SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2002
OR
|_| TRANSITION REPORT UNDER 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: (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 |_| No |X|
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 June 17, 2002
--------------------------------------- ----------------------------
Common Stock, par value $.001 per share 40,005,039
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 six months ended April 30, 2002.
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, 2001.
The results reflected for the three and six months ended April 30, 2002
are not necessarily indicative of the results for the entire fiscal year.
-2-
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEET
APRIL 30, 2002
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 500,462
Loan Receivable - Related Parties 12,260
Loan Receivable - Others 31,611
Other Current Assets 13,763
Due from Sale of Subsidiary 1,492,131
------------
Total Current Assets 2,050,227
------------
Property and Equipment (Net of
Accumulated Depreciation of $366,365) 1,388,788
------------
Other Assets:
Mining Reclamation Bonds 47,750
Security Deposit 13,265
------------
Total Other Assets 61,015
------------
Total Assets $ 3,500,030
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued Expenses $ 413,051
Note Payable - Current Portion 2,057
------------
Total Current Liabilities 415,108
------------
Commitments and Contingencies
Stockholders' Equity:
Common Stock, Par Value $.001 Per Share;
Authorized 150,000,000 shares; Issued and
Outstanding 39,869,441 Shares 39,869
Capital Paid In Excess of Par Value 21,582,896
Deficit Accumulated in the Development Stage (18,537,101)
Accumulated Other Comprehensive Income (Loss) (742)
------------
Total Stockholders' Equity 3,084,922
------------
Total Liabilities and Stockholders' Equity $ 3,500,030
============
The accompanying notes are an integral part of the financial statements.
-3-
LEADVILLE MINING AND MILLING CORP.
(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
2002 2001 2002 2001 April 30, 2002
----------- ------------ ----------- ------------ -----------------
Revenues:
Interest Income $ 4,452 $ 750 $ 5,485 $ 2,186 $ 719,959
Miscellaneous 115 -- 115 4,769 26,391
Gain on Sale of Subsidiary 1,947,215 -- 1,947,215 -- 1,947,215
Gain on Sale of Property and Equipment 83,638 -- 83,638 -- 83,638
----------- ------------ ----------- ------------ ------------
Total Revenues 2,035,420 750 2,036,453 6,955 2,777,203
----------- ------------ ----------- ------------ ------------
Costs and Expenses:
Mine Expenses 243,315 238,406 518,045 847,035 4,918,670
Selling, General and Administrative
Expenses 174,491 181,161 435,149 434,702 7,166,463
Stock Based Compensation 388,027 122,300 388,027 845,663 8,720,036
Depreciation 582 956 1,745 2,868 366,366
Loss on Write-Off of Investment -- -- -- -- 10,000
Loss on Joint Venture -- -- -- -- 101,700
----------- ------------ ----------- ------------ ------------
Total Costs and Expenses 806,415 542,823 1,342,966 2,130,268 21,283,235
----------- ------------ ----------- ------------ ------------
Income (Loss) Before Provision For
Income Taxes 1,229,005 (542,073) 693,487 (2,123,313) (18,506,032)
Provision For Income Taxes 977 877 2,457 1,217 31,069
----------- ------------ ----------- ------------ ------------
Net Income (Loss) $ 1,228,028 $ (542,950) $ 691,030 $ (2,124,530) $(18,537,101)
=========== ============ =========== ============ ============
Net Income (Loss) Per Share $ 0.03 $ (0.02) $ 0.02 $ (0.07)
============ ============ =========== ============
Average Common Shares Outstanding 38,818,308 31,372,108 36,562,422 29,079,284
============ ============ =========== ============
The accompanying notes are an integral part of the financial statements.
-4-
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
For The Period
Nine Months Ended September 17, 1982
April 30, (Inception)
---------------------------- To
2002 2001 April 30, 2002
----------- ----------- ------------------
Cash Flow From Operating Activities:
Net Income (Loss) $ 691,030 $(2,124,530) $(18,537,101)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided (Used) By Operating Activities:
Depreciation 1,745 2,868 366,366
Loss on Write-Off of Investment -- -- 10,000
Loss From Joint Venture -- -- 101,700
Value of Common Stock Issued For Services -- 19,791 2,747,007
Stock Based Compensation 388,027 855,663 8,720,036
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Other Current Assets (7,447) 2,290 (13,763)
(Increase) in Prepaid Expenses -- (63,000) --
(Increase) in Security Deposit (9,598) -- (13,265)
Increase in Accrued Expenses 342,415 7,174 413,051
Other (308) -- (8,114)
----------- ----------- ------------
Net Cash Provided (Used) By Operating Activities 1,405,864 (1,299,744) (6,214,083)
----------- ----------- ------------
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 Assets of Business Acquired (Net of Cash) -- -- (42,130)
Increase in Option Payment Payable -- -- 50,000
Payment of Option Payment Payable (50,000) -- (50,000)
Due from Sale of Subsidiary (1,492,131) -- (1,492,131)
----------- ----------- ------------
Net Cash Used By Investing Activities (1,542,131) -- (3,351,611)
----------- ----------- ------------
The accompanying notes are an integral part of the financial statements.
-5-
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Continued)
For The Period
Nine Months Ended September 17, 1982
April 30, (Inception)
------------------------ To
2002 2001 April 30, 2002
--------- --------- ------------------
Cash Flow From Financing Activities:
(Increase) Decrease in Loans Receivable -
Related Parties $ (1,260) $ -- $ (12,260)
Increase in Loans Receivable - Other 9,689 (33,980) (31,611)
Increase in Loans Payable - Officers -- -- 18,673
Repayment of Loans Payable - Officers -- -- (18,673)
Increase in Note Payable -- -- 11,218
Payments of Notes Payable (3,144) -- (9,161)
Decrease in Loan Payable -- (4,020) --
Proceeds From Sale of Common Stock 567,524 1,639,276 10,569,733
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) (42,750)
--------- ----------- ------------
Net Cash Provided By Financing Activities 572,809 1,594,676 10,066,156
--------- ----------- ------------
Increase In Cash and Cash Equivalents 436,542 294,932 500,462
Cash and Cash Equivalents - Beginning 63,920 49,422 --
--------- ----------- ------------
Cash and Cash Equivalents - Ending $ 500,462 $ 344,354 $ 500,462
========= =========== ============
Supplemental Cash Flow Information:
Cash Paid For Interest $ -- $ -- $ --
========= =========== ============
Cash Paid For Income Taxes $ 1,440 $ 1,217 $ 29,160
========= =========== ============
Non-Cash Financing Activities:
Issuances of Common Stock as Commissions
on Sales of Common Stock $ 8,000 $ 66,230 $ 448,495
========= =========== ============
Issuance of Common Stock as Payment for Expenses $ -- $ -- $ 192,647
========= =========== ============
Issuance of Common Stock as Payment for Property
and Equipment $ -- $ -- $ 4,500
========= =========== ============
The accompanying notes ar an integral part of the financial statements.
-6-
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2002
(Unaudited)
NOTE 1 - Basis of Presentation
The consolidated financial statements include the accounts of
Leadville Mining & Milling Corp. ("Leadville") and its subsidiaries, all of
which are wholly-owned. All significant inter-company accounts and transactions
have been eliminated in consolidation.
In the opinion of the Company's management, the accompanying
consolidated financial statements reflect all adjustments (which include only
normal recurring adjustments) necessary to present fairly the consolidated
financial position and results of operations and cash flows for the periods
presented. These financial statements are unaudited and have not been reported
on by independent public accountants.
Results of operations for interim periods are not necessarily
indicative of the results of operations for a full year.
Effective December 15, 2000, Leadville obtained an option from
AngloGold North America Inc. to purchase from AngloGold North America Inc., and
AngloGold (Jerritt Canyon) Corp. 100% of the issued and outstanding stock of
Minera Chanate, S.A. de C.V., ("Minera") a subsidiary of those two companies.
Minera's assets consist of certain exploitation and exploration concessions of
the States of Sonora, Chihuahua and Guerrero, Mexico.
Pursuant to the option, during fiscal 2001, Leadville provided
AngloGold funds needed of approximately $145,000 to cover all rental and
maintenance payments required to hold Minera's concessions.
On June 29, 2001 Leadville exercised its option to purchase all of
the stock of Minera. In addition, although it exercised such option, Leadville
must make a payment of $50,000 to AngloGold pursuant to the option agreement. If
such $50,000 payment is not made by December 15, 2001, Leadville must sell back
to AngloGold the Minera shares for nominal consideration. During December 2001
Leadville made the required option payment.
Under the terms of the option, Leadville has granted AngloGold the
right to designate one of its wholly-owned Mexican subsidiaries to receive a
one-time option to purchase 51% of Minera Chanate. That option is exerciseable
over a 180 day period commencing at such time as Leadville notifies AngloGold
that we have made a good faith determination that we have gold-bearing ore
deposits on any one of the identified group of Minera Chanate properties, when
aggregated with any ore that Leadville has mined, produced and sold from such
properties, of in excess of 2,000,000 troy ounces of contained gold. The
exercise price would equal twice Leadville's project costs on the properties
during the period commencing on December 15, 2000 and ending on the date of such
notice.
-7-
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2002
(Unaudited)
NOTE 2 - Commitments and Contingencies
On February 23, 2002, Minera Santa Rita S. de R.L. de C.V., one of
our wholly-owned Mexican subsidiaries, entered into a joint venture agreement
with Grupo Minero FG S.A. de C.V. to explore, evaluate and develop certain
mining exploitation concessions formerly owned by Minera Chanate S.A. de C.V.
(see Note 3), another of our wholly-owned Mexican subsidiaries. The concessions
are located in the Municipality of Altar in the State of Sonora, Mexico. Grupo
Minero FG S.A. de C.V., referred to as FG, is a private Mexican company that
owns and operates the La Colorada open-pit gold mine outside of Hermosillo in
Sonora, Mexico. FG also is involved in road construction and maintenance for the
Sonoran government.
Pursuant to the agreement, the venture will be conducted in five
phases. The first two phases will entail continued exploration and evaluation of
the mining potential of lots in the concessions. Phase two will culminate with a
feasibility study. The parties anticipate that phase one will cost approximately
$330,000 and be completed by November 1, 2002 and that phase two will cost
approximately $350,000 and be completed by March 1, 2003. Phase three consists
of FG's contribution to the venture of mining equipment sufficient to develop
the lots pursuant to the feasibility study. Phase three will occur only if the
parties determine to continue and they are able to obtain outside funding for
phase four. We are unable to estimate phase four costs at this time. Phase four
involves the building of an access road, the acquisition of water extraction
rights and the drilling and equipping of water wells. Phase five entails
exploitation, processing and sale of minerals on a commercial scale.
Pursuant to the agreement, FG has paid us $75,000 to participate in
the venture. It will contribute an additional $75,000 towards the first phase of
the venture for which it will receive a 30% interest in the venture. The balance
of the costs for phase one and the costs for phase two will be split equally
between the parties. As mentioned above, phase four will be funded from outside
sources. Phase five funding will be provided by the parties in proportion to
their respective interests in the venture.
FG's percentage of the venture can increase to 45%. It will increase
to 31% upon completion of phase one; 33% upon completion of phase two; 37% upon
its contribution of equipment in phase three; 40% upon completion of phase four;
and 45% upon attaining optimal levels of production in phase five. Optimal
levels of production will be determined by agreement of the parties.
The venture is terminable, among other things, if:
o its purpose is concluded or can no longer be obtained;
o it experiences continued non-profitability;
o the parties elect to terminate it at a meeting of the
parties;
o it loses 2/3 of its assets;
o the parties fail to obtain the requisite financing to
fund phase four by September 1, 2003; or
o Santa Rita fails to enter into an agreement with Minera
Chanate or its transferee by March 15, 2002 to permit
Santa Rita to exploit the lots in the concessions.
-8-
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2002
(Unaudited)
NOTE 2 - Commitments and Contingencies (Continued)
If FG determined that it does not want to continue to participate in the venture
after the parties agree to commence phase two, or it cannot provide its share of
the funding for Phase two, Santa Rita has a 45 day option to purchase FG's
interest in the venture for $127,500. If Santa Rita does not exercise this
option within the 45 day period and pay the purchase price within 15 days
thereafter, FG may sell its interest to another party.
If additional contributions are needed as determined by a meeting of the
parties, the parties have 30 days to elect whether they will make these
contributions and an additional 15 days to make their contribution. To the
extent that a party, referred to as the waiving party, does not want to pay its
share or does not pay its share, the other party can make the payment and the
waiving party's percentage interest in the venture will be diluted
proportionately plus 10%. The waiving party can reacquire its lost interest by
repaying the amount previously not paid plus a 25% penalty. These dilution
provisions do not apply to Santa Rita unless and until FG has contributed
$600,000 to the venture. FG can be diluted any time on or after the date it
acquires its initial 30% interest.
NOTE 3 - Sale of Subsidiary Stock
On March 20, 2002, the Company sold all of the issued and
outstanding shares of stock of its wholly-owned subsidiary, Minera Chanate S.A.
de C.V. ("Minera Chanate"), to an unaffiliated party for a purchase price of
$2,131,616, payable in three installments. We received the first installment of
$639,485 less commissions of $51,159 in March 2002. A second payment of $497,377
less commissions of $14,336, plus interest at the rate of 4.5% per annum, is due
and payable on or before August 9, 2002. A third payment of $994,754 less
commissions of $82,565, plus interest at the rate of 4.5% per annum, is due and
payable on or before December 9, 2002. Any portions of the second and third
installments not timely paid will accrue interest at the rate of 7% per annum.
Payment of the balance of the purchase price is secured by the stock of Minera
Chanate. In connection with the above transaction the Company recognized a gain
of $1,947,215.
During March 2002, prior to the sale of Minera Chanate and pursuant
to the Grupo Minero joint venture agreement, Minera Chanate, in a series of
transactions, transferred all of its surface land and mining claims to Oro de
Altar S. de R.L. de C.V. ("Ora"), another of our wholly-owned subsidiaries.
-9-
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Cautionary Statement on Forward-Looking Statements
Some information contained in or incorporated by reference into this report on
Form 10-QSB may contain "forward-looking statements," as defined in Section 21E
of the Securities and Exchange Act of 1934. These statements include comments
regarding exploration and mine development and construction plans, costs, grade,
production and recovery rates, permitting, financing needs, the availability of
financing on acceptable terms or other sources of funding, and the timing of
additional tests, feasibility studies and environmental permitting. The use of
any of the words "anticipate," "continue," "estimate," "expect," "may," "will,"
"project," "should," "believe" and similar expressions are intended to identify
uncertainties. We believe the expectations reflected in those forward-looking
statements are reasonable. However, we cannot assure you that these expectations
will prove to be correct. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of the risk factors
set forth below and other factors set forth in, or incorporated by reference
into, this report:
o worldwide economic and political events affecting the supply of and
demand for gold;
o volatility in market prices for gold and other metals;
o financial market conditions, and the availability of debt or equity
financing on terms acceptable to us;
o uncertainties as to whether additional drilling, testing and
feasibility studies will establish reserves at any of our
properties;
o uncertainties associated with developing a new mine, including
potential cost overruns and the unreliability of estimates in early
states of mine development;
o uncertainties as to title to our properties and the availability of
sufficient properties to allow for planned activities in Mexico or
the Leadville District;
o variations in ore grade and other characteristics affecting mining,
crushing, milling and smelting operations and mineral recoveries;
o geological, metallurgical, technical, permitting, mining and
processing problems;
o the availability and timing of acceptable arrangements for power,
transportation, mine construction, contract mining, water and
smelting; the availability, terms conditions and timing of required
government approvals;
o uncertainties regarding future changes in tax and foreign-investment
legislation or implementation of existing tax and foreign-investment
legislation;
o the availability of experienced employees; and
o political instability, violence and other risks associated with
operating in a country like Mexico with a developing economy.
-10-
Many of those factors are beyond our ability to control or predict. You should
not unduly rely on these forward-looking statements. These statements speak only
as of the date of this report on Form 10-QSB. Except as required by law, we are
not obligated to publicly release any revisions to these forward-looking
statements to reflect future events or developments. All subsequent written and
oral forward-looking statements attributable to us and persons acting on our
behalf are qualified in their entirety by the cautionary statements contained in
this section and elsewhere in this report on Form 10-QSB.
Results of Operation
Revenues.
We generated no revenues from mining operations during the three months ended
April 30, 2002 and 2001. There were de minimis non-operating revenues during the
nine months ended April 30, 2002 and 2001 of $5,600 and $1,281, respectively.
We recognized gains on the sale of the subsidiary and the sale of property and
equipment of $1,947,215 and $83,638 respectively.
Costs and Expenses.
Over all, costs and expenses during the three months ended April 30, 2002
($806,415) increased by $309,584 (approximately 62.3%) from the three months
ended April 30, 2001 ($496,831). Over all, costs and expenses during the nine
months ended April 30, 2002 ($1,342,966) increased by $126,868 (approximately
10.4%) from the nine months ended April 30, 2001 ($1,216,098).
Mine expenses during the three months ended April 30, 2002 ($243,315) increased
by $57,446 (approximately 30.9%) from the three months ended April 30, 2001
($185,869). We believe that the increase in mine expenses resulted primarily
from work at our Mexican properties. Mine expenses during the nine months ended
April 30, 2002 ($518,045) decreased by $38,683 (approximately 6.9%) from the
nine months ended April 30, 2001 ($556,728). We believe that the decrease in
mine expenses resulted primarily from lack of available capital.
Selling, general and administrative expenses during the three months ended April
30, 2002 ($174,491) decreased by $135,140 (approximately 43.6%) from the three
months ended April 30, 2001 ($309,631). We believe that the decrease was due to
lack of available capital. Selling, general and administrative expenses during
the nine months ended April 30, 2002 ($435,149) decreased by $220,229
(approximately 33.6%) from the nine months ended April 30, 2001 ($655,378). We
believe that the decrease was due to the lack of available capital.
Stock based compensation during the three months ended April 30, 2002 was
$388,027 compared to 0 for the period ended April 30, 2001. Stock based
compensation increased $388,027 approximately (100%) during the nine month
period ended April 30, 2002 ($388,027) from the nine month period ended April
30, 2001 ($0).
Net Income.
As a result, our net income for the three months ended April 30, 2002 was
$1,228,028, which was $1,724,914 more than our $496,886 loss for the three
months ended April 30, 2001. Our net income for the nine months ended April 30,
2002 was $691,030, which was $1,906,657 more than our $1,215,627 loss for the
nine months ended April 30, 2001.
-11-
Liquidity and Capital Resources
As of April 30, 2002, we had working capital of $1,635,119. Our plans over the
next 12 months include the costs of administration, and exploration related
activities in both Colorado and Mexico. In this regard, as noted in our
quarterly report of form 10-QSB for the period ended January 31, 2002, we
entered into a joint venture agreement with Grupo Minero FG S.A. de C.V. ("Grupo
Minero") in Hermosillo to explore, evaluate and develop certain of our Mexican
properties in five phases. We estimate that the balance of our portion of the
costs for the first phase (anticipated to be completed by November 2002) and the
second phase (anticipated to be competed by March 2003) will be approximately
$500,000. We plan to pay for a significant portion of our anticipated expenses
related to phases one and two with the proceeds from the sale of our subsidiary,
Minera Chanate, S.A. de C.V. As explained in our annual report on form 10-KSB,
historically, we have not generated any material revenues from operations and
have been in a precarious financial condition. No assurance whatsoever can be
given that we will be able to generate any significant revenues in the near
future or, after we have depleted the proceeds from the sale of our subsidiary,
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 if and when we have depleted the
proceeds from the sale of our subsidiary, we will need to obtain substantial
financing. While we plan to seek such financing through bank financing, private
placement of our shares, joint venture partners and other arrangements, there is
no assurance that we will be successful.
In addition, during the three months ended April 30, 2001, we raised
approximately $292,748 through the sale of common stock.
Environmental Issues
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 at our Leadville
properties, it was 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 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. We again increased
the bond by an additional $24,550 and $6,600, respectively on March 14, 2000 and
July 25, 2000. The current amount of this bond is $37,150.
In Mexico, we are not aware of any significant environmental concerns or
existing reclamation requirements at the Minera Chanate properties. However, we
will be required to obtain various environmental and related permits in order to
engage in our planned activities at El Chanate. The costs and any delays
associated with obtaining these required permits could have an impact on our
ability to timely complete our planned activities at El Chanate and ultimately
on the feasibility of opening a mine.
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 Possible Responsible Party. 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.
-12-
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.
-13-
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
During the quarter ended April 30, 2002, 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, 2002, we sold an aggregate of
725,000 shares to three individuals for an aggregate of $23,200. In March, 2002,
we sold an aggregate of 210,000 shares to three individuals for an aggregate of
$21,000. In April, 2002, we sold an aggregate of 1,176,905 shares to six
individuals for an aggregate of $43,052.
Item 3. Defaults Upon Senior Securities
None.
Item 4 Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
On March 30, 2002, we and our wholly-owned subsidiary, Leadville Mining &
Milling Holding Corporation ("Holding") sold all of the issued and outstanding
shares of stock of our wholly-owned subsidiary, Minera Chanate S.A. de
C.V.("Minera Chanate"), to an unaffiliated party for a purchase price of
US$2,131,616, payable in three installments. We received the first installment
of US$639,485 in April 2002. A second payment of US$497,377, less US$14,336
(representing the amount Minera Chanate debt assumed by the purchaser), plus
interest at the rate of 4.5% per annum, is due and payable on or before August
9, 2002. A third payment of US$994,754, plus interest at the rate of 4.5% per
annum, is due and payable on or before December 9, 2002. Any portions of the
second and third installments not timely paid will accrue interest at the rate
of 7% per annum. Payment of the balance of the purchase price is secured by the
stock of Minera Chanate.
During March 2002, prior to the sale of Minera Chanate and pursuant to the Grupo
Minero joint venture agreement, Minera Chanate, in a series of transactions,
sold all of its surface land and mining claims to Oro de Altar S. de R. L. de
C.V. ("Ora"), another of our wholly-owned subsidiaries. Ora, in turn, leased the
foregoing land and mining claims to Minera Santa Rita S. de R.L. de C.V.,
another of our wholly-owned subsidiaries.
Item 6. Exhibits and Reports on Form 8-K
10.a March 30, 2002 Minera Chanate Stock Purchase and Sale and Security
Agreement (Sale by us and Holding of all of the stock of Minera Chanate)
(In Spanish).
10.b English summary of March 30, 2002 Minera Chanate Stock Purchase and Sale
and Security Agreement.
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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 19, 2002
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