UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------------
FORM 10-QSB
[x] Quarterly Report Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarterly Period ended September 30, 1996
Transition Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition Period from to
----- -----
Commission File Number
----------------------------------------
IDAHO CONSOLIDATED METALS CORP.
-------------------------------
(Exact Name of Small Business
Issuer as Specified in Its Charter)
British Columbia, Canada
--------------------------------
(State or other jurisdiction of
incorporation or organization)
82-0465571
--------------------------------
(I.R.S. Employer Identification No.)
504 Main Street, Suite 475
Post Office Box 1124
Lewiston, Idaho 83501
--------------------------------
(Address of Principal Executive Offices)
(208) 743-0914
--------------------------------
(Issuer's Telephone Number,
Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 6,854,208 as of
November 6, 1996.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
IDAHO CONSOLIDATED METAL CORP.
Form 10-QSB
For the Fiscal Quarter ended September 30, 1996
TABLE OF CONTENTS
PART I.FINANCIAL INFORMATION
Item 1. Financial Statements of the Company
Item 2. Management's Discussion and Analysis or Plan of Operation
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF THE COMPANY
--------------------------------------------
The following unaudited interim financial statements for the period
ending September 30, 1996, are included in response to item 1 and have
been compiled by Staley, Okada, Chandler & Scott, Chartered
Accountants.
The financial statements should be read in conjunction with
Management's Discussion and Analysis or Plan of Operations and other
financial information included elsewhere in this Form 10-QSB.
<PAGE>
SCHEDULE A
IDAHO CONSOLIDATED
METALS CORP.
(An Exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
30 SEPTEMBER 1996
Unaudited - See Notice to Reader
U.S. Funds
STALEY, OKADA, CHANDLER & SCOTT
Chartered Accountants
<PAGE>
NOTICE TO READER
We have compiled the interim balance sheet of Idaho
Consolidated Metals Corp. as at 30 September 1996 and the interim
statements of changes in shareholders' equity, operations and cash
flows for the nine months then ended from information provided by
management. We have not audited, reviewed or otherwise attempted to
verify the accuracy or completeness of such information. Readers are
cautioned that these statements may not be appropriate for their
purposes.
Burnaby, B.C. STALEY, OKADA, CHANDLER & SCOTT
12 November 1996 CHARTERED ACCOUNTANTS
<PAGE>
Idaho Consolidated Metals Corp. Statement 1
(An Exploration Stage Company)
Interim Balance Sheet
As at 30 September
U.S. Funds
Unaudited - See Notice to Reader
September 30,
------------------------
1996 1995
----------- -----------
ASSETS
Current:
Cash $ 534,526 $ 10,224
Accounts receivable 85,000 94
Inventory 164,416 124,416
Prepaid expenses - 269
----------- -----------
783,942 135,003
Capital Assets:
Net of accumulated amortization 9,417 3,937
Resource Property Costs - Schedule 4,301,072 3,741,421
----------- -----------
$ 5,094,431 $ 3,880,361
=========== ===========
LIABILITIES
Current:
Bank loan $ 30,408 $ -
Accounts payable:
Related parties 78,519 88,911
Other 533,477 463,726
Current portion of notes payable 529,906 415,000
Share subscriptions payable - 340,200
----------- -----------
1,172,310 1,307,837
----------- -----------
Notes Payable 20,078 -
----------- -----------
<PAGE>
Idaho Consolidated Metals Corp. Statement 1
(An Exploration Stage Company)
Interim Balance Sheet, Continued
As at 30 September
U.S. Funds
Unaudited - See Notice to Reader
September 30,
------------------------
1996 1995
----------- -----------
SHAREHOLDERS' EQUITY
Share Capital - Statement 2 $ 7,421,177 $ 5,095,447
Deficit - Accumulated during the
exploration stage - Statement 2 (3,466,549) (2,470,338)
Foreign Currency Translation
Adjustments - Statement 2 (52,585) (52,585)
----------- -----------
3,902,043 2,572,524
----------- -----------
$ 5,094,431 $ 3,880,361
=========== ===========
ON BEHALF OF THE BOARD:
--------------------------------,
Director
--------------------------------,
Director
- See Accompanying Notes -
<PAGE>
Idaho Consolidated Metals Corp. Statement 2
Interim Statement of Changes in Shareholders' Equity
U.S. Funds
Unaudited - See Notice to Reader
<TABLE>
<CAPTION>
Deficit
Accumulated Foreign
Common Shares During the Currency
---------------------- Exploration Translation
Shares Amount Stage Adjustment Total
--------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance - 31 December 1994 5,310,044 $ 4,298,476 $(1,794,488) $ (52,585) $ 2,451,403
Issuance of shares for
exercise of warrants
($2.23 per share) 30,000 66,900 - - 66,900
Private placement ($1.50
per share) 290,464 435,696 - - 435,696
Release of escrowed
shares for executive
compensation ($1.57 per
share) - 294,375 - - 294,375
Loss for the period -
Statement 3 - - (675,850) - (675,850)
--------- ----------- ----------- ----------- -----------
Balance - 30 September 1995 5,630,508 $ 5,095,447 $(2,470,338) $ (52,585) $ 2,572,524
========= =========== =========== =========== ===========
Balance - 31 December 1995 5,968,308 $ 5,602,147 $(2,645,366) $ (52,585) $ 2,904,196
Options exercised 30,000 39,520 - - 39,520
Private placement ($1.50
per share) 100,000 150,000 - - 150,000
Private placement ($1.75
per share) 755,900 1,322,825 - - 1,322,825
Finder's fee - (45,000) - - (45,000)
Release of escrowed
shares for executive
compensation ($1.28 to
$2.34 per share) - 351,685 - - 351,685
Loss for the period -
Statement 3 - - (821,183) - (821,183)
--------- ----------- ----------- ----------- -----------
Balance - 30 September 1996 6,854,208 $ 7,421,177 $(3,466,549) $ (52,585) $ 3,902,043
========= =========== =========== =========== ===========
</TABLE>
- See Accompanying Notes -
<PAGE>
Idaho Consolidated Metals Corp. Statement 3
Interim Statement of Operations
For the Nine Months Ended 30 September
U.S. Funds
Unaudited - See Notice to Reader
1996 1995
---------- ----------
Administrative Expenses:
Executive compensation $ 351,685 $ 294,375
Professional fees 142,786 140,791
Management fees and wages 116,448 64,413
Shareholder information 54,846 46,030
Office and general 42,904 32,358
Travel 33,712 27,862
Transfer agent and filing fees 12,953 5,012
Office rent 9,082 9,510
Finance fees 5,067 29,453
Entertainment and promotion 1,982 6,873
Amortization 1,102 1,143
Loss on disposal of capital assets - 4,576
---------- ----------
772,567 662,396
---------- ----------
Other (Income) Expense:
Interest income (5,925) (761)
Interest expense 54,541 14,215
---------- ----------
48,616 13,454
---------- ----------
Loss for the Period $ 821,183 $ 675,850
========== ==========
Loss Per Common Share $ 0.14 $ 0.12
========== ==========
Weighted Average Number of Common Shares
Outstanding 6,012,344 5,506,981
========== ==========
- See Accompanying Notes -
<PAGE>
Idaho Consolidated Metals Corp. Statement 4
Interim Statement of Cash Flows
For the Nine Months Ended 30 September
U.S. Funds
Unaudited - See Notice to Reader
1996 1995
---------- ----------
Cash Resources Provided By (Used In):
Operating Activities:
Loss for the period $ (821,183) $ (675,850)
Items not affecting cash
Amortization 1,102 1,143
Loss on disposal of capital assets - 4,576
Release of escrowed shares for
executive compensation 351,685 294,375
Changes in current assets and
liabilities:
Accounts receivable (40,762) 2,217
Inventory (40,000) (25,000)
Prepaid expenses - 2,176
Accounts payable:
Related parties (38,354) (155,215)
Other (21,468) 77,853
---------- ----------
Net cash used in operating
activities (608,980) (473,725)
---------- ----------
Investing Activities:
Property rights, plant and equipment (339,161) (395,288)
Capital assets (6,963) -
---------- ----------
Net cash used in investing
activities (346,124) (395,288)
---------- ----------
Financing Activities:
Bank loan (5,000) -
Repayments of notes payable (140,016) (65,000)
Net proceeds from sale of common
stock 1,819,030 502,596
Share capital issued for non-cash
consideration (351,685) -
Share subscriptions payable - 340,200
---------- ----------
Net cash provided by financing
activities 1,322,329 777,796
---------- ----------
Net Increase (Decrease) in Cash 367,225 (91,217)
Cash position - Beginning of period 167,301 101,441
---------- ----------
Cash Position - End of Period $ 534,526 $ 10,224
========== ==========
- See Accompanying Notes -
<PAGE>
Idaho Consolidated Metals Corp. Schedule
Interim Schedule of Resource Property Costs
For the Nine Months Ended 30 September
U.S. Funds
Unaudited - See Notice to Reader
1996 1995
---------- ----------
Direct - Mineral:
Idaho County, Idaho, U.S.A.:
Staking, filing and claim rental $ 154,299 $ 105,213
Process plant and equipment 103,807 127,519
Acquisition, lease and advance
royalties 94,400 41,200
Camp and general 35,054 20,259
Geological 30,313 55,129
Assaying 13,442 13,044
Drilling 2,032 -
Taxes and licenses 1,459 45,488
Environmental 180 -
Stripping - 31,345
Survey - 1,916
Option payment received (50,000) -
---------- ----------
Costs for the Period 384,986 441,113
Balance - Beginning of period 3,916,086 3,300,308
---------- ----------
Balance - End of Period $4,301,072 $3,741,421
========== ==========
- See Accompanying Notes -
<PAGE>
Idaho Consolidated Metals Corp.
Notes to Interim Financial Statements
30 September 1996
U.S. Funds
Unaudited - See Notice to Reader
1. Significant Accounting Policies
The notes to the financial statements as of 31 December 1995, as
set forth in the company's 1995 Annual Report on Form 10-K,
substantially apply to these interim financial statements and are
not repeated here.
2. Interim Financial Statements Adjustments
The financial information given in the accompanying unaudited
interim financial statements reflects all adjustments which are,
in the opinion of management, necessary to a fair statement of the
results for the interim periods reported. All such adjustments
are of a normal recurring nature. All financial statements
presented herein are unaudited.
<PAGE>
SCHEDULE B Page 1 of 2
1. YEAR-TO-DATE REQUIREMENTS
a) Deferred costs, exploration and development:
See attached Schedule for details.
b) General and administrative:
See attached interim financial statements for details.
c) Expenditures to non-arms length parties:
U.S. Funds
----------
Paid management fees and salary to president
and director $25,753
Paid management fees to directors 3,464
-------
$29,217
=======
<PAGE>
2. FOR THE QUARTER ENDED 30 SEPTEMBER 1996
a) Securities issued:
<TABLE>
<CAPTION>
Total Net
Type of Proceeds Type of Proceeds
Date Security Type of Issue Number Price U.S. Funds Consideration Commission U.S.Funds
------------- -------- ----------------- --------- ----- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12 Sept. 1996 Common Private placement 337,800 $1.50 $ 506,700 Cash None $ 506,700
12 Sept. 1996 Common Private placement 100,000 $1.50 150,000 Cash None 150,000
12 Sept. 1996 Common Private placement 755,900 $1.75 1,322,825 Cash $45,000 1,277,825
--------- ---------- ----------
1,193,700 $1,979,525 $1,934,525
========= ========== ==========
</TABLE>
b) Options granted:
NONE
3. AS AT 30 SEPTEMBER 1996
a) Authorized and issued share capital:
Authorized Issued
----------
U.S. Funds
Class Par Value Number Number Amount
------ ---------------- ---------- ----------
Common N.P.V. 20,000,000 $6,854,208 $7,421,177
<PAGE>
b) Summary of options, warrants and convertible securities
outstanding:
<TABLE>
<CAPTION>
Price CND
Date Granted Number Type Name Funds Expiry Date
--------------- ------- -------- ----------- ----- ---------------
<S> <C> <C> <C> <C> <C>
Options:
30 October 1995 60,000 Director D.W. Steiner $1.80 30 October 1999
30 October 1995 50,000 Director E.R. Knickel $1.80 30 October 1999
30 October 1995 30,000 Director P. Lepik $1.80 30 October 1999
30 October 1995 50,000 Employee W. Struck $1.80 30 October 1999
30 October 1995 30,000 Employee G. Magnuson $1.80 30 October 1999
17 May 1996 250,000 Employee K. Scott $3.30 17 May 2000
17 May 1996 75,000 Employee T. Weed $3.30 17 May 2000
-------
545,000
=======
Warrants:
12 September 1996 268,900 $1.50 12 September 1997
or $2.50 12 September 1998
12 September 1996 377,950 $1.75 12 September 1997
------- or $2.75 12 September 1998
646,850
=======
</TABLE>
c) Shares in escrow or subject to pooling:
562,500 common shares
d) List of directors:
D.W. Steiner
E.R. Knickel
G. Webster
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
------------------------------------------------------------------
(Dollar references are in U.S. dollars, unless otherwise specified.)
This Report on Form 10-QSB contains forward-looking statements. A
forward-looking statement may contain words such as "will continue to
be," "will be," "continue to," "expect to," "anticipates that," "to
be," or "can impact." Management cautions that forward-looking
statements are subject to risks and uncertainties that could cause the
Company's actual results to differ materially from those projected in
forward-looking statements.
RESULTS OF OPERATION
Quarter ended September 30, 1996 compared with the quarter ended
September 30, 1995.
The Company is in the exploration stage and has yet to generate
revenue from production. The Company continues to explore its mineral
properties in an effort to establish proven economic ore reserves.
Activities at the Eckert Hill plant were suspended during the quarter
while the Company interviewed for the position of metallurgist. The
metallurgist was hired in November 1996 and will be responsible for
finalization of the design, construction and start-up of the plant.
Operations at the facility also remain temporarily suspended as a
result of a legal action commenced against the Company in October 1996
by the operator of the facility. The legal action was commenced by
Mr. Joe Swisher and Idaho Mining and Development Company and alleges
substantial amounts owing to the plaintiffs in excess of amounts
accrued within the audited accounts of the Company. The Company
intends to honor all amounts properly accrued as owing to the
plaintiffs but will vigorously defend against the additional amounts
claimed. The Company has filed an action against Mr. Joe Swisher and
Silver Crystal Mines, Inc. for breach of contract on the Eckert Hill
plant, slander of title and restoration of all property and equipment
of the Company. The Company also is seeking an injunction to prevent
Mr. Swisher and Silver Crystal Mines, Inc. from using the Swisher-Br
process, a precious metals extraction process over which the Company
has an exclusive-use license. Once reactivated, the Eckert Hill
facility will remain a pilot plant until sufficient ore reserves and
gold concentrates are realized to take the facility into full
production.
During the quarter ended September 30, 1996, the Company completed
closing agreements with Idaho Gold Corporation, a subsidiary of Bema
Gold Corporation, to acquire the Buffalo Gulch , Deadwood and Friday
properties. The Company is currently conducting a 10-hole large
diameter diamond drill coring program on the Buffalo Gulch property as
recommended in a feasibility study authored by Mineral Resources
Development Incorporated which was updated in July 1996. The
preliminary indications are encouraging and the Company is proceeding
with reactivating permits towards putting Buffalo Gulch into
production by the fall of 1997. The Company's joint venture with
<PAGE>
Cyprus-Amax on the Petsite and Golden Eagle properties is proceeding
well with the completion of an extensive geochemical soil sampling
program which has delineated a potentially large gold anomaly. Based
on the results, Cyprus-Amax redirected additional funds to conduct a
second phase of drilling on the properties. Cyprus-Amax also is
conducting a geochemical orientation survey on the Deadwood property
and has indicated an interest in participating in a joint venture to
further explore and develop this property.
In the third quarter of 1996, general and administrative expenses
increased by $277,884 to $350,292 as compared to $122,408 in the third
quarter of 1995. The increase brings total general and administrative
expenses to $772,567 at September 30, 1996 as compared to $662,396 at
September 30, 1995. The increase was mainly due to $179,712 in
executive compensation expense for the third quarter of 1996 as
compared to $Nil in the third quarter of 1995 as a result of an
increase in qualifying exploration and development expenditures in the
quarter as compared to the prior year when sufficient qualifying
expenditures had been completed by June 30 to maximize the release of
shares from escrow for that year.
Under U.S. generally accepted accounting principles, the Company must
record executive remuneration on the release of performance shares
from escrow. The Company issued 750,000 shares at the time of its
initial public offering to the original principal founders of the
Company at a price of $0.01 CDN. per share, subject to the terms of an
escrow agreement. The number of shares released from escrow is
calculated on an annual basis as the Company expends qualifying
amounts on its exploration and development programs, and the Company
must seek regulatory approval for each release. During the third
quarter of 1996, the Company expended sufficient amounts on
exploration and development to qualify for a release of 76,800 shares,
which results in $179,712 of executive remuneration and a
corresponding $179,172 increase in share capital. By the second
quarter of 1995, the Company had expended sufficient amounts to
qualify for the maximum number of shares which could be released in
that year, and accordingly no further amounts were calculated in the
third quarter of 1995. The executive remuneration is a deemed amount
and is based upon the fair market value of the Company's common shares
during the relevant quarter. Regulatory approval of this release has
yet to be obtained.
During the quarter ended September 30, 1996, the Company expended
$291,341 ($384,986 for the nine months to September 30, 1996) on its
resource property exploration, development and acquisition program as
compared to $202,187 ($441,113 for the nine months to September 30,
1995) in the third quarter of 1995. The overall decrease is related
to reduced exploration and development activities as the Company seeks
to obtain sufficient financing to continue its programs. The
expenditures during the third quarter of 1996 were mainly related to
claim maintenance and administration costs, the payment of $50,000 to
Idaho Mining and Development Company on an option to increase the
Company's interest in the Golden Eagle properties from 60% to 100%,
and minor exploration costs.
<PAGE>
All of the Company's resource properties continue to be explored on
the basis of independent engineering report recommendations, and a
determination as to whether the properties contain proved reserves has
yet to be made. Management has obtained independent valuations of the
various resource properties and presently believes no write down to
net realizable value is required on any of the properties.
In 1994, the Company challenged the 1993 introduction of the claim
rental fees system by the BLM and requested a waiver of those fees
which would amount to approximately $460,000 for 1993 and 1994. The
request for waiver was denied by the BLM, and the Company then
appealed that decision to the United States Department of the
Interior, which denied the appeal. Management identified
approximately 1,700 peripheral claims which were dropped as a result
of the decision because they do not unduly affect the status of each
claim block. The key claims in each claim block have been maintained,
and accordingly an accrual of $229,125 has been made in the financial
statements comprised of $61,100 for each of 1993 to 1995 and $15,275
for each of the quarters ended March 31, 1996, June 30, 1996 and
September 30, 1996, representing the approximate amount of claim
rental fees which are owing to the BLM.
The net loss for the nine months to September 30, 1996 increased to
$821,183 ($0.14 per share) from $675,850 ($0.12 per share) for the
nine months to September 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company anticipates, based on currently proposed plans and
assumptions relating to its operations and exploration activities,
that the proceeds of private placements and the exercise of stock
options during the ensuing year will be sufficient to satisfy the
Company's contemplated cash requirements for the ensuing 12 month
period. The Company has also signed a letter of engagement with
Whalen Beliveau of Toronto, Canada to participate in a financial
advisory role to locate sufficient funding to finance capital
expenditures on the construction of the Buffalo Gulch Mine and other
Company projects. The Eckert Hill Property in Idaho and its related
process plant will require approximately $450,000 for commissioning of
the process plant for bulk sample testing and for the related
geological expenditures and feasibility studies. The Bema Properties
will require approximately $250,000 for permitting and an initial
exploration program. The Company estimates a cash requirement of
approximately $300,000 on the Mineral Zone and other properties for
claim rental fees and general exploration programs. The Company
requires approximately $480,000 for general and administrative
expenditures for the ensuing 12 month period, $529,906 for payments on
its notes payable and approximately $85,000 related to the proposed
application to another stock exchange for listing and market making
expenses. The remaining proceeds of private placements and the
exercise of stock options will be reserved for general working capital
purposes to reduce current liabilities.
<PAGE>
The Company has notes payable of $529,906 due in the next year. The
Company anticipates repayment of these notes from the proceeds of
outstanding stock purchase warrants and the exercise of stock options.
The Company expects to fund exploration of the Petsite and Golden
Eagle properties through its joint venture with Cyprus under which
Cyprus has been granted an option to earn a 70% working interest in
the properties. The Company is also in discussions to obtain joint
venture partners on certain of its other properties.
As at September 30, 1996, the Company has a working capital deficiency
of $388,368. The Company anticipates improvement of this deficiency
from the exercise of warrants from recent private placements and the
exercise of stock options during the ensuing year. The Company may
also seek a debt restriction plan with its current debt holders and
seek additional private placement funding during 1996/97 in order to
correct this deficiency.
The Company is dependent on the proceeds of private placements and the
exercise of stock options to fund its general and administrative
expenditures and its mineral exploration and development costs.
Without such proceeds, the Company may not continue as a going
concern. The Company anticipates revenue to be generated during 1997
from the processing of ores through its Eckert Hill facility. The
amount of positive cash flows, if any, from such production of ores at
the Eckert Hill facility cannot be reasonably estimated, and
accordingly the Company will be required to rely on the sale of
securities or on a possible joint venture partner for its required
funding. The Company will need further funds to continue its
operations, and there is no reasonable assurance that such funding
will be available.
As at September 30, 1996, the Company had a working capital deficiency
of $388,368 as compared to deficiency of $1,172,834 at September 30,
1995.
Cash flows generated from the financing activities of the Company were
recorded at the periods ended September 30, 1996 and 1995 of
$1,322,329 and $777,796 respectively. The long-term debt increased to
$20,078 at September 30, 1996 from $Nil at September 30, 1995 and
current liabilities decreased to $1,172,310 at September 30, 1996 from
$1,307,837 at September 30, 1995. The Company has also issued
1,193,700 shares from treasury in the third quarter of 1996 on the
completion of three private placements which netted the treasury
$1,934,525. The related cash for these subscriptions was raised
during 1995 and 1996 and included in current liabilities at
September 30, 1995 was $340,200 related to these private placements.
The private placements allow the holders of share purchase warrants to
purchase an additional 377,950 common shares for $1.75 U.S. to
September 12, 1997 or at $2.75 to September 12, 1998 and an additional
268,900 common shares for $1.50 per share to September 12, 997 or at
$2.50 to September 12, 1998. Of the September 30, 1996 current
liabilities, $229,125 represents accrued claim rental fees, $529,906
<PAGE>
represents the current portion of notes payable to shareholders and
$304,352 are amounts payable to various related parties. The balance
of current liabilities consists of accrued liabilities, a bank loan in
the amount of $30,408 and trade accounts payable. Legal fees
represent a significant portion of these unpaid trade accounts
payable.
The Company is considering reincorporating in the State of Wyoming,
U.S.A. which, if completed, could impair the Company's ability to use
Canadian net operating loss carryforwards and could result in certain
Canadian exit taxes.
Negative cash flows from operating activities were recorded for the
periods ended September 30, 1996 and 1995 of ($608,980) and ($473,725)
respectively. The Company will continue recording negative cash flows
from operating activities unless significant revenue is generated from
ore production. This continued negative cash flow will have a
material negative impact on liquidity.
Investing activities consist of funds being expended on resource
properties. The net cash expended on investing activities decreased
to $346,124 to September 30, 1996 from $395,288 to September 30, 1995.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
------------------------------
On October 18, 1996, Joe Swisher and Idaho Mining and Development
Company, a company controlled by Mr. Swisher, who together hold more
than ten percent (10%) of the outstanding shares of the Company, filed
a complaint for damages against the Company in the Idaho State Court,
County of Kootenai. The suit alleges, inter alia, that the Company
has breached certain contracts in which the Company acquired assets
from plaintiffs and that the Company owes monies on certain promissory
notes issued by the Company in connection with those acquisitions.
(See the Company's Form 10-KSB for the period ended December 31, 1994,
"Description of Business," regarding these acquisitions.) Plaintiffs
seek compensatory damages in the form of money and/or shares of the
Company.
On October 22, 1996, the Company filed a separate action in the Idaho
State Court, County of Nez Pierce, against Swisher and another company
controlled by him, Silver Crystal Mines, Inc., alleging, inter alia,
breach of contract to build facilities on the Company's land,
conversion of assets and slander of title relating to the Company's
exclusive licenses to the Swisher-Br Process. (See the Company's Form
10-KSB for the period ended December 31, 1995, "Description of
Business," regarding the Company's acquisition of the Swisher-Br
Process.) The Company seeks injunctive relief and compensatory
damages for the above-mentioned conduct.
The Company intends to vigorously defend and prosecute the above-
mentioned actions, but the expense of the actions and uncertainty of
litigation could have a material negative impact on the Company.
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 -- Not
applicable.
ITEM 5. OTHER INFORMATION -- Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are attached to the Company's
Form 10-QSB for the quarter ending September 30, 1996:
10.5 Black Bear Option Agreement dated August 1,1996
27 Financial Data Schedule
(b) There were no reports on Form 8-K filed during the third
quarter ending September 30, 1996.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IDAHO CONSOLIDATED METALS CORP.
DATED: November 19, 1996
By: /s/ Delbert W. Steiner
-------------------------------------
Delbert W. Steiner
President and Chief Executive Officer
DATED: November 19, 1996
By: /s/ Kenneth A. Scott
-------------------------------------
Kenneth A. Scott
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 535
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<PP&E> 4310
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<CURRENT-LIABILITIES> 1172
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0
0
<COMMON> 7421
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</TABLE>
EXHIBIT 10.5
BLACK BEAR AGREEMENT
--------------------
Dated: August 1, 1996
OPTION AGREEMENT
between
Frank H. Piatt, John R. Heigis
Thomas C. Rich
and
Idaho Consolidated Metals Corporation
<PAGE>
BLACK BEAR AGREEMENT
OPTION AGREEMENT
THIS AGREEMENT is dated August 1, 1996.
BETWEEN:
FRANK H. PIATT, JOHN R. HEIGIS, THOMAS CAT RICH;
(hereinafter called the "Owner")
OF THE FIRST PART
AND:
IDAHO CONSOLIDATED METALS CORPORATION, a body corporate
incorporated under the laws of the Province of British Columbia
having a place of business at 504 Main, Suite 470, Lewiston,
Idaho, U.S.A.
(hereinafter called the "Optionee")
OF THE SECOND PART
OPTION TERM AND PROPERTY DESCRIPTION
1. The Owner hereby options to the Optionee all of the property
described in Schedule "A" together with, except as may be
expressly provided in Schedule "A", all:
(a) tailings, dumps and mine wastes;
(b) surface rights, easements and rights of way incident
thereto;
(c) mining and water rights incident thereto; and
(d) improvements, fixtures, personal property, mining machinery
and tooks thereon useful or convenient for mining and
related uses.
herein defined as "Mining Property".
<PAGE>
TITLE
2.1 The Owner represents that it is in exclusive possession of and
bears full mining privileges to the Mining Property, subject to
the rules and regulations of the State of Idaho. Owner warrants
and shall defend title to all of the Mining Property for which
Owner warrants in Subsections (2) and (3) hereof.
2.2 Owner represents that the mining claims have been properly
acquired and maintained and that any required validation work
has been properly performed; assessment work and proof of
assessment work duly performed and filed or otherwise properly
carried out under the provisions of the applicable legislation.
2.3 Owner warrants that the Mining Property is free and clear of
all liens and encumbrances, including any leases, rights or
licences granted to third persons by, through or under Owner,
except taxes not yet payable and those liens and encumbrances,
if any, specifically described in Schedule "A".
2.4 Owner shall not create, permit or suffer any liens or
encumbrances on the Mining Property unless expressly
subordinated to Optionee's rights hereunder. If the Mining
Property or any interest therein should be subject to lien or
encumbrance, Optionee, at its option, may discharge the same
and thereby be subrogated to all the rights of the holder
thereof, and may recover any amounts so paid from any amounts
otherwise due to Owner.
2.5 Owner shall at Optionee's request take all action necessary to
cure any defect in or remove any cloud on title to the Mining
Property, including participation in judicial proceedings and
recordation of any unrecorded documents. If after notice or
demand Owner fails to do so, Optionee may take such action in
Owner's name and recover its reasonable costs and expenses,
including attorney's fees, from amounts otherwise due to Owner.
2.6 Owner shall provide Optionee with all data and information
related to title to the Mining Property and copies of all
unrecorded documents related thereto.
2.7 Neither the Optionee's execution of this Agreement nor its
failure to disapprove Owner's title shall constitute an
admission of or estoppel as to the validity of Owner's title.
<PAGE>
OPTION PAYMENTS
3. The Owner shall receive $4,500.00 on the execution of this
Agreement (receipt of which is hereby acknowledged). The
Optionee agrees to pay to the Owner the sum of $1,200.00 per
quarter commencing July 1, 1996 (July 1 payment has been made)
in order to keep this option in good standing. This payment
shall continue for one (1) year. At the end of the first year,
the Optionee can elect to proceed with either of the following
two options.
OPTION I - The Optionee can elect to purchase the property and
the Owner agrees to transfer all right, title and
interest in the property to the Optionee for a
total price of $90,000.
OPTION II - The Optionee agrees to pay to the Owner the sum of
$2,400 per quarter for a year total of $9,600 and
a cumulative total of $9,600. In the second year,
the quarterly payment will increase by $1,200 to
$3,600. This will give a total for the second year
of $14,400 and a cumulative total of $24,000. In
the third year, the quarterly payments will
increase by $1,200 to $4,800 for a year total of
$19,200 and a cumulative total of $43,200. In year
four, the quarterly payments will increase by
$1,200 to $6,000 per quarter for a year total of
$24,000 and a cumulative total of $67,200. In year
five, the quarter payments will increase by $1,200
to $7,200 per quarter for a year total of $28,800,
and a cumulative total of $96,000. At the end of
year five, the Optionee will make a final payment
of $24,000 for a cumulative total of $120,000. The
Owner agrees to transfer all right, title and
interest in the property to the Optionee. Schedule
B has the payment schedule listed for the first
year and for the two options as well.
In the event that the Optionee places the property into
production the Owner agrees to transfer all right, title and
interest in the property to the Optionee and the owner shall be
entitled to receive $120,000.00 less all quarterly payments
made to the date when the property is placed in production. In
the event the property is not placed into production by July 1,
2002 then the Optionee shall have no further interest in the
property unless the Optionee elects to pay to sum of $120,000
to the Owners less all quarterly payments made on or before
July 1, 2002.
<PAGE>
WORK COMMITMENT
4. The Optionee agrees to expend a total of $3,000.00 on the
property on or before July 1, 1997 and to expend a minimum of
$3,000.00 per year each and every year thereafter so as to
maintain its interest in the property.
METHOD OF PAYMENT
5. All payments due Owner shall be deemed received by Owner if
sent certified mail to Thomas Cat Rich, Box 241, Kooskia, ID
83539. Optionee shall not be liable for distribution of
payments from such account and Owner shall bear all charges of
financial institution.
EXCLUSIVE POSSESSION
6. Optionee shall have exclusive possession and quiet enjoyment of
the Mining Property while this Agreement is in effect.
ADVERSE CLAIMS
7.1 If Owner should own less than the entire ownership interest
described in the Mining Property, all payments shall be payable
to Owner only in the proportion to Owner's actual ownership. If
production from the Mining Property or any part thereof should
be subject to any royalty or interest in production other than
those expressly reserved to Owner herein, Optionee may credit
all costs and expenses it incurs by reason of such royalty or
interests against amounts otherwise due to Owner.
7.2 Optionee shall have no obligation to protect or defend if any
third person asserts any claims to the Mining Property for any
reason except Optionee's failure to perform obligations
expressly required by this Agreement.
7.3 If any third person asserts any claim to the Mining Property or
to any amounts payable by Optionee, Optionee may deposit any
amounts payable by Optionee, Optionee may deposit any amounts
otherwise due Owner in escrow until the dispute is finally
resolved. Optionee may credit all costs and expenses including
attorney's fees, it incurs by reason of such claim against all
amounts otherwise due Owner.
<PAGE>
TAXES
8. Optionee shall pay all taxes on the Mining Property accruing
while this Agreement is in effect but apportioned appropriately
for fractions of years. All taxes shall be paid before
delinquent, but neither party shall be under any obligation to
pay any tax while contesting it in good faith.
ASSESSMENT WORK
9.1 Optionee shall perform:
(a) assessment work (unless deferred or excused) or make
payments in lieu of assessment work to necessary parties
for the benefit of the leased state land included in this
Agreement according to the laws and statutes of the State
of Idaho;
(b) no additional work commitments above and beyond those
judged necessary by the Optionee.
9.2 Owner agrees that all contiguous property are to be treated as
a whole pursuant to any limitations or rulings by the State of
Idaho and that any assessment work conducted on any part of any
property can be applied to the necessary assessment work for
any or all those lumped properties when such work is required
by state law.
EXPLORATION AND MINING RIGHTS
10.1 Owner grants Optionee unrestricted access to the Mining
Property and the exclusive rights:
(a) to explore, develop and mine, and to extract, remove,
store and dispose of any and all ores, minerals, air,
water, waste and other materials from the Mining Property
by means of underground or surface mining operations in or
on the Mining Property or other property and to deposit on
the Mining Property materials from the Mining Property or
other property;
(b) to carry on mining, milling, treatment, processing,
beneficiating, smelting and refining operations on or in
the Mining Property with respect to ores, minerals and
other materials from the Mining Property or other
property, including existing tailings, wastes and dumps;
<PAGE>
(c) to use any part of the Mining Property for stockpiles,
tailings, wastes or dumps, and for any other purpose
incident to the underground or surfacing mining on the
Mining Property or other property;
(d) to erect or construct, use and maintain on the Mining
Property such roads, facilities, buildings, structures,
machinery and equipment as Optionee may require for the
conduct of its operations on the Mining Property or other
property;
(e) to continue to keep this Agreement in effect and use the
Mining Property for mining, milling, treatment,
processing, beneficiation, smelting, refining or storage
of ores, minerals and other materials from other property
with such use being deemed the conduct of development and
mining operations by the Optionee; and
(f) to stockpile or to sell or otherwise dispose of ores,
minerals and other materials in such forms at such times
and on such terms as Optionee along may determine.
10.2 Optionee shall conduct its operations in a good and workmanlike
manner in substantial compliance with the then generally
accepted understanding of applicable laws and regulations in
the mining industry.
RIGHT OF WAY
11. While this Agreement is in effect, Optionee shall have non-
exclusive rights of way upon, over, into and through the Mining
Property and other property now or hereafter owned, leased or
otherwise controlled by Owner to construct, improve, and
maintain such pipelines, communication lines, electrical power
or transmission lines, roads, railroads, tramways, flumes,
tunnels, drifts and other facilities as may be necessary or
convenient for Optionee's operations in the vicinity of the
Mining Property.
LIABILITY AND INDEMNITY
12.1 Optionee shall keep the Mining Property free of liens for
labour performed and materials furnished for Optionee. Subject
to the limitations in this section, Optionee shall hold Owner
harmless from all liability to third persons caused by
Optionee's operations on the Mining Property which result in
injury to or death of persons or livestock or damage to
personal property or liability for violation of applicable laws
or regulations.
<PAGE>
12.2 In no event shall Optionee's liability for damage or economic
loss to Owner's property, whether resulting from Optionee's
negligence or otherwise, exceed the fair market value of the
affected property (not including its value for mining or
related purposes).
12.3 Within a reasonable time after termination of this Agreement
Optionee shall begin and diligently pursue to completion any
reclamation of Owner's real property then required by
applicable laws and regulations by reason of Optionee's
operations. Optionee's liability with respect to disturbance of
real property shall be limited to compliance with such laws and
regulations.
12.4 The payments and the performance of assessment work as herein
expressly required are in lieu of any obligation of Optionee
express or implied, to explore, develop or mine the Mining
Property or to make any other efforts or expenditures in
connection therewith.
12.5 The obligations and limitations of liability in this section
shall survive termination of this Agreement.
RIGHT TO INSPECT
13. At reasonable times Owner may at Owner's risk and expense enter
the Mining Property to make reasonable inspections
RIGHT TO DATA
14.1 Upon execution of this Agreement, Owner shall make available to
Optionee for copying and general use all geological,
geophysical and engineering data and maps, logs of drill holes,
cuttings and cores, logging results, assay, sampling and
similar data concerning the Mining Property in Owner's
possession or control.
14.2 The Optionee shall provide to the owner, geological reports of
the Optionees exploration and development of the Mining
Property on an ongoing basis.
14.3 Upon request by Owner made within sixty (60) days after
termination of this agreement, Optionee shall deliver to Owner
a final report of its activities on the Mining Property
together with copies or summaries of all assay results and
electric and drill hole logs and copies of drill hole location
maps including interpretations and evaluations thereof which
Optionee has obtained as a result of work on the Mining
Property under this Agreement. Optionee shall have no liability
on account of any such data relied on acted on by Owner.
<PAGE>
DEFAULT RECTIFICATION
15.1 Default by Optionee in performance of any obligation arising
hereunder shall not work a forfeiture or termination of this
Agreement, nor cause the termination or reversion of the estate
created hereby, nor be grounds for cancellation hereof in whole
or in part.
15.2 If Optionee commits a default, Owner shall give Optionee notice
specifying the default with particularity. Owner's sole remedy
shall be recovery of actual compensatory damages plus interest
at the prevailing U.S. Treasury note rate for $10,000.00 notes
held for ninety (90) days and the payment of the alleged
default itself interest on which accrues from the date Optionee
receives notice of default. If Optionee by notice to Owner
disputes the existence of the default, no interest shall accrue
if Optionee, within thirty (30) days after the default is
finally determined, initiates and diligently pursues to
completion efforts to cure and default.
AFTER-ACQUIRED RIGHTS
16. If Owner acquires any right or interest within one (1) mile of
the boundaries of the Mining Property while this Agreement is
in effect:
(a) Owner shall promptly notify Optionee;
(b) such right or interest shall automatically become part of
the Mining Property for all purposes of this Agreement;
and
(c) Owner shall sign, acknowledge and deliver to Optionee an
amendment to this Agreement so as to include such right or
interest.
TERMINATION
17.1 Optionee may terminate this Agreement at any time by giving
Owner notice of termination in recordable form.
17.2 Upon termination or surrender, all rights and obligations of
the parties with respect to the affected acreage shall
terminate except for:
(a) Optionee's obligation to provide data and a report; and
(b) any outstanding quarterly payments; and
(c) any rights or obligations which expressly survive
termination.
<PAGE>
REMOVAL OF PROPERTY AND EQUIPMENT
18. Optionee may, within one (1) year after termination of this
Agreement, remove from Owner's real property all fixtures and
personal property, including ores, tailings, dumps and wastes
and improvements which it has erected or placed thereon except
mine supports in place. Owner shall not be responsible for any
such property of Optionee. Optionee may post watchmen on the
Mining Property during such period.
FORCE MAJEURE
19.1 If Optionee shall be prevented by Force Majeure from timely
performance of any acts or obligations hereunder, the failure,
if any, shall be excused and the period for performance shall
be extended for a period equal to the duration of the Force
Majeure. Optionee shall promptly give Owner notice of
commencement and termination of Force Majeure. Optionee shall
use reasonable diligence to remove Force Majeure but shall not
be required against its will to institute legal proceedings,
adjust any labour dispute or challenge the validity of any law,
regulation, action or inaction of government.
19.2 "Force Majeure" includes any cause beyond Optionee's reasonable
control, whether or not foreseeable, including but not limited
to law, regulations, action or inaction of government,
inability to obtain any public or private license, permit or
authorization which may be required for operations in
connection with the Mining Property or other property,
including removal and disposal of waters, wastes and tailings
and reclamation, mining casualty, damage to or destruction of
mine or mill plans or facility, fire, explosion, inclement
weather, flood, civil commotion, labour dispute, inability to
obtain workmen or material, delay in transportation, economic
conditions and acts of God.
ARBITRATION
20. Any dispute arising out of or related to the negotiation,
existence, performance, breach or termination of this Agreement
shall be finally determined by arbitration. The exclusive place
of arbitration shall be Lewiston, Idaho. Either party may
compel arbitration by notice to the other. Within forty-five
(45) days of the notice the parties shall select one
arbitrator. If they fail to agree, the presiding Judge (or
senior Judge in point of service if there is no presiding
Judge) of the State Court for the place of arbitration shall
<PAGE>
appoint one arbitrator from a list of three (3) persons
submitted by each party. The arbitrator shall follow the
procedural rules of the American Arbitration Association and
shall apply the substantive law of the state where the Mining
Property is located. The arbitrator shall issue his decision
within six (6) months of his selection. Costs of arbitration
shall be borne equally.
NOTICE PROVISIONS
21. All notices and other communications to either party shall be
in writing and delivered personally or sent by prepaid mail.
All notices of default or arbitration and demands for
performance or assurance, if delivered personally to Optionee,
shall be delivered to Optionee's Land Administrator and, if
mailed to either party, shall be sent by certified or
registered mail shall be effective on the next business day
after the date of the actual delivery. Until a change of
address is so given, notices shall be addressed to Optionee and
Owner, respectively as set out herein.
If to the Owners:
Frank H. Piatt
P.O. Box 1814
Lewiston, ID 83501
John R. Heigis
P.O. Box 536
Juliaetta, ID 83535
Thomas Cat Rich
Box 241
Kooskia, Idaho 83539
If to the Optionee:
Idaho Consolidated Metals Corporation
504 Main, Ste 470
P.O. Box 1124
Lewiston, ID 83501
FURTHER ASSURANCES
22. The parties agree to execute any and all further documents and
agreements as may be reasonably required to carry out the
spirit and intent of this Agreement.
<PAGE>
REGISTRATION OF DOCUMENTS
23. The parties may register their interests as they appear and the
parties agree to cooperate fully with each other in any
requirements for such registration.
APPOINTMENT OF ATTORNEY
24. The owner hereby appoints the optionee his true and lawful
attorney for any purpose related to the carrying out of any
terms or provisions of this Agreement and without limiting the
generality of the foregoing for the purpose of any necessary
applications or filings to any governmental body or agency.
RIGHT OF FIRST REFUSAL
25.1 In the event that the owner receives a bona fide offer in
lawful money of the United States, which it is willing to
accept for the purchase of all its interest in said lands, from
a person, firm or corporation ready, willing and able to
purchase same, the owner shall immediately give written notice
thereof to the optionee hereto, including in the said notice
and name and address of the offeror, the price offered and all
other pertinent terms and conditions of the offer. The
optionee, for a period of thirty (30) days following receipt of
said notice, shall have the prior and preferred right and
option to purchase the owner's interest at the price and
according to the terms and conditions specified in said offer.
The optionee shall give written notice to the owner within said
thirty (30) day period, to purchase the interest being sold.
If, however, such right and option is not exercised by the
optionee giving written notice thereof within thirty (30) days
after the receipt of the above-mentioned notice, the owner may
accept the offer and complete said sale to the offeror in
accordance with said offer within sixty (60) days after the
expiration of the said thirty (30) day period; provided that if
the owner fails to accept said offer or to complete said sale
within said sixty (60) day period, the preferred right and
option of the optionee hereunder shall be considered as revived
and the owner shall not complete said sale to said offeror
unless and until said offer has again been presented to the
optionee, as hereinabove provided, and said optionee has again
failed to elect to purchase on the terms and conditions of said
offer.
<PAGE>
25.2 A party who wishes to dispose of its entire interest by merger,
reorganization, consolidation or sale of all its assets, or a
sale or transfer of its interest to a subsidiary or parent
company, or subsidiary of a parent company, or to any company
in which any one party owns a majority of the stock, where the
transferee assumes the obligations hereunder of such party and
thereby becomes a party to this Agreement shall not be bound by
the provisions of the right of first refusal.
25.3 An assignment shall not operate to relieve the assigned
interest or the assignor from any liability or obligation which
accrued prior to such assignment.
COMPLIANCE WITH LAW
26. The optionee shall be responsible for the compliance with all
governmental rules and regulations as may from time to time be
in effect including without limiting the generality of the
foregoing, rules and regulations made pursuant to any mining,
pollution and environmental requirements of the State of Idaho
or other regulatory authority. The optionee shall be
responsible for the posting of any bonds necessary for the
reclamation and restoration of the property as required by any
governmental agency and further the optionee agrees to obtain
the consents, licenses and permits required which may be
necessary for the carrying out of its operations. The owner
agrees to cooperate with the optionee in the obtaining of such
consents, licenses and permits.
BUYOUT PROVISIONS
27. The optionee shall have the right to buyout all of the owner's
right, title and interest in and to the property described in
Schedule "A" attached hereto, together with all ancillary
rights appurtenant thereto for the sum of $120,000.00 less all
payments made to the date of buyout in accordance with
paragraph 3 hereof.
REGULATORY APPROVAL
28. The owners hereby acknowledge that this agreement is subject to
Vancouver Stock Exchange regulatory approval and the optionee
hereby agrees to obtain such approval on or before December 31,
1996, failing which approval, this Agreement shall be of no
further force and effect unless this time is extended by mutual
agreement of the parties. The owners agree to cooperate in the
obtaining of such approval.
<PAGE>
CONFIDENTIALITY
29. The owners hereby acknowledge that the optionee is a publicly
held corporation traded on the Vancouver Stock Exchange and
subject to the rules and regulations of the Superintendent of
Brokers for British Columbia and they hereby agree not to
release information about the property without obtaining the
prior approval of the optionee, such approval not to be
unreasonably withheld.
RIGHT TO ASSIGN
30. The owners hereby acknowledge that the optionee shall have the
right to assign their interest herein to the wholly owned
subsidiary of the optionee and further, that the optionee shall
have the right to assign their interest herein to third parties
with the owners' consent, such consent not to be unreasonably
withheld.
UNITED STATES CURRENCY
31. All sums of money referred to in the Agreement shall be
expressed in United States currency.
DEVOLUTION PROVISIONS
32. All covenants, conditions and terms of this Agreement shall be
of benefit to and run with the Mining Property and shall bind
and inure to the benefit of the parties hereto, their
respective successors and assigns. The only relationship
between Owner and Optionee is that of lessor/lessee. Nothing
herein shall be construed to create, expressly or by
implication a partnership, joint enterprise, relationship of
master and servant or principal and agent, or the like, between
parties.
HEADINGS
33. The headings used in this Agreement are for convenience only
and are to be disregarded in construing this Agreement.
ENTIRE AGREEMENT
34. This Agreement contains the entire agreement of the parties.
There are no other conditions, agreements, representations,
warranties or understandings, express or implied.
<PAGE>
The parties have executed this Agreement the day and year above
written
Signed, Sealed and Delivered by )
FRANK H. PIATT in the ) /s/FRANK H. PIATT
presence of: ) ------------------------------
) Frank M. Piatt
Thomas Cat Rich ) August 5, 1996
-----------------------------------)
Name )
)
P.O. Box 241 )
-----------------------------------)
Address )
)
Kooskia, Idaho 83539 )
-----------------------------------)
)
Logging, Construction and Mining )
-----------------------------------)
Occupation )
Signed, Sealed and Delivered by )
JOHN R. HEIGIS in the ) /s/JOHN R. HEIGIS
presence of: ) ------------------------------
) John R. Heigis
Thomas Cat Rich ) August 5, 1996
-----------------------------------)
Name )
)
P.O. Box 241 )
-----------------------------------)
Address )
)
Kooskia, Idaho 83539 )
-----------------------------------)
)
Logging, Construction and Mining )
-----------------------------------)
Occupation )
<PAGE>
Signed, Sealed and Delivered by )
THOMAS CAT RICH in the ) /s/THOMAS CAT RICH
presence of: ) ------------------------------
) Thomas Cat Rich
Frank H. Piatt ) August 5, 1996
-----------------------------------)
Name )
)
P.O. Box 1814 )
-----------------------------------)
Address )
)
Lewiston, Idaho 83501 )
-----------------------------------)
)
Logging, Construction and Mining )
-----------------------------------)
Occupation )
SIGNED ON BEHALF OF IDAHO )
CONSOLIDATED METALS CORP )
by its duly authorized ) /s/THOMAS CAT RICH
signatories: ) ------------------------------
) Thomas Cat Rich
) August 5, 1996
-----------------------------------)
Authorized Signatory )
)
)
)
-----------------------------------)
Authorized Signatory )
<PAGE>
SCHEDULE "A"
PROPERTY
--------
This is Schedule "A" to that certain Agreement dated August 1, 1996
made between Frank H. Piatt, John A. Heigis, Thomas Cat Rich and Idaho
Consolidated Metals Corporation.
IMC BLM Date of
No. No. Claim Name Location Record Date
------ ----- ---------------------- ----------- -----------
297158 72588 Black Bear Group No. 1 March 16/82 March 22/82
297159 72589 Black Bear Group No. 2 March 16/82 March 22/82
297160 72590 Black Bear Group No. 3 March 17/82 March 22/82
297161 72591 Black Bear Group No. 4 March 17/82 March 22/82
297162 72592 Black Bear Group No. 5 March 18/82 March 22/82
297163 72593 Black Bear Group No. 6 March 18/82 March 22/82
all located in the Elk City Mining District, T 29N Range 8E, County of
Idaho, State of Idaho, United States of America.
<PAGE>
SCHEDULE "B"
IDAHO CONSOLIDATED METALS CORPORATION
BLACK BEAR CLAIMS - PAYMENT SCHEDULE
File: BB2.wb2
Revised: 07/21/96
Printed: 08/05/96
FIRST YEAR
----------
Payments Comments
-------- --------
Upon Signing $ 4,500
July 1, 1996 1,200 Paid
Aug. 5, 1996 400 Paid Payment to complete the quarter
Nov. 1, 1996 1,200
Feb. 1, 1996 1,200
May 1, 1996 1,200
-------
Total $ 9,700
=======
OPTION I
--------
Aug. 1, 1997 $90,000
=======
OPTION II
---------
<TABLE>
<CAPTION>
Quarterly Yearly Cumulative
Year Payments Total Total Comments
---- --------- -------- ---------- --------------------------------------------------
<S> <C> <C> <C> <C>
1997 $ 2,400 $ 9,600 $ 9,600 Quarterly payments starting August 1, 1997
1998 3,600 14,400 24,000
1999 4,800 19,200 43,200
2000 6,000 24,000 67,200
2001 7,200 28,800 96,000
2002 24,000 --------
$120,000 Final payment at the end of year 5, August 1, 2002
========
</TABLE>
Note: At the end of year 1, Idaho Consolidated Metals can select
either Option I or Option II.
<PAGE>
