lease obligations - 48,964
Current portion of long-term debt 363,687 513,971
Total Current Liabilities 965,568 1,282,048
LONG TERM DEBT ($8,308,947 in 1996 and
$7,811,657 in 1995 to related parties) 8,866,656 8,171,205
OTHER LIABILITIES 54,378 51,190
Total Liabilities 9,886,602 9,504,443
COMMITMENTS AND CONTINGENCIES (Note 5)
SHAREHOLDERS' EQUITY
Capital Stock
Preferred stock, $.001 par value; no shares
issued Common stock, $.001 par value; issued
and outstanding:
Class A 10,733,516 in 1996; 10,562,544 in 1995 10,733 10,562
Convertible Class B Series 2 39,062.5 in
1996 and 1995 39 39
Convertible Class B Series 1 638 in 1996 and 1995 1 1
Additional paid-in capital 53,129,285 52,690,024
Stock subscription receivable (326,812) (317,841)
Accumulated deficit (32,970,119) (32,015,175)
Total Shareholders' Equity 19,843,127 20,367,610
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 29,729,729 $ 29,872,053
See notes to consolidated financial statements.
<PAGE>
SISKON GOLD CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
Three months ended June 30 Six Months ended June 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES
Gold sales $ 609,343 $ - $ 609,343 $ -
Royalties and leases 14,881 36,009 37,787 52,023
Total Revenue 624,224 36,009 647,130 52,023
OPERATING EXPENSES
Production 639,070 - 639,070 -
Depreciation, depletion and amortization 211,792 - 211,792 -
General and administrative 358,390 314,873 671,330 620,925
Exploration costs 32,385 10,916 40,913 51,409
Royalties 12,152 - 12,152 -
Total Operating Expenses 1,253,789 325,789 1,575,257 672,334
OPERATING LOSS (629,565) (289,780) (928,127) 620,311)
OTHER INCOME(EXPENSES)
Gain on sale of property and equipment 3,370 - 3,370 93,001
Interest and other income 23,636 31,263 71,092 84,788
Interest expense (101,279) - (101,279) -
Total Other Income(Expenses) (74,273) 31,263 (26,817) 177,789
NET LOSS $ (703,838) $ (258,517) $ (954,944) $ (442,522)
NET LOSS PER SHARE $ (0.07) $ (0.03) $ (0.09) $ (0.05)
WEIGHTED AVERAGE
NUMBER OF SHARES 10,642,101 9,056,855 10,602,323 9,057,717
</TABLE>
See notes to consolidated financial statements.
SISKON GOLD CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED)
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (954,944) $ (442,522)
Adjustments to reconcile net loss to net cash used in
operating activities
Issuance of common stock for services 50,000 55,000
Issuance of common stock for interest 101,279 -
Depreciation, depletion and amortization 211,792 11,781
Gain on sale of mineral rights and equipment (3,370) (93,001)
Accrued interest receivable (8,971) -
(Increase) decrease in accounts receivable (366) 6,357
Increase in inventories (73,645) (11,302)
(Increase) decrease in prepaid expenses (3,523) 12,807
(Decrease) in accounts payable and
accrued liabilities (117,233) (176,149)
Decrease in accrued reclamation costs - (20,000)
Net cash used in operating activities (798,981) (657,029)
CASH FLOWS FROM INVESTING ACTIVITIES
Collection on notes receivable 1,565 1,525
Sale of mineral rights and equipment 3,370 73,000
Purchase of equipment (472,970) (457,022)
Purchase and additions to land (3,462) (127,588)
Deferred development costs (2,042,040) (2,571,874)
Increase in bonds (160,772) (10,844)
Net cash used in investing activities (2,674,309) (3,092,803)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing of convertible debt 500,000 1,000,000
Deferred financing costs (47,117) -
Payments of obligations under capital leases (48,964) (333,820)
Payments of long-term debt (244,655) -
Net cash provided by financing activities 159,264 666,180
DECREASE IN CASH (3,314,026) (3,083,652)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,251,032 4,244,698
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 937,006 $ 1,161,046
See notes to consolidated financial statements.
<PAGE>
SISKON GOLD CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
Siskon Gold Corporation and subsidiary (the Company) is engaged in the
business of exploring, developing and mining precious mineral
properties, principally gold. Gold dor<e'>, the Company's principle
product, is produced and sold in the United States. At June 1996, the
Company owned (directly or through a joint venture) interests in various
mineral properties located in the Western United States. The Company's
operations are conducted in one business segment: mineral resource
exploration, development and production.
The accompanying interim consolidated financial statements have been
prepared by the Company without audit and contain all adjustments which,
in the opinion of management, are necessary to present fairly the
Company's financial position as of June 30, 1996 and December 31, 1995
and the results of its operations and cash flows for the interim periods
ending June 30, 1996 and 1995. Such adjustments consist of normal,
recurring adjustments.
The accompanying interim consolidated financial statements do not contain
all disclosures required by generally accepted accounting principles for annual
financial statements. It is suggested that these financial statements be read
in conjunction with the audited consolidated financial statements and the
related notes contained in the Company's Annual Report on Form 10-KSB, for the
year ended December 31, 1995.
Operating results for interim periods are not necessarily indicative of
those expected for a full year.
2. INVENTORIES
Inventories at June 30 and December 31, 1995 were as follows:
1996 1995
Gold dor<e'> inventory $ 106,036 $ 117,441
Materials and supplies 208,214 123,164
$ 314,250 $ 240,605
3. PROPERTY, PLANT AND EQUIPMENT
In March 1995, USNGS sold its interest in the Beatty claims for $175,000
in cash, assumption of all reclamation liabilities and a two percent NSR
royalty resulting in a gain on sale to the Company of $93,001.
4. CONVERTIBLE DEBT
In May 1996, the Company borrowed $500,000 from Carl Seaman, a
shareholder and holder of a majority of existing convertible debt. The
loan will be secured by the San Juan and Big Horn mines, is due November
15, 1998 and bears interest at ten percent with the principle and
interest convertible into Class A common stock at $1.75 per share. In
connection with the loan Mr. Seaman was granted the right to convert
$500,000 of the Seamans' existing convertible debt into Class A common
stock at $1.75 per share. If a private placement is completed prior to
November 15, 1998 at a price below $1.75 per share, Mr. Seaman would have
the right to change the conversion price of his new note to the same as
that under the private placement.
5. CAPITAL STOCK, STOCK OPTIONS AND WARRANTS
Stock option and warrant transactions for the six months ended June 30,
1996 were as follows:
Number of Exercise Exercisable
CLASS A SHARES PRICE PER SHARE OPTIONS
Options outstanding at
December 31, 1995 606,666 $2.00 - $4.94 504,166
Granted 304,000 2.00 - 2.56 161,500
Cancelled (137,166) 3.44 - 4.00 (97,166)
Vested - 3.05 20,000
Options outstanding at
June 30, 1996 773,500 $2.00 - $4.94 583,500
Warrants outstanding at
December 31, 1995
and June 30, 1996 4,719,083 $2.82 - $7.50 4,719,083
In June 1996, the shareholders approved an increase in the number of
Class A common stock issuable under the Directors Stock Grant Plan by
75,000 shares.
6. COMMITMENTS AND CONTINGENCIES
In May 1991, the Company received a request from the California Regional
Water Quality Control Board ("CRQCB) to prepare an environmental site
assessment report (a report prepared by an independent geological
engineering firm that addresses all site conditions including hydrology
and hydrological conditions) on a site previously owned by the Company
known as the Croman Mill Site, located in Siskiyou County, California.
The Croman Mill Site is a historical mining mill site which contains
stockpiled mine tailings from mining operations conducted by prior
operators and represents a "pre-existing" condition in relation to the
time the Company owned the property. Although the Company received
correspondence from the CRWQCB and exchanged correspondence during the
time period between May 1991 and March 1992, no further activity from
environmental agencies had occurred until the Company received a request
by the Environmental Protection Agency to visit the site for the purposes
of collecting water and soil samples. A representative of the Company
accompanied state and federal environmental officials during the site
visit in April 1996. Several soil and water samples were taken by
officials during the visit. Simultaneously, the Company also conducted
limited sampling of the water and soil at the mill site. In the event
that the test results lead to further testing and analysis which
ultimately results in a clean-up or abatement order issued by a state or
federal environmental agency, then the Company intends to seek
indemnification from the prior operators of the property which may have
been primarily responsible for the condition of the mine tailings located
on the mill site. The Company sold the Croman Mill Site in June 1996.
In March 1994, the Company received preliminary notice from the U.S.
Forest Service (USFS) naming the Company and six other parties as
potentially responsible parties to a hazardous substance release in
Siskiyou County, California. The hazardous release is alleged to be
coming from old mill tailings, storage containers and a mine tunnel. One
of the sites may have been the Siskon Mine which was previously owned by
the Company and may have been operated by a predecessor of the Company
among others. In September 1995, the Company received a letter from the
USFS requesting a field visit to the Siskon Mine. As of June 30, 1996,
no date has yet been determined for the field visit. The Company is
unable to determine whether it will be liable for environmental
remediation or estimate the amount of any liability. In the event that
the Company is issued a clean up or abatement order, the Company will
seek indemnification from other potentially responsible parties who may
have been responsible.
<PAGE>
FORM 10-QSB - ITEM 6
SISKON GOLD CORPORATION AND SUBSIDIARY
LIST OF EXHIBITS
The following exhibit of the Company is included in response to Item 6:
10.26 Timber sales agreement
PURCHASE AND SALE OF MERCHANTABLE TIMBER
This Agreement for the Purchase and Sale of Merchantable Timber (the
"Agreement") is entered into this 31st day of July, 1996 by and between
Siskon Gold Corporation, a California Corporation (the "Seller") and
Robinson Enterprises, a California Corporation (the "Buyer").
W I T N E S S E T H
WHEREAS, Seller is the owner of approximately two-thousand acres of
real property located in Nevada County, California; and
WHEREAS, Buyer wishes to purchase the merchantable timber herein
designated now growing on and forming a part of the real property and to
harvest such merchantable timber for a period of three (3) years from the
date of this Agreement.
NOW, THEREFORE, in consideration of the promises, representations,
warranties, covenants and conditions set forth in this Agreement, the
parties hereto mutually agree as follows:
ARTICLE 1
GENERAL
1.1 THE SAN JUAN RIDGE PROPERTY. The real property from which Buyer may
remove merchantable timber under this Agreement and on which the
merchantable timber agreed to be sold by this Agreement is now growing, and
of which it now forms a part, is that certain real property located in
Nevada County, California, as more particularly illustrated and described
on EXHIBIT A hereto and made a part hereof (the "San Juan Ridge Property").
ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE AND SALE. Seller shall sell the merchantable timber now
growing on the San Juan Ridge Property to Buyer for a period of three (3)
years from the date of closing (the "Merchantable Timber"), and Buyer shall
purchase the Merchantable Timber from Seller on the terms and subject to
the conditions specified in this Agreement.
2.2 PRICE. The purchase price for the Merchantable Timber shall be four
hundred fifty thousand dollars ($450,000) (the "Purchase Price").
2.3 PAYMENT. The Purchase Price shall be paid in full, by cash or
cashier's check, prior to any harvesting or logging of timber, as provided
in this Agreement.
ARTICLE 3
CONDITIONS
3.1 GENERAL. The provisions of this Article are conditions to the sale of
the Merchantable Timber.
3.2 DEED. Upon execution of this Agreement, Seller shall deliver to Buyer
a Quitclaim Deed to Merchantable Timber on the San Juan Ridge Property.
3.3 PAYMENT. Upon execution of this Agreement, Buyer shall deliver to
Seller the full purchase price of $450,000, in cash or cashier's check, and
in a manner acceptable to Seller.
ARTICLE 4
TERM
4.1 TERM OF AGREEMENT. This Agreement shall expire three (3) years from
the date of this Agreement (the "Termination Date"), unless sooner
terminated by written agreement executed by both Seller and Buyer. In no
event, however, shall this Agreement be extended beyond a period of three
(3) years.
ARTICLE 5
MERCHANTABLE TIMBER BEING SOLD
5.1 MERCHANTABLE TIMBER SOLD. The Merchantable Timber agreed to be sold
by Seller and purchased by Buyer consists of
(a) All timber, other than oak or madrone, on the San Juan Ridge
Property defined as merchantable by the official rules of a recognized
timber scaling and grading bureau including short logs; and
(b) All trees, other than oak or madrone, now growing, standing, or
lying on said real property.
5.2 EXCLUDED TIMBER. The Merchantable Timber agreed to be sold by Seller
and purchased by Buyer shall not consist of any deciduous tree species such
as oak or madrone, or any timber within one hundred (100) feet of existing
temporary or permanent buildings, standby generators or the waste dump at
the mine portal.
ARTICLE 6
SCALING OF TIMBER
6.1 SCALING. All Merchantable Timber purchased by Buyer pursuant to this
Agreement or removed from the San Juan Ridge Property by Buyer pursuant to
this Agreement shall be scaled at the sole cost and expense of Buyer.
6.2 AVAILABLE INFORMATION. Seller shall make available to Buyer any and
all applicable information in its possession concerning previously
conducted environmental studies of the San Juan Ridge Property or other
related information which may assist Buyer in complying with governmental
requirements and conducting its operations, as provided in this Agreement.
Seller further agrees to cooperate with Buyer in its efforts to meet such
governmental requirements. Seller makes no representations or warranties
regarding the accuracy or completeness of such information provided to
Buyer, and such information is intended solely to assist Buyer in its
independent preparation of environmental impact reports or related
governmental requirements.
6.3 BOUNDARIES. Seller shall identify and "mark" for Buyer the boundaries
which encompass the San Juan Ridge Property.
ARTICLE 7
OPERATIONS BY BUYER
7.1 BUYER'S OPERATIONS. Buyer shall, at Buyer's own cost and expense,
fell and remove the Merchantable Timber from the San Juan Ridge Property.
Buyer shall fell and remove the Merchantable Timber in a good and
workmanlike manner and operate under a state approved forest plan, which
includes erosion, reforestation and related environmental protection
measures. Buyer shall fell and remove the Merchantable Timber on or before
the Termination Date, and shall do Buyer's utmost to prevent unnecessary
damage, including damage by forest fire or like calamity, to the San Juan
Ridge Property or any adjoining property.
7.2 BUYER'S COVENANT AGAINST INTERFERENCE. Buyer shall not in any way
impede Seller's active mining operations or interfere with any activities
associated with Seller's active mining operations.
ARTICLE 8
NO LIENS
8.1 NO LIENS. Buyer shall fell, cut, and remove the timber sold under
this Agreement from the San Juan Ridge Property at its own cost and expense
and shall allow no lien to attach to said real property for any materials
furnished or labor rendered by any person or entity in performance of
Buyer's duties or rights under this Agreement.
ARTICLE 9
EXAMINATION BY BUYER
9.1 BUYER'S EXAMINATION. Buyer hereby agrees with and represents to
Seller that it has carefully examined the San Juan Ridge Property and all
timber thereon and that it is entering this Agreement and agreeing to
purchase the timber herein described as a result of its examination of said
real property and the timber thereon and not as a result of any
representations made to it by Seller, or any agent of Seller, not contained
in this Agreement including, but not limited to, the records of survey,
maps or any related materials received by Buyer or the accuracy of such
materials.
ARTICLE 10
INDEMNIFICATION
10.1 INDEMNIFICATION. Buyer shall indemnify and hold Seller and the
property of Seller, including said real property, free and harmless from
any and all claims, losses, damages, injuries, and liabilities arising from
the death or injury of any person or persons, or from the damage or
destruction of any property or properties caused by or connected with the
performance of this Agreement by Buyer, its agents, servants,
subcontractors, or employees.
ARTICLE 11
WORKER'S COMPENSATION INSURANCE
11.1 WORKER'S COMPENSATION. Buyer, at its own cost and expense, shall
procure and maintain in full force and effect during its felling or removal
of timber from said real property pursuant to this Agreement or otherwise,
a policy of workers' compensation or employer's liability insurance for the
protection of Buyer's employees, including executive, managerial, and
supervisorial employees, engaged in work on said real property. Further,
should Buyer employ any subcontractors or sub-buyers in any way it shall
insist that they also procure and maintain a policy of workers'
compensation or employer's liability insurance for the protection of their
employees engaged in work on said real property. Buyer further agrees that
the certificates for the insurance policies required by this Paragraph
shall be displayed to Seller or Seller's representative at any time on
request.
ARTICLE 12
LIABILITY INSURANCE
12.1 INSURANCE COVERAGE. At all times under this Agreement, Buyer shall
maintain the following insurance which shall include a provision naming
Seller as an additional insured and providing that the policies will not be
canceled or modified without thirty days (30) written notice to Seller.
Compliance by Buyer with the insurance requirements of this Agreement shall
not relieve Buyer of the indemnification contained in Article 10. Buyer
shall deliver proof of such insurance to Seller prior to any harvesting or
logging of merchantable timber, as provided in this Agreement.
a. Comprehensive General Liability insurance as shall protect Buyer
and Seller from claims for damages for bodily injury, including
wrongful death, as well as from claims for property damages which may
arise from any operations, whether such operations be by Buyer or by
anyone directly or indirectly employed by Buyer.
Minimum required amounts are:
Bodily Injury: $ 500,000 each person and
$1,000,000 each accident
Property Damage: $ 500,000 each occurrence
b. Comprehensive Automobile Liability insurance protecting Buyer and
Seller from claims for damages for property damage and bodily injury,
including wrongful death, which may arise from the ownership, use or
maintenance of owned and non-owned or rented vehicles, including
licensed or unlicensed or rented vehicles, by Buyer or by anyone
directly or indirectly employed by Buyer.
Minimum required amounts are:
Bodily Injury: $ 500,000 each person and
$1,000,000 each accident
Property Damage: $ 500,000 each accident
ARTICLE 13
DEFAULT
13.1 DEFAULT. Should Buyer default in the performance of any conditions of
this Agreement, Seller may suspend all future operations by Buyer under
this Agreement or on said real property until the default is corrected by
Buyer on giving Buyer 30 days' notice in writing of the default and
Seller's election to suspend operations under this Paragraph.
ARTICLE 14
MISCELLANEOUS
14.1 INTERPRETATION. This Agreement shall be governed by and construed in
accordance with the laws of the State of California. Any legal action to
enforce or interpret the provisions of this Agreement may be commenced only
in the Municipal or Superior Court of the County of Nevada, State of
California. The captions of paragraphs used in this Agreement are for
convenience only. The provisions hereof shall be binding upon and inure to
the benefit of the successors and assigns of Seller and Buyer.
14.2 TIME OF ESSENCE. Time is of the essence of this Agreement.
14.3 ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties; any previous understandings of the parties regarding the
subject matter of this Agreement are expressly declared void and are
superseded by this Agreement.
14.4 ATTORNEY'S FEES. In the event either Seller or Buyer shall commence
legal proceedings for the purpose of enforcing any provision or condition
hereof, or by reason of any breach arising under the provisions hereof,
other than as provided for by law, the prevailing party shall be entitled
to reasonable attorneys' fees, costs, and disbursements in addition to any
other relief to which such party may be entitled.
<PAGE>
14.5 SECTION AND OTHER HEADINGS. The section and other headings contained
in this Agreement are for reference purposes only and shall not be deemed
to be a part of this Agreement or to affect the meaning or interpretation
of this Agreement.
14.6 EXHIBITS AND SCHEDULES. All Exhibits hereto are expressly made a part
of this Agreement as fully as though completely set forth herein, and all
references to this Agreement, in any of such writings or elsewhere, shall
be deemed to refer to and include all such Exhibits.
14.7 SEVERABILITY. If any term or provision of this Agreement shall, to
any extent, be held invalid or unenforceable, the remainder of this
Agreement shall not be affected.
14.8 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
14.9 ASSIGNMENT. This Agreement shall not be assigned by Buyer without the
prior written approval of Seller.
IN WITNESS WHEREOF, the parties have executed this Purchase and Sale
Agreement as of the date first written above.
BUYER: SELLER:
ROBINSON ENTERPRISES SISKON GOLD CORPORATION
a California corporation a California corporation
_____________________________ ___________________________________
Lowell Robinson, President Michael K. Epstein, Vice -President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FORM 10-QSB FOR THE PERIOD ENDED JUNE 30, 1996 FOR SISKON GOLD CORPORATION
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<CIK> 0000876459
<NAME> SISKON GOLD CORP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 937,006
<SECURITIES> 0
<RECEIVABLES> 7,952
<ALLOWANCES> 0
<INVENTORY> 314,250
<CURRENT-ASSETS> 1,405,536
<PP&E> 27,670,030
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,729,729
<CURRENT-LIABILITIES> 965,568
<BONDS> 0
0
0
<COMMON> 10,773
<OTHER-SE> 53,129,285
<TOTAL-LIABILITY-AND-EQUITY> 29,729,729
<SALES> 609,343
<TOTAL-REVENUES> 647,130
<CGS> 639,070
<TOTAL-COSTS> 1,575,257
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 101,279
<INCOME-PRETAX> (954,944)
<INCOME-TAX> 0
<INCOME-CONTINUING> (954,944)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (954,944)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
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