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 April 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-13078
LEADVILLE MINING & MILLING CORPORATION
(Exact name of small business issuer as specified in its charter)
NEVADA 13-3180530
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
76 Beaver Street, New York, NY 10005
(Address of principal executive offices)
Issuer's telephone number, including area code: (212) 344-2785
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 ___
Indicate the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date.
Class Outstanding at April 30, 2001
----- -----------------------------
Common Stock, par value 32,389,215 Shares
$.001 per share
Transitional Small Business Format (check one); Yes ___ No _X_
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying financial statements are unaudited for the interim periods, but
include all adjustments (consisting only of normal recurring accruals), which we
consider necessary for the fair presentation of results for the three and nine
months ended April 30, 2001.
Moreover, these financial statements do not purport to contain complete
disclosure in conformity with generally accepted accounting principles and
should be read in conjunction with our audited financial statements at, and for
the fiscal year ended July 31, 2000.
The results reflected for the three and nine months ended April 30, 2001 are not
necessarily indicative of the results for the entire fiscal year.
2
LEADVILLE MINING AND MILLING CORP. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET
APRIL 30, 2001
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 344,354
Loan Receivable 48,530
Prepaid Expense 63,000
Other Current Assets 889
------------
Total Current Assets 456,773
------------
Property and Equipment (Net of
Accumulated Depreciation of $363,667) 1,341,985
------------
Other Assets:
Mining Reclamation Bonds 47,750
Security Deposit 3,667
------------
Total Other Assets 51,417
------------
Total Assets $ 1,850,175
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued Expenses and Taxes $ 60,688
Note Payable - Current Portion 6,380
------------
Total Current Liabilities 67,068
------------
Commitments and Contingencies
Stockholders' Equity:
Common Stock, Par Value $.001 Per Share;
Authorized 150,000,000 shares; Issued and
Outstanding 32,389,215 Shares 32,389
Capital Paid In Excess of Par Value 13,685,112
Deficit Accumulated in the Development Stage (11,934,394)
------------
Total Stockholders' Equity 1,783,107
------------
Total Liabilities and Stockholders' Equity $ 1,850,175
============
The accompanying notes are an integral part of the financial statements.
3
LEADVILLE MINING AND MILLING CORP. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For The Period
Three Months Ended Nine Months Ended September 17,1982
April 30, April 30, (Inception)
------------------------------ ------------------------------ To
2001 2000 2001 2000 April 30, 2001
------------ ------------ ------------ ------------ -----------------
Revenues:
Interest Income $ 750 $ 415 $ 2,186 $ 881 $ 713,691
Miscellaneous -- -- 4,769 400 31,045
------------ ------------ ------------ ------------ ------------
Total Revenues 750 415 6,955 1,281 744,736
------------ ------------ ------------ ------------ ------------
Costs and Expenses:
Mine Expenses 238,406 185,869 847,035 556,728 4,259,474
Selling, General and
Administrative Expenses 303,461 309,631 1,280,365 655,378 7,915,679
Depreciation 956 1,331 2,868 3,992 363,666
Loss on Write-Off of
Investment -- -- -- -- 10,000
Loss on Joint Venture -- -- -- -- 101,700
------------ ------------ ------------ ------------ ------------
Total Costs and
Expenses 542,823 496,831 2,130,268 1,216,098 12,650,519
------------ ------------ ------------ ------------ ------------
Loss Before Provision
For Income Taxes (542,073) (496,416) (2,123,313) (1,214,817) (11,905,783)
Provision For Income
Taxes 877 470 1,217 810 28,611
------------ ------------ ------------ ------------ ------------
Net Loss $ (542,950) $ (496,886) $ (2,124,530) $ (1,215,627) $(11,934,394)
============ ============ ============ ============ ============
Net Loss Per Share $ (0.02) $ (0.02) $ (.07) $ (0.06)
============ ============ ============ ============
Average Common Shares Outstanding 31,372,108 22,389,935 29,079,284 21,266,961
============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
4
LEADVILLE MINING AND MILLING CORP. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
For The Period
Nine Months Ended September 17, 1982
April 30, (Inception)
----------------------------- To
2001 2000 April 30, 2001
---------- ----------- ------------------
Cash Flow From Operating Activities:
Net Loss $ ( 2,124,530) $(1,215,627) $(11,934,394)
Adjustments to Reconcile Net Loss to
Net Cash Used By Operating Activities:
Depreciation 2,868 3,992 363,666
Loss on Write-Off of Investment -- -- 10,000
Loss From Joint Venture -- -- 101,700
Value of Common Stock Issued For Services 19,791 77,502 1,962,025
Compensation Portion of Options Exercised 855,663 329,422 2,303,719
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Other Current Assets 2,290 (805) (889)
Increase in Prepaid Expenses (63,000) -- (63,000)
(Increase) in Security Deposit -- -- (3,667)
Increase (Decrease) in Accrued Expenses
and Taxes 7,174 2,439 60,688
---------- ----------- ------------
Net Cash Used By Operating Activities (1,299,744) (803,077) (7,200,152)
---------- ----------- ------------
Cash Flow From Investing Activities:
Purchase of Property and Equipment -- -- (1,705,650)
Investment in Joint Venture -- -- (101,700)
Investment in Privately Held Company -- -- (10,000)
---------- ----------- ------------
Net Cash Used By Investing Activities -- -- (1,817,350)
---------- ----------- ------------
The accompanying notes are an integral part of the financial statements.
5
LEADVILLE MINING AND MILLING CORP. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Continued)
For The Period
Nine Months Ended September 17, 1982
April 30, (Inception)
---------------------------- To
2001 2000 April 30, 2001
----------- --------- --------------
Cash Flow From Financing Activities:
Increase in Loans Receivable $ (33,980) $ (660) $ (48,530)
Increase of Loans Payable - Officers -- -- 18,673
Repayment of Loans Payable - Officers -- -- (18,673)
Increase in Notes Payable -- 11,218 11,218
Decrease in Note Payable (4,020) -- (4,838)
Proceeds from Sale of Common Stock 1,639,276 787,600 9,865,769
Commissions on Sale of Common Stock -- -- (5,250)
Expenses of Initial Public Offering -- -- (408,763)
Purchase of Certificate of Deposit-Restricted -- -- (5,000)
Purchase of Mining Reclamation Bond (6,600) (24,550) (42,750)
----------- --------- -----------
Net Cash Provided By Financing Activities 1,594,676 773,608 9,361,856
----------- --------- -----------
Increase (Decrease) In Cash and Cash Equivalents 294,932 (29,469) 344,354
Cash and Cash Equivalents - Beginning 49,422 106,893 --
----------- --------- -----------
Cash and Cash Equivalents - Ending $ 344,354 $ 77,424 $ 344,354
=========== ========= ===========
Supplemental Cash Flow Information:
Cash Paid For Interest $ -- $ -- $ --
=========== ========= ===========
Cash Paid For Income Taxes $ 1,217 $ 810 $ 28,060
=========== ========= ===========
Non-Cash Financing Activities:
Issuances of Common Stock as Commissions
on Sales of Common Stock $ 66,230 $ 19,120 $ 411,180
=========== ========= ===========
Issuances of Common Stock as
Payment For Expenses $ -- $ 77,502 $ 192,647
=========== ========= ===========
Issuance of Common Stock For
Acquisition of Property and Equipment $ -- $ -- $ 4,500
=========== ========= ===========
The accompanying notes are an integral part of the financial statements.
6
LEADVILLE MINING AND MILLING CORP. AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2001
(Unaudited)
NOTE 1 - Basis of Presentation
In the opinion of the Company, the accompanying unaudited financial
statements reflect all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows for the periods presented.
The results for interim periods are not necessarily indicative of the
results to be obtained for a full fiscal year.
NOTE 2 - Formation of Subsidiary
On February 1, 2001 the Company formed a wholly owned subsidiary; Leadville
Mining & Milling Holding Corporation for the purpose of acquiring additional
mining properties.
NOTE 3 - Principals of Consideration
The consolidated financial statements include the accounts of Leadville
Mining & Milling Corporation and its wholly owned subsidiary. All significant
inter-company accounts and transactions have been eliminated in consolidation.
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Cautionary Statement on Forward-Looking Statements
Except for the historical information contained herein, certain of the matters
discussed in this quarterly report are "forward-looking statements," as defined
in Section 21E of the Securities Exchange Act of 1934, which involve certain
risks and uncertainties, which could cause actual results to differ materially
from those discussed herein including, but not limited to, risks relating to
changing economic conditions, changes in the prices of minerals and the results
of testing and actual mining.
We caution readers that any such forward-looking statements are based on our
current expectations and beliefs but are not guarantees of future performance.
Actual results could differ materially from those expressed or implied in the
forward-looking statements.
Results of Operations
General
International Northair Mines Property - Sinaloa, Mexico
During the fiscal quarter ended April 30, 2001 we completed Phase I exploration
drilling on the Lobos property located in Sinaloa, Mexico. The Lobos property
consists of two concessions totaling over 7,000 acres (the "Lobos Program"). The
Lobos Program was carried out under an option agreement with International
Northair Mines Ltd. ("INM"), of Vancouver, BC (CDNX:INM) and its wholly-owned
Mexican subsidiary pursuant to which we can earn a 51% interest in INM's Lobos
Project. The due diligence period under that option agreement ended on April 5,
2001, and the agreement remains in full force and effect. The parties are in the
process of preparing a more detailed option agreement which will be registered
in Mexico.
Twenty-four reverse circulation holes totaling 2,750 feet were completed at
three separate strategic locations along a mineralized corridor of at least 4000
feet in length. All 24 holes encountered gold mineralization. Based upon results
from initial exploration, we have commenced additional exploration with emphasis
on road building, trenching, sampling and assaying. Our current plan for
additional exploration, assuming adequate funding is available, is as follows:
1. Cut two major new roads
2. Cut trenches across mineralized contacts
3. Sample all new mineralized outcrops.
8
The areas to be worked are:
1. Cut a road west of and below, the Northwest Zone that will hopefully
expose the western extension of the northwest zone, and connect the
upper and lower roads (550 meters).
2. Cut a road from the upper Northwest Zone to the North Zone (520
meters).
3. Cut trenches from the above road across the Tfb/Tip contact (250 to
300 meters).
4. Cut several trenches across the Northeast Zone (60 meters in 4
trenches).
Results of exploration conducted by INM indicate that the Lobos Project has a
potential for containing multiple bulk tonnage gold deposits. The property
contains epithermal low sulfidation gold mineralization related to rhyodacite
intrusive porphyry. A large northwest-striking corridor of mineralization occurs
along the southwest flank of the intrusive within a fine-grained flow banded
unit that is genetically related to the intrusive. This corridor of alteration
and mineralization has been mapped over a strike length of 1.8 kilometers, and
has average widths of mineralization and alteration from 25 to over 100 meters
consisting of multiple lenticular quartz veins, hydrothermal breccias containing
gold mineralization. The zone remains open to the north. An additional strike
length of 400 meters of mineralization occurs in the NW zone, oriented
perpendicular to the strike of the main corridor. This brings the total to
approximately 2.2 kilometers of continuous alteration and mineralization.
AngloGold Properties - Sonora, Mexico.
During the quarter ended April 30, 2001, we continued our due diligence with
regards to the mineral properties located in North West Mexico owned by Minera
Chanate S.A. de C.V., a wholly-owned subsidiary of AngloGold North America Inc.
and AngloGold (Jerritt Canyon) Corp. We have completed our corporate and title
due diligence review of Minera Chanate. We have determined that 15 of the 106
concessions should be dropped, leaving 91 concessions and close the transaction
on or about June 29, 2001. We plan to exercise the option to obtain 100% of the
shares of Minera Chanate S.A. de C.V. We are seeking joint venture partners to
participate in the further exploration and development of the Minera Chanate
concessions. These claims are in excess of 300 square miles of terrain.
During the quarter, we also continued geological evaluation of several areas
within the concessions to determine whether they have open pit potential. These
properties will be subject to further evaluation and possible reverse
circulation ("R.C.") drilling.
El Chanate, one of the primary targets within the Minera Chanate concessions,
was also subject to further economic evaluation. Scott Hazlitt, our mining
project manager, conducted reserve evaluation and computer simulations together
with the independent services of Mine Reserve Associates of Lakewood, Colorado.
Minerals Advisory Group, LLC of Tucson, Arizona conducted mine planning and
equipment. Kappes, Cassidy and Associates of Reno, Nevada is studying the
metallurgy by conducting grinding studies with bottle roll and column tests for
solubility on El Chanate mineral samples. The result of the grinding studies
shows that the gold recovery increases significantly as grinding reduces the ore
particle size.
Our evaluation of the Minera Chanate properties remains an on-going project.
Upon completion of our evaluation, provided we determine that the results are
satisfactory, we hope to be ready for development and subsequent production. We
currently anticipate additional exploratory
9
drilling will be conducted, assuming adequate funding is available, to expand
the known deposits in addition to, in-drilling, which would expand the present
drill pattern to improve drill hole density.
Leadville Colorado Properties
During the fiscal quarter ended April 30, 2001 work at our Leadville, Colorado
operation consisted primarily of mine maintenance, property acquisition and
geological planning for additional R.C. drilling on Breece Hill.
Two additional patented mining claims were leased. Both claims are in the
immediate Hopemore/Hunter mine area. The lease agreement was for 100% of the
Hamburg and 14/32 of the Spot Cash. The Hamburg is a narrow north trending
fraction between the Eliza and the Black Prince claims (north of the Hunter
mine). The Spot Cash is a small claim between the Highland Chief and St. Louis
south of the Hamburg.
Three Months Ended April 30, 2001 Compared to Three Months Ended April 30, 2000
We generated no revenues from operations during the three months ended April 30,
2001 and 2000. There were de minimis non-operating revenues during these periods
of $750 and $415, respectively. Mine expenses increased by $52,537
(approximately 28%) from $185,869 during the three months ended April 30, 2000
to $238,406 during the three months ended April 30, 2001. The increase in mine
expenses resulted primarily from mine development, longhole drilling, assaying
and metallurgy. Selling, general and administrative expenses and depreciation
decreased by $6,545 (approximately 2.1%) from $310,962 during the three months
ended April 30, 2000 to $304,417 during the three months ended January 31, 2001.
As a result, our net loss for the three months ended April 30, 2001 was
$542,950, which was $46,064 more (approximately 9%) than our loss of $496,886
for the three months ended April 30, 2000.
Liquidity and Capital Resources
As of April 30, 2001, we had working capital of $389,705 compared to working
capital of $152,153 as of July 31, 2000. This $237,552 increase in working
capital primarily was due to an increase in capital funding. We anticipate that
we will need approximately $250,000 in order to carry out our plans for the
remainder of fiscal 2001. Our plans include the costs of administration, and
exploration related activities in both Colorado and Mexico. As was explained in
our annual report on form 10-KSB, we are in a precarious financial condition. No
assurance whatsoever can be given that we will be able to continue as a going
concern or that any of our plans with respect to our gold properties will, to a
material degree, come to fruition. In order to continue our program, we must
obtain substantial financing. While we are seeking such financing through
private placement of our shares, joint venture partners and other arrangements,
there is no assurance that we will be successful.
In this regard, during the three months ended April 30, 2001, we raised
approximately $386,995 through the sale of common stock.
10
Environmental Issues
Colorado
We do not expect that environmental issues will have an adverse material effect
on our liquidity or earnings. Before any mining development or mining
exploration or construction of milling facilities could begin, it would be
necessary to meet all environmental requirements and to satisfy the regulatory
agencies in Colorado that our proposed procedures fell within the boundaries of
sound environmental practice. We are bonded to insure procedures and reclamation
of any areas disturbed by our current activities. In 1997, the Colorado Mined
Land Reclamation Board reviewed our permit and bond and determined that an
increase in the bond was necessary. At that time, we placed an additional $6,000
in escrow against any future indemnity. In the year 2000 the bond was increased
for the mine and the mill. Surface drilling bonds total $12,200.
Part of the Leadville Mining District was declared a Superfund site. Several
mining companies and one individual were declared defendants in a possible
lawsuit. We were not named a defendant or Potential Responsible Party under
CERCLA. We did respond in full detail to a lengthy questionnaire prepared by the
Environmental Protection Agency ("EPA") regarding our proposed procedures and
past activities in November 1990. To our knowledge, the EPA has initiated no
further comments or questions.
We do include in all our internal revenue and cost projections a certain amount
for environmental and reclamation costs on an ongoing basis. This amount is
determined at a fixed amount of $1.50 per ton of material to be milled on a
continual, ongoing basis to provide for further tailing disposal sites and to
reclaim the tailings disposal sites in use. At this time, there does not appear
to be any environmental costs to be incurred by us beyond those already
addressed above. No assurance can be given that environmental regulations will
not be changed in a manner that would adversely affect our planned operations.
Mexico
We are not aware of any significant environmental concerns or significant
existing reclamation requirements at either the properties owned by Minera
Chanate or those owned by International Northair. However, we are continuing our
environmental due diligence at both locations.
11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
During the quarter ended April 30, 2001, we issued the following shares of our
common stock pursuant to the exemption from registration provided by Section
4(2) of the Securities Act of 1933: In February 2001, we sold an aggregate of
605,769 shares to five individuals for an aggregate of $157,500. In March 2001,
we sold an aggregate of 101,953 shares to six individuals for an aggregate of
$24,445 and issued 350,000 shares to one individual for services for an
aggregate of $132,300. In April 2001, we sold an aggregate of 1,030,789 shares
to thirteen individuals for an aggregate of $205,050.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
LEADVILLE MINING & MILLING CORPORATION
Registrant
By: /s/ Gifford A. Dieterle
-------------------------------
Gifford A Dieterle
President/Treasurer
Date: June 15, 2001