Note: Set page parameters at .5T, .5B, 1.0L, .9R
Courier 10pt type, 60 line page
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<PAGE>
_____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
Registration Statement Under the Securities Act of 1933
ROYAL SILVER MINES, INC.
(Exact name of registrant as specified in its charter)
(Formerly Consolidated Royal Mines, Inc.)
UTAH 87-0306609
(State or other jurisdiction, (I.R.S. Employer
incorporation or organization) Identification No.)
10220 N. Nevada, Suite 230, Spokane, WA 99218
(Address of principal executive offices)
(509) 466-3144
(Registrant's telephone number, including area code)
1992 STOCK OPTION AND STOCK AWARD PLAN OF ROYAL SILVER MINES, INC.
(Full title of the plan)
Carlos M. Chavez, Legal Counsel
331 S. Rio Grande St., Suite 208, Salt Lake City, UT 84101
(801) 534-1132
(Name, address, including zip code, and telephone
number, including area code of agent for service)
<TABLE>
<CAPTION>
Title of Proposed Proposed
each class maximum maximum
of security Amount offering aggregate Amount of
to be to be price per offering registration
registered registered share <F1> price fee
__________ __________ __________ _________ __________
<S> <C> <C> <C> <C>
Common stock,
par value
$.01 per share 831,775 $0.875 $727,803 $220.52
<FN>
<F1> Estimated pursuant to Rule 457(c) solely for the purpose of calculating
the registration fee in accordance with Rule 457(c) under the Securities Act of
1933 and based upon the average of the Nasdaq high and low prices for shares of
common stock of Royal Silver Mines, Inc. as reported by the Dow Jones
News/Retrieval service on December 31, 1996.
</FN>
</TABLE>
The Exhibit Index appears on page 2 of the sequentially numbered
pages of this registration statement.
This registration statement, including exhibits, contains 6 pages.
_____________________________________________________________________________
<PAGE>
Pursuant to Instruction E of the General Instructions to Form S-8,
the contents of the original Registration Statement on Form S-8,
filed by the Company on July 17, 1995, is incorporated herein by
reference.
ITEM 8. EXHIBITS.
Copies of the following documents are being furnished as exhibits
required by Item 601 of Regulation S-K, promulgated under the
Securities Act and the Exchange Act. The SEC reference number
refers to the exhibit table in Item 601 of Regulation S-K.
EXHIBIT INDEX
SEC Exh. Sequential Page No.
Reference No. Document of Location
- --------- ---- --------------------------- -----------------
4 4.1 1992 Stock Option and Stock *
Award Plan with Amendment
No. 1 to the Plan
4 4.2 Ratification of the Plan 4
5 5.1 Opinion of Counsel 5
regarding legality
23 5.1 Consent of Counsel 5
23 23.1 Letter from and Consent
of Auditor 6
24 24.1 Power of Attorney 7
* Incorporated by reference to the Form S-8 Registration Statement
filed on July 17, 1995.
1
<PAGE>
EX-4.2
RATIFICATION BY THE BOARD OF DIRECTORS
ESTABLISHING ADDITIONAL AMOUNT OF SHARES TO BE REGISTERED
PURSUANT TO AMENDMENT NO. 1 TO THE 1992 STOCK OPTION
AND STOCK AWARD PLAN OF ROYAL SILVER MINES, INC.
WHEREAS, Royal Silver Mines, Inc. (the "Company") adopted the
1992 Stock Option and Stock Award Plan of Royal Silver Mines, Inc.
(the "Plan") by approval of the Board of Directors (the "Board") on
January 10, 1992, and by approval of the Company shareholders on
January 31, 1992;
WHEREAS, Amendment No. 1 to the Plan was approved by the Board
on June 7, 1995, and approved by the shareholders on June 17, 1995,
and the Board caused 237,500 shares to be registered by
Registration Statement previously filed on Form S-8; and
WHEREAS, this Ratification is made pursuant to the authority
granted by the shareholders to the Board under Amendment No. 1,
and is authorized by the unanimous consent of the Board, as
recorded by resolution of the Board of Directors.
NOW, THEREFORE, the Plan, as amended, is hereby ratified to
permit the aggregate registration of up to a total of 1,069,275
shares of the Company's common stock that may be issued subject to
the terms of the Plan, or if already issued, that their issuance is
hereby ratified under the Plan and made a part of the registration
being put into effect by the filing of this Form S-8, as follows:
1. As of December 31, 1996, there was a total of 10,692,732
shares of issued and outstanding common stock of the Company.
The Plan authorizes up to ten percent of issued and
outstanding common shares to be registered and administered
under the Plan. Therefore as of December 31, 1996, 1,069,275
Company shares are authorized to be registered.
2. The Registration Statement shall be amended by short-form
registration to cause the number of registered shares to be
increased by 831,775, such that the total of shares
registered under authority of Form S-8 will increase from
237,500 to 1,069,275, all of which shall be registered and
eligible for issuance as free-trading stock.
3. Except as amended hereby, the Plan remains unmodified and in
full force and effect.
2
<PAGE>
EX-5.1
CARLOS M. CHAVEZ, ATTORNEY AT LAW
331 SOUTH RIO GRANDE STREET, SUITE 208
SALT LAKE CITY, UTAH 84101
TELE: 801/534-1132 FAX: 801/534-1129
December 31, 1996
Board of Directors
ROYAL SILVER MINES, INC.
N. 10220 Nevada, Suite 230
Spokane, Washington 99218
RE: Registration of Additional Shares Under Employee Stock Plan,
Short-Form Registration Statement on Form S-8
Dear Board:
I have acted as counsel to Royal Silver Mines, Inc., a Utah
corporation (the 'Company'), in connection with the preparation and
filing of a Registration Statement on Form S-8 (the 'Registration
Statement') to be filed with the Securities and Exchange Commission
on or after December 31, 1996, pertaining to the registration of
additional securities consisting of 831,775 shares of the Company's
common stock, $0.01 par value (the 'Shares') being registered in
connection with the Company's 1992 Stock Option and Stock Award
Plan, as amended (the 'Plan').
I have reviewed the Articles of Incorporation and Bylaws of the
Company, the meeting minutes and resolutions of the Board of
Directors and share-holders of the Company, the Form S-8
Registration Statement, the Plan, relevant prospectuses and other
such documents as appropriate. As to factual matters, I have relied
upon a certificate supplied to me by an officer of the Company. In
rendering the opinion expressed herein, I have assumed, upon
reasonable investigation, the validity of all documents and the
accuracy of all information supplied to me by the Company.
Based upon the foregoing, I am of the opinion that when the
Registration Statement becomes effective, all such Shares being
registered pursuant to the Registration Statement, and all such
registered Shares as they are issued and paid for in accordance
with the Plan, will have been duly authorized and will be legally
issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Carlos M. Chavez
Attorney at Law
cc: Williams & Webster, P.S.
3
<PAGE>
EX-23.1
[COMPANY LOGO]
WILLIAMS & WEBSTER, P.S.
601 W. Riverside, Suite 1970
Spokane, WA 99201-0611
509-838-5111
December 31, 1996
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of
our audit report dated December 13, 1996 (and to all references to
our Firm), included in or made a part of the Form S-8 registration
statement of Royal Silver Mines, Inc. and its affiliated subsidiaries, as
filed on or about December 31, 1996.
/s/ Williams & Webster, P.S.
WILLIAMS & WEBSTER, P.S.
(THIS SPACE INTENTIONALLY LEFT BLANK)
4
<PAGE>
EX-24.1
POWER OF ATTORNEY
We, the undersigned officers and directors of Royal Silver Mines,
Inc., hereby severally constitute Robert E. Jorgensen and Carlos M. Chavez, as
our true and lawful attorney-in-fact with full power to sign for us and in our
names in the capacities indicated below, the Registration Statement filed
herewith and any amendments to said Registration Statement, and generally to do
all such things in our name and behalf in our capacities as officers and
directors to enable Royal Silver Mines, Inc., to comply with the provisions of
the Securities Act of 1933 as amended, and all requirements of the Securities
and Exchange Commission, hereby ratifying and confirming our signatures as they
may be signed by our said attorney-in-fact, to said Registration Statement and
any and all amendments thereto.
Witness our hands on the date set forth below.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Spokane, State of Washington, on the thirty-
first day of December, 1996.
REGISTRANT: ROYAL SILVER MINES, INC.
/s/ Robert E. Jorgensen
_____________________________
Robert, E. Jorgensen, Executive Vice-President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
Dated: December 31, 1996
BY ITS CHIEF EXECUTIVE OFFICER:
/s/ Howard M. Crosby
_____________________________
Howard M. Crosby, Chief Executive Officer
BY ITS PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ Robert E. Jorgensen
_____________________________
Robert E. Jorgensen, Treasurer and Controller
5
<PAGE>
Dated: December 31, 1996
BY A MAJORITY OF ITS BOARD OF DIRECTORS:
/s/ Howard M. Crosby
_____________________________________
HOWARD M. CROSBY, BOARD CHAIRMAN(*)
/s/ Robert S. Jorgensen
_____________________________________
ROBERT S. JORGENSEN, DIRECTOR(*)
/s/ Spenst Hansen
_____________________________________
SPENST HANSEN, DIRECTOR(*)
/s/ E. Hal Cameron
_____________________________________
E. HAL CAMERON, DIRECTOR(*)
/s/ Carlos M. Chavez
_____________________________________
CARLOS M. CHAVES, DIRECTOR(*)
/s/ James W. Prier
_____________________________________
JAMES W. PRIER, DIRECTOR(*)
/s/ Ronald Kitching
_____________________________________
RONALD KITCHING, DIRECTOR (*)
(*) Executed pursuant to Power of Attorney, as previously
authorized, to ratify and confirm these persons' signatures by
the attorney-in-fact therein named.
6
<PAGE>
==============================================================================
REOFFER PROSPECTUS
==============================================================================
ROYAL SILVER MINES, INC.
Additional Registration of 831,775 Shares of Common Stock
Par Value $.01 Per Share
Issuable Under the Royal Silver Mines, Inc.
1992 Stock Option and Stock Award Plan
(As Last Amended By Shareholder Approval on June 17, 1995)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS REOFFER PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This Reoffer Prospectus relates to Shares of common stock, $.01 par value, of
Royal Silver Mines, Inc. ('Royal' or the 'Company'), issued pursuant to the
Company's 1992 Stock Option and Stock Award Plan, as amended by the First
Amendment to 1992 Stock Option and Stock Award Plan, which may be offered by
certain shareholders of the Company (the 'Selling Shareholders') for their own
respective accounts (the 'Shares'). The Company will not receive any part of
the proceeds from the sales thereof (See 'Selling Shareholders' section,
below). The Selling Shareholders are affiliates of the Company.
The Company has not been advised by the Selling Shareholders that there are any
underwriting arrangements with respect to the sale of the Shares. The Shares
will be sold from time to time in the over-the-counter market at then
prevailing prices, or at prices related to then current market prices, or in
private transactions at negotiated prices, and brokerage fees may be paid by
the Selling Shareholders in connection therewith. The Selling Shareholders
will pay all applicable stock transfer taxes, transfer fees and related fees
and expenses. The Company will bear the cost of preparing and filing the
registration statement and prospectuses and all filing fees and legal and
accounting expenses in connection with registration under federal and state
securities laws.
The Company's common stock is traded in the Nasdaq Bulletin Board OTC market
under the ticker symbol 'RSMI.' On December 31, 1996, the closing average price
of the stock was $0.875.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD
CAREFULLY REVIEW THE 'RISK FACTORS' INDICATED BELOW.
The Date of this Reoffer Prospectus is December 31, 1996.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
REOFFER PROSPECTUS, IN CONNECTION WITH THE OFFERING CONTAINED HEREIN, AND IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS REOFFER PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES COVERED BY THIS REOFFER PROSPECTUS TO ANY PERSON IN ANY JURISDICTION
IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER
DELIVERY OF THIS REOFFER PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
FACTS HEREIN SET FORTH SINCE THE DATE HEREOF.
1
<PAGE>
TABLE OF CONTENTS
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . 3
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
STRATEGY AND BUSINESS PLAN . . . . . . . . . . . . . . . . . . . . . . . 6
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
GOVERNMENT REGULATION AND ENVIRONMENTAL CONCERNS . . . . . . . . . . . . 10
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SELLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . 13
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . 14
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION
TO ANY PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL OR AN OFFERING OF ANY
SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES.
2
<PAGE>
AVAILABLE INFORMATION
Royal is subject to the informational requirements of the Securities Exchange
Act of 1934 (the 'Exchange Act') and, in accordance therewith, files reports,
proxy and information statements and other information with the Securities and
Exchange Commission (the 'Commission'). Such reports, statements and other
information may be inspected at and copies of such material may be obtained (at
prescribed rates) from the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, DC 20549, and at certain of
its regional offices at 5757 Wilshire Boulevard, Suite 500 East, Los Angeles,
CA 90036-3648, 219 South Dearborn Street, Chicago, IL 60604, and 75 Park
Place, 14th Floor, New York, NY 10007 or may be electronically retrieved
through the Edgar' system administered by the Commission.
This Reoffer Prospectus, which constitutes an exhibit to the registration
statement filed by the Company with the Commission under the Securities Act, as
amended (the 'Registration Statement'), omits certain of the information
contained in the Registration Statement. Reference is here-by made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Shares offered hereby.
Statements contained herein concerning document provisions are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement, or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following document, which is on file with the Commission is incorporated
herein by reference and made a part hereof: the Company's Annual Report, as
filed on Form 10-K for the year ended September 30, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Reoffer Prospectus and
prior to the termination of the offering of the Shares made by this Reoffer
Prospectus shall be deemed to be incorporated by reference in this Reoffer
Prospectus and to be a part of this Reoffer Prospectus from the date of the
filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or replaced for purposes of this Reoffer Prospectus to the extent that a
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or replaces such
statement. Any such statement so modified or replaced shall not be deemed,
except as so modified or replaced, to constitute a part of this Reoffer
Prospectus.
The Company undertakes to provide without charge to each person, including any
beneficial owner, to whom this Reoffer Prospectus is delivered, upon written or
oral request by such person, a copy of any document referred to above which has
been or may be incorporated herein by reference in this Reoffer Prospectus,
other than exhibits to such documents not specifically incorporated by
reference. Such written or oral request should be directed to the Corporate
Secretary of the Company and may be transmitted by any of the following means:
3
<PAGE>
(a) By mail/courier, to: 10220 N. Nevada, Suite 230
Spokane, Washington 99218
(b) By facsimile, to: 509/466-3321; or
(c) By E-Mail, to: rsmi @ royalsilver.com
For further information, please refer to the Registration Statement.
Each person with an agreement of award of shares or options under the Plan will
be provided with copies of all reports, proxy statements and other
communications generally distributed to Royal shareholders.
THE COMPANY
Royal Silver Mines, Inc. (generally referred to as 'Royal' or 'the Company'),
formerly known as Consolidated Royal Mines, Inc., and also, Royal Minerals,
Inc., is a U.S. mineral resource company incorporated under the laws of the
State of Utah. The Company is engaged in the business of acquiring and
exploring mineral properties containing silver, gold, copper, and other
mineralization, with a primary emphasis on silver. Prior to September 30,
1995, Royal acquired all of the outstanding securities of Celebration Mining
Company ('Celebration'), a development stage company, pursuant to a share
exchange agreement and plan of reorganization ('Reorganization'). Unless
indicated differently by the context, all references to 'the Company' and
'Royal' in this report shall be read to refer to Royal Silver Mines, Inc., the
corporate entity that resulted from the business combination of Consolidated
Royal Mines, Inc. and Celebration Mining Company.
Prior to the Reorganization, Celebration was a non-public, closely held
Washington corporation. It was formed in February 1994 to identify and acquire
mineral properties for subsequent exploration and development, if warranted,
through equity financing and joint venture arrangements. The Reorganization has
been accounted for as a purchase by Celebration of Royal. Celebration was
treated as the acquiring company for financial reporting purposes because its
shareholders constituted greater than 50 percent of the combined shareholder
group at the time of reorganization. In conformity with generally accepted
accounting principles and the Company's accounting policy, Celebration is
recognized as the predecessor entity. Consequently, Celebration's assets and
liabilities were not adjusted in the accompanying financial statements. On the
other hand, for purposes of reporting statutory and corporate authority, Royal
is deemed to be the acquiring corporation, and Celebration is now a wholly-
owned subsidiary of Royal. Prior to the Reorganization, Royal had been a
majority-owned subsidiary of Centurion Mines Corporation ('Centurion').
Currently, however, Centurion holds an approximate 14 percent shareholder
interest in Royal and is an affiliate and related party of the Company.
The Company operates its business as an exploration stage company, meaning that
it intends to receive income from property sales, joint ventures, or other
business arrangements with larger companies, rather than developing and placing
its properties into production on its own. There currently are several
business arrangements, joint venture prospects, and potential property sales
from which the Company expects to receive income. The Company has owned
royalty interests in properties situated in Utah's Gold Belt. There has been
and is no assurance that the Company will receive royalties from these
properties; it received no royalty income during the fiscal year ended
September 30, 1996 ("Fiscal 1996").
4
<PAGE>
The Company currently has no revenues. At September 30, 1996, the Company's
accumulated deficit was $3,057,817. Although it has recurring losses from
operations, the Company has increased its operating capital and improved its
financial condition and ability. Regarding its losses from operations, the
Company cannot assure that it will be able to fully carry out its plans as
budgeted without additional operating capital. At September 30, 1996, the
Company had a cash balance of $688,716 and working capital of $686,573, as
compared to a cash balance of $151,698 and a working capital deficit of
$665,274 at September 30, 1995. Royal will need capital resources of
approximately $40,000 per month to meet its estimated expenditures for the
ensuing twelve months. The Board of Directors has instructed management to
consult with experienced financial and investment advisory firms to formulate
arrangements for such capital fund raising. Currently, the Company is pursuing
various alternatives, including, if necessary, the private placement of stock.
During the twelve months ended September 30, 1996, the Company placed 1,949,332
shares of its common stock for $2,958,314 in cash. The Company also issued
406,050 shares of its common stock in lieu of outstanding debt. The stock was
issued at $1.50 per share for a total value of $609,075. At the end of
September, 1996, the Company reached an agreement with Centurion Mines
Corporation, a related affiliate, for an option to purchase or assign up to
800,000 shares of Royal common stock, presently owned by Centurion Mines and
representing approximately seven and one-half percent of currently outstanding
shares, at an exercise price of $1.75 per share. The re-purchase option, which
is assignable to third parties, expires October 1, 1998.
As discussed in greater detail below in the section entitled 'The Company's
Strategy and Business Plan,' a substantial portion of Royal's assets consist of
investments in mineral properties for which additional exploration is required
to determine if they contain mineralization that is economically recoverable.
The realization of these investments is contingent to a large extent upon the
success of Royal's property transactions as a whole, the existence of
economically recoverable metals and other mineralized material, the ability of
the Company to obtain financing or make other arrangements for development, and
upon future profitable production. The likelihood and extent to which these
contingencies may be material is uncertain, and Royal cannot assure that the
outcome of these uncertain events will not have a material impact and result in
adverse consequences to the Company. If Royal does not receive suitable
financing or funds from its present or future business arrangements to develop
these properties, and continues to suffer losses from operations, the Company
will revise its business activities accordingly.
HISTORY
The Company was incorporated in Utah on April 6, 1969 as Royal Resources, Inc.
for the purpose of acquiring and developing mineral properties. The Company
changed its name to Royal Minerals, Inc., on January 6, 1983, and became a
public company in July 1984. Royal complied with the Securities and Exchange
Commission reporting requirements until August 1986, at which time Royal filed
Form 15 with the Commission and suspended further reporting requirements. On
January 31, 1992, Centurion owned 82.3 percent of the Company's common stock
(see the section entitled 'Centurion's Acquisition and Control of the Company,'
below.) Also on January 31, 1992, the Company shareholders authorized a 5-for-
1 reverse stock split, and on March 4, 1994, authorized a 4-for-1 reverse stock
split of the common stock of the Company.
5
<PAGE>
On March 17, 1994, the Company changed its name to Consolidated Royal Mines,
Inc. On November 22, 1994, the Company filed a registration statement on Form
10 and renewed its reporting requirements, effective January 23, 1995. During
the fourth quarter of Fiscal 1995, the Company revised its business plan to
concentrate on the acquisition of silver properties. That change in focus
prompted Consolidated Royal Mines, Inc. and Celebration Mining Company to
implement the Reorganization, which closed on August 8, 1995, and to change the
Company's name to Royal Silver Mines, Inc., effective September 18, 1995.
STRATEGY AND BUSINESS PLAN
Royal's management believes that control of land and mineral rights is the key
ingredient for financial success in the exploration and development phases of
the mining business. Previously, Royal had concentrated its main exploration
efforts in the northern Utah Gold Belt because of that area's history of
profitable metal production and because of Royal's exploration experience in
the western United States. After the Reorganization, the Company acquired a
number of significant mineral properties focusing on silver resources. The
Company expects to concentrate its main exploration efforts during Fiscal 1997
in Idaho's Coeur d' Alene Mining District and to a much lesser extent in the
Lakeview Mining District, and Utah's Ashbrook Mining District where the Company
owns a 25% interest in the Vipont Mine property. The Company was involved in a
joint venture in Australia through an agreement between Celebration and an
Australian company. A deep test exploration hole was drilled in search of a
buried massive sulfide target; however the hole encountered only weak
mineralization.
Royal's corporate strategy is directed toward the acquisition of land positions
for the exploration of mineralization in established mining districts that have
had large and profitable production histories. This approach is referred to in
the mining industry as 'headframe geology,' which is defined as concentrating
efforts near previously known, profitable ore deposits. Royal does not
currently have sufficient capital of its own to carry out its strategy and
business plan.
The Company's plan of operation for Fiscal 1997 is to proceed with its
exploration efforts and to seek business arrangements that, in conjunction with
the funds of other companies or business entities, will provide sufficient
funding to meet the initial expenditures required for the exploration of
mineralization on such properties and to acquire land positions or other
interests in mineral properties. It expects in this way to achieve an increase
in the value of its assets and to obtain production income with less risk of
its own funds for development expenditures and capital investment in production
facilities. As a consequence of the Company's plans, management expects a
reversal of the current trend of diminishing cash flow. However, because it
currently does not have sufficient capital, if the Company is not successful in
obtaining suitable joint venture commitments and funds, there is no assurance
that the Company otherwise will obtain the capital it would need to achieve its
business plan. During September 1996, the Company completed its initial due
diligence review and signed a revised option agreement with the Placer Mining
Corporation of Kellogg, Idaho, to purchase a 100 percent ownership interest in
the Bunker Hill Mine, a silver-lead-zinc mine in Shoshone County, Idaho. The
Bunker Hill Mine is the largest mine in northern Idaho's historic Coeur d'Alene
Mining District, which currently has four major silver mines in production. The
Bunker Hill Mine has produced over 35 million tons of ore over a one hundred
year period.
6
<PAGE>
Under the terms of the option, the Company can acquire the mine by making
payment through one of two alternative purchase arrangements: the Company may
either (1) pay $7 million and issue 500,000 shares of its restricted common
stock to Placer Mining on or before May 10, 1997; or (2) pay $4 million and
issue 500,000 shares to Placer Mining on or before May 10, 1997, and then pay
an additional $3.5 million on or before May 10, 1998. Under either alternative,
Placer Mining will retain a 2-3/4 percent net smelter return royalty on the
property. The Company intends to raise the necessary funds via equity and/or
debt financing, or through a possible joint venture with a major partner.
The Bunker Hill Mine, which was originally discovered in 1881, was last
operated on a large scale in 1990. Placer Mining has reestablished small
production of high grade lead-silver ore from stopes on 10 level and 11 level,
but has lacked the requisite capital to properly redevelop the mine. In order
to achieve the necessary economies of scale, and to benefit from low cost, bulk
underground mining methods, the Company's engineers believe that a capital
investment in excess of $50 million will be required over and above the
purchase price. However, the Company believes that if the technical due
diligence is favorable and the ongoing environmental issues can be
satisfactorily resolved, an investment of that magnitude may be possible to
obtain.
The Board of Directors reasonably believes that the Company is able to engage
in nearly any size operation or scope of mining activity depending on the
circumstances and merits of each proposed operation or mining activity.
Accordingly, the Board has not limited the size of operation or scope of
project which it believes is reasonable for management to consider in achieving
the Company's business plan. Following that direction, management of the
Company pursued a vigorous and fruitful program during the last quarter of
Fiscal 1995, acquiring interests in seven distinct parcels of mineral property.
Further, management has been authorized to consider and review all reasonable
proposals and, upon satisfactory assessment, to then make a specific
determination as to an estimated range of funding amounts that each such
proposal reasonably might require.
By further direction of the Board of Directors, management may enter into new
mining arrangements with joint venturers, partners, or other third parties.
Such arrangements may be multi-party ventures to which the Company will
contribute stock, cash, and/or mineral interests. In such arrangements, the
Company's participation in revenues and profits, if any, will be reduced. At
this time, the Company has no agreement or understanding with any third parties
for the formation of a joint venture mining operation other than those
described herein. The Company will encounter significant competition from
firms currently engaged in the mining industry. In general, all of these
companies are substantially larger than the Company, and have substantially
greater resources and operating histories. (See 'Risk Factors,' below.)
Management, together with such professional advisors which the Company deems
appropriate, will investigate prospective properties through on-site
examination, reviewing available geologic reports or publications relating to
the property, and a general field reconnaissance to secure preliminary
information regarding characteristics of the property. If, from such
preliminary reviews, management deems it advisable to further investigate the
property, the Company may determine the condition of title and ownership by
using abstractors or title companies, and may obtain a preliminary feasibility
study by one or more geologists, mining engineers, or accountants. If, after
the foregoing preliminary investigation, management determines that the
7
<PAGE>
property does not meet the Company's acquisition criteria, efforts to acquire
the property will be abandoned, in which case costs incurred in conducting the
investigation would not be recoverable. It should be noted, however, that the
Company has only a limited amount of funds available for working capital which
could be used for future exploration expenditures. Thus, if future exploration
is desired, additional funds would be needed. Only a limited amount of such
funds have currently been identified and there can be no assurance that such
funds would be available at an acceptable cost, if at all.
Inasmuch as the eventual project, operation or mining activity could be of any
size or scope, management is not able at this time to provide more exact
amounts or a detailed listing of operation costs, including increases in
general and administrative expense, if any. However, the Company plans to fund
any increases in general and administrative expense principally from joint
venture revenues, fees it may receive, or additional funds it may receive from
debt or equity financing. Funds required to finance the Company's exploration
and development of mineral properties are expected to come primarily from joint
venture participant contributions with the remainder provided by funds
generated from such joint venture and other lease or royalty arrangements.
Management has budgeted approximately $480,000 for Fiscal 1997 for general and
administrative expenses and other operating costs. To date, the Company has
made full and timely payment of its expenses, in particular to the various
governmental payees it interacts with, and has met its obligations to the
entities and contractors that provide its personnel, office space, and
equipment needs. The Company currently is seeking additional sources of
working capital sufficient to continue its present level of funding its general
and administrative expenses and meet ongoing payment obligations for its leases
to governmental bodies. Operating costs are largely dependent upon the level
of exploration and development activity engaged in, which, in turn, is
dependent upon availability of funds. The Company has determined not to incur
any operating costs related to exploration and development until sufficient
funds are available for payment.
RISK FACTORS
The following risk factors with respect to the Company and its operations may
affect its strategy and business plan:
1. RECENT STATUS AS A PUBLIC REPORTING COMPANY. The Company became a fully
reporting public company on January 23, 1995. The Company has no current
operating history and is subject to all risks inherent in a developing business
enterprise. The likelihood of success of the Company must be considered in
light of the problems, expenses, difficulties, complications, and delays
frequently encountered in connection with a new business in general and those
specific to the natural resource industry and the competitive and regulatory
environment in which the Company will operate.
2. EXPLORATION STAGE COMPANY. Mineral exploration, particularly for gold and
silver, is highly speculative in nature, frequently is nonproductive, and
involves many risks, often greater than those involved in the discovery of
mineralization. Such risks can be considerable and may add unexpected
expenditures or delays to the Company's plans. There can be no assurance that
the Company's mineral exploration activities will be successful or profitable.
Once mineralization is discovered, it may take a number of years from the
initial phase of drilling until production is possible, during which time the
economic feasibility of production may change.
8
<PAGE>
A related factor is that exploration stage companies use the evaluation work of
professional geologists, geophysicists, and engineers for estimates in
determining whether to acquire an interest in property or to commence
exploration or development work. These estimates generally rely on scientific
estimates and economic assumptions, and in some instances may not be correct,
and could result in the expenditure of substantial amounts of money on a
property before it can be determined whether or not the property contains
economically recoverable mineralization.
The economic viability of a property cannot be determined until extensive
exploration and development has been conducted and a comprehensive feasibility
study performed. The Company currently does not have any such feasibility
studies, and has not yet prepared feasibility studies on any of its properties.
Moreover, the market prices of any minerals produced are subject to
fluctuation, which may negatively affect the economic viability of properties
on which expenditures have been made. The Company is not able to determine at
present whether or not, or the extent to which, such risks may adversely affect
the Company's strategy and business plans.
3. COMPETITION. The mining industry is very competitive. There is a high
degree of competition to obtain favorable mining properties and suitable mining
prospects for drilling, exploration, development and mining operations. The
Company encounters competition from a handful of other similarly-situated
mining companies in the silver mining industry in connection with the
acquisition of properties capable of profitably producing silver and other
mineralization. The Company is unable to ascertain the exact number of such
competitor companies, however, the Company believes that with the acquisition
of significant properties in the Coeur d'Alene Mining District of Northern
Idaho, USA, its competitive position for exploring and developing such
properties for silver mineralization should improve. Nevertheless, the Company
may be unable to acquire attractive mining properties on terms it considers
acceptable. Accordingly, there can be no assurance that the Company's programs
will yield commercially minable reserves.
4. LACK OF REVENUE. The Company needs additional capital but currently has no
revenues. Substantial expenditures are required to establish ore reserves
through drilling, to determine metallurgical processes to extract the
mineralization from the ore and, in the case of new properties, to construct
mining and processing facilities. The Company lacks a constant and continual
flow of revenue. The Company currently holds certain royalty interests in
several mining properties previously sold, but there is no assurance that the
Company will receive royalty payments, or that the Company will otherwise
receive adequate funding to be able to finance its exploration activities. The
Company is looking for revenue sources on an on-going basis, but there can be
no assurance that such sources can be found or that, if available, the terms of
such financing will be commercially acceptable to the Company. Because of the
Company's need for additional capital to fund its present operations, to
complete the acquisition of certain mineral rights, and to provide for further
exploration and development, the lack of consistent revenue could be a
detrimental factor in the progress of the Company.
9
<PAGE>
5. REALIZATION OF INVESTMENTS IN MINERAL PROPERTIES AND ADDITIONAL CAPITAL
NEEDS. The ultimate realization of the Company's investments in mineral
properties is dependent upon the success of future property sales, the
existence of economically recoverable reserves, the ability of the Company to
obtain financing or make other arrangements for development and upon future
profitable production. The Company expects to finance its operations for
Fiscal 1997 through the sale of equity securities, joint venture arrangements
(including project financing), and the sale of interests in mineral properties.
The Company does not have sufficient capital of its own to explore and develop
its mineral properties and there can be no assurance that the Company will be
successful in obtaining the required funds to finance its long-term capital
needs.
6. RETENTION AND ATTRACTION OF KEY PERSONNEL. The Company's success will
depend, in large part, on its ability to retain and attract highly qualified
personnel. The Company's success in retaining its present staff and in
attracting additional qualified personnel will depend on many factors,
including its ability to provide them with competitive compensation
arrangements, equity participation and other benefits. There is no assurance
that the Company will be successful in retaining or attracting highly qualified
individuals in key management positions.
7. REGULATORY CONCERNS. Environmental and other government regulations at the
federal, state and local level pertaining to the Company's business and
properties may include: 1) Surface Impact, 2) Water Acquisition, 3) Site
Access, 4) Reclamation, 5) Wildlife Preservation, 6) Licenses and Permits, and
7) Maintaining the Fees for unpatented mining claims. See the section below
entitled 'Government Regulation and Environmental Concerns,' for a
comprehensive discussion of the risks related to this factor.
GOVERNMENT REGULATION AND ENVIRONMENTAL CONCERNS
The Company is committed to complying and, to its knowledge, is in compliance
with all governmental and environmental regulations. The Company's activities
are subject to extensive federal, state, and local laws and regulations
controlling not only the mining of and exploration for mineral properties, but
also the possible effects of such activities upon the environment. Permits
from a variety of regulatory authorities are required for many aspects of mine
operation and reclamation. The Company cannot predict the extent to which
future legislation and regulation could cause additional expense, capital
expenditures, restrictions and delays in the development of the Company's
properties, including those with respect to unpatented mining claims.
As used in this Annual Report, the term 'unpatented mining claim' refers to a
mining claim on federal lands which has not been converted into full fee
ownership in the name of a private person or entity. The process of converting
ownership was established under the (U.S.) General Mining Law of 1872, as
amended (the 'General Mining Law'), and requires that certain conditions be
met. Once met, and all other requirements are satisfied, the U.S. government
transfers ownership of the underlying property (held to that point in the
public trust) to the private person or entity by granting fee simple and
conveying full private ownership of the subject mineral property, including
mineral rights, surface, subsurface and appurtenant rights, subject to any
vested and accrued water rights. The act of granting full fee ownership is
accomplished by a duly endorsed instrument referred to as a 'patent.' Until
such time as a mining claim on federal land may be 'patented,' the claim is
deemed an 'unpatented mining claim' and ownership is held in the public trust
10
<PAGE>
by the U.S. government subject to existing federal mining laws and other
applicable statutory or regulatory provisions as may be implemented by the
federal bureaucracy.
In 1992, the U.S. Congress passed a number of amendments to the General Mining
Law which governs mining claims and related activities on federal lands. A
holding fee of $100 and a filing assessment of $35 per claim was imposed upon
unpatented mining claims located on federal lands. Since 1992, a variety of
legislation has been proposed to further amend the General Mining Law. The
proposed legislation would, among other things, impose royalties and add
requirements affecting reclamation, environmental controls, and restoration.
although such legislative proposals are not currently in effect, the likelihood
or extent of subsequent enactments is not presently known and the potential
impact on the Company as a result of future congressional action cannot be
predicted.
The Company's activities are not only subject to extensive federal, state, and
local regulations controlling the mining of and exploration for mineral
properties, but also the possible effects of such activities upon the
environment. Future legislation and regulations could cause additional
expense, capital expenditures, restrictions and delays in the development of
the Company's properties, the extent of which cannot be predicted. Also, as
discussed above, permits from a variety of regulatory authorities are required
for many aspects of mine operation and reclamation. In the context of
environmental permitting, including the approval of reclamation plans, the
Company must comply with known standards, existing laws and regulations that
may entail greater or lesser costs and delays depending on the nature of the
activity to be permitted and how stringently the regulations are implemented by
the permitting authority. While it is possible that the costs and delays
associated with the compliance of such laws, regulations, and permits could
become such that the Company would not proceed with the development or
operation of a mine, the Company is not presently aware of any material
environmental constraint affecting its properties that would preclude the
economic development or operation of any specific property, other than those
relating to the Bunker Hill Mine (described in Item 2.)
At present, the Company does not have any environmental control facilities.
Thus, the Company has not made any material capital expenditures for
environmental controls, other than the nominal costs of preparing the plans and
contingencies for such environmental controls, measures and facilities as may
be required in its future activities.
As the Company becomes more active on its properties, it is reasonable to
expect that compliance with environmental regulations will substantially
increase costs to the Company. Such compliance may include feasibility studies
on the surface impact of the Company's proposed operations; costs associated
with minimizing surface impact; water treatment and protection; reclamation
activities, including rehabilitation of various sites; on-going efforts at
alleviating the mining impact on wildlife; and permits or bonds as may be
required to ensure the Company's compliance with applicable regulations. It is
possible that the costs and delays associated with such compliance could become
so prohibitive that the Company may decide to not proceed with the exploration,
development, or mining operations on any of its mineral properties.
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<PAGE>
Specifically as it relates to the Company's option to purchase the Bunker Hill
Mine, Royal Silver Mines has endeavored to assess the environmental issues,
including preexisting conditions such as acid water mine drainage and related
treatment efforts, and the impact of these and other issues that may arise
pertaining to environmental protection requirements and areas of concern, some
of which are tailings pond construction, mine waste rock disposal, etc.
Discussions with the State of Idaho and the EPA have been ongoing and continue.
The company expects to complete a full review and determination of the
environmental impact and requirements to bring the mine to an economically
productive level.
Future costs of compliance may depend upon the extent and type of exploration
and testing required. Moreover, there is no assurance that the Company will be
able to comply with requirements imposed on future development, or that the
Company will be able to economically develop operating mines under such
regulations. Therefore, management is not able to estimate those amounts at
this time.
USE OF PROCEEDS
The Shares have been or will be issued to the Selling Shareholders as awards
under the Plan. Pursuant to the Registration Statement, the Selling
Shareholders may offer their Shares for their own respective accounts and the
Company will not receive any part of the proceeds from the sale thereof.
SELLING SHAREHOLDERS
The Selling Shareholders will be officers and directors of the Company,
shareholders who own 5% or more of the outstanding Shares of the Company
('Principal Shareholders'), and shareholders who receive Shares pursuant to
awards under the Plan (the "Other Selling Shareholders"). As of the date of
this Reoffer Prospectus, awards of the Shares and options to acquire Shares
have been made under the Plan to the following Principal Shareholders,
officers, directors and Other Selling Shareholders.
12
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL SHAREHOLDERS SHARES SHARES
(F1) AWARDED ISSUED
____________ ____________
<S> <C> <C>
Howard Crosby 260,000 65,000
105 N. First, Ste. 232
Sandpoint, ID 83864
Robert E. Jorgensen 134,500 34,500
W. 2719 Strong Rd.
Spokane, WA 99208
OFFICERS AND DIRECTORS
Howard Crosby SEE ABOVE SEE ABOVE
Robert E. Jorgensen SEE ABOVE SEE ABOVE
Ronald Kitching 30,000 7,500
Hal Cameron 22,500 15,000
Spenst Hansen 52,500 46,500
Jerry Stacey 21,000 14,000
Carlos M. Chavez 35,000 20,000
James W. Prier 30,000 7,500
John Ryan 40,700 25,700
OTHER SELLING SHAREHOLDERS 158,800 43,050
TOTALS: 785,000 235,700
======== =======
<FN>
<F1> All shares are owned beneficially and of record, unless otherwise noted.
Mr. Crosby is a director, executive officer and 50% shareholder of Extol
International Corp., a privately-held Washington corporation. As a 50%
shareholder, Mr. Crosby holds indirect beneficial ownership of one-half of the
restricted shares retained by Extol following the closing of the share exchange
with Celebration.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Shareholders, or by
pledgees, donees, transferees or other successors in interest. Such sales may
be made in the over-the-counter market, or otherwise at prices and at terms
then prevailing or at prices related to the then current market price, or in
negotiated transactions.
The Shares may be sold in one or more of the following ways:
(a) a block trade in which the broker or dealer so engaged will attempt to
sell the Shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
(b) purchase by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Reoffer Prospectus.
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<PAGE>
(c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers. In effecting sales, brokers or dealers engaged by the
Selling Shareholders may arrange for other brokers or dealers to participate.
Brokers or dealers will receive commissions or discounts from the Selling
Shareholders in amounts to be negotiated immediately prior to the sale. Such
brokers or dealers and any other participating brokers or dealers may be deemed
to be 'underwriters' within the meaning of the Securities Act in connection
with such sales. In addition, any securities covered by this Reoffer
Prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule
144 rather than pursuant to this Reoffer Prospectus.
(d) private transactions at a negotiated price.
Upon the Company being notified by a Selling Shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of Shares
through a block trade, special offering, exchange distribution, or secondary
distribution or a purchase by a broker or dealer, a supplemented prospectus
will be filed, if required, pursuant to Rule 424(c) under the Act, disclosing
(i) the name of each such Selling Shareholder and of the participating broker-
dealer(s), (ii) the number of Shares involved, (iii) the price at which such
Shares will be sold, (iv) the commissions paid or discounts or concessions
allowed to such broker-dealers(s), where applicable, (v) that such broker-
dealer(s) did not conduct any investigation to verify the information set out
or incorporated by reference in this Reoffer Prospectus and (vi) other facts
material to the transaction.
The Selling Shareholders will be subject to anti-fraud and anti-market
manipulation rules under the Exchange Act in connection with this offering.
Rules 10b-2, 10b-6 and 10b-7, among others, effectively prohibit the Selling
Shareholders from purchasing the Company's common stock while the Shares are
being offered pursuant to this Reoffer Prospectus.
The Company has agreed to indemnify the Selling Shareholders and underwriters
acting on their behalf against certain liabilities, including liabilities under
the Securities Act, for material misrepresentations contained, or omissions not
contained, in this Prospectus.
The laws of certain states may require that sales of the Shares offered hereby
be conducted solely through the brokers or dealers so registered in those
states.
DESCRIPTION OF SECURITIES
AUTHORIZED CAPITAL
- ------------------
The Company is authorized to issue 40,000,000 shares of common stock, $.01 par
value, of which 10,692,732 were issued and outstanding as of December 31, 1996.
All outstanding shares are fully-paid and non-assessable. The approximate
number of holders of common stock of record on December 31, 1996, was
approximately 390.
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<PAGE>
DIVIDENDS
- ---------
The holders of the common stock are entitled to dividends as determined by the
board of directors from legally available funds. All shares of common stock
have equal rights to participate in any dividend, if, as and when declared by
the board of directors. Since its inception, the Company has not paid any
dividends on its common shares and does not anticipate or contemplate paying
dividends in the foreseeable future. Management of the Company presently
intends to use earnings to finance future growth and development.
VOTING RIGHTS
- -------------
The holders of common stock are entitled to one vote for each share of common
stock held. The Shares do not have the right to cumulative voting for
directors, which means that holders of more than 50% of the Shares voting for
the election of directors can elect all of the directors if they choose to do
so.
PRE-EMPTIVE RIGHTS
- ------------------
No shares have pre-emptive rights.
TRANSFER AGENT
- --------------
OTC Stock Transfer, Inc., is transfer agent for the Company's common stock.
The address is P.O. Box 15600, 231 East 2100 South, Salt Lake City, Utah 84115.
The telephone number is 801/485-5554 and the facsimile number is 801/486-0562.
RESTRICTIONS ON TRANSFERABILITY OF COMMON STOCK
- -----------------------------------------------
During the effectiveness of the Registration Statement of which this Reoffer
Prospectus is a part, the Shares may be sold and transferred subject to the
requirement that the Selling Shareholder and any underwriters acting on behalf
of such Selling Shareholder deliver this Reoffer Prospectus to each offeree.
After the Registration Statement ceases to be effective, Shares purchased from
the Selling Shareholder or any underwriters acting on behalf of such Selling
Shareholder may be resold and transferred without the filing of a subsequent
registration statement.
The award of Shares or options to purchase Shares under the Plan may be subject
to contractual restrictions on transferability. Any such contractual
restriction will be conspicuously noted on the certificates representing the
effective securities. No Shares may be sold hereunder except in accordance
with such contractual restrictions. As of the date of this Reoffer Prospectus,
no contractual restrictions have been imposed on awards under the Plan.
WARRANTS AND OPTIONS
- --------------------
The Plan as amended and authorizes, by ratification, the issuance to key
employees, officers and directors of the Company of up to 1,069,275 shares of
the Company's common stock, including issuances effectuated by exercise of
options or warrants certificated under the Plan for the purchase of common
Shares registered hereby. As of the date of this Reoffer Prospectus, awards of
options and warrants have been authorized and awarded under the Plan, but none
have been exercised.
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<PAGE>
LEGAL MATTERS
The legality of the Shares offered hereby will be passed upon for the Company
by Carlos M. Chavez, Esq., Salt Lake City, Utah.
EXPERTS
The consolidated financial statements and schedules incorporated by reference
in this Reoffer Prospectus and elsewhere in the Form S-8 Registration Statement
have been audited by Williams & Webster P.S., Certified Public Accountants,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein by reference in reliance upon the
authority of said firm as experts in giving said reports. Reference is made to
said reports, which include an explanatory paragraph with respect to the
realizability of the Company's investments in mineral properties as discussed
therein in Note 1 to the consolidated financial statements.
16
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