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 October 31, 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 December 19, 2001
----- --------------------------------
Common Stock, par value 35,175,548 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 months ended October 31, 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, 2001.
The results reflected for the three months ended October 31, 2001 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
OCTOBER 31, 2001
(Unaudited)
ASSETS
Current Assets:
Cash $ 31,847
Loans Receivable - Related Party 8,000
Loans Receivable - Others 42,800
Other Current Assets 9,778
------------
Total Current Assets 92,425
------------
Property and Equipment (Net of
Accumulated Depreciation of $365,202) 1,389,905
------------
Other Assets:
Mining Reclamation Bonds 47,750
Security Deposit 3,667
------------
Total Other Assets 51,417
------------
Total Assets $ 1,533,747
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 132,337
Notes Payable 4,022
Option Payment Payable 50,000
------------
Total Current Liabilities 186,359
------------
Commitments and Contingencies
Stockholders' Equity:
Common Stock, Par Value $.001 Per Share;
Authorized 150,000,000 shares; Issued and
Outstanding 34,905,981 Shares 34,906
Capital Paid In Excess of Par Value 20,807,517
Deficit Accumulated in the Development Stage (19,494,917)
Accumulated Other Comprehensive Income (Loss) (118)
------------
Total Stockholders' Equity 1,347,388
------------
Total Liabilities and Stockholders' Equity $ 1,533,747
============
The accompany 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 Three Months For The Period
Ended September 17,1982
October 31, (Inception)
----------------------------- To
2001 2000 October 31, 2001
------------ ------------ ----------------
(Unconsolidated)
Revenues:
Interest Income $ 640 $ 653 $ 715,114
Miscellaneous -- 4,577 26,276
------------ ------------ ------------
Total Revenues 640 5,230 741,390
------------ ------------ ------------
Costs and Expenses:
Mine Expenses 152,575 323,684 4,553,199
Selling, General and Administrative Expenses 113,891 93,373 6,845,205
Stock Based Compensation -- 426,550 8,332,009
Depreciation 581 956 365,202
Loss on Write-Off of Investment -- -- 10,000
Loss on Joint Venture -- -- 101,700
------------ ------------ ------------
Total Costs and Expenses 267,047 844,563 20,207,315
------------ ------------ ------------
Loss Before Provision For Income Taxes (266,407) (839,333) (19,465,925)
Provision For Income Taxes 380 170 28,991
------------ ------------ ------------
Net Loss $ (266,787) $ (839,503) $(19,494,916)
============ ============ ============
Net Loss Per Share $( . 01) $ (.03)
============ ============
Average Common Shares Outstanding 34,401,366 26,150,013
============ ============
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 Three Months For The Period
Ended September 17, 1982
October 31, (Inception)
------------------------ To
2001 2000 October 31, 2001
--------- --------- ----------------
(Unconsolidated)
Cash Flow From Operating Activities:
Net Loss $(266,787) $(839,503) $(19,494,917)
Adjustments to Reconcile Net Loss to
Net Cash Used By Operating Activities:
Depreciation 581 956 365,202
Loss on Write-Off of Investment -- -- 10,000
Loss From Joint Venture -- -- 101,700
Value of Common Stock Issued For Services -- 15,170 2,747,007
Stock Based Compensation -- 426,550 8,332,009
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Other Current Assets (3,462) (6,474) (9,778)
Increase in Security Deposit -- -- (3,667)
Increase (Decrease) in Accounts Payable 61,701 52,296 124,530
Other 363 -- 363
--------- --------- ------------
Net Cash Used By Operating Activities (207,604) (351,005) (7,827,551)
--------- --------- ------------
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
--------- --------- ------------
Net Cash Used By Investing Activities -- -- (1,809,480)
--------- --------- ------------
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 Three Months For The Period
Ended September 17, 1982
October 31, (Inception)
------------------------- To
2001 2000 October 31, 2001
--------- --------- ----------------
(Unconsolidated)
Cash Flow From Financing Activities:
Increase in Loans Receivable - Related Party $ 3,000 $ -- $ (8,000)
Increase in Loans Receivable - Others (1,500) (1,500) (42,800)
Increase in Loans Payable - Officers -- -- 18,673
Repayment of Loans Payable - Officers -- -- (18,673)
Increase in Note Payable -- -- 11,218
Payments of Note Payable (1,179) (1,228) (7,196)
Proceeds From Sale of Common Stock 175,210 383,570 10,177,419
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 175,531 374,242 9,668,878
--------- --------- ------------
Increase (Decrease) In Cash (32,073) 23,237 31,847
Cash - Beginning 63,920 49,422 --
--------- --------- ------------
Cash - Ending $ 31,847 $ 72,659 $ 31,847
========= ========= ============
Supplemental Cash Flow Information:
Cash Paid For Interest $ -- $ -- --
========= ========= ============
Cash Paid For Income Taxes $ -- $ 170 $ 28,060
========= ========= ============
Non-Cash Financing Activities:
Issuances of Common Stock as Commissions
on Sales of Common Stock $ -- $ 58,530 $ 440,495
========= ========= ============
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 are an integral part of the financial statements.
6
LEADVILLE MINING AND MILLING CORP.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2001
(Unaudited)
NOTE 1 - Basis of Presentation
The consolidated financial statements include the accounts of Leadville
Mining & Milling Corp. 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 exercisable over a 180
day period commencing at such time as Leadville notifies AngloGold that it has
made a good faith determination that it has 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
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 our company;
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 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;
8
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.
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 our Company 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.
Three Months Ended October 31, 2001 compared to Three Months Ended October 31,
2000
Results of Operation
On December 14, 2001 we finalized the stock purchase to acquire all the
outstanding shares of Minera Chanate S.A. de C.V. the holding company of all of
AngloGold/North America's mineral concessions in Mexico by making the final
requisite $50,000 payment.
During the fiscal quarter ended October 31, 2001, due diligence continued with
regards to these mineral concessions located in Northwest Mexico owned by Minera
Chanate. Based upon the results of our due diligence studies, we dropped 62 of
the 106 concessions, leaving 44 concessions. These concessions represent in
excess of 44 square miles of terrain.
During the quarter, we also conducted geological evaluation of several specific
areas within the concessions to determine whether open pit potential existed.
The result of these studies were negative and no further work is planned.
The El Chanate mine, one of the primary targets within the Minera Chanate
concessions, was also further evaluated. Scott Hazlitt, consultant, conducted
field studies and computer simulations. Metallurgical testing also continued.
Results of grinding studies indicated that the gold recovery increased
significantly as grinding reduced the ore particle size. Studies by Resource
Development Inc., of Wheat Ridge, Colorado indicated encouraging gold recoveries
using heap leach cyanide technology on minus 2 inch material. Further testing is
planned.
Our evaluation of the Minera Chanate properties remains an on-going project.
Upon completion of the pre-feasibility and feasibility studies and assuming that
the results are satisfactory, we hope to be ready in mid 2002 for mine
development followed by production. The feasibility studies indicated, will
consist of primarily drilling, metallurgy, pit and plant design. The ability to
conduct this operation is determined by the availability of capital. As a
result, we will be seeking capital through bank bridge financing, joint venture,
or private placement of our securities. We cannot assure that we will be able to
secure adequate financing from any of these or other sources.
During the first fiscal quarter ended October 31, 2001 exploration continued at
the Hopemore mine, in Colorado, both underground and on the surface in search of
mineable gold.
9
At the Hopemore mine, 7th level the exploratory drift on vein #69, 7L-428
continued in a southeasterly direction encountering gold and silver
mineralization on an average 4-foot width, the length of the structure. Long
hole drilling was also carried out at the terminus of the drift to test the
walls and the vein ahead of the drift. The #69 vein is considered to be the
feeder system to the overlaying Silica Stope, ore body. The grades to date
reveal a series of small gold shoots along a generally, lower grade mineral
trend. The site is presently undergoing evaluation pursuant to possible further
exploration.
Long hole drilling has also been performed on the Hopemore 6th level at a
location where intense mining occurred at the turn of the last century. No assay
results have yet been received.
R.C. drilling including Phase I and Phase II have been completed and the results
are being evaluated. Phase III R.C. drilling will be guided by information
gained from the evaluation. General observations to date revealed a large
envelope of gold/silver mineralization associated with near surface carbonate
rock units, overlain by approximately 100 feet of porphyry sill material. The
mineral trend appears to trend to the north-northeast and east. We continue to
seek an expanded land position in that direction.
R.C. Drilling also took place on ground acquired to the west of the Hopemore
Mine, in the areas of the great magnetic anomaly. Three R.C. holes were drilled
within the anomaly and encountered disseminated gold/silver mineralizations at
depths of 150 to 200 feet. The results were encouraging and will serve as the
catalyst for further exploration.
We generated no revenues from operations during the three months ended October
31,2001 and 2000. There were de minimis non-operating revenues during the three
months ended October 31, 2001 and 2000 of $640 and $5230, respectively.
Over all, costs and expense decreased by $577,516 (approximately 68.4%) from
October 31, 2000 ($844,563) to October 31, 2001 ($267,047).
Mine expenses decreased by $171,109 (approximately 52.9%) from October 31, 2000
($323,684) to October 31, 2001 ($152,575). The decrease in mine expenses
resulted primarily from a limited amount of capital available to us for these
purposes.
Selling, general and administrative expenses increased by $20,518 approximately
(22.0%) from October 31, 2000 ($93,373) to October 31, 2001 ($113,891) primarily
due to increased administrative activities.
Stock based compensation decreased 426,550 approximately (100%) from October 31,
2000 (426,550) to October 31, 2001 (0) due to a decrease in option grants.
As a result, our net loss for the three months ended October 31, 2001 was
$266,787, which was $572,716 (approximately 68.2%) less than our October 31,
2000 loss of $839,503.
10
Liquidity and Capital Resources
As of October 31, 2001, we had a working capital deficit of ($93,934) We
anticipate that we will need approximately $750,000 in order to carry out our
plans for the remainder of the fiscal year ending July 31, 2002. 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 bank bridge financing,
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 October 31, 2001, we raised
approximately $175,210 through the sale of common stock.
Environmental Issues
Management does 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.
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.
11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
During the quarter ended October 31, 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 August 2001, we sold an aggregate of
621,667 shares to 6 individuals for an aggregate of $86,500. In September 2001,
we sold an aggregate of 272,985 shares to 4 individuals for an aggregate of
$33,660. In October 2001, we sold an aggregate of 471,730 shares to 6
individuals for an aggregate of $55,050.
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
None
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: December 20, 2001