UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-KSB
x |
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the fiscal year ended October 31, 2005
o |
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: 000-27667
Metalline
Mining Company
(Name
of
small business issuer in its charter)
Nevada
|
91-1766677
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
|
|
1330
E. Margaret Ave.
Coeur
d'Alene, ID 83815
(Address
of principal executive offices, Zip Code)
Issuer's
telephone number: (208)
665-2002
Securities
registered under Section 12 (b) of the Exchange Act: None
Securities
registered under Section 12 (g) of the Exchange Act:
Common
Stock
(Title
of
class)
Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act. o
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 o
Check
if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained,
to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes o
No x
State
issuer's revenues for its most recent fiscal year. None.
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity
was
sold, as of January 4, 2006 was $16,447,793.
The
number of shares of common stock outstanding as of January 4, 2006 was
20,954,585.
Transitional
Small Business Disclosure Format (Check one): Yes o No x
METALLINE
MINING COMPANY ANNUAL REPORT
ON
FORM 10-KSB FOR THE FISCAL YEAR
ENDED
OCTOBER 31, 2005
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E-1
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METALLINE
MINING COMPANY ANNUAL REPORT
ON
FORM 10-KSB FOR THE FISCAL YEAR
ENDED
OCTOBER 31, 2005
This
annual report on Form 10-KSB contains forward-looking statements regarding
future events and Metalline Mining Company's (the "Company's") future results
that are subject to the safe harbors created under the Securities Act of 1933
(the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange
Act"). These statements are based on current expectations, estimates, forecasts,
and projections about the industry in which the Company operates and the beliefs
and assumptions of the Company's management. Words such as "expects,"
"anticipates," "targets," "goals," "projects," "intends," "plans," "believes,"
"seeks," "estimates," "continues," "may," variations of such words, and similar
expressions are intended to identify such forward-looking statements. In
addition, any statements that refer to projections of the Company's future
financial performance, the Company's anticipated growth and potentials in its
business, and other characterizations of future events or circumstances are
forward-looking statements. Readers are cautioned that these forward-looking
statements are only predictions and are subject to risks, uncertainties, and
assumptions that are difficult to predict, including those identified elsewhere
herein, including under "Risk Factors." Therefore, actual results may differ
materially and adversely from those expressed in any forward-looking statements.
The Company undertakes no obligation to revise or update any forward-looking
statements for any reason.
METALLINE
MINING COMPANY ANNUAL REPORT
ON
FORM 10-KSB FOR THE FISCAL YEAR
ENDED
OCTOBER 31, 2005
Overview
Metalline
Mining Company (the "Company") is an exploration stage enterprise, formed under
the laws of the state of Nevada on August 20, 1993, to engage in the business
of
mining. The Company currently owns eight concessions, which are located in
the
municipality of Sierra Mojada, Coahuila, Mexico. The Company's objective is
to
define sufficient mineral reserves on the Property to justify the development
of
a mechanized mining operation (the "Project"). The Company conducts its
operations in Mexico through its wholly owned Mexican subsidiary, Minera Metalin
S.A. de C.V. The Company
currently has a total of five employees, including four full-time
employees.
Mining
operations are typically developed in phases. These phases include: 1) exploring
to identify available mineral deposits and define a resource; 2) conducting
a
feasibility study to determine whether deposits may be profitably extracted;
and
3) eventually developing mining operations. The Company has already conducted
extensive exploration and identification of the mineralization located on the
concessions that it possesses in the Sierra Mojada mining district, or the
District. The Company has also initiated a feasibility study. If the results
of
the feasibility study are positive and the Company is able to secure sufficient
financing, then the Company would proceed to the development stage, leading
eventually to the operation of a mine on the concessions.
Thus
far,
the Company has spent a total of approximately $13 million during the
exploration phase and continues to maintain a sampling and drilling program
that
is budgeted at approximately $50,000 per month, not including analytical costs,
which can vary from $20,000 to $40,000 per month. The Company estimates that
completion of a feasibility study will cost approximately $5 million and the
Company expects that it will take approximately 12 months to complete. Following
the completion of a successful feasibility study, the Company would then proceed
to the construction phase, which would entail construction of a mine and related
infrastructure pursuant to a mine plan developed specifically for the Company's
concessions, and construction of an extraction plant to extract metal from
the
ore that would be mined.
Much
of
the infrastructure required for a mine, including access to roads, electricity
and rail lines, is already in place due to the historical mining operations
conducted in the District. Results from mapping, sampling, drilling and
inspection of existing workings indicate that large mineralized resources can
be
developed within and adjacent to the existing workings and in unexplored
stratigraphic units outside of and below the existing mine workings. The Company
anticipates that it would also build additional infrastructure, including mine
access, a tailings pond and an extraction plant. The Company would also enter
into agreements with the landowners of the concessions' surface rights upon
completion of a feasibility study and finalization of a mine plan for the
Project. The Company estimates that construction of a mine and extraction plant
would cost approximately $400 million and take approximately two to three years
to complete.
A
description of work completed in the exploration phase and initiated in the
feasibility phase follows:
In
1997
the Company initiated exploration of the concessions by collecting and analyzing
historical data from previous mining operations, surveying the locations of
the
mines, geological mapping, and sampling of the surface and some of the existing
mines. Based on the information gained from this work, the Company has been
exploring the tabular, nearly horizontal bodies of mineralized material located
on the concessions that are known as mantos.
Exploration
from 1997 to 1999 concentrated on the polymetallic copper, silver, zinc, lead
mineralization north of the Sierra Mojada Fault. The Veta Rica, Once, San Jose
and other mines located in the western part of the district were mapped and
channel sampled. In the eastern part of the District in the Encantada and
Fronteriza mines, copper, silver, zinc, lead mineralization has been mapped,
channel sampled and drilled and is known as the Polymetallic Manto. Work on
the
polymetallic mineralization was put on standby in 1999 when the Company
recognized the potential of the oxide zinc mineralization as a result of a
positive feasibility study conducted on the Skorpion Mine located in Namibia,
Africa, that demonstrated that the use of the solvent extraction electrowinning
("SXEW) process could make it profitable to mine oxide zinc deposits that would
otherwise be unfeasible. Now that the Company's work on the oxide zinc
mineralization is in the feasibility study stage, the Company anticipates
continued exploration of the polymetallic mineral system north of the Sierra
Mojada Fault. However, the Company has not yet allocated financial resources
nor
established a timeline for when it expects to initiate such additional
exploration.
In
September 1999, the Company entered into a joint venture agreement with North
Ltd. of Australia. North Ltd. conducted a surface reverse circulation drill
program that drilled 26 holes to explore the oxide zinc mineralization south
of
the Sierra Mojada Fault. North Ltd. was purchased by Rio Tinto for its iron
ore
holdings and in October 2000 Rio Tinto terminated the joint venture with the
Company. Rio Tinto did not retain an interest in the Sierra Mojada
concessions.
In
November 2001, the Company entered into a joint venture agreement with Servios
Industriales Penoles ("Penoles"), Mexico's second largest mining company.
Penoles conducted exploration of the oxide zinc mineralization that included:
channel sampling; driving raises vertically through the mineralized mantos;
and
surface and underground drilling. In November 2003, Penoles and the Company
terminated their joint venture agreement by mutual consent. Penoles did not
retain an interest in the concessions.
The
Company initiated a diamond drill program in January 2004, and drilled over
30,000 meters in 2004 and 2005. In addition, over 9,000 meters of percussion
drill and over 12,000 meters of channel samples of the oxide zinc mineralization
in the San Salvador, Encantada and Fronteriza mines has been completed by the
Company and its joint venture partners. This work has defined a body of oxide
zinc mineralization extending 1,500 meters in an east-west direction, 100 to
200
meters in a north-south direction, and 20 to 100 meters vertically. The Company
intends to continue the drill program into the Esmeralda mine, the next mine
to
the west of the San Salvador, to further define the extent of the Iron Oxide
Manto and the Smithsonite Manto.
Prior
mining of oxide zinc mineralization has occurred intermittently over a distance
in excess of 5 kilometers from the Oriental Mine located in the east end of
the
District to the Vasquez Tres Mine located in the west end of the District.
Holes
drilled 2,000 meters west of the San Salvador Mine intersected oxide zinc
mineralization that is up to 140 meters (460 feet) thick and 10 meters (33
feet)
below the surface. Drilling has also intersected oxide zinc mineralization
intermittently over the 2,000 meters between the Fronteriza mine and the
Oriental mine.
In
2004,
the Company retained Reserva International, LLC, an independent contractor
specializing in resource evaluation, to generate a block model evaluation based
upon the data compiled from the Company's and its joint venture partner's
accumulated database to determine the size and grade of the mineralization
of
the Iron Oxide Manto and the Smithsonite Manto. Based on the estimates generated
from the block model evaluation, the Company has determined that the estimated
mineralization justifies a feasibility study of the Iron Oxide
Manto.
Although
the Company is of the opinion that sufficient mineralized material has been
defined to justify construction of a mine, extraction plant and refinery, the
Company still must complete a feasibility study to determine whether a mining
operation may be profitably conducted. This study will consist of a detailed
engineering and economic valuation of the Iron Oxide Manto mineralized material
to determine the viability and profitability of the potential
operation.
The
Company initiated the feasibility study in 2004, retaining Green Team
Consultants Internation cc ("GTI"), of Johannesburg, South Africa. GTI was
selected, in part, due to GTI's experience conducting the feasibility study
for
the Skorpion Mine in Namibia, Africa. GTI supervised the design, construction
and training of the Skorpion Zinc personnel, and operated the mine and
extraction plant through initial production and until the mine and plant were
90% of capacity, at which point operation of the mine and plant was turned
over
to Skorpion Zinc, a subsidiary of Anglo American Corporation PLC.
The
Skorpion Mine is the first, and to date only, mine in the world using the SXEW
process for extracting zinc from oxide zinc ore and produces a refined product,
Super High Grade zinc which is 99.995% zinc. SXEW is a hydrometallurgical
process that has about a 30% lower cost for extracting zinc than the
pyrometallurgical process used at smelters by essentially all other mining
operations around the world. The Company anticipates that using the SXEW process
will enable the Company to extract zinc more efficiently and economically than
its competitors.
GTI,
as
general contractor for the feasibility study, has retained TWP Consulting (pty)
Ltd. ("TWP") to prepare the mine plan as part of the feasibility study for
the
Project. TWP is a large South African mining consulting company that has worked
on large mining projects in South Africa and internationally, including the
mine
plan at the Skorpion Mine.
GTI
has
also retained Min-Tek, a South African consulting company specializing in
mineral and metallurgical research and development, to complete the
metallurgical work for the Project. Min-Tek performed the metallurgical work
for
the Skorpion feasibility studies.
GTI
has
also retained SRK Consulting ("SRK") as the auditing engineering firm for the
feasibility study. SRK is a world-wide engineering consulting company that
was
the auditing engineering firm for the feasibility study of the Skorpion
Mine.
Principals
of GTI, TWP and SRK have completed a tour and examination of the Sierra Mojada
Property, reviewed the project data, conducted underground examination of the
Iron Oxide, Smithsonite and Polymetallic Mantos, and selected surface locations
for the mine and extraction plant facilities.
On
July
12, 2005, the Company released the results of Mint-Tek's metallurgical test
work. The test work focused on demonstrating the viability of using a
combination of dense media separation ("DMS") and flotation processes to
successfully produce a zinc oxide concentrate from a variety of samples taken
from the Sierra Mojada mineralization. The report included a conceptual block
flow diagram showing the key DMS and flotation steps followed by conventional
zinc refining using leach, solvent extraction and electrowinning. The Company
believes that the ability to produce a concentrate which can be shipped
economically would be a major contributing factor to the potential success
of
the Project because it would allow the Company to choose the best site for
a
refinery based upon the tax regime, cost of power and other capital and
operating cost inputs available at various locations. In addition, the report
noted that acid-consuming mineral such as limestone and dolomite would be
discarded in the concentration process, which would reduce sulphuric acid
consumption in the refinery process.
Min-Tek's
test work of the Sierra Mojada samples indicated that a zinc oxide concentrate
with a zinc content of 30% can be produced at an overall concentrator zinc
recovery of 75%-80%. The concentrate produced responded well to atmospheric
leaching with dilute sulphuric acid, and refinery leach extraction efficiency
was above 98%. The concentrator operating cost is expected to be approximately
$5-$8 per ton of ore treated, which is offset by the fact that the sulphuric
acid consumption in the refinery leach step is expected to be 70% less than
that
achievable with direct leaching of the ore.
The
Company expects to continue to optimize the concentrating process route by
conducting further test work to confirm key aspects of the flowsheet and to
enhance overall recovery and concentrate grade. In particular, the incorporation
of cleaner and scavenger steps in the flotation circuit and the potential to
recover zinc from slimes produced in the process (currently considered to be
discarded) provides further upside potential.
Feasibility
study work continues to determine the mining method and its related costs and
to
determine the production rate. Drilling continues to explore the Iron Oxide
Manto mineralization to the west in the San Salvador and La Esmeralda mines.
In
addition, surveying, mapping and channel sampling is being conducted in the
La
Esmeralda mine to determine the location of historic workings. No historic
data
is available for the La Esmeralda mine, which produced ore from the Lead Manto
south of the Sierra Mojada Fault and the copper, silver, polymetallic
mineralization north of the Sierra Mojada Fault. The Company expects that the
decline to access the Iron Oxide Manto mineralization will enter through ground
upon which La Esmeralda is located, and the location of the existing workings
must be determined as part of the mine plan for the feasibility study. Channel
samples in these workings have been collected and have produced a few thousand
samples of mineralized material, which consist of north side copper-silver
mineralization and south side oxide zinc mineralization. These samples have
been
prepared for assay and results will be announced when available.
The
Company has had a mining operation in the Smithsonite Manto that has been
shipping zinc carbonate ore to Cameron Chemical Company, for use as a
micronutrient for the fertilizer industry. During the period ended October
31,
2005, the Company realized other income from the sale of the zinc carbonate
ore.
The Company has ceased mining zinc carbonate ore, but anticipates continued
sales from the existing inventory of mined ore until the inventory is
depleted.
Cautionary
Note
The
Company is an exploration stage company and does not currently have any known
reserves and cannot be expected to have reserves unless and until a feasibility
study is completed for the Sierra Mojada concessions that shows proven and
probable reserves. There can be no assurance that the Company's concessions
contain proven and probable reserves and investors may lose their entire
investment in the Company.
Set
forth
below and elsewhere in this Annual Report on Form 10-KSB and in other
documents we file with the Securities and Exchange Commission are risks and
uncertainties that could cause actual results to differ materially from the
results contemplated by the forward-looking statements contained in this Annual
Report on Form 10-KSB.
Risk
Factors
Exploration
stage mining company with no history of operation.
The
Company is in its exploration stage, has no operating history, and is subject
to
all the risks inherent in a new business enterprise. The likelihood of success
of the Company must be considered in light of the problems, expenses,
difficulties, complication, and delays frequently encountered in connection
with
a new business, and the competitive and regulatory environment in which the
Company will operate.
No
commercially mineable ore body.
No
commercially mineable ore body has been delineated on the properties, nor have
any reserves been identified.
Risks
inherent in the mining industry.
The
Company is subject to all of the risks inherent in the mining industry
including, without limitation, the following: competition from a large number
of
companies, many of which are significantly larger than the Company, in the
acquisition, exploration, and development of mining properties; the concession
holder must pay fees and perform labor on the concessions to maintain the
concessions title; exploration for minerals is highly speculative and involves
substantial risks, even when conducted on properties known to contain
significant quantities of mineralization, and most exploration projects do
not
result in the discovery of commercially mineable deposits of ore; operations
are
subject to a variety of existing laws and regulations relating to exploration
and development, permitting procedures, safety precautions, property
reclamation, employee health and safety, air quality standards, pollution and
other environmental protection controls; a large number of factors beyond the
control of the Company, including fluctuations in metal prices, inflation,
and
other economic conditions, will affect the economic feasibility of mining;
mining activities are subject to substantial operating hazards some of which
are
not insurable or may not be insured due to economic considerations; and, the
availability of water, which is essential to milling operations.
Nature
of the industry.
Exploration,
development, and mining of mineral properties is highly speculative and involves
unique and greater risks than are generally associated with other businesses.
The Company's operations will be subject to all the operating hazards and risks
normally incident to the exploration, development, and mining of mineral
properties, including risks enumerated above and below.
Fluctuating
price for metals.
The
Company's operations will be greatly influenced by the prices of silver, copper,
lead, zinc, and other metals. These prices fluctuate widely and are affected
by
numerous factors beyond the Company's control, including expectations for
inflation, the strength of the United States dollar, global and regional demand
and political and economic conditions and production costs in major metal
producing regions of the world.
Mining
concessions.
The
Company holds mining concessions in Mexico. The Company holds title to the
concessions that it owns subject to its obligation to maintain the concessions
by conducting work on the concessions, recording evidence of the work with
the
Mexican Ministry of Mines and paying a semi-annual fee to the Mexican
government. Ownership
of the concessions provides the Company with exclusive exploration and
exploitation rights of all minerals located on the concessions, but does not
include the surface rights to the real property. Therefore, the Company will
need to negotiate the necessary agreements, as needed, with the appropriate
surface landowners if the Company determines that a mining operation is feasible
for the concessions. The Company currently anticipates that it will build mining
infrastructure needed on land owned by the local municipality. Initial
communications with the municipality officials indicate that they will be
willing to negotiate the necessary agreements, but there can be no assurance
that an agreement that is satisfactory to the Company will be
reached.
Environmental
controls.
Compliance
with statutory environmental quality requirements may necessitate significant
capital outlays, may materially affect the earning power of the Company, or
may
cause material changes in the Company's intended activities. No assurance can
be
given that environmental standards imposed by either federal or state
governments will not be changed or become more stringent, thereby possibly
materially adversely affecting the proposed activities of the
Company.
Governmental
regulation and environmental controls.
The
Company's activities are subject to extensive Mexican laws and regulations
controlling not only the exploration for and development of mineral properties,
but also the possible effect of such activities upon the environment. In its
mining operations, the Company will use certain equipment, which will subject
the Company to Mexican safety and health regulations. While the Company intends
to act in compliance with all such regulations, any adverse ruling under any
regulations, any imposition of a fine, or any imposition of more stringent
regulations could require the Company to make additional capital expenditures
that could impair its operations.
Availability
of water; shortages of supplies and materials.
Water
is
essential in all phases of the exploration and development of mineral
properties. It is used in such processes as exploration, drilling, leaching,
placer mining, dredging, testing, and hydraulic mining. Any water that may
be
found will be subject to acquisition pursuant to appropriate governing laws.
The
Company has not determined the availability of water at Sierra Mojada, except
to
note that adequate water supplies are generally developed by drilling, but
has
not determined the cost of acquisition. Both the lack of available water and
the
cost of acquisition may make an otherwise viable project economically impossible
to complete. The mineral industry has experienced from time to time shortages
of
certain supplies and materials necessary in the exploration for and evaluation
of mineral deposits. The prices at which such supplies and materials are
available have also greatly increased. There is a possibility that planned
operations may be subject to delays due to such shortages and that further
price
escalations will increase the costs of the Company.
Uninsured
risks.
The
Company may not be insured against all losses or liabilities, which may arise
from operations, either because such insurance is unavailable or because the
Company has elected not to purchase such insurance due to high premium costs
or
other reasons.
Need
for subsequent funding.
The
Company has an immediate need for additional funds in order to finance its
proposed business operations. The Company's continued operations therefore
will
depend upon the availability of cash flow, if any, from its operations or its
ability to raise additional funds through equity or debt financing. There is
no
assurance that the Company will be able to obtain additional funding when
needed, or that such funding, if available, can be obtained on terms acceptable
to the Company. If the Company cannot obtain needed funds, it may be forced
to
curtail or cease its activities.
Need
for additional key personnel.
At
the
present, the Company employs four full-time and one part-time employee. The
success of the Company's proposed business will depend, in part, upon the
ability to attract and retain qualified employees. The Company believes that
it
will be able to attract competent employees, but no assurance can be given
that
the Company will be successful in this regard. If the Company is unable to
engage and retain the necessary personnel, its business would be materially
and
adversely affected.
Reliance
upon directors and officers.
The
Company is wholly dependent, at the present, upon the personal efforts and
abilities of its officers and directors who will exercise control over the
day
to day affairs of the Company. While the Company may solicit business through
its officers, there can be no assurance as to the volume of business, if any,
which the Company may succeed in obtaining, nor that its proposed operations
will prove to be profitable. As of the date hereof, the Company does not have
any commitments regarding its proposed operations and there can be no assurance
that any commitments will be forthcoming.
Non-arms'
length transaction.
The
number of shares of common stock issued to certain shareholders of the Company
for cash was arbitrarily determined and may not be considered the product of
arm's length transactions.
Indemnification
of officers and directors for securities liabilities.
The
Bylaws of the Company provide that the Company may indemnify any director,
officer, agent, and/or employee as to those liabilities and on those terms
and
conditions as are specified in the Nevada Business Corporation Act. Further,
the
Company may purchase and maintain insurance on behalf of any such persons
whether or not the corporation would have the power to indemnify such person
against the liability insured against. The foregoing could result in substantial
expenditures by the Company and prevent any recovery from such officers,
directors, agents, and employees for losses incurred by the Company as a result
of their actions. Further, the Company has been advised that in the opinion
of
the Securities and Exchange Commission, indemnification is against public policy
as expressed in the Securities Act of 1933, as amended, and is, therefore,
unenforceable.
Competition.
The
Company believes that it will have competitors and potential competitors, many
of whom may have considerably greater financial and other resources than the
Company.
Public
market for securities.
At
present, the Company's common stock is traded under the symbol MMGG on the
OTC
Bulletin Board operated by the National Association of Securities Dealers,
Inc.
This market is a thinly traded market and lacks the liquidity of other public
markets with which some investors may have more experience.
Cumulative
voting, preemptive rights and control.
There
are
no preemptive rights in connection with the Company's common stock. The
Company's shareholders may be further diluted in their percentage
ownership of the Company in the event additional shares are issued by the
Company in the future. Cumulative voting in the election of directors is not
provided for. Accordingly, the holders of a majority of the shares of common
stock, present in person or by proxy, will be able to elect all of the Company's
Board of Directors.
Sales
of Unregistered Securities
The
Company has financed its obligations to date by selling shares of its common
stock in transactions that have not been registered under the Securities
Act or
registered or qualified under any applicable state or foreign securities
laws.
The Company has attempted to limit its sales to accredited investors in
compliance with the exemptions from registration provided by the Securities
Act
and various state securities laws for private placement transactions. There
can
be no assurance, however, that the Company's sales will be deemed to be exempt
by securities regulators. The Company is currently reviewing its sales of
unregistered securities to determine whether these sales have complied with
the
appropriate exemptions for the states in which the Company has sold securities.
A finding that the Company is liable for damages for past securities sales
could
have a material adverse effect on the Company.
Lack
of Formal Market Study
The
Company has not requisitioned a formal marketing study by an independent
marketing organization to evaluate the demand for mineral resources that
the
Company intends to develop. The Company has conducted in-house evaluation
of
market factors to support its assessment of the mining industry and the demand
for zinc, but there can be no assurance that there is sufficient demand to
support the development of the Project and the sale of zinc or other metals
that
the Company may mine as part of the Project.
No
dividends anticipated.
At
the
present time the Company does not anticipate paying dividends, cash or
otherwise, on its common stock in the foreseeable future. Future dividends
will
depend on earnings, if any, of the Company, its financial requirements and
other
factors. There can be no assurance that the Company will pay
dividends.
The
Company owns the following eight mining concessions, including the buildings
and
equipment located thereon:
Concession
|
|
Title
No.
|
|
Hectares
|
|
|
|
|
|
|
|
Sierra
Mojada
|
|
|
198513
|
|
|
4,767.3154
|
|
Mojada
3
|
|
|
199246
|
|
|
1,689.2173
|
|
Esmeralda
|
|
|
188765
|
|
|
117.5025
|
|
Esmeralda
1
|
|
|
187776
|
|
|
97.6839
|
|
Unificación
Mineros Nortenos
|
|
|
169343
|
|
|
336.7905
|
|
La
Blanca
|
|
|
188326
|
|
|
33.5044
|
|
Fortuna
|
|
|
160461
|
|
|
13.9582
|
|
Vulcano
|
|
|
83507
|
|
|
4.4904
|
|
Total
|
|
|
|
|
|
7,060.4626
|
|
The
eight
concessions total 7,060 hectares (17,445 acres). The Company owns 100% of the
eight concessions pursuant to purchase agreements with the previous owners.
A
number of prior established concessions that are not owned by the Company are
located within the largest concession, the Sierra Mojada concession. The Company
holds title to the concessions that it owns subject to its obligation to
maintain the concessions by conducting work on the concessions, recording
evidence of the work with the Mexican Ministry of Mines and paying a semi-annual
fee to the Mexican government.
Ownership
of a concession provides the owner with exclusive exploration and exploitation
rights of all minerals located on the concessions, but does not include the
surface rights to the real property. Therefore, the Company will need to
negotiate the necessary agreements, as needed, with the appropriate surface
landowners if the Company determines that a mining operation is feasible for
the
concessions. The Company currently anticipates that it will build mining
infrastructure needed on land owned by the local municipality. Initial
communications with the municipality officials indicate that they will be
willing to negotiate the necessary agreements.
The
concessions are located within a mining district known as the Sierra Mojada
District (the "District"). The District is located in the west central part
of
the state of Coahuila, Mexico, near the Coahuila-Chihuahua state border
approximately 200 kilometers south of the Big Bend of the Rio Grande River.
See
Exhibit 99.1 attached hereto and incorporated herein by reference for a map
showing the location of the mine. The principal mining area extends for some
5
kilometers in an east-west direction along the base of the precipitous, 1,000
meter high, Sierra Mojada Range. The District has high voltage electric power
supplied by the national power company, Comision Federal de Electricidad, C.F.E.
and is supplied water by the municipality of Sierra Mojada. The District is
accessible from Torreon by vehicle via 250 kilometers of paved road. There
is a
well maintained, 1,100 meter, gravel airstrip in the District as well as a
railroad connecting with the National Railway at Escalon and
Monclova.
Over
45
mines have produced ore from underground workings throughout the approximately
five kilometer by two kilometer area that comprises the District. The Company
estimates that since its discovery in 1879, the District has produced about
10
million tons of high grade ore that was shipped directly to smelters. The
District has never had a mill to concentrate ore and all mining conducted thus
far has been limited to selectively mined ore of sufficient grade to direct
ship
to smelters. The Company believes that mill grade mineralization that was not
mined remains available for extraction. The Company anticipates exploring and
potentially developing the mill grade mineralization and the unexplored portions
of the concessions.
The
concessions contain two distinct mineral systems separated by the Sierra Mojada
Fault which trends east-west along the base of the range. North of the fault
mineralization composed of silver, copper, zinc, lead sulfide and oxide
minerals. South of the fault the mineralization is oxide zinc and oxide lead
minerals.
The
sediments in the District are predominantly limestone and dolomite with some
conglomerate, sandstone and shale and the bedding attitudes are near horizontal.
The mines are dry and the rocks are competent. The thickness and attitude of
the
mineralized material is amenable to high volume mechanized mining methods and
low cost production.
Much
of
the infrastructure required for a mine, including access to roads, electricity
and rail lines, is already in place due to the historical mining operations
conducted in the District. Results from mapping, sampling, drilling and
inspection of existing workings indicate that large mineralized resources can
be
developed within and adjacent to the existing workings and in unexplored
stratigraphic units outside of and below the existing mine workings. The Company
anticipates that it would also build additional infrastructure, including mine
access, a tailings pond and an extraction plant. The Company would also enter
into agreements with the landowners of the concessions' surface rights upon
completion of a feasibility study and finalization of a mine plan for the
Project. The Company estimates that construction of a mine and extraction plant
would cost approximately $400 million and take approximately two to three years
to complete. The Company intends to finance this cost with a combination of
equity and debt. In addition the Company may seek joint venture partners or
other alternative financing sources as necessary to complete development of
the
Project.
The
Company's corporate offices are located at 1330 East Margaret Avenue, Coeur
d'Alene, Idaho 83815, and its telephone number is (208) 665-2002 and FAX is
(208) 665-0041. The Company's facilities in Mexico include offices, residences,
shops, warehouse buildings and mining equipment located at Calle Maria #1,
La
Esmeralda, Coahuila, Mexico. The Company's telephone and FAX number in Mexico
is
52 872 761 5129. Electric power has been upgraded to 13,200 volts and lines
run
to the compound, the shops and the San Salvador and Encantada mines. The San
Salvador and the Encantada mines have been electrified and the main levels
are
wired. San Salvador and Encantada head frames and hoists have been rebuilt
and
upgraded. In management's opinion, the Company's properties may not be
adequately covered by insurance. The Company has chosen not to obtain such
insurance for the Company's properties in Mexico because it would be difficult
to obtain and the cost of such insurance would outweigh its value. In
management's opinion, the Company's plant and equipment are in good condition
and well maintained.
The
Company is not currently a party to any legal proceedings.
There
were no matters submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
The
Company's shares are traded on the Over-the-Counter Bulletin Board operated
by
the National Association of Securities Dealers, Inc. under the trading symbol
"MMGG." The Company's shares began trading on November 19, 1996. A summary
of
trading by quarter for 2005, 2004, and 2003 follows:
Fiscal
Quarter
|
|
High
Bid(1)
|
|
Low
Bid(1)
|
|
|
|
|
|
|
|
2005
|
|
|
|
|
|
Fourth
Quarter
|
|
|
1.25
|
|
|
0.84
|
|
Third
Quarter
|
|
|
1.45
|
|
|
0.90
|
|
Second
Quarter
|
|
|
2.09
|
|
|
1.35
|
|
First
Quarter
|
|
|
2.31
|
|
|
1.55
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
|
|
|
|
|
Fourth
Quarter
|
|
|
2.10
|
|
|
1.57
|
|
Third
Quarter
|
|
|
3.25
|
|
|
1.64
|
|
Second
Quarter
|
|
|
2.45
|
|
|
1.75
|
|
First
Quarter
|
|
|
3.21
|
|
|
1.60
|
|
|
|
|
|
|
|
|
|
2003
|
|
|
|
|
|
|
|
Fourth
Quarter
|
|
|
2.00
|
|
|
1.18
|
|
Third
Quarter
|
|
|
1.35
|
|
|
1.10
|
|
Second
Quarter
|
|
|
1.40
|
|
|
1.01
|
|
First
Quarter
|
|
|
1.45
|
|
|
1.20
|
|
|
|
|
|
|
|
|
|
(1) |
These
quotations reflect inter-dealer prices, without retail markup, markdown,
or commissions, and may not represent actual
transactions.
|
As
of
October 31, 2005, the Company had approximately 300 holders of record of its
common stock.
The
Company has not paid any dividends since its inception and does not anticipate
paying any dividends on its common stock in the foreseeable future.
During
the year ended October 31, 2003, the Company sold 7,000 common stock units
with
an ascribed cash value of $10,500. The Company also sold 849,000 shares (without
warrants) at an average price of $0.98 per share. The Company also issued
100,000 shares of common stock under the Penoles agreement for cash, at $2.00
per share (see Note 12). Additionally, 373,925 shares of common stock valued
at
$468,771 were issued as compensation for officers. These shares were issued
in
private placement transactions without registration under the Securities Act
in
reliance upon the exemptions from the registration requirements provided by
Section 4(2) and Rule 506 of Regulation D under the Securities Act.
During
the year ended October 31, 2004, the Company issued a total of 7,580,150 shares
of common stock to accredited investors for cash at $1.00 per share, realizing
$6,881,287 after private placement costs of $698,863. Additionally, 141,286
shares of common stock valued at an aggregate of $155,214 were issued for
services and 120,655 shares of common stock valued at an aggregate of $152,271
were issued as compensation to officers. These shares were issued in private
placement transactions without registration under the Securities Act in reliance
upon the exemptions from the registration requirements provided by Section
4(2)
and Rule 506 of Regulation D under the Securities Act.
During
the year ended October 31, 2005, the Company issued 476,404 shares of common
stock for cash at an average of $0.98 per share, for a total received of
$466,729. In connection with the sale of these shares, for each share sold
the
Company also issued a warrant to purchase one additional share of common stock
at an exercise price of $1.25 per share. In addition, 176,772 shares of common
stock valued at an aggregate of $176,772 were issued as compensation to officers
and employees. These securities were issued in private placement transactions
without registration under the Securities Act in reliance upon the exemptions
from the registration requirements provided by Section 4(2) and Rule 506 of
Regulation D under the Securities Act.
Plan
of Operation
The
Company's plan of operation for the next twelve months, subject to maintaining
sufficient funds, is to conduct a feasibility study for the Company's Sierra
Mojada Project to determine whether a mining operation may be profitably
conducted on the Company's concessions. The study is expected to include a
detailed engineering and economic valuation of the Iron Oxide Manto mineralized
material with continued geologic mapping of the surface and underground
workings, sampling and drilling to explore for additional mineralization, and
compilation of the data into a computer data base for reserve calculation to
determine whether a mining operation can be economically conducted on the
Company's Sierra Mojada concessions. See "Description of Business."
In
order
to finance the initiation of the feasibility study, the Company has raised
capital by selling unregistered shares of its common stock in a private
placement offering. The Company anticipates that the funds that it has raised
will be sufficient to maintain operations for the next twelve months, but there
can be no assurance that the Company has sufficient funds to complete the
feasibility study. If the Company is unable to raise additional capital, it
may
have to cease operations.
Due
to
the Company's lack of revenues, the Company's independent certified public
accountants included a paragraph in the Company's 2005 financial statements
relative to a going concern uncertainty. The Company has financed its
obligations during the 2004-2005 fiscal year by its sale of 476,404 shares
at an
average price of $0.98 per share.
The
selected financial data set forth below has been derived from, and should be
read in conjunction with the Company's financial statements and the notes
thereto, and Item 6 of this report entitled "Management's Discussion and
Analysis or Plan of Operation. The selected financial data for the two years
ended October 31, 2005 have been derived from the Company's audited consolidated
financial statements beginning on page F/A-1, and incorporated by reference
herein.
The
selected financial data should be read in conjunction with and is qualified
by
such financial statements and the notes thereto.
Selected
Financial Data
|
|
2005
|
|
2004
|
|
Summary
of Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital
|
|
$
|
(35,526
|
)
|
$
|
2,551,383
|
|
Current
assets
|
|
|
259,791
|
|
|
2,758,268
|
|
Total
assets
|
|
|
5,085,442
|
|
|
7,659,878
|
|
Current
liabilities
|
|
|
295,317
|
|
|
206,885
|
|
Long-term
obligation
|
|
|
7,365
|
|
|
11,574
|
|
Total
liabilities
|
|
|
302,682
|
|
|
218,459
|
|
Stockholder's
equity
|
|
|
4,782,760
|
|
|
7,441,419
|
|
|
|
|
|
|
|
|
|
Summary
of Statements of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
0
|
|
|
0
|
|
Net
loss (1)
|
|
|
(3,302,161
|
)
|
|
(5,036,805
|
)
|
Net
loss per share
|
|
|
(0.16
|
)
|
|
(0.30
|
)
|
|
|
|
|
|
|
|
|
(1) |
Cumulative
losses for period from inception (Nov. 8, 1993) through October 31,
2005
were $16,611,799.
|
There
have been no disagreements on accounting and financial disclosures through
the
date of this 10-KSB.
Disclosure
Controls and Procedures.
The
Company's principal executive officer and principal financial officer have
evaluated the effectiveness of the Company's disclosure controls and procedures
(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act) as of the end of the period covered by this report. Based on such
evaluation, the Company's principal executive officer and principal financial
officer have concluded that, as of the end of such period, the Company's
disclosure control and procedures are effective in recording, processing,
summarizing and reporting, on a timely basis, information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act.
Changes
in Internal Control Over Financial Reporting.
There
was
no change in the Company's internal control over financial reporting that
occurred during the fiscal period to which this report relates that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
Not
Applicable.
The
officers and directors of the Company are as follows:
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Merlin
Bingham
|
|
72
|
|
President
and Chairman of the Board of Directors
|
|
|
|
|
|
Roger
Kolvoord
|
|
65
|
|
Vice
President-Business and Member of the Board of Directors
|
|
|
|
|
|
Wesley
A. Pomeroy
|
|
51
|
|
Member
of the Board of Directors
|
|
|
|
|
|
Terry
J. Brown
|
|
46
|
|
Vice
President-Operations
|
|
|
|
|
|
Wayne
Schoonmaker
|
|
68
|
|
Secretary
& Treasurer
|
All
directors hold office until the next annual meeting of shareholders or until
their successors have been elected and qualified. The Company's officers are
elected by the Board of Directors at the annual meeting and hold office until
their death, or until they resign.
The
Company's Board of Directors is responsible for the oversight and management
of
the Company. The Board does not have a separately-designated standing audit
committee because the entire Board of Directors acts as the Company's audit
committee. The Board has not designated an audit committee financial expert,
as
that term is defined in the Exchange Act rules promulgated by the SEC, because
of the size of the Board and because the Company is still an exploration stage
company.
Officer
and Director Biographies:
Merlin
Bingham, President, and Chairman of the Board of Directors
Since
October 1996, Mr. Bingham has been the President and Chairman of the Board
of
Directors of the Company. From 1963 to 1983 Mr. Bingham worked in exploration
for mining and oil companies in the western U.S. and Alaska, Zambia, the United
Arab Emirates, Ecuador and Mexico. Since 1983, Mr. Bingham has been a consulting
geologist. Mr. Bingham received a B.S. degree in Mineralogy from the University
of Utah in 1963.
Roger
Kolvoord - Vice President-Business and Director
Dr.
Kolvoord has been a director of the Company since August 2002 and was appointed
Vice President, Business in April 2003. Dr. Kolvoord has a B.S. degree in
geology from the University of Michigan, a M.S. in Mineralogy form the
University of Utah, and a Ph.D. in geochemistry from the University of Texas
at
Austin. He worked in exploration and exploration research for Kennecott Copper
Company, Ranchers Exploration and Development Corporation, and ARCO, and
operated a services company providing field services to oil and gas and mining
companies. He has extensive mining and energy exploration experience. He was
a
manager with the Boeing Company for 14 years, working mainly in program
management and new business development capacities in information systems and
in
remote sensing and geospatial information (mapping) ventures. An Associate
Technical
Fellow
of
the Boeing Company, he returned to private consulting practice in 2000. An
active member of the American Association of Petroleum Geologists, he served
two
terms as the Pacific Section Councilor of the Energy Minerals Division and
is
currently Chair of the Geospatial Information Committee. He resides in the
Puget
Sound region of Washington.
Wesley
A.
Pomeroy - Director
Mr.
Pomeroy was appointed to the Board of Directors in September 2005 to fill an
existing vacancy. Mr. Pomeroy is currently President of The Joe Dandy
Mining Company, with gold properties in Cripple Creek, Colorado, and is a member
of the Front Range Oil and Gas LLC and the POMOCO LLC (Pomeroy Oil Company).
He
is also currently a consulting geologist with Vortex Petroleum Inc. and has
been
associated since 1977 with various exploration and oil and gas companies. Mr.
Pomeroy received a Bachelor of Science degree in geology from Colorado State
University in 1977 and an MBA from the University of Colorado in 1990.
He
resides in the Denver, Colorado area.
Terry
J.
Brown - Vice President-Operations
Mr.
Brown
was appointed Vice President-Operations in September 2005. Mr. Brown has 22
years experience in the mining industry in the United States, Mexico and Chile
and has most recently been active as a consulting geologist in Mexico. His
background is in exploration and project management, mine development and
feasibility studies, and mining operations. Mr. Brown is a Certified
Professional Geologist and is a member of the American Institute of Professional
Geologists and the Society of Economic Geologists. He received a Bachelor of
Science degree in geology from the New Mexico Institute of Mining &
Technology in 1983. Mr. Brown resides in Chihuahua, Mexico.
Wayne
Schoonmaker - Secretary & Treasurer
Mr.
Schoonmaker was appointed Secretary & Treasurer of the Company in August
1997 and has held that position since that time. He is also currently Secretary
& Treasurer of Hanover Gold Company, Inc. of Spokane, Washington and
Secretary & Treasurer and Director of Independence Lead Mines Company of
Wallace, Idaho. During the period of 1979 through 1993, Mr. Schoonmaker was
employed at Asarco Incorporated as Chief Accountant of the Troy Mine and as
Financial Manager of Asarco's Northwest Mining Department. From July 1978 to
December 1978, Mr. Schoonmaker was Assistant Treasurer of the Bunker Hill Mining
Company, and from 1964 to 1978, he was Assistant Secretary of Hecla Mining
Company. Mr. Schoonmaker received a Bachelor of Science degree in Accounting
from the University of Montana in 1962 and an MBA from the University of Idaho
in 1987. Mr. Schoonmaker is a Certified Public Accountant in the states of
Idaho
and Montana.
Section
16(a) Beneficial Ownership Reporting Compliance
Under
Section 16(a) of the Securities Exchange Act of 1934, and the rules and
regulations promulgated thereunder, the Company's directors, executive officers
and beneficial owners of more than 10% of any registered class of the Company's
equity securities are required to file reports of their ownership of the
Company's securities and any changes in that ownership with the SEC. Based
solely on its review of copies of these reports and on written representations
from such reporting persons, the Company believes that during 2005 such filing
requirements were complied with.
Code
of Ethics
The
Company has not yet adopted a code of ethics that applies to the Company's
principal executive officer, and principal financial officer because of the
limited size of the Company and its management team, and because the Company
is
still an exploration stage company.
Summary
Compensation Table
The
following table sets forth information concerning compensation received from
the
Company by each of the executive officers for services in all capacities to
the
Company and its subsidiaries for the last four years. This information includes
the dollar value of base salaries, bonus awards and number of stock options
granted, and certain other compensation, if any.
|
|
|
|
|
|
|
|
|
|
Long-Term
Compensation
|
|
|
|
|
|
|
|
Annual
Compensation
|
|
Awards
|
|
|
|
|
|
Fiscal
|
|
|
|
|
|
Other
Annual
|
|
Securities
|
|
All
Other
|
|
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Compensation
|
|
Underlying
|
|
Compensation
|
|
Name
and Principal Position
|
|
ended
|
|
(US$)
|
|
(US$)
|
|
(US$)
|
|
Options
(#)
|
|
(US$)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merlin
Bingham
|
|
|
2005
|
|
|
201,563
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
President
|
|
|
2004
|
|
|
101,563
|
|
|
0
|
|
|
60,938(1
|
)
|
|
0
|
|
|
0
|
|
|
|
|
2003
|
|
|
33,854
|
|
|
0
|
|
|
135,417(1
|
)
|
|
0
|
|
|
0
|
|
|
|
|
2002
|
|
|
48,000
|
|
|
0
|
|
|
40,625(1
|
)
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger
Kolvoord
|
|
|
2005
|
|
|
81,250
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Vice
President
|
|
|
2004
|
|
|
118,750
|
|
|
0
|
|
|
74,479(1
|
)
|
|
0
|
|
|
0
|
|
|
|
|
2003
|
|
|
33,854
|
|
|
0
|
|
|
155,729(1
|
)
|
|
0
|
|
|
0
|
|
|
|
|
2002
|
|
|
0
|
|
|
|
|
|
0
|
|
|
100,000
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wayne
Schoonmaker
|
|
|
2005
|
|
|
20,250
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
Secretary,
Treasurer
|
|
|
2004
|
|
|
20,250
|
|
|
0
|
|
|
18,563(1
|
)
|
|
0
|
|
|
0
|
|
|
|
|
2003
|
|
|
8,438
|
|
|
0
|
|
|
35,438(1
|
)
|
|
0
|
|
|
0
|
|
|
|
|
2002
|
|
|
12,000
|
|
|
0
|
|
|
10,125(1
|
)
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry
Brown
|
|
|
2005
|
|
|
56,160
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Vice
President
|
|
|
2004
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
2003
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
2002
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Represents
the value of shares of the Company's common stock issued as compensation
for services rendered, based on the fair market value of such shares
on
the date of issuance.
|
There
are
no other stock option plans, retirement, pension, or profit sharing plans for
the benefit of the Company's officers and directors.
Option
Grants in 2005.
During
the fiscal year ended October 31, 2005, the Company did not grant common
stock options.
Aggregated
Year-End Option Values
The
following table sets forth information on unexercised options at October 31,
2005. None of the executive officers exercised any stock option during fiscal
2005.
|
|
Number
of Unexercised Securities Underlying Options (#)
|
|
Value
of Unexercised In-the-Money Options(US$)(1)
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
|
Merlin
Bingham
|
|
|
100,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Roger
Kolvoord
|
|
|
100,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Wayne
Schoonmaker
|
|
|
50,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Because
there was no positive spread between the respective exercise prices
of
outstanding stock options and the closing price of the Company's
common
stock on October 31, 2005 ($0.83), none of the options were
in-the-money.
|
Long-Term
Incentive Plan Awards.
The
Company's shareholders approved a Qualified Stock Option Plan at the annual
meeting of shareholders held March 1, 2001. During the years ended October
31,
2001 and 2002, options for 350,000 shares and 100,000 shares, respectively,
were
granted to officers and directors of the Company. There were no options granted
during the years ended October 31, 2003, 2004 and 2005. Options for 100,000
shares granted to Daniel E. Gorski expired upon his resignation in September
2004.
Compensation
of Directors.
In
general, the directors do not receive any compensation for serving as members
of
the Board of Directors. There are no contractual arrangements with any member
of
the Board of Directors.
The
following table sets forth the common stock ownership of each person known
by
the Company to be the beneficial owner of five percent or more of the Company's
common stock, each director individually, and all officers and directors of
the
Company as a group. Each person has sole voting and investment power with
respect to the shares of common stock shown, unless otherwise noted, and all
ownership is of record and beneficial.
|
|
Amount
and
|
|
|
|
|
|
nature
of
|
|
|
|
|
|
beneficial
|
|
%
of Outstanding
|
|
Name
and Address of Beneficial
owner
|
|
ownership
|
|
Shares
|
|
|
|
|
|
|
|
Merlin
Bingham
|
|
|
1,296,285
|
|
|
6.35
|
%
|
1330
E. Margaret Ave.
|
|
|
|
|
|
|
|
Coeur
d'Alene, ID 83815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger
Kolvoord
|
|
|
356,891
|
|
|
1.75
|
%
|
1330
E. Margaret Ave.
|
|
|
|
|
|
|
|
Coeur
d'Alene, ID 83815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wayne
Schoonmaker
|
|
|
73,116
|
|
|
*
|
|
1330
E. Margaret Ave.
|
|
|
|
|
|
|
|
Coeur
d'Alene, ID 83815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wesley
Pomeroy
|
|
|
50,000
|
|
|
*
|
|
1330
E. Margaret Ave.
|
|
|
|
|
|
|
|
Coeur
d'Alene, ID 83815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry
Brown
|
|
|
0
|
|
|
*
|
|
1330
E. Margaret Ave.
|
|
|
|
|
|
|
|
Coeur
d'Alene, ID 83815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
officers and directors as a group (5 persons)
|
|
|
1,549,520
|
|
|
8.46
|
%
|
|
|
|
|
|
|
|
|
Britannia
Holdings
|
|
|
3,190,500
|
|
|
15.64
|
%
|
King's
House The Grange
|
|
|
|
|
|
|
|
St.
Peter Port Guernsey Channel Islands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
COMPENSATION PLAN INFORMATION
The
following table provides information about the Company's common stock that
may
be issued upon the exercise of options, warrants and rights under the Company's
equity compensation plans as of October 31, 2005.
Plan
Category
|
|
(a)
Number of Securities to be Issued Upon Exercise of Outstanding Options,
Warrants and Rights
|
|
(b)
Weighted Average Exercise Price of Outstanding Options, Warrants
and
Rights
|
|
Securities
Remaining Available for Future Issuance Under Equity Compensation
Plans
(Excluding Securities Reflected in Column (a))
|
|
Equity
compensation plans approved by shareholders:
|
|
|
670,000
|
|
$
|
1.56
|
|
|
0
|
|
Equity
compensation plans not approved by shareholders:
|
|
|
1,163,887
|
|
$
|
2.02
|
|
|
0
|
|
Total:
|
|
|
2,008,053
|
|
$
|
1.87
|
|
|
0
|
|
Equity
Compensation Plans Not Approved by Security Holders
Warrants
Thirty-three
warrants to non-employees remained outstanding as of October 31, 2005. Such
warrants were granted pursuant to the terms of a form warrant agreement, with
each such grant authorized by the Board. These warrants have not been approved
by the shareholders of the Company. The warrants have exercise prices ranging
from $0.75 per share to $5.00 per share and have expiration dates ranging from
June 2006 to January 2011.
The
Company receives rent-free office space in Coeur d'Alene, Idaho from its
president. The value of the space is not considered materially significant
for
financial reporting purposes. The Company also has given $9,560 in cash advances
for travel to two of its officers at October 31, 2005 under an accountable
plan
per IRS Regulation Section 1.62.
The
exhibits filed as part of this report and the exhibits incorporated herein
by
reference are listed
in
the
Exhibit Index at page E-1.
Audit
Fees:
The
aggregate fees and expenses billed by Williams & Webster, P.S. for
professional services rendered for the audit of the Company's annual financial
statements and the review of the financial statements included in the Company's
periodic reports filed with the SEC on Forms 10-Q, were $18,409 and $21,647
for
the fiscal years ended October 31, 2004 and 2005,
respectively.
Audit
Related Fees:
There
were no fees billed by Williams & Webster, P.S. for audit related services
rendered during fiscal 2004 and 2005.
Tax
Fees:
There
were no fees billed by Williams & Webster, P.S. for tax services rendered
during fiscal 2004 and 2005.
All
Other Fees:
There
were no other services provided by Williams & Webster, P.S. during fiscal
2004 and 2005.
METALLINE
MINING COMPANY
An
Exploration Stage Company
October
31, 2005
In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
METALLINE
MINING COMPANY
Merlin
Bingham, its
President
Date:
January 30, 2006
By:
/s/
Wayne
Schoonmaker
Wayne
Schoonmaker, its
Principal
Accounting Officer
Date:
January 30, 2006
In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the
dates indicated.
By: |
/s/
Merlin Bingham |
|
By:
|
/s/
Roger Kolvoord |
|
Merlin Bingham |
|
|
Roger Kolvoord |
|
President/Director |
|
|
Vice President-Business/Director |
|
Date: January 30, 2006 |
|
|
Date: January 30, 2006 |
|
|
|
|
|
By: |
/s/
Wayne Schoonmaker |
|
By: |
/s/
Wesley Pomeroy |
|
Wayne Schoonmaker |
|
|
Wesley Pomeroy |
|
Secretary/Treasurer |
|
|
Director |
|
Date: January 30, 2006 |
|
|
Date: January 30,
2006 |
METALLINE
MINING COMPANY
|
PAGE
|
|
|
|
F/S-1
|
|
|
Financial
Statements:
|
|
|
|
|
F/S-2
|
|
|
|
F/S-3
|
|
|
|
F/S-4
|
|
|
|
F/S-7
|
|
|
|
F/S-8
|
[The
balance of this page has been intentionally left blank.]
The
Board
of Directors
Metalline
Mining Company
Coeur
d'Alene, Idaho
We
have
audited the accompanying consolidated balance sheets of Metalline Mining Company
(a Nevada corporation and an exploration stage company) as of October 31, 2005
and 2004, and the related consolidated statements of operations, stockholders'
equity and cash flows for the years then ended, and for the period from November
8, 1993 (inception) to October 31, 2005. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our
audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In
our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Metalline Mining Company
as
of October 31, 2005 and 2004, and the results of its operations, stockholders'
equity and its cash flows for the years then ended, and for the period from
November 8, 1993 (inception) to October 31, 2005 in conformity with accounting
principles generally accepted in the United States of America.
The
accompanying consolidated financial statements have been prepared assuming
that
the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's significant operating losses raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters also are described in Note 2. The financial
statements do not include any adjustments that might result from the outcome
of
this uncertainty.
/s/
Williams & Webster, P.S.
Williams
& Webster, P.S.
Certified
Public Accountants
Spokane,
Washington
January
27, 2006
METALLINE
MINING COMPANY
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
31,
|
|
October
31,
|
|
|
|
2005
|
|
2004
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS |
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
213,369
|
|
$
|
1,384,030
|
|
Marketable
securities
|
|
|
—
|
|
|
1,250,000
|
|
Accounts
receivable
|
|
|
23,620
|
|
|
88,164
|
|
Prepaid
expenses
|
|
|
13,242
|
|
|
2,052
|
|
Employee
advances
|
|
|
9,560
|
|
|
34,022
|
|
Total
Current Assets
|
|
|
259,791
|
|
|
2,758,268
|
|
|
|
|
|
|
|
|
|
PROPERTY
CONCESSIONS
|
|
|
|
|
|
|
|
Sierra
Mojada, Mojada 3
|
|
|
15,875
|
|
|
15,875
|
|
Fortuna
|
|
|
76,725
|
|
|
76,725
|
|
Esmeralda
|
|
|
255,647
|
|
|
255,647
|
|
Esmeralda
I
|
|
|
180,988
|
|
|
180,988
|
|
U.M.
Nortenos, Vulcano
|
|
|
3,682,772
|
|
|
3,682,772
|
|
La
Blanca
|
|
|
122,760
|
|
|
122,760
|
|
Total
Property Concessions
|
|
|
4,334,767
|
|
|
4,334,767
|
|
|
|
|
|
|
|
|
|
EQUIPMENT
|
|
|
|
|
|
|
|
Office
and mining equipment, net
|
|
|
490,884
|
|
|
566,843
|
|
Total
Equipment
|
|
|
490,884
|
|
|
566,843
|
|
TOTAL
ASSETS
|
|
$
|
5,085,442
|
|
$
|
7,659,878
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
86,189
|
|
$
|
57,231
|
|
Accrued
liabilities and expenses
|
|
|
189,046
|
|
|
145,445
|
|
Other
liabilities
|
|
|
15,873
|
|
|
|
|
Note
payable, current portion
|
|
|
4,209
|
|
|
4,209
|
|
Total
Current Liabilities
|
|
|
295,317
|
|
|
206,885
|
|
|
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES
|
|
|
|
|
|
|
|
Note
payable, net of current portion
|
|
|
7,365
|
|
|
11,574
|
|
|
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
Preferred
stock, $0.01 par value; 1,000,000 shares authorized, no shares
outstanding
|
|
|
|
|
|
|
|
Common
stock, $0.01 par value; 50,000,000 shares authorized, 20,404,585
and
19,751,409 shares issued and outstanding,
respectively
|
|
|
204,047
|
|
|
197,515
|
|
Additional
paid-in capital
|
|
|
19,852,673
|
|
|
19,064,992
|
|
Stock
options and warrants
|
|
|
1,347,839
|
|
|
1,498,550
|
|
Deficit
accumulated during exploration stage
|
|
|
(16,621,799
|
)
|
|
(13,319,638
|
)
|
Total
Stockholders' Equity
|
|
|
4,782,760
|
|
|
7,441,419
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
5,085,442
|
|
$
|
7,659,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November
8,
|
|
|
|
|
|
|
|
1993
|
|
|
|
|
|
|
|
(Inception)
|
|
|
|
Years
Ended
|
|
to
|
|
|
|
October
31,
|
|
October
31,
|
|
October
31,
|
|
|
|
2005
|
|
2004
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
—
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GENERAL
AND ADMINISTRATIVE EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Salaries
and payroll expenses
|
|
|
797,104
|
|
|
633,019
|
|
|
3,237,617
|
|
Office
and administrative expenses
|
|
|
309,483
|
|
|
299,172
|
|
|
988,946
|
|
Taxes
and fees
|
|
|
95,353
|
|
|
108,220
|
|
|
489,441
|
|
Professional
services
|
|
|
328,954
|
|
|
516,015
|
|
|
4,367,642
|
|
Property
expenses
|
|
|
186,057
|
|
|
233,148
|
|
|
1,944,103
|
|
Depreciation
|
|
|
83,557
|
|
|
63,045
|
|
|
341,920
|
|
Exploration
and research
|
|
|
1,666,884
|
|
|
3,374,049
|
|
|
5,334,086
|
|
TOTAL
GENERAL AND ADMINISTRATIVE EXPENSES
|
|
|
3,467,392
|
|
|
5,226,667
|
|
|
16,703,754
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
FROM OPERATIONS
|
|
|
(3,467,392
|
)
|
|
(5,226,667
|
)
|
|
(16,703,754
|
)
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous
ore sales, net of expenses
|
|
|
7,964
|
|
|
170,217
|
|
|
165,138
|
|
VAT
tax refunds
|
|
|
119,615
|
|
|
|
|
|
119,615
|
|
Miscellaneous
income
|
|
|
8,500
|
|
|
|
|
|
8,500
|
|
Interest
and investment income
|
|
|
29,758
|
|
|
20,251
|
|
|
75,473
|
|
Interest
and financing expense
|
|
|
(606
|
)
|
|
(606
|
)
|
|
(286,771
|
)
|
TOTAL
OTHER INCOME
|
|
|
165,231
|
|
|
189,861
|
|
|
81,954
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
BEFORE INCOME TAXES
|
|
|
(3,302,161
|
)
|
|
(5,036,805
|
)
|
|
(16,621,799
|
)
|
INCOME
TAXES
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$
|
(3,302,161
|
)
|
$
|
(5,036,805
|
)
|
$
|
(16,621,799
|
)
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
AND DILUTED NET LOSS PER COMMON SHARE
|
|
$
|
(0.16
|
)
|
$
|
(0.30
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
|
|
|
20,014,313
|
|
|
17,025,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Common
Stock
|
|
Additional
|
|
Stock
|
|
Stock
|
|
Deficit
During
|
|
|
|
|
|
Number
of
|
|
|
|
Paid-in
|
|
Subscriptions
|
|
Options
and
|
|
Exploration
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Receivable
|
|
Warrants
|
|
Stage
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issuance prior to inception
(no
value)
|
|
|
960,800
|
|
$
|
9,608
|
|
$
|
(9,608
|
)
|
$
|
—
|
|
$
|
|
|
$
|
|
|
$
|
|
|
1:5
reverse common stock split
|
|
|
(768,640
|
)
|
|
(7,686
|
)
|
|
7,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended October 31, 1994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,831
|
)
|
|
(8,831
|
)
|
Balances,
October 31, 1994
|
|
|
192,160
|
|
|
1,922
|
|
|
(1,922
|
)
|
|
|
|
|
|
|
|
(8,831
|
)
|
|
(8,831
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3:1
common stock split
|
|
|
384,320
|
|
|
3,843
|
|
|
(3,843
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended October 31, 1995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,761
|
)
|
|
(7,761
|
)
|
Balances,
October 31, 1995
|
|
|
576,480
|
|
|
5,765
|
|
|
(5,765
|
)
|
|
|
|
|
|
|
|
(16,592
|
)
|
|
(16,592
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of common stock as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
for par value at transfer of ownership
|
|
|
2,000
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
-
for cash at an average of $0.11 per share
|
|
|
1,320,859
|
|
|
13,209
|
|
|
133,150
|
|
|
|
|
|
|
|
|
|
|
|
146,359
|
|
-
for services at an average of $0.08 per share
|
|
|
185,000
|
|
|
1,850
|
|
|
12,600
|
|
|
|
|
|
|
|
|
|
|
|
14,450
|
|
-
for computer equipment at $0.01 per share
|
|
|
150,000
|
|
|
1,500
|
|
|
13,500
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
-
for mineral property at $0.01 per share
|
|
|
900,000
|
|
|
9,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
Net
loss for the year ended October 31, 1996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(40,670
|
)
|
|
(40,670
|
)
|
Balances,
October 31, 1996
|
|
|
3,134,339
|
|
|
31,344
|
|
|
153,485
|
|
|
|
|
|
|
|
|
(57,262
|
)
|
|
127,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of common stock as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
for cash at an average of $0.61 per share
|
|
|
926,600
|
|
|
9,266
|
|
|
594,794
|
|
|
|
|
|
|
|
|
|
|
|
604,060
|
|
-
for services at an average of $0.74 per share
|
|
|
291,300
|
|
|
2,913
|
|
|
159,545
|
|
|
|
|
|
|
|
|
|
|
|
162,458
|
|
-
for payment of a loan at $0.32 per share
|
|
|
100,200
|
|
|
1,002
|
|
|
30,528
|
|
|
|
|
|
|
|
|
|
|
|
31,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
issued as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
300,000 options for cash
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
Net
loss for the year ended October 31, 1997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(582,919
|
)
|
|
(582,919
|
)
|
Balances,
October 31, 1997
|
|
|
4,452,439
|
|
|
44,525
|
|
|
941,352
|
|
|
|
|
|
|
|
|
(640,181
|
)
|
|
345,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of common stock as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
for cash at an average of $1.00 per share
|
|
|
843,500
|
|
|
8,435
|
|
|
832,010
|
|
|
|
|
|
|
|
|
|
|
|
840,445
|
|
-
for cash and receivables at $1.00 per share
|
|
|
555,000
|
|
|
5,550
|
|
|
519,450
|
|
|
(300,000
|
)
|
|
|
|
|
|
|
|
225,000
|
|
-
for services at an average of $0.53 per share
|
|
|
41,800
|
|
|
418
|
|
|
21,882
|
|
|
|
|
|
|
|
|
|
|
|
22,300
|
|
-
for mine data base at $1.63 per share
|
|
|
200,000
|
|
|
2,000
|
|
|
323,000
|
|
|
|
|
|
|
|
|
|
|
|
325,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
issued or granted as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
1,200,000 options for cash
|
|
|
|
|
|
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
-
for financing fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
60,000
|
|
-
for consulting fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117,000
|
|
|
|
|
|
117,000
|
|
Warrants
issued for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
488,980
|
|
|
(488,980
|
)
|
|
|
|
Net
loss for the year ended October 31, 1998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(906,036
|
)
|
|
(906,036
|
)
|
Balance,
October 31, 1998
|
|
|
6,092,739
|
|
$
|
60,928
|
|
$
|
2,757,694
|
|
$
|
(300,000
|
)
|
$
|
665,980
|
|
$
|
(2,035,197
|
)
|
$
|
1,149,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Common
Stock
|
|
Additional
|
|
Stock
|
|
Stock
|
|
Deficit
During
|
|
|
|
|
|
Number
of
|
|
|
|
Paid-in
|
|
Subscriptions
|
|
Options
and
|
|
Exploration
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Receivable
|
|
Warrants
|
|
Stage
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
October 31, 1998
|
|
|
6,092,739
|
|
$
|
60,928
|
|
$
|
2,757,694
|
|
$
|
(300,000
|
)
|
$
|
665,980
|
|
$
|
(2,035,197
|
)
|
$
|
1,149,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of common stock as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
for cash at an average of $1.04 per share
|
|
|
818,800
|
|
|
8,188
|
|
|
842,712
|
|
|
|
|
|
|
|
|
|
|
|
850,900
|
|
-
for drilling fees at $0.90 per share
|
|
|
55,556
|
|
|
556
|
|
|
49,444
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
option and warrant activity as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
exercise of options at $0.90 per share
|
|
|
250,000
|
|
|
2,500
|
|
|
267,500
|
|
|
|
|
|
(45,000
|
)
|
|
|
|
|
225,000
|
|
-
issuance of options for financing fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
216,000
|
|
|
|
|
|
216,000
|
|
-
expiration of options
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
(60,000
|
)
|
|
|
|
|
|
|
Stock
subscription received
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended October 31, 1999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,423,045
|
)
|
|
(1,423,045
|
)
|
Balance,
October 31, 1999
|
|
|
7,217,095
|
|
|
72,172
|
|
|
3,977,350
|
|
|
|
|
|
776,980
|
|
|
(3,458,242
|
)
|
|
1,368,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
option and warrant activity as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
of options at $0.86 per share
|
|
|
950,000
|
|
|
9,500
|
|
|
1,090,750
|
|
|
|
|
|
(288,000
|
)
|
|
|
|
|
812,250
|
|
Warrants
issued for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,000
|
|
|
|
|
|
55,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of common stock as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
for cash at an average of $2.77 per share
|
|
|
1,440,500
|
|
|
14,405
|
|
|
3,972,220
|
|
|
|
|
|
|
|
|
|
|
|
3,986,625
|
|
-
for services at $1.28 per share
|
|
|
120,000
|
|
|
1,200
|
|
|
152,160
|
|
|
|
|
|
|
|
|
|
|
|
153,360
|
|
-
for equipment at $1.67 per share
|
|
|
15,000
|
|
|
150
|
|
|
24,850
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended October 31, 2000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(882,208
|
)
|
|
(882,208
|
)
|
Balances,
October 31, 2000
|
|
|
9,742,595
|
|
|
97,427
|
|
|
9,217,330
|
|
|
|
|
|
543,980
|
|
|
(4,340,450
|
)
|
|
5,518,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
option and warrant activity as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Warrants exercised at $0.75 per share
|
|
|
20,000
|
|
|
200
|
|
|
25,560
|
|
|
|
|
|
(10,760
|
)
|
|
|
|
|
15,000
|
|
-
Options issued for consulting fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
740,892
|
|
|
|
|
|
740,892
|
|
-
Warrants issued for consulting fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
144,791
|
|
|
|
|
|
144,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of common stock as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
for cash at $2.00 per share
|
|
|
250,000
|
|
|
2,500
|
|
|
494,076
|
|
|
|
|
|
3,424
|
|
|
|
|
|
500,000
|
|
-
for cash of $210 and services at $2.07 per share
|
|
|
21,000
|
|
|
210
|
|
|
43,260
|
|
|
|
|
|
|
|
|
|
|
|
43,470
|
|
-
for cash of $180 and services at $2.05 per share
|
|
|
18,000
|
|
|
180
|
|
|
36,720
|
|
|
|
|
|
|
|
|
|
|
|
36,900
|
|
-
for services at $2.45 per share
|
|
|
6,000
|
|
|
60
|
|
|
14,640
|
|
|
|
|
|
|
|
|
|
|
|
14,700
|
|
-
for services at $1.50 per share
|
|
|
12,000
|
|
|
120
|
|
|
17,880
|
|
|
|
|
|
|
|
|
|
|
|
18,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended October 31, 2001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,069,390
|
)
|
|
(2,069,390
|
)
|
Balance,
October 31, 2001
|
|
|
10,069,595
|
|
|
100,697
|
|
|
9,849,466
|
|
|
|
|
|
1,422,327
|
|
|
(6,409,840
|
)
|
|
4,962,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of common stock as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
for cash at $2.00 per share
|
|
|
50,000
|
|
|
500
|
|
|
99,500
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
-
for cash and warrants at $1.50 per share
|
|
|
96,000
|
|
|
960
|
|
|
134,400
|
|
|
|
|
|
8,640
|
|
|
|
|
|
144,000
|
|
-
for cash and warrants at $1.50 per share
|
|
|
66,667
|
|
|
667
|
|
|
93,333
|
|
|
|
|
|
6,000
|
|
|
|
|
|
100,000
|
|
-
for compensation at an average of $1.23 per share
|
|
|
86,078
|
|
|
861
|
|
|
104,014
|
|
|
|
|
|
|
|
|
|
|
|
104,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
option activity as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
for compensation at $0.61 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,000
|
|
|
|
|
|
61,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended October 31, 2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(765,765
|
)
|
|
(765,765
|
)
|
Balance,
October 31, 2002
|
|
|
10,368,340
|
|
$
|
103,685
|
|
$
|
10,280,713
|
|
$
|
|
|
$
|
1,497,967
|
|
$
|
(7,175,605
|
)
|
$
|
4,706,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Additional
|
|
Stock
|
|
Stock
|
|
Deficit
During
|
|
|
|
|
|
Common
Stock
|
|
Paid-in
|
|
Subscriptions
|
|
Options
and
|
|
Exploration
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Receivable
|
|
Warrants
|
|
Stage
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
October 31, 2002
|
|
|
10,368,340
|
|
$
|
103,685
|
|
$
|
10,280,713
|
|
$
|
|
|
$
|
1,497,967
|
|
$
|
(7,175,605
|
)
|
$
|
4,706,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of common stock as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
for cash at $2.00 per share
|
|
|
100,000
|
|
|
1,000
|
|
|
199,000
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
-
for cash at an average of $0.98 per share
|
|
|
849,000
|
|
|
8,489
|
|
|
821,510
|
|
|
|
|
|
|
|
|
|
|
|
829,999
|
|
-
for cash and warrants at $1.50 per share
|
|
|
7,000
|
|
|
70
|
|
|
9,847
|
|
|
|
|
|
583
|
|
|
|
|
|
10,500
|
|
-
for compensation at an average of $1.25 per share
|
|
|
391,332
|
|
|
3,913
|
|
|
487,275
|
|
|
|
|
|
|
|
|
|
|
|
491,188
|
|
-
for services at an average of $1.23 per share
|
|
|
91,383
|
|
|
914
|
|
|
119,320
|
|
|
|
|
|
|
|
|
|
|
|
120,234
|
|
-
for subscriptions receivable at $1.00 per share
|
|
|
38,000
|
|
|
380
|
|
|
37,620
|
|
|
(38,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended October 31, 2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,107,228
|
)
|
|
(1,107,228
|
)
|
Balance,
October 31, 2003
|
|
|
11,845,055
|
|
|
118,451
|
|
|
11,955,285
|
|
|
(38,000
|
)
|
|
1,498,550
|
|
|
(8,282,833
|
)
|
|
5,251,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of common stock as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
for cash at $1.00 per share, less issuance costs of
$698,863
|
|
|
7,580,150
|
|
|
75,802
|
|
|
6,805,485
|
|
|
|
|
|
|
|
|
|
|
|
6,881,287
|
|
-
for compensation at an average of $1.26 per share
|
|
|
120,655
|
|
|
1,207
|
|
|
151,064
|
|
|
|
|
|
|
|
|
|
|
|
152,271
|
|
-
for services at various prices
|
|
|
141,286
|
|
|
1,413
|
|
|
153,801
|
|
|
|
|
|
|
|
|
|
|
|
155,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
subscription received
|
|
|
|
|
|
|
|
|
|
|
|
38,000
|
|
|
|
|
|
|
|
|
38,000
|
|
Miscellaneous
corrections and adjustments
|
|
|
64,263
|
|
|
643
|
|
|
(643
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended October 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,036,805
|
)
|
|
(5,036,805
|
)
|
Balance,
October 31, 2004
|
|
|
19,751,409
|
|
|
197,515
|
|
|
19,064,992
|
|
|
|
|
|
1,498,550
|
|
|
(13,319,638
|
)
|
|
7,441,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash at an average of $0.98 per share with attached
warrants valued at an average of $0.28 per share
|
|
|
476,404
|
|
|
4,764
|
|
|
329,806
|
|
|
|
|
|
132,159
|
|
|
|
|
|
466,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for compensation at an average of $1.00 per share
|
|
|
176,772
|
|
|
1,768
|
|
|
175,005
|
|
|
|
|
|
|
|
|
|
|
|
176,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expiration
of stock warrants
|
|
|
|
|
|
|
|
|
282,870
|
|
|
|
|
|
(282,870
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended October 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,302,161
|
)
|
|
(3,302,161
|
)
|
Balance,
October 31, 2005
|
|
|
20,404,585
|
|
$
|
204,047
|
|
$
|
19,852,673
|
|
$
|
|
|
$
|
1,347,839
|
|
$
|
(16,621,799
|
)
|
$
|
4,782,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
from
|
|
|
|
|
|
|
|
November
8, 1993
|
|
|
|
|
|
|
|
(Inception)
|
|
|
|
Years
Ended
|
|
to
|
|
|
|
October
31,
|
|
October
31,
|
|
October
31,
|
|
|
|
2005
|
|
2004
|
|
2005
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(3,302,161
|
)
|
$
|
(5,036,805
|
)
|
$
|
(16,621,799
|
)
|
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
83,557
|
|
|
63,045
|
|
|
341,920
|
|
Noncash
expenses
|
|
|
|
|
|
|
|
|
126,864
|
|
Common
stock issued for services
|
|
|
|
|
|
155,214
|
|
|
966,538
|
|
Common
stock issued for compensation
|
|
|
176,772
|
|
|
152,271
|
|
|
820,231
|
|
Stock
options issued for services
|
|
|
|
|
|
|
|
|
801,892
|
|
Stock
options issued for financing fees
|
|
|
|
|
|
|
|
|
276,000
|
|
Common
stock issued for payment of expenses
|
|
|
|
|
|
|
|
|
326,527
|
|
Stock
warrants issued for services
|
|
|
|
|
|
|
|
|
688,771
|
|
(Increase)
decrease in:
|
|
|
|
|
|
|
|
|
|
|
Foreign
property tax refund receivable
|
|
|
|
|
|
|
|
|
|
|
Marketable
securities
|
|
|
1,250,000
|
|
|
(1,250,000
|
)
|
|
|
|
Accounts
receivable
|
|
|
64,544
|
|
|
(88,164
|
)
|
|
(23,620
|
)
|
Prepaid
expenses
|
|
|
(11,190
|
)
|
|
(1,926
|
)
|
|
(13,242
|
)
|
Employee
advances
|
|
|
24,462
|
|
|
(13,122
|
)
|
|
(9,560
|
)
|
Increase
(decrease) in:
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
28,959
|
|
|
(53,667
|
)
|
|
86,189
|
|
Contracts
payable
|
|
|
|
|
|
|
|
|
4,209
|
|
Accrued
liabilities and expenses
|
|
|
59,474
|
|
|
137,484
|
|
|
220,703
|
|
Net
cash used by operating activities
|
|
|
(1,625,583
|
)
|
|
(5,935,671
|
)
|
|
(12,008,378
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Purchase
of investments
|
|
|
|
|
|
|
|
|
(484,447
|
)
|
Proceeds
from investments
|
|
|
|
|
|
|
|
|
484,447
|
|
Equipment
purchases
|
|
|
(7,598
|
)
|
|
(328,746
|
)
|
|
(792,781
|
)
|
Mining
property acquisitions
|
|
|
|
|
|
|
|
|
(4,452,631
|
)
|
Net
cash used by investing activities
|
|
|
(7,598
|
)
|
|
(328,746
|
)
|
|
(5,245,412
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from sales of common stock
|
|
|
466,729
|
|
|
6,881,287
|
|
|
16,370,187
|
|
Proceeds
from sales of options and warrants
|
|
|
|
|
|
|
|
|
949,890
|
|
Deposits
for sale of stock
|
|
|
|
|
|
38,000
|
|
|
125,500
|
|
Proceeds
from shareholder loans
|
|
|
|
|
|
|
|
|
30,000
|
|
Payment
of note payable
|
|
|
(4,209
|
)
|
|
(4,209
|
)
|
|
(8,418
|
)
|
Net
cash provided by financing activities:
|
|
|
462,520
|
|
|
6,915,078
|
|
|
17,467,159
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
(1,170,661
|
)
|
|
650,661
|
|
|
213,369
|
|
Cash
and cash equivalents beginning of period
|
|
|
1,384,030
|
|
|
733,369
|
|
|
|
|
Cash
and cash equivalents end of period
|
|
$
|
213,369
|
|
$
|
1,384,030
|
|
$
|
213,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW DISCLOSURES:
|
|
|
|
|
|
|
|
|
|
|
Income
taxes paid
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Interest
paid
|
|
$
|
606
|
|
$
|
606
|
|
$
|
286,771
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH
INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services
|
|
$ |
|
|
$
|
155,214
|
|
$
|
966,538
|
|
Common
stock issued for compensation
|
|
$
|
176,772
|
|
$
|
152,271
|
|
$
|
820,231
|
|
Common
stock issued for payment of expenses
|
|
$
|
|
|
$
|
|
|
$
|
326,527
|
|
Common
stock issued for equipment
|
|
$
|
|
|
$
|
|
|
$
|
25,000
|
|
Common
stock options issued for financing fees
|
|
$
|
|
|
$
|
|
|
$
|
276,000
|
|
Options
issued for services
|
|
$
|
|
|
$
|
|
|
$
|
801,892
|
|
Warrants
issued for services
|
|
$
|
|
|
$
|
|
|
$
|
688,771
|
|
Noncash
expenses
|
|
$
|
|
|
$
|
|
|
$
|
126,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE
1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Metalline
Mining Company ("the Company") was incorporated in the State of Nevada on
November 8, 1993 as the Cadgie Company for the purpose of acquiring and
developing mineral properties. The Cadgie Company was a spin-off from its
predecessor, Precious Metal Mines, Inc. On June 28, 1996, at a special directors
meeting, the Company's name was changed to Metalline Mining Company. The
Company's fiscal year-end is October 31.
The
Company expects to engage in the business of mining. The Company currently
owns
concessions located in Sierra Mojada, Coahuila, Mexico. The Company conducts
its
operations in Mexico through its wholly owned subsidiary corporation, Minera
Metalin S.A. de C.V. ("Minera Metalin").
The
Company's efforts have been concentrated in expenditures related to exploration
properties, principally in the Sierra Mojada project located in Coahuila,
Mexico. The Company has not determined whether the exploration properties
contain ore reserves that are economically recoverable. The ultimate realization
of the Company's investment in exploration 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
ultimate realization of the Company's investment in exploration properties
cannot be determined at this time, and accordingly, no provision for any asset
impairment that may result, in the event the Company is not successful in
developing or selling these properties, has been made in the accompanying
financial statements.
The
Company is actively seeking additional capital and management believes its
properties can ultimately be sold or developed to enable the Company to continue
its operations. However, there are inherent uncertainties in mining operations
and management cannot provide assurances that it will be successful in this
endeavor. Furthermore, the Company is in the exploration stage, as it has not
realized any revenues from its planned operations.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies is presented to assist in
understanding the financial statements. The financial statements and notes
are
representations of the Company's management, which is responsible for their
integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the U.S. and have been consistently applied
in
the preparation of the financial statements.
Accounting
Method
The
Company's financial statements are prepared using the accrual method of
accounting.
Accounts
Receivable
The
Company carries its accounts receivable at cost. On a periodic basis, the
Company evaluates its accounts receivable and determines if an allowance for
doubtful accounts is necessary, based on a history of past write-offs and
collections and current credit conditions.
The
Company has not yet established a policy regarding accruing interest on trade
receivables. Accounts will be written off as uncollectible when it is determined
that collection will be unlikely.
Cash
and Cash Equivalents
For
purposes of the statement of cash flows, the Company considers all bank
accounts, certificates of deposit, money market accounts and short-term debt
securities purchased with a maturity of three months or less to be cash
equivalents.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
2005
|
|
|
|
|
|
|
|
|
|
Compensated
Absences
The
Company's policy is to recognize the cost of compensated absences when actually
paid to employees. If the amount were estimatible, it would not be currently
recognized as the amount would be deemed immaterial.
Concentration
of Risk
The
Company maintains its domestic cash in two commercial depository accounts.
One
of these accounts is insured by the Federal Deposit Insurance Corporation (FDIC)
for up to $100,000. The other account consists of money market funds,
certificates of deposit and preferred securities, all of which are not insured.
The Company also maintains cash in banks in Mexico. These accounts, which had
U.S. dollar balances of $30,110 and $61,616 at October 31, 2005 and 2004,
respectively, are denominated in pesos and are considered uninsured.
Additionally, the Company maintained Mexican petty cash balances of $428 and
$4,864 at October 31, 2005 and 2004, respectively. At October 31, 2005, the
Company's cash balances included $114,965 which was not federally insured.
Derivative
Instruments
The
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," (hereinafter "SFAS No. 133") as amended by SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of
the
Effective Date of FASB No. 133", and SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities" and SFAS No. 149,
"Amendment of Statement 133 on Derivative Instruments and Hedging Activities."
These statements establish accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. They require that an entity recognize
all
derivatives as either assets or liabilities in the consolidated balance sheet
and measure those instruments at fair value.
If
certain conditions are met, a derivative may be specifically designated as
a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging derivative with the recognition of (i) the changes in the fair
value of the hedged asset or liability that are attributable to the hedged
risk
or (ii) the earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss is
recognized in income in the period of change.
Historically,
the Company has not entered into derivatives contracts to hedge existing risks
or for speculative purposes.
During
the years ended October 31, 2005 and 2004, the Company has not engaged in any
transactions that would be considered derivative instruments or hedging
activities.
Earnings
Per Share
The
Company has adopted Statement of Financial Accounting Standards No. 128, which
provides for calculation of "basic" and "diluted" earnings per share. Basic
earnings per share includes no dilution and is computed by dividing net income
available to common shareholders by the weighted average common shares
outstanding for the period. Diluted earnings per share reflect the potential
dilution of securities that could share in the earnings of an entity similar
to
fully diluted earnings per share. Although there were common stock equivalents
outstanding October 31, 2005 and 2004, they were not included in the calculation
of earnings per share because they would have been considered anti-dilutive.
Common stock equivalents outstanding were 1,833,887 and
1,647,665 at October 31, 2005 and 2004, respectively.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
2005
|
|
|
|
|
|
|
|
|
|
Use
of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Exploration
Costs
In
accordance with accounting principles generally accepted in the United States
of
America, the Company expenses exploration costs as incurred. Exploration costs
expensed during the year ended October 31, 2005 and 2004 were $1,666,884 and
$3,374,049, respectively. The exploration costs expensed during the Company's
exploration stage amount to $5,334,086.
Exploration
Stage Activities
The
Company has been in the exploration stage since November 8, 1993 and has no
revenues from operations. The Company is primarily engaged in the acquisition
and exploration of property concessions. Should the Company locate a
commercially minable reserve, the Company would expect to actively prepare
the
site for extraction.
Fair
Value of Financial Instruments
The
Company's financial instruments as defined by Statement of Financial Accounting
Standards No. 107, "Disclosures about Fair Value of Financial Instruments,"
include cash and cash equivalents, marketable securities, receivables, advances
to employees, accounts payable and accrued expenses. All instruments are
accounted for on a historical cost basis, which, due to the short maturity
of
these financial instruments, approximates fair value at October 31, 2005 and
2004.
Foreign
Currency Translation
Assets
and liabilities of the Company's foreign operations are translated into U.S.
dollars at the year-end exchange rates, and revenue and expenses are translated
at the average exchange rates during the period. Exchange differences arising
on
translation are disclosed as a separate component of shareholders' equity.
Realized gains and losses from foreign currency transactions are reflected
in
the results of operations.
Foreign
Operations
The
accompanying balance sheet at October 31, 2005 contains Company assets in
Mexico, including: $4,334,767 in property concessions; $514,855 (before
accumulated depreciation) of mining equipment; and $30,538 of cash. Although
this country is considered economically stable, it is always possible that
unanticipated events in foreign countries could disrupt the Company's
operations. The Mexican government does not require foreign entities to maintain
cash reserves in Mexico.
Going
Concern
As
shown
in the accompanying financial statements, the Company has no revenues, has
incurred a net loss of $3,302,161 for the year ended October 31, 2005 and has
an
accumulated deficit of $16,621,799. These factors indicate that the Company
may
be unable to continue in existence. The financial statements do not include
any
adjustments related to the recoverability and classification of recorded assets,
or the amounts and classification of liabilities that might be necessary in
the
event the Company cannot continue in existence.
The
Company's management believes that significant and imminent private placements
of stock and continuing contracted agreements will generate sufficient cash
for
the Company to continue to operate based on current expense projections. The
Company is currently operating on the cash proceeds of a private placement
offering currently in progress.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
2005
|
|
|
|
|
|
|
|
|
|
Marketable
Securities
Pursuant
to Statement of Financial Accounting Standards No. 115, the Company classifies
marketable securities as trading, available-for-sale, or held-to-maturity.
During the year ended October 31, 2004, the Company invested $1,250,000 in
total-return mutual funds consisting of equities, convertible debt and
high-yield securities, and classified them as trading. During the year ended
October 31, 2005, these securities were sold and the proceeds were used in
the
operations of the Company. The Company did not hold marketable securities at
October 31, 2005.
Principles
of Consolidation
The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiary, after elimination of intercompany accounts and
transactions. The wholly owned subsidiary of the Company is listed in Note
1.
Property
Concessions
Costs
of
acquiring property concessions are capitalized by project area upon purchase
or
staking of the associated claims. Costs to maintain the property concessions
and
leases are expensed as incurred. When a property concession reaches the
production stage, the related capitalized costs will be amortized, using the
units of production method on the basis of periodic estimates of ore
reserves.
Property
concessions are periodically assessed for impairment of value and any diminution
in value is charged to operations at the time of impairment. Should a property
concession be abandoned, its capitalized costs are charged to operations. The
Company charges to operations the allocable portion of capitalized costs
attributable to property concessions sold. Capitalized costs are allocated
to
property concessions abandoned or sold based on the proportion of claims
abandoned or sold to the claims remaining within the project area.
Property
and Equipment
Property
and equipment are recorded at cost. Major additions and improvements are
capitalized. Minor replacements, maintenance and repairs that do not increase
the useful life of the assets are expensed as incurred. Depreciation of property
and equipment is determined using the straight-line or accelerated methods
over
the expected useful lives of the assets. See Note 3.
Provision
for Taxes
Income
taxes are provided based upon the liability method of accounting pursuant to
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (hereinafter "SFAS No. 109"). Under this approach, deferred income taxes
are recorded to reflect the tax consequences in future years of differences
between the tax basis of assets and liabilities and their financial reporting
amounts at each year-end. A valuation allowance is recorded against deferred
tax
assets if management does not believe the Company has met the "more likely
than
not" standard imposed by SFAS No. 109 to allow recognition of such an
asset.
At
October 31, 2005, the Company had net deferred tax assets calculated at an
expected rate of 34% of approximately $4,618,000, principally arising from
net
operating loss carryforwards for income tax purposes. As management of the
Company cannot determine that it is more likely than not that the Company will
realize the benefit of the net deferred tax asset, there is a valuation
allowance equal to the net deferred tax asset.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
2005
|
|
|
|
|
|
|
|
|
|
The
significant components of the deferred tax assets at October 31, 2005 and 2004
were as follows:
|
|
October
31,
|
|
October
31,
|
|
|
|
2005
|
|
2004
|
|
Net
operating loss carryforward
|
|
$
|
13,582,000
|
|
$
|
10,456,000
|
|
Deferred
tax asset
|
|
$
|
4,618,000
|
|
$
|
3,555,000
|
|
Deferred
tax asset valuation allowance
|
|
$
|
(4,618,000
|
)
|
$
|
(3,555,000
|
)
|
At
October 31, 2005, the Company has net operating loss carryforwards of
approximately $13,582,000, which expire in the years 2008 through 2025. The
Company has recognized approximately $1,491,000 of losses from the issuance
of
stock options and warrants for services through fiscal 2005, which were not
deductible for tax purposes. The change in the allowance account from October
31, 2004 to 2005 was $1,063,000. The Company has immaterial temporary
differences resulting from differences in tax depreciation of
equipment.
During
2005, the Company received value added tax refunds from the Mexican government
in the amount of $119,615.
Recent
Accounting Pronouncements
In
May
2005, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 154 ("SFAS No. 154"), "Accounting Changes and
Error Corrections." This statement requires entities that voluntarily make
a
change in accounting principle to apply that change retrospectively to prior
periods' financial statements, unless this would be impracticable. SFAS No.
154
supersedes APB Opinion No. 20, "Accounting Changes," which previously required
that most voluntary changes in accounting principle be recognized by including
in the current period's net income the cumulative effect of changing to the
new
accounting principle. SFAS No. 154 also makes a distinction between
"retrospective application" of an accounting principle and the "restatement"
of
financial statements to reflect the correction of an error. SFAS No. 154 applies
to accounting changes and error corrections that are made in fiscal years
beginning after December 15, 2005. Management believes the adoption of this
statement will not have an immediate material impact on the financial statements
of the Company.
In
March
2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
No. 47 ("FIN 47"), "Accounting for Conditional Asset Retirement Obligations."
FIN 47 clarifies that the term "conditional asset retirement obligation," which
as used in SFAS No. 143, "Accounting for Asset Retirement Obligations," refers
to a legal obligation to perform an asset retirement activity in which the
timing and (or) method of settlement are conditional on a future event that
may
or may not be within the control of the entity. The entity must record a
liability for a "conditional" asset retirement obligation if the fair value
of
the obligation can be reasonably estimated. FIN 47 also clarifies when an entity
would have sufficient information to reasonably estimate the fair value of
an
asset retirement obligation. FIN 47 is effective no later than the end of fiscal
years ending after December 15, 2005. Management believes the adoption of this
statement will not have an immediate material impact on the financial statements
of the Company.
In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 153. This Statement addresses the measurement
of exchanges of nonmonetary assets. The guidance in APB Opinion No. 29,
"Accounting for Nonmonetary Transactions," is based on the principle that
exchanges of nonmonetary assets should be measured based on the fair value
of
the assets exchanged. The guidance in that Opinion, however, included certain
exceptions to that principle. This statement amends Opinion 29 to eliminate
the
exception for nonmonetary exchanges of similar productive assets and replaces
it
with a general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. This statement is effective for financial statements for fiscal
years beginning after June 15, 2005. Earlier application is permitted for
nonmonetary asset exchanges incurred during fiscal years beginning after the
date of this statement is issued. Management believes the adoption of this
statement will not impact the financial statements of the Company.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
2005
|
|
|
|
|
|
|
|
|
|
In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 152, which amends SFAS Statement No. 66,
"Accounting for Sales of Real Estate," to reference the financial accounting
and
reporting guidance for real estate time-sharing transactions that is provided
in
AICPA Statement of Position (SOP) 04-2, "Accounting for Real Estate Time-Sharing
Transactions." This statement also amends SFAS No. 67, "Accounting for Costs
and
Initial Rental Operations of Real Estate Projects," to state that the guidance
for (a) incidental operations and (b) costs incurred to sell real estate
projects, does not apply to real estate time-sharing transactions. The
accounting for those operations and costs is subject to the guidance in SOP
04-2. This statement is effective for financial statements for fiscal years
beginning after June 15, 2005. Management believes the adoption of this
Statement will not impact the financial statements of the Company.
Revenue
Recognition Policy
The
Company recognizes revenue when there is a mutually executed contract, the
contract price is fixed and determinable, delivery of the product has occurred,
and collectibility of the contract price is considered probable. As of October
31, 2005, the Company has not recognized revenues.
Stock-Based
Compensation
Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (hereinafter "SFAS No. 123"),
defines
a
fair value-based method of accounting for stock options and other equity
instruments. The Company has adopted this method, which measures compensation
costs based on the estimated fair value of the award and recognizes that cost
over the service period.
NOTE
3 - PROPERTY AND EQUIPMENT
Property
and equipment are stated at cost. Depreciation is provided using the
straight-line or accelerated methods over the estimated useful lives of the
assets. The useful lives of property, plant and equipment for purposes of
computing depreciation are five to seven years for equipment, and 39 years
for
buildings.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
2005
|
|
|
|
|
|
|
|
|
|
The
following is a summary of property, equipment, and accumulated depreciation
at
October 31, 2005 and 2004:
|
|
2005
|
|
2004
|
|
Mining
equipment
|
|
$
|
514,855
|
|
$
|
507,257
|
|
Buildings
and structures
|
|
|
141,061
|
|
|
141,061
|
|
Land
- non mineral
|
|
|
15,839
|
|
|
15,839
|
|
Vehicles
|
|
|
42,068
|
|
|
42,068
|
|
Computer
equipment
|
|
|
88,787
|
|
|
88,787
|
|
Office
equipment
|
|
|
4,183
|
|
|
4,183
|
|
Furniture
and fixtures
|
|
|
8,185
|
|
|
8,185
|
|
|
|
|
814,978
|
|
|
807,380
|
|
Less:
Accumulated depreciation
|
|
|
(324,094
|
)
|
|
(240,537
|
)
|
|
|
$
|
490,884
|
|
$
|
566,843
|
|
|
|
|
|
|
|
|
|
Depreciation
expense for the years ended October 31, 2005 and 2004 was $83,557 and $63,045,
respectively. The Company evaluates the recoverability of property and equipment
when events and circumstances indicate that such assets might be impaired.
The
Company determines impairment by comparing the undiscounted future cash flows
estimated to be generated by these assets to their respective carrying amounts.
Maintenance and repairs are expensed as incurred. Replacements and betterments
are capitalized. The cost and related reserves of assets sold or retired are
removed from the accounts, and any resulting gain or loss is reflected in
results of operations.
NOTE
4 - CONCESSIONS IN THE SIERRA MOJADA DISTRICT
Sierra
Mojada Mining Concessions
During
the period of August 23, 1996 to July 18, 2000, the Company executed six
separate agreements for the acquisition of eight concessions in the mining
region known as the Sierra Mojada District located in Sierra Mojada, Coahuila,
Mexico. Each agreement enabled the Company to explore the underlying concession
in consideration for the payment of stipulated annual payments. Each of the
concession agreements included an option to purchase the concession and the
annual payments, which were applied in full toward the contracted purchase
price
of the related concession.
The
Company subsequently completed the purchase of the eight concessions, as
follows: Esmeralda, consisting of approximately 118 hectares, on March 20,
1997;
Fortuna, consisting of approximately 14 hectares, on December 8, 1999; Sierra
Mojada and Mojada 3, consisting of approximately 4,767 and 1,689 hectares,
respectively, on May 30, 2000; Unificacion Mineros Nortenos and Vulcano,
consisting of approximately 337 and 4 hectares, respectively, on August 30,
2000; Esmeralda I, consisting of approximately 98 hectares, on August 20, 2001;
and La Blanca, consisting of approximately 34 hectares, on August 20, 2001.
The
Company has recorded the concessions at acquisition cost.
All
of
the concessions were acquired by purchase agreements with Mexican entities
and/or Mexican individuals and all of the concessions were paid for in cash.
In
the acquisition of Sierra Mojada and Mojada 3 there was one purchase agreement
for both concessions. Also, in the acquisition of Unificacion Mineros Nortenos
and Vulcano, there was one purchase agreement for both concessions.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
2005
|
|
|
|
|
|
|
|
|
|
Because
all eight concessions are located in the Sierra Mojada Mining District and
in
close proximity to one another, the concessions are routinely treated as one
major prospect area and are collectively referred to as the Sierra Mojada
Project. The primary work performed on the Company's concessions has consisted
of geologic mapping, sampling, and drilling. This work has resulted in
establishing the presence of mineralized material (zinc) of sufficient quantity
and grade to justify in the Company's opinion a feasibility study, which
commenced during 2005.
NOTE
5 - LONG-TERM LIABILITIES
The
Company's long-term liabilities at October 31, 2005 and 2004 are as
follows:
|
|
2005
|
|
2004
|
|
Note
payable to bank, due July of 2008, monthly principal and interest
payments
at 4.94%, collateralized by a vehicle
|
|
$
|
11,574
|
|
$
|
15,783
|
|
Less:
Current portion
|
|
|
(4,209
|
)
|
|
(4,209
|
)
|
|
|
$
|
7,365
|
|
$
|
11,574
|
|
Loan
maturities for each of the five years following October 31, 2005 are as follows:
|
|
|
|
|
2006
|
|
$
|
4,209
|
|
2007
|
|
|
4,537
|
|
2008
|
|
|
2,828
|
|
2009
|
|
|
—
|
|
2010
|
|
|
—
|
|
|
|
$
|
11,574
|
|
NOTE
6 - RELATED PARTY TRANSACTIONS
The
Company receives rent-free office space in Coeur d'Alene, Idaho from its
president. The value of the space is not considered materially significant
for
financial reporting purposes. The Company also has given $9,560 in cash advances
for travel to two of its officers at October 31, 2005 under an accountable
plan
per IRS Regulation Section 1.62.
NOTE
7 - PREFERRED STOCK
At
its
March 1, 2001 annual shareholders meeting, the Company approved a change to
its
articles of incorporation whereby the Company is authorized to issue 1,000,000
shares of $0.01 par value preferred stock. The specific features of the
preferred stock are to be determined by the Company's board of directors. At
October 31, 2005, there were no shares of preferred stock issued or
outstanding.
METALLINE
MINING COMPANY
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|
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(AN
EXPLORATION STAGE COMPANY)
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|
|
|
|
|
|
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
2005
|
|
|
|
|
|
|
|
|
|
NOTE
8 - COMMON STOCK
In
March
2005, the Company's board of directors authorized a private placement of up
to
5,333,334 shares of the Company's restricted common stock at a price of $1.125
per share for total proceeds of $6,000,000. Purchasers of these shares will
also
receive a warrant to purchase one share of the Company's common stock at an
exercise price of $2.00 per share with an exercise period of five years. In
September 2005, a modification of the private placement terms was authorized.
The modified terms allow for the issuance of 7,500,000 shares of common stock
at
a price of $0.80 per share, a warrant exercise price of $1.25 per share and
an
exercise period of five years.
During
the year ended October 31, 2005, the Company issued 476,404 shares of common
stock, under the aforementioned private placement, for cash consideration at
an
average of $0.98 per share with attached warrants valued at an average of $0.28
per share (see Note 10). In addition, 176,772 shares of common stock were issued
to officers and employees of the Company at an average of $1.00 per share in
consideration for accrued wages.
During
the year ended October 31, 2004, the Company issued 7,580,150 shares of common
stock for cash consideration at $1.00 per share less issuance costs of $698,863.
Officers of the Company were issued 120,655 shares at an average of $1.26 per
share in payment of accrued wages. The Company also issued 141,286 shares in
exchange for services received. See Note 13.
During
the year ended October 31, 2003, the Company sold 7,000 common stock units
with
an ascribed cash value of $10,500. The Company also sold 849,000 shares at
an
average price of $0.98 per share. The Company also issued 100,000 shares of
common stock under the Penoles agreement for cash, at $2.00 per share.
Additionally, 373,925 shares of common stock valued at $468,771 were issued
as
compensation to officers.
During
the year ended October 31, 2002, the Company sold 162,667 common stock units
with an ascribed cash value of $229,360 for common stock, and $14,640 for
warrants. The Company also issued 50,000 shares of common stock under the
Penoles agreement for cash at $2.00 a share. (See Note 12.) Additionally, 86,078
shares of common stock valued at $104,875 were issued as compensation to
officers. On May 20, 2002, the Company authorized the offering of 1,000,000
common stock units, with each unit consisting of one share of common stock
and
one warrant equal to 1/3 of a share of common stock.
During
the year ended October 31, 2001, the Company issued 20,000 shares of common
stock for the exercise of warrants valued at $10,760 and for cash of $15,000.
Additionally, 57,000 shares of common stock were issued for services valued
at
$112,680 and for cash of $390, and 250,000 shares of common stock with 125,000
warrants attached were issued for $500,000 in cash.
During
the year ended October 31, 2000, the Company sold 1,440,500 shares of its common
stock for $3,968,625 cash, issued 120,000 shares of common stock for services
valued $153,360, issued 15,000 shares of common stock for equipment valued
at
$25,000 and issued 950,000 shares of common stock for options exercised at
$0.86
per share.
During
the year ended October 31, 1999, the Company sold 1,068,800 shares of common
stock for $1,075,900 cash. In addition the Company received $37,500 as a deposit
toward the purchase of 50,000 shares (this stock was issued in December 1999)
and $300,000 for payment of subscriptions receivable. The Company also issued
55,556 shares for payment of drilling expenses valued at $50,000.
In
February 1998, 200,000 shares of common stock were issued for a mine database.
The shares were valued at $1.625 per share, resulting in a transaction valued
at
$325,000. Services valued at $22,300 were paid with 41,800 shares of common
stock. An additional 1,398,500 shares of common stock were issued for $1,065,445
cash and receivables, and a subscription receivable of $300,000, between
February and October 1998.
METALLINE
MINING COMPANY
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|
|
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(AN
EXPLORATION STAGE COMPANY)
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|
|
|
|
|
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
2005
|
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In
April
1997, 250,000 common stock shares were issued for cash of $87,500 and 133,800
shares of common stock were issued for services valued at $45,583. In May and
June 1997, 181,600 shares of common stock were issued for $63,560 cash and
62,500 shares of common stock were issued for services valued at $21,875. In
August and October 1997, 420,000 and 75,000 shares of common stock were issued
for cash of $378,000 and $75,000, respectively. Additionally, during August
1997, 100,200 shares of common stock were issued for debt of $31,530 and 95,000
shares of common stock were issued for services valued at $95,000.
During
November 1995, the Company's directors approved the issuance of 45,000 shares
of
common stock for services rendered at $0.01 per share. During June 1996, the
Company issued 900,000 shares of common stock for the assignment of mineral
rights in the Sierra Mojada Project in Coahuila, Mexico valued at $0.01 per
share to Messrs. John Ryan, Merlin Bingham, and Daniel Gorski, who had formed
a
partnership to advance development of the mining concession located in Coahuila,
Mexico. The partnership had an informal joint venture agreement with USMX,
Inc.
covering the mining concessions. By acquiring the partnership interest, the
Company was able to negotiate and sign a formal joint venture agreement with
USMX in July 1996.
During
the year ended October 31, 1996, Metalline Mining Company issued 1,320,859
shares of common stock for $146,359 in cash. During October 1996, the Company
issued 150,000 shares of common stock for computer equipment valued at $15,000.
Also during October 1996, the Company issued 120,000 shares of common stock
to
Mr. Gorski and an additional 20,000 shares of common stock to Mr. Ryan for
services rendered valued at $14,000.
In
January 1996, Mr. Carmen Ridland, in a private sale, sold a controlling interest
in the corporation to Mr. Howard Crosby. On January 12, 1996, Mr. Ridland
transferred control of Cadgie Co. to Mr. Crosby and Mr. Robert
Jorgensen.
On
August
4, 1995 the directors of Cadgie Co. declared a 3:1 forward stock split of the
outstanding Cadgie Co. shares, thus increasing the number of outstanding shares
from 192,160 to 576,480.
On
August
31, 1994, the directors of Cadgie Co. declared a 1:5 reverse stock split of
the
outstanding Cadgie Co. shares, thus reducing the number of outstanding shares
from 960,800 to 192,160 shares.
The
Company (Cadgie Co.) was formed in August of 1993 and incorporated in November
1993 by Mr. Carman Ridland of Las Vegas, Nevada as a spin-off from its
predecessor, Precious Metal Mines, Inc. The Company issued 960,800 of its $0.01
par value shares to Precious Metal Mines, Inc. for 16 unpatented mining claims
located near Philipsburg, Montana comprising the Kadex property group. Precious
Metal Mines, Inc. distributed the 960,800 shares of Cadgie Company to its
shareholders. One share of Cadgie Co. was exchanged for each share of Precious
Metal Mines, Inc. held by holders of record as of August 31, 1993.
NOTE
9 - STOCK OPTIONS
During
the years ended October 31, 2005 and 2004, the Company did not grant common
stock options.
In
2002,
the Company granted 100,000 options with an exercise price of $1.25 and an
expiration of seven years. The fair value of these options was determined using
the Black-Scholes option pricing model using a risk free interest rate of 3.25%
and a volatility of 42.49%. The total value was calculated at
$61,000.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
2005
|
|
|
|
|
|
|
|
|
|
Following
is a summary of the Company's stock option activity during the years ending
October 31, 2005 and 2004:
|
|
Shares
|
|
Weighted
Average Exercise Price
|
|
|
|
|
|
|
|
Options
outstanding at November 1, 2003
|
|
|
770,000
|
|
$
|
1.67
|
|
Granted
|
|
|
—
|
|
|
—
|
|
Canceled
|
|
|
(100,000
|
)
|
|
2.15
|
|
Exercised
|
|
|
—
|
|
|
—
|
|
Options
outstanding at October 31, 2004
|
|
|
670,000
|
|
|
1.56
|
|
Granted
|
|
|
—
|
|
|
—
|
|
Canceled
|
|
|
—
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
—
|
|
Options
outstanding at October 31, 2005
|
|
|
670,000
|
|
$
|
1.56
|
|
On
March
1, 2001, the Company's shareholders approved a qualified stock option plan
(the
"Plan"), which provides for non-statutory and incentive stock options for
employees, directors and consultants, and has reserved a total of 1,000,000
shares of common stock for issuance pursuant to the Plan.
Summarized
information about stock options outstanding and exercisable at October 31,
2005
is as follows:
Options
Outstanding
|
|
Options
Exercisable
|
|
Exercise
Price
|
|
Number
Outstanding
|
|
Weighted
Average Remaining Contractual Life (Years)
|
|
Weighted
Average
Exercise
Price
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise
Price
|
|
$1.25
|
|
|
100,000
|
|
|
3.77
|
|
$
|
1.25
|
|
|
100,000
|
|
$
|
1.25
|
|
1.32
|
|
|
370,000
|
|
|
0.93
|
|
|
1.32
|
|
|
370,000
|
|
|
1.32
|
|
2.15
|
|
|
200,000
|
|
|
4.33
|
|
|
2.15
|
|
|
200,000
|
|
|
2.15
|
|
$1.25-2.15
|
|
|
670,000
|
|
|
2.37
|
|
$
|
1.56
|
|
|
670,000
|
|
$
|
1.56
|
|
NOTE
10 - STOCK WARRANTS
During
the year ended October 31, 2005, the Company issued 476,404 common stock units
that consisted of 476,404 shares of common stock and warrants to purchase an
additional 476,404 shares of common stock. As part of the total cash purchase,
the warrants were valued at $132,159. The warrants were valued using the
Black-Scholes option pricing model. The assumptions used were as follows:
volatility of 58%, a risk-free interest rate of 3% and an exercise term of
five
years. During 2005, 290,182 stock warrants expired. As of October 31, 2005,
1,163,887 stock warrants were outstanding and exercisable.
During
2004, the Company did not issue stock warrants. At October 31, 2004, 977,665
stock warrants were outstanding and exercisable.
METALLINE
MINING COMPANY
|
|
|
|
|
|
|
|
(AN
EXPLORATION STAGE COMPANY)
|
|
|
|
|
|
|
|
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31,
2005
|
|
|
|
|
|
|
|
|
|
During
the year ended October 31, 2003, the Company issued 7,000 common stock units
that consisted of 7,000 shares of common stock and warrants to purchase an
additional 2,333 shares of common stock. As part of the total cash purchase,
the
warrants were valued at $583.
During
the year ended October 31, 2002, the Company issued 162,667 common stock units
that were made up of 162,667 shares of common stock and warrants to purchase
an
additional 54,222 shares of common stock. As part of the total cash purchase,
the warrants were valued at $14,640.
During
the year ended October 31, 2001, the Company issued 250,000 shares of stock
with
125,000 warrants attached. These warrants were valued at $3,424. Additionally
20,000 warrants were exercised for $15,000 in cash and services valued at
$10,760. The Company also issued 80,000 warrants for services, which were valued
at $144,791.
NOTE
11 - COMMITMENTS AND CONTINGENCIES
Compliance
with Environmental Regulations
The
Company's mining activities are subject to laws and regulations controlling
not
only the exploration and mining of property concessions, but also the effect
of
such activities on the environment. Compliance with such laws and regulations
may necessitate additional capital outlays, affect the economics of a project,
and cause changes or delays in the Company's activities.
NOTE
12 - JOINT VENTURE AGREEMENTS
Penoles
Agreement
On
November 15, 2001, the Company entered into an agreement with Compania Minera
La
Parrena S.A. de C.V. ("Penoles") whereby Penoles may earn the right to acquire
a
60% interest in certain mining concessions located in the Sierra Mojada region
of Coahuila, Mexico. The earn-in right was contingent upon the following:
delivery by Penoles within four years of a pre-feasibility study, completion
by
Penoles of $1,000,000 of qualified expenditures on the aforementioned mining
concessions, and Penoles purchase of up to 250,000 shares of Metalline's common
stock $2.00 per share. As of October 31, 2003, Penoles had purchased 150,000
shares of common stock under this agreement. See Note 8.
During
the year ended October 31, 2003, the Company received reimbursement of $151,536
from Penoles for expenses incurred by Metalline, which were applied toward
an
aggregate $85,712 of qualified expenditures incurred by Penoles. In November
2003, the agreement between the Company and Minas Penoles was terminated by
the
Company.
Northern
Limited
On
October 7, 1999, the Company announced that it entered into a five-year
"earn-in" type of a joint venture agreement with North Limited. The agreement
gives North Limited the right to earn into 60% of the Company's Sierra Mojada
Project by providing all funds necessary to complete a feasibility study
delivered in no more than five years that is acceptable to international banking
institutions for lending development capital. North Limited is a large
Australian mining company based in Melbourne, Australia and was known as North
Broken Hill Peko before a name change in 1994. In August 2000, Rio Tinto Limited
purchased North Limited for its iron ore holdings and subsequently terminated
North Limited's agreement with the Company.
EXHIBIT
NO.
|
|
EXHIBIT
|
|
|
|
3.1
|
|
Articles
of Incorporation of Metalline Mining Company. Filed as an exhibit
to the
registrant's registration statement on Form 10-SB (Commission File
No.
000-27667) and incorporated by reference herein.
|
|
|
|
3.2
|
|
Amended
and Restated Bylaws of Metalline Mining Company. Filed as an exhibit
to
the registrant's current report on Form 8-K filed on September 14,
2005
and incorporated by reference herein.
|
|
|
|
3.3
|
|
Articles
of Amendment to the Articles of Incorporation. Filed as an exhibit
to the
registrant's registration statement on Form 10-SB and incorporated
by
reference herein.
|
|
|
|
4.1
|
|
Reference
is made to Exhibits 3.1, 3.2 and 3.3.
|
|
|
|
21.1
|
|
Subsidiaries
of Metalline Mining Company. Filed herewith.
|
|
|
|
23.1
|
|
Consent
of Williams & Webster, P.S. Filed herewith
|
|
|
|
31.1
|
|
Certification
of Principal Executive Officer pursuant to Rule 13a-14(a) of the
Exchange
Act. Filed herewith.
|
|
|
|
31.2
|
|
Certification
of Principal Financial Officer pursuant to Rule 13a-14(a) of the
Exchange
Act. Filed herewith.
|
|
|
|
32.1
|
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.
Furnished herewith.
|
|
|
|
32.2
|
|
Certification
of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.
Furnished herewith.
|
|
|
|
99.1
|
|
Sierra
Mojada location map. Filed
herewith.
|