-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WWvSRlQPyc7+qWVCCcNMUIiw3/u8OO2dA3SgCBJ81CXsXty90PX7R9GbO1aBRpqw 5tLSdljCQ3akTsiG6z9dWQ== 0001097630-00-000003.txt : 20000202 0001097630-00-000003.hdr.sgml : 20000202 ACCESSION NUMBER: 0001097630-00-000003 CONFORMED SUBMISSION TYPE: 10SB12G PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20000111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW JERSEY MINING CO CENTRAL INDEX KEY: 0001030192 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 820490295 STATE OF INCORPORATION: ID FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10SB12G SEC ACT: SEC FILE NUMBER: 000-28837 FILM NUMBER: 505180 BUSINESS ADDRESS: STREET 1: 89 APPLEBERG RD STREET 2: PO BOX 1019 CITY: KELLOGG STATE: ID ZIP: 83837 BUSINESS PHONE: 2087833331 MAIL ADDRESS: STREET 1: 89 APPLEBERG ROAD STREET 2: PO BOX 1019 CITY: KELLOGG STATE: ID ZIP: 83837 10SB12G 1 DOWNLOAD FORMATTING INSTRUCTIONS FOR CORRECT PAGINATION: PAGE SETUP: .5"TOP, .5"BOTTOM, .5"LEFT, .5"RIGHT TYPE: COURIER NEW, 10pt (This space intentionally left blank.) SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-SB GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS Under Section 12(b) or 12(g) of The Securities Exchange Act of 1934 NEW JERSEY MINING COMPANY -------------------------- (Name of small business issuer in its charter) IDAHO 82-0490295 - --------------------------- ----------------------------------- (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) P.O. Box 1019 (Street: 89 Appleberg Road) Kellogg, Idaho 83837 - ------------------------------------------- ----------- (Address of principal executive offices) (Zip Code) (208)783-3331 - --------------------------- Issuer's telephone number Securities registered under Section 12(b) of the Act: None - ------------------- ------------------------------ Title of each class Name of each exchange on which registered Securities registered under Section 12(g) of the Act: Common Stock- No Par Value -------------------------- Title of Class The registrant has elected to use Alternative 3 of the possible disclosure models for Part I. TABLE OF CONTENTS Page Glossary of Significant Mining Terms 2 PART I Item 1. Description of Business 3 Item 2. Management's Discussion and Analysis of or Plan of Operation 6 Item 3. Description of Property 6 Item 4. Security Ownership of Certain Beneficial Owners and Management 11 Item 5. Directors and Executive Officers, Promoters and Control Persons 12 Item 6. Executive Compensation 14 Item 7. Certain Relationships and Related Transactions 14 Item 8. Description of Securities 15 PART II Item 1. Market Price of and Dividends on the Registrant's Common Equity And Related Stockholder Matters. 16 Item 2. Legal Proceedings 17 Item 3. Changes in and Disagreements with Accountants 17 Item 4. Recent Sales of Unregistered Securities 17 Item 5. Indemnification of Directors and Officers 18 PART F/S Item 1. Financial Statements 18 PART III Item 1. Index to Exhibits 31 GLOSSARY Ag- Silver. Au- Gold. Alluvial- Adjectivally used to identify minerals deposited over time by moving water. Argillites- Metamorphic rock containing clay minerals Arsenopyrite- An iron-arsenic sulfide. Common constituent of gold mineralization. Bedrock- Solid rock underlying overburden. CIL- A standard gold recovery process involving the leaching with cyanide in agitated tanks with activated carbon. CIL means "carbon-in-leach." Crosscut- A nominally horizontal tunnel, generally driven at right angles to the strike of a vein. Deposit- A mineral deposit is a mineralized body which has been intersected by sufficient closely-spaced drill holes or underground sampling to support sufficient tonnage and average grade(s)of metal(s)to warrant further exploration or development activities. Development Stage- As defined by the SEC- includes all issuers engaged in the preparation of an established commercially mineable deposit (reserves) for its extraction which are not in the production stage. Drift- A horizontal mine opening driven on the vein. Driving is a term used to describe the excavation of a tunnel. Exploration Stage- As defined by the SEC- includes all issuers engaged in the search for mineral deposits (reserves) which are not in either the development or production stage. Fault- A fracture in the earth's crust accompanied by a displacement of one side of the fracture with respect to the other and in a direction parallel to the fracture. Galena- A lead sulfide mineral. The most important lead mineral in the Coeur d'Alene Mining District. Grade- A term used to assign the concentration of metals per unit weight of ore. An example - ounces of gold per ton of ore (opt). One ounce per ton is 34.28 parts per million. Mineralization-The presence of minerals in a specific area or geologic formation. Ore- A mineral or aggregate of minerals which can be mined and treated at a profit. A large quantity of ore which is surrounded by non-ore ore sub-ore material is called an orebody. Production Stage- As defined by the SEC - includes all issuers engaged in the exploitation of a mineral deposit (reserve). Pyrite- An iron sulfide. A common mineral associated with gold Mineralization. Quartz- Crystalline silica (SiO2). An important rock-forming and gangue material in gold veins. Quartzites- Metamorphic rock containing quartz. Raise- An opening driven upward generally on the vein. Reserves- That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Reserves are subcategorized as either proven (measured) reserves, for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings, or drill holes, and grade and/or quality are computed from the results of detailed sampling, and (b) the sites for inspection, sampling, and measurement are spaced so closely and geologic character is so well defined that size, shape, depth, and mineral content are well-established; or probable (indicated) reserves, for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, yet the sites for inspection, sampling and measurement are farther apart. Tetrahedrite- Sulfosalt mineral containing copper, antimony and silver. Vein- A zone or body of mineralized rock lying within boundaries separating it from neighboring wallrock. A mineralized zone having a more or less regular development in length, width and depth to give it a tabular form and commonly inclined at a considerable angle to the horizontal. Wallrock- Barren rock surrounding a vein. PART I ITEM 1. DESCRIPTION OF THE BUSINESS BUSINESS DEVELOPMENT Form and Year of Organization New Jersey Mining Company (the company) is a corporation organized under the laws of the State of Idaho on July 18, 1996. The Company was dormant until December 31,1996, when all of the assets and liabilities of the New Jersey Joint Venture ( a partnership) were transferred to the Company in exchange for 10,000,000 shares of common stock. The New Jersey Joint Venture, a partnership, was formed in 1994 to develop the New Jersey mine. The partnership consisted of Mine Systems Design, Inc. [75%], Plainview Mining Company [13%], Silver Trend Mining Company [10%], Mark C. Brackebusch [1%], and Mascot Silver-Lead Mines, Inc. [1%]. The New Jersey Joint Venture brought the New Jersey mine into production by building a 100 ton per day concentrator with a gravity circuit for gold recovery. Any Bankruptcy, Receivership or Similar Proceedings There have been no bankruptcy, receivership or similar proceedings. Any Material Classification, Merger, Consolidation, or Purchase or Sale of a Significant Amount of Assets Not in the Ordinary Course of Business. On March 12, 1998 New Jersey Mining Co. and Plainview Mining Co. consummated a merger with New Jersey Mining Co. being the surviving corporation. A majority of Plainview shareholders (59%) approved the merger at a Special Meeting of Shareholders held on January 27, 1998. The merger involved Plainview delivering all of its assets to New Jersey in exchange for stock with 2 shares of New Jersey Mining Co. common stock being exchanged for each share of Plainview Mining Co. common stock. The Articles of Merger were filed with the Idaho Secretary of State on March 27,1998. The Articles of Merger are included as an Exhibit herewith. BUSINESS OF THE COMPANY General Description of the Business The company is involved in exploring for and developing gold, silver and base metal ore resources in the Coeur d'Alene Mining District of northern Idaho. The Company has a portfolio of three mineral properties in the Coeur d'Alene Mining District: the New Jersey mine, the CAMP project and the Wisconsin-Teddy project.The New Jersey mine is the Company's development stage property while the other two properties are exploration stage properties. The New Jersey mine is located 3 miles east of Kellogg,Idaho. The Company's New Jersey mine property has an area of approximately 370 acres and includes a group of mineral leases. A mineral lease from Gold Run Gulch Mining Company includes 5 patented claims containing 62 acres, seven unpatented claims surrounding the patented claims, and mineral rights to fee land containing 108 acres. The known orebody is located on the patented claims. Another mineral lease from William Zanetti in the New Jersey mill area contains about 60 acres. Both mineral leases carry a 5% Net Smelter royalty. Effect of Existing or Probable Governmental Regulations on the Business All operating plans have been made in consideration of existing governmental regulations. Regulations that would most affect operations are related to water quality. Plans of operation will be required before exploration or mining activities can be conducted on Federal land that is administered by the Bureau of Land Management. The Bunker Hill Superfund site is located about 1 mile west of the New Jersey mine. It is possible that Superfund status could be applied to the area around the New Jersey mine because of historic mining activities. There is no known evidence that previous operations at the New Jersey mine prior to 1910 caused any ground water or stream pollution or discharged any tailings into the South Fork of the Coeur d'Alene River; however such evidence could be discovered. Historic mine tailings from upstream mining operations located near the New Jersey mill may have to be covered or removed if Superfund status is applied. The Bureau of Land Management is currently revising its regulations relative to exploration and mining operations, but the planned changes are not thought to have major effects on planned operations at the New Jersey mine. Costs and Effects of Compliance with Environmental Laws (Federal, State and Local) No major Federal permits [except EPA storm water permit which is a blanket state-wide permit] are required for the New Jersey mine because most operations are on private land and there are no process discharges to streams. Any exploration program conducted by the Company on unpatented mining claims, usually administered by the U.S. Bureau of Land Management (BLM), requires a Plan of Operation permit. For example, the Company recently received permission to drill an exploration hole on its unpatented Wisconsin claims after submitting a Plan of Operation to the BLM. Approval of the Plan of Operation took about 2 weeks. The Plan of Operation includes the details of the drill site reclamation, the location of the hole and other details. The Company is also subject to the rules of the U.S. Department of Labor, Mine Safety and Health Administration (MSHA) for the New Jersey mine operations. When the mine is operating, MSHA performs a series of inspections to verify compliance with mine safety laws. The Company files reports with MSHA on a quarterly basis. With respect to the New Jersey mine, two important State of Idaho permits are necessary to perform the mining and milling operation, both of which are in hand. The first is an Idaho Cyanidation Permit and the second is a reclamation plan for surface mining operations. An Idaho cyanidation permit was applied for, and the permit was granted October 10, 1995 [No. CN-000027] The Idaho Cyanidation Permit was obtained through a 1 year permitting effort, which is quite speedy compared to several other cases. The operation of the cyanidation mill did not prove to be controversial locally, probably due to the long mining history in the established Coeur d'Alene Mining District. The deposition of tailings using paste technology is a unique part of the permit. Tailings will be dewatered to a paste consistency using a high density thickener. Cyanide will be destroyed in the paste using bleach, and the tailings will be deposited on a sloped stack. Fred W. Brackebusch has received a U.S. patent (5,636,942) on this new tailings technology. Reclamation of the tailings stack will be done concurrently with mining. The Cyanidation permit requires quarterly surface and groundwater monitoring prior to startup of the CIL plant and monthly sampling once operations commence. The current water monitoring program costs the ompany about $2,000 on an annual basis. The estimated annual cost for sampling after CIL operations begin is $25,000. The surface mining reclamation plan was approved by the Idaho State Department of Lands in 1993.The plan calls for grading of steep fill slopes and planting of vegetation on the area disturbed by the open pit mine. A bond of $1,750 is held in a joint account to ensure that reclamation is completed. The Company complies with local building codes and ordinances as required by law. Number of Total Employees and Number of Full Time Employees The Company's total number of employees is three including the President Fred Brackebusch, the Vice President Grant Brackebusch and the Secretary Tina Brackebusch. There are no full-time employees at this time. REPORTS TO SECURITY HOLDERS The Company is not required to deliver an annual report to shareholders, however, it has delivered an annual report to shareholders in each of the past two years. The annual report delivered to shareholders in 1998 did contain audited financial statements while the recent 1999 annual report letter did not contain audited financial statements. It is expected in the future that the Company may deliver annual reports with audited financial statements. The Company may also rely on the Internet in the future to deliver annual reports to shareholders. This filing of Form 10-SB is the initial filing of New Jersey Mining Company and is being made in order to comply with the new NASD rules for listing on the OTC Bulletin Board. The Company will be subject to disclosure rules of Regulation S-B for a small business issuer under the Securities Exchange Act of 1934. The Company expects that it will become subject to the disclosure filing requirements effective sixty days after the date the Securities and Exchange Commission ("SEC') accepts its original Form 10-SB filing, and after that date will be required to file Form 10-KSB annually and Form 10-QSB quarterly. In addition, the Company will be required to file Form 8 and other proxy and information statements from time to time as required. The public may read a copy of any materials the Company files with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov)that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. ITEM 2. MANAGEMENT'S PLAN OF OPERATION Plan of Operation The plan of operation for the next twelve months consists of maintaining the status quo. Mine Systems Design, Inc. has agreed to fulfill the requirements of mineral leases, pay maintenance costs including property taxes, and to conduct environmental sampling required by permits. New Jersey Mining Company receives a monthly payment from its ownership in the CAMP project, which is adequate to cover minor administrative costs. No additional funding is necessary to maintain the status quo condition. It is expected that Mine Systems Design, Inc. may expand the building which houses the mineral processing equipment, but such work is not required by any agreement. No equipment will be purchased or sold during the next twelve months. It is not expected that any employees will be hired in the next twelve months. ITEM 3. DESCRIPTION OF PROPERTIES NEW JERSEY MINE Location The New Jersey mine is located in the Gold Run Gulch area, comprising about 15 square miles in the Coeur d'Alene Mining District just east of Kellogg, Idaho. The mine is adjacent to Interstate 90 and is easily accessed by local roads through the entire year. The area is underlain by argillites and quartzites of the Prichard formation [member of Belt Supergroup], which commonly hosts gold mineralization. The controlled property,known as the New Jersey mine, has an area of approximately 370 acres and includes a group of mineral leases and property held by the Company. Mineral Leases A mineral lease from Gold Run Gulch Mining Company includes 5 patented claims containing 62 acres, seven unpatented claims surrounding the patented claims, and mineral rights to fee land containing 108 acres. The known orebody is located on the patented claims. Another mineral lease from William Zanetti in the New Jersey mill area contains about 60 acres. Alliance Title and Escrow Corporation of Wallace, Idaho has issued a Commitment for Title Insurance for the fee simple property leased from Gold Run Gulch Mining Company and William Zanetti. The unpatented claims leased from Gold Run Gulch Mining Company are on federal land administered by the U.S. Bureau of Land Management. The leases provide for the Company's exploration, development and mining of minerals on patented and unpatented claims through October 2008 and thereafter as long as mining operations are deemed continuous. The lessors may terminate the leases upon the Company's failure to perform under the terms of the leases. The leases provide for royalties of 5% of net sales of ores or concentrates less transportaton also know as a Net Smelter Return. Additional royalties of 1% to 5% are due if the gold price exceeds $ 557.34 per ounce as of September 30, 1999. This additional royalty gold price is indexed to the Consumer Price Index with 1987 as the base year. Also, annual advance royalties totaling $2900 per year are required under the leases. The advance royalties are accumulated and will be credited against the royalty obligations. Both the Zanetti and Gold Run Gulch lease agreements are included as exhibits in this Form 10-SB filing. History There are at least 14 gold prospects in or near the New Jersey mine area. Most of the prospecting activity was completed before the turn of the century, and almost no work has been done for at least 50 years. Just after the turn of the century, at the New Jersey mine, more than 2,500 feet of development workings including drifts, crosscuts, shafts, and raises, were driven by the New Jersey Mining and Milling Company to develop the Coleman vein and the northwest branch of the Coleman vein. A 10 stamp gravity mill was built and operated for a short period. The amount of money spent from 1899 to 1910 appears to have been $500,000 to $1,000,000 in 1996 dollars. The operation was discontinued because of the difficulty in recovering fine gold without cyanidation technology, because of the lower price of gold relative to mining costs, and because of inadequate drilling and mining technology. For example, the Coleman vein, a hard quartz vein, was so difficult to drill using hand steel that drifts along the vein were not driven to any great lengths. A considerable portion of the gold is in free grains, so there is a strong nugget effect. Hershey [1916], a well known Coeur d'Alene district geologist, noted the nugget effect and lack of drifting on the vein: "The average gold-content is known to be very low, though it is said that one small shoot carried $55 gold per ton (2.66 ounces per ton @ $20.67 per ounce which was the gold price at that time). The great variation in the assays indicates a pockety distribution. This suggests that if this fine large vein were developed for 2000 ft. instead of merely 200 ft., a commercial ore-shoot might be found." Present Condition and Work Completed on the Property Presently, operations at the New Jersey mine are suspended due to the low price of gold. Operations were suspended in mid 1997. During the period from 1994 through the suspension of operations in 1997 many projects were completed on the property. Several of the historic underground workings, namely the 2400 level adit and the Keyhole tunnel, were opened up. This permitted personnel to sample, map and evaluate the Coleman vein and associated gold bearing structures. A 100 ton per day gravity mill has been built and commissioned. A crushing plant was built and commissioned in 1996. An open pit mining program on the Coleman vein was initiated in 1995. A series of haulage roads were also upgraded in order to provide access from the open pit operation to the gold plant (mill). Approximately 5,000 tons of ore were processed at the mill during 1995 through 1996. A gravity concentrate was produced and sold to ASARCO in East Helena, Montana. Gold recovery from the ore using gravity methods of concentration was relatively low (approx. 60%) so the decision was made to upgrade the mill to a CIL (Carbon-In-Leach) process. Testwork using the CIL process on New Jersey ores determined gold recovery rates up to 95% were achievable. As previously stated the Company has received a Cyanide Permit from the State of Idaho (Permit No. CN-000027). In late 1996, the Company began construction the permitted CIL mill upgrade with work mainly consisting of the concrete foundation work for the new process facilities. Other work included carpentry and metal working tasks. This work was suspended in the spring of 1997 after completion of all the required concrete work due to an inability of the company to raise sufficient funds. Since 1997 only regular maintenance and upkeep (including environmental monitoring) and some geological work have been performed at the project site. In the summer of 1999, management of the Company began a modest construction project which culminated in the partial completion of one 32 foot by 48 foot pole type building. The Company's proposed program of exploration and development for the New Jersey mine is listed below: 1. Diamond Drilling - The Company would drill approximately 10,000 feet of diamond drill holes. A portion of this drilling, about 5,000 feet, would be done to increase the amount and certainty of gold resources on the Coleman vein. Some of this drill footage would also be more exploratory in nature and would test geochemical anomalies and other vein prospects. This program would cost about $250,000. 2. Mill Upgrade - The upgrade of the current gravity mill to a CIL process would be completed. This is also expected to cost $250,000. Both of the above programs are dependent on the Company's ability to raise money through a private placement and will not be completed until such a placement takes place. Geology and Reserve/Resource The description of the geology of the New Jersey mine and the calculation of mineral resources have been completed by the Company and not an independent third party. The description of the geology of the area can be verified from third party published reports by the U.S. Geological Survey and unpublished reports by Oscar Hershey, former Coeur d'Alene District geologist. The Company is solely responsible for the resource calculations. Geology The Prichard formation, which is 25,000 feet in thickness, underlies the New Jersey mine area which is adjacent to and north of the major Osburn fault. The Osburn fault is in the center of a Proterozoic rifting basin. The Prichard formation is divided into nine rock units of alternating argillites and quartzites, and the units exposed in the New Jersey mine area appear to belong to the lower members. A broad domal structure with a series of tighter folds near the Osburn fault typifies the structure of the area. South of the Osburn fault, the Wallace formation is exposed on the north flank of the Big Creek anticline. Gold mineralization is associated with sulfide-bearing quartz veins which cut the bedding in Prichard argillite and quartzite. Associated sulfides are pyrite, arsenopyrite, chalcopyrite, low-silver tetrahedrite, galena, and sphalerite. Most commonly in the Coleman vein of the New Jersey mine visible gold is associated with the tetrahedrite. Gold prospects are concentrated in the New Jersey mine area possibly because of the presence of lower Prichard stratigraphic members, an anticlinal structure, and/or the existence of a gold source. Gold is associated with arsenic, copper, and antimony. Igneous dikes are relatively rare. Some wallrock alteration has been observed. The Coleman vein shows a characteristic brecciation The strike length of the veins on the property based on exposures in drifts, outcrops and float is about 1,500 feet. Reserves The only reserves at the New Jersey mine as of this date are those contained within the open pit on the Coleman vein. Open pit reserves are from the planned pit which extends from the south portal north to the terminus of the Coleman Vein. The vertical extent of the pit is from the surface outcrop down to the Keyhole Tunnel level. Grade estimation for the blocks in the pit reserve is based upon calculated head grades from 5,000 tons of gravity-mill production. Other sources include channel samples from the outcrop and also from the Keyhole Tunnel Open Pit Reserve (Proven and Probable) ============================================================================= Ore Blocks Tons Grade (Au ounces/ton) Ounces (Au) - ----------------------------------------------------------------------------- Coleman (17+00-21+00) 62,300 0.133 8,306 Coleman Split (21+0-23+00) 23,500 0.103 2,420 North Vein (21+00) 3,300 0.250 825 - ------------------------------------------------------------------------------ Total 89,100 0.130 11,551 ============================================================================= The open pit reserve tonnages are diluted. That is, the expected dilution from open pit mining is accounted for in the grade and tonnage of the reserve blocks. The ounces stated in the above table are contained ounces. According to metallurgical testwork, approximately 95% of the gold contained in the open pit reserve will be recovered at the mill using the CIL process. CAMP PROJECT Location The CAMP project is an exploration project located south of and adjacent to the City of Osburn, Idaho. The CAMP is accessed by the Mineral Point mine road otherwise known as the McFarren Gulch road. The CAMP is located in the approximate center of the silver belt of the Coeur d'Alene Mining District. The CAMP project covers approximately 380 acres. The Company controls 17.75% of the land in the CAMP. Merger Mines and Coeur d'Alene Mines Corp. (CDE:NYSE)control the remainder. Coeur d'Alene Mines Corp. is the operator of the property. This property was acquired by the Company in its January 1998 merger with Plainview Mining Co. The CAMP area extends from the surface to 900 feet below sea level. Sunshine Mining Company owns the mineral property beneath the CAMP property. Mineral Lease As part of a July 26, 1978 lease agreement with Coeur d'Alene Mines Corp. (Coeur), New Jersey Mining Co. will receive a 7.1% Net Profits Interest (NPI), if the property is put into production. However, according to the agreement Coeur can retain 93.925% of the net profits until Coeur is reimbursed in total for its advance payments and expenditures. The term of the lease is 61 years. The Agreement also calls for Coeur to spend $50,000 annually on exploration. However, a December 18, 1992 Amendment to the Agreement allowed Coeur to fulfill the exploration work requirement until 2006 by applying past work in the amount of $1,436,243 towards the exploration work requirement. History Originally the CAMP project was leased to ASARCO during the period from 1969 through 1972. ASARCO developed an exploration drift on the 1400 level of the Coeur d'Alene mine (aka Mineral Point mine), before terminating the drift 1000 feet short of its planned termination. The drift extended 1,000 feet into the CAMP project area before terminating. A series of diamond drill holes were planned along the 1400 level drift, but ASARCO terminated the lease agreement before any drilling could take place. In 1978, Coeur d'Alene Mines Corp. signed a new lease agreement with Merger Mines and Plainview Mining Co. Coeur began an exploration program soon thereafter consisting of geochemical soil sampling, trenching, an exploration tunnel and diamond drilling (surface & underground). The exploration program continued through 1982. Coeur spent a total of $1,436,243 on the project. The property has not received any more exploration activity since 1982. Geology The CAMP area lies astride the Silver Belt of the Coeur d'Alene Mining District east of the Sunshine mine and west of the Coeur and Galena mines. The north limb of the Big Creek anticline trends through the CAMP area. Most of the silver orebodies in adjacent properties are located in the north limb of the Big Creek anticline. Prospective fault structures that trend through the CAMP property include the Polaris fault, Silver Summit vein-fault, Chester fault, and other structures. Favorable rock types are located in the footwall of the Polaris fault including the St. Regis and Revett formation. WISCONSIN-TEDDY PROJET Summary This project lies north of the New Jersey mine and is accessed by a local frontage road. The Company's claims cover 83 acres. The claims are unpatented and are on federal land administered by the U.S. Bureau of Land Management. The project is a base metal exploration project in the Prichard formation. Several tunnels with an aggregate length of 2,000 feet were driven on the property prior to 1930. This development was related to two veins systems - a copper-gold vein and a zinc-lead-silver vein. Preliminary field investigations have delineated a large structure about 30 meters in width which contains anomalous copper, lead and silver mineralization. One shallow exploration hole (500 feet) is planned for an initial investigation of this structure. This property may contain a vent or fracture system related to Sullivan-type mineralization. NJMC plans to rehabilitate the underground workings in order to undertake a sampling program which may indicate future drilling targets. ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information on the ownership of the Company's voting securities by Officers, Directors and major shareholders as those who own beneficially more than five percent of the Company's common stock through the most current date - December 31, 1999. Security Ownership of Certain Beneficial Owners and Management ============================================================================== Title Of Name and Address of Amount & Nature of Percent of Class Beneficial Owner Beneficial Owner Class - ------------------------------------------------------------------------------ Common Trend Mining Co. 1,000,000 (a) 8.70% 410 Sherman Ave., Suite 209 Coeur d'Alene, ID 83814 - ------------------------------------------------------------------------------ Common Plainview Shareholders Trust 849,034 (b) 7.38% Tina C. Brackebusch, Trustee P.O. Box 1019 Kellogg, ID 83837 - ------------------------------------------------------------------------------ Common Fred W. Brackebusch 7,267,215 indirect(c) 63.34% President & Director 16,000 direct P.O. Box 1019 Kellogg, Idaho 83837 - ------------------------------------------------------------------------------ Common Grant A. Brackebusch 382,485 indirect(d) 3.38% Vice Pres. & Director 6,000 direct P.O. Box 131 Silverton, ID 83837 - ------------------------------------------------------------------------------ Common Charles F. Asher, Director 52,000 0.45% P.O. Box 4157 South Padre Island, TX 78597 - ------------------------------------------------------------------------------ Common Tina C. Brackebusch, Secretary 6,000 0.05% P.O. Box 131 Silverton, ID 83867 - ------------------------------------------------------------------------------ Common Ronald Eggart, Director 45,332 0.39% HC-01 Box 187 Kellogg, ID 83837 - ------------------------------------------------------------------------------ Common Kurt Hoffman, Director 8,000 0.07% 401 S. Dollar Street Coeur d'Alene, ID 83814 ============================================================================== (a) Trend Mining Co. does not have the right to acquire any securities pursuant (b) to options, warrants, conversion privileges or other rights. (b) The Plainview Shareholders Trust was created in order to hold shares for those shareholders of Plainview Mining Company who have not participated in the merger with the Company as of this date. As Plainview shareholders exchange their shares for New Jersey shares, the number of shares in the Trust declines. Tina C. Brackebusch is the Trustee and retains the right to vote those shares. The Plainview Shareholders Trust does not have the right to acquire any securities pursuant to options, warrants, conversion privileges or other rights. (c) Fred Brackebusch owns 95% of Mine Systems Design, Inc.(MSD) which is a Schedule S corporation that owns 7,649,700 common shares of New Jersey Mining Co. Mine Systems Design, Inc. Neither MSD nor Fred Brackebusch have the right to acquire any securities pursuant to options, warrants, conversion privileges or other rights. (d) Grant Brackebusch owns 5% of Mine Systems Design, Inc.(MSD) which is a Schedule S corporation that owns 7,649,700 common shares of New Jersey Mining Co. Mine Systems Design, Inc. Neither MSD nor Grant Brackebusch have the right to acquire any securities pursuant to options, warrants, conversion privileges or other rights. None of the directors or officers have the right to acquire any securities pursuant to options, warrants, conversion privileges or other rights. ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS Directors and Executive Officers ============================================================================== Name & Address Age Position Date First Term Elected Expires - ------------------------------------------------------------------------------ Fred W. Brackebusch 55 President 7/18/96 P.O. Box 1019 Director Kellogg, Idaho 83837 Treasurer - ------------------------------------------------------------------------------ Grant A. Brackebusch 30 Vice President 7/18/96 P.O. Box 131 Director Silverton, ID 83867 - ------------------------------------------------------------------------------ Charles F. Asher 75 Director 1/1/97 P.O. Box 4157 South Padre Island TX 78597 - ------------------------------------------------------------------------------ Tina C. Brackebusch 30 Secretary 1/1/97 P.O. Box 131 Silverton, ID 83867 - ------------------------------------------------------------------------------ Ronald Eggart 78 Director 1/1/97 HC-01 Box 187 Kellogg, ID 83837 - ------------------------------------------------------------------------------ Kurt J. Hoffman 33 Director 9/29/97 401 S. Dollar St. Coeur d'Alene, ID 83814 ============================================================================== Directors are elected by shareholders at each annual shareholders meeting to hold office until the next annual meeting of shareholders or until their respective successors are elected and qualified. Fred W. Brackebusch, P.E. is the President and a Director of the Company. He has a B.S. and an M.S. in Geological Engineering both from the University of Idaho. He is a consulting engineer with extensive experience in mine development, mine backfill, mine management, permitting, process control and mine feasibility studies. He has over 25 years of experience in the Coeur d'Alene Mining District principally with Hecla Mining Co. He has been the principal owner of Mine Systems Design, Inc., a mining consulting business, since 1987. Mr. Brackebusch is also on the Board of Directors of Trend Mining Company and Mascot Silver-Lead Mines, Inc. Grant A. Brackebusch, P.E. is the Vice President and a Director of the Company. He holds a B.S. in Mining Engineering from the University of Idaho. He worked for Newmont Gold Co. in open pit mine planning and pit supervision for 3 years. Since that time he as worked with Mine Systems Design performing various engineering and geotechnical tasks. He also supervised New Jersey Mining Co.'s mining and milling operations prior to the suspension of operations. He is also a Director of Trend Mining Co. Charles Asher is a Director of the Company. He is also a Director with the following companies: ConSil Corporation, Merger Mines Corporation, and Mascot Silver-Lead Mines Inc. He was formerly President of Plainview Mining Co. and Silver Trend Mining Co. Mr. Asher has extensive experience as an underground mine operator in the Coeur d'Alene Mining District. Tina C. Brackebusch is Secretary of the Company. She has served as Office Manager for the Company. She holds a B.S. in Secondary Education from the University of Idaho. Ronald Eggart is a Director of the Company. He is a retired CPA with a long record of experience with Coeur d'Alene Mining District mining ventures. He is also a Director and Secretary for Mascot Silver-Lead Mines Inc. Kurt J. Hoffman is a Director of the Company. He is President and a Director of Trend Mining Co. and is also a director of Atlas Mining Co. Family Relationships Fred W. Brackebusch is the father of Grant A. Brackebusch. Tina C. Brackebusch is the wife of Grant A. Brackebusch. Involvement in Certain Legal Proceedings No Executive Officer or Director of the Company has been involved, either as a general partner or an executive officer, with a business that filed a bankruptcy petition. No Executive Officer or Director of the Company has been convicted in any criminal proceeding (excluding traffic violations and other minor offenses) or is the subject of a criminal proceeding which is currently pending. No Executive Officer or Director of the Company has been subject of any Order, Judgment, or Decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring, suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person , director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities. ITEM 6. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE ============================================================================== Name & Year Salary Bonus Other Restrct. Options LTIP Pricipal ($) ($) Annual Stock SARs Payout Position Comp.($) Awards($) ($) - ------------------------------------------------------------------------------ F. 1997 -0- -0- -0- -0- -0- -0- Brackebusch 1998 -0- -0- -0- -0- -0- -0- President 1999 -0- -0- -0- -0- -0- -0- - ------------------------------------------------------------------------------ G. 1997 13,760 -0- -0- -0- -0- -0- Brackebusch 1998 -0- -0- -0- -0- -0- -0- Vice Pres. 1999 -0- -0- -0- -0- -0- -0- - ------------------------------------------------------------------------------ C. Asher 1997 -0- -0- -0- -0- -0- -0- Director 1998 -0- -0- -0- -0- -0- -0- 1998 -0- -0- -0- -0- -0- -0- - ------------------------------------------------------------------------------ T. 1997 -0- -0- -0- -0- -0- -0- Brackebusch 1998 -0- -0- -0- -0- -0- -0- Secretary 1999 -0- -0- -0- -0- -0- -0- - ------------------------------------------------------------------------------ R. Eggart 1997 -0- -0- -0- -0- -0- -0- Director 1998 -0- -0- -0- -0- -0- -0- 1999 -0- -0- -0- -0- -0- -0- - ------------------------------------------------------------------------------ K. Hoffman 1997 -0- -0- -0- -0- -0- -0- Director 1998 -0- -0- -0- -0- -0- -0- 1999 -0- -0- -0- -0- -0- -0- ============================================================================== Mr. Grant Brackebusch was paid a salary in early 1997 for his supervisory role at the New Jersey mine. However, this salary was terminated once operations were suspended in April of 1997. Since its formation in June 1996 and to this date, the Company has not paid to, except for the above mentioned event, nor has there been accrued for, any Officer or Director of the Company any cash remuneration for services which are related to the duties of those Officers or Directors. There are no immediate plans to pay any cash remuneration to any Officers or Directors related to their respective duties until the Company is able to afford payment. The Board of Directors agreed to pay Officers and Directors for their services 3,000 shares of restricted (Rule 144) common stock per year for 1998 and 1999. There are no plans at this time to change the number of shares awarded to Directors and Officers of the Company. No value was ascribed to the stock. The Company does not have a standard arrangement pursuant to which Directors or Officers are compensated for their services. ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The principal office, telephone, copier and other office equipment are provided by Mine Systems Design Inc. which is the majority shareholder of the Company. In exchange for the use of these facilities and services, Mine Systems Design, Inc. was issued 49,200 shares of restricted Common Stock in early 1999. Because New Jersey Mining Company has no significant revenue source from operations and has been unable to raise funds from investors due to the low gold price, Mine Systems Design, Inc. has agreed, as of January 1, 1999, to fulfill the requirements of mineral leases, pay maintenance costs including property taxes, and to conduct environmental sampling required by permits. The Company made an exchange offer to Plainview Mining Company, Inc. shareholders in 1997 which led to the merging of Plainview into New Jersey Mining Co. At the time of the offer, Mr. Fred Brackebusch, Mr. Charles Asher and Mr. Ron Eggart were on the Board of Directors for both Plainview and New Jersey. According to an evaluation by an independent expert, 2 shares of New Jersey common stock should be exchanged for each share of Plainview. The Board of Directors of New Jersey Mining Company approved an exchange offer on September 29, 1997 whereby shareholders of Plainview Mining Company, Inc. would be offered 2 shares of the common stock of New Jersey Mining Company for each share of common stock of Plainview Mining Company, Inc. The Board of Directors of Plainview Mining Company, with the exception of Mr. Fred Brackebusch who abstained, approved the exchange offer and recommended that their shareholders accept the exchange offer. On December 30, 1997, New Jersey Mining Company and Plainview Mining Company, Inc. approved a merger agreement that involved Plainview Mining Company, Inc. delivering all of its assets to New Jersey Mining Company in exchange for stock with 2 shares of New Jersey Mining Company common stock exchanged for share of common stock of Plainview Mining Company, Inc. New Jersey Mining Company was to be the surviving corporation according to the agreement. The merger agreement was contingent upon the approval of the shareholders of Plainview Mining Company, Inc. Previously, a majority of New Jersey Mining Co. shareholders approved the merger. On January 27, 1998 a Special Meeting of Plainview Mining Company Inc. shareholders was held to vote on the merger. Plainview Mining Company Inc. had 1,500,000 shares of common stock issued and authorized as of the Special Meeting date. No other classes of Plainview Mining Company Inc. stock were authorized. The number of votes cast by the shareholders of Plainview Mining Company Inc. for the merger plan was 886,841 with no dissenting or disputed votes. Therefore, the merger was approved by a majority of the shareholders of Plainview Mining Company Inc. The effective date of the merger of New Jersey Mining Company and Plainview Mining Company Inc. was March 12, 1998. A copy of the merger agreement is included as an Exhibit herewith. ITEM 8. DESCRIPTION OF SECURITIES The Company's Certificate of Incorporation authorizes the issuance of 21,000,000 shares,of which 20,000,000 shares shall be Common Stock having no par value per shares and 1,000,000 shares shall be Preferred Stock having no par value per share. The Company has 11,510,190 shares of Common Stock issued and outstanding and no shares of Preferred Stock issued and outstanding as of December 31, 1999. Common Stock The holders of Common Stock are entitled to one vote per share on each matter submitted to a vote at any meeting of shareholders. No shareholders of the Company have cumulative voting rights. The Company's bylaws provide that a majority of all the Shares entitled to vote, represented by Shareholders of record in person or proxy, shall constitute a quorum at a meeting of Shareholders. Shareholders of the Company have no preemptive rights to acquire additional shares of Common Stock or other securities. The Common Stock is not subject to redemption and carries no subscription or conversion rights. In the event of liquidation of the Company, the shares of Common Stock are entitled to share equally in corporate assets after satisfaction of all liabilities. Holders of Common Stock are entitled to receive such dividends, as the Board of Directors may from time to time declare out of funds legally available for the payment of dividends. The Company seeks growth and expansion of its business through the reinvestment of profits, if any, and does not anticipate that it will pay dividends in the foreseeable future. Preferred Stock The authority to issue the Preferred Stock is vested in the Board of Directors of the Company, which has the authority to fix and determine the powers, qualifications, limitations, restrictions, designations, rights preferences, or other variations of each class or series within each class which the Company is authorized to issue. The above-described authority of the Board of Directors may be exercised by corporate resolution from time to time as the Board of Directors sees fit. PART II ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS OTC Eligibility Rules Effective July 1, 1999 all companies that began quotation on the NASD's OTC Bulletin Board ("OTCBB") prior to January 4, 1999 are being reviewed to determine compliance status with respect to the OTCBB's eligibility rules. To be compliant, a company must be (1) registered with the SEC under section 13 or 15(d) of the Exchange Act, and current in its required filings, i.e., must have filed its latest required annual filing and any subsequent quarterly filings. In the alternative, a company may be deemed compliant if it has cleared all comments by the SEC. New Jersey Mining Company is filing this Form 10-SB in order to comply with the OTCBB's new rules. As of the date of this filing, the Company's stock was trading on the NASD's OTCBB under the symbol "NJMC". The Company began trading on the OTCBB on January 28, 1998 following its merger with Plainview Mining Company, Inc. The deadline for the Company's compliance with the new OTCBB eligibility rule is February 24, 2000. In the event the Company does not clear all comments by the SEC by the deadline, the Company has requested one of its market makers to list the Company's Common Stock in the National Quotation Bureau's "pink sheets" until such time that the Company is re-listed with the OTCBB. The following table sets forth, for the respective periods indicated, the prices for the Company's Common Stock in the over-the-counter market according to the NASD's OTC Bulletin Board. The bid prices represent inter-dealer quotations, without adjustments for retail markups, markdowns or commissions and may not necessarily represent actual transactions. All prices in the following table have been rounded to the nearest whole cent. Quarterly High/Low Bids ============================================================================== High Bid Low Bid - ------------------------------------------------------------------------------ Fiscal Year Ending December 31, 1998 First Quarter $ 0.56 $ 0.25 Second Quarter $ 0.25 $ 0.13 Third Quarter $ 0.22 $ 0.09 Fourth Quarter $ 0.25 $ 0.09 - ------------------------------------------------------------------------------ Fiscal Year Ending December 31, 1999 First Quarter $ 0.19 $ 0.09 Second Quarter $ 0.19 $ 0.06 Third Quarter $ 0.16 $ 0.06 Fourth Quarter $ 0.16 $ 0.06 ============================================================================== Shareholders As of December 31, 1999 there were approximately 231 shareholders of record of the Company's Common Stock. As of December 31, 1999 the Company had issued and outstanding 11,510,190 shares of Common Stock. Dividend Policy The Company has not declared or paid cash dividends or made distributions in the past and the Company does not anticipate that it will pay cash dividends or make distributions in the foreseeable future. The Company currently intends to retain and reinvest future earnings, if any, to finance its operations. Transfer Agent The transfer agent for the Company's Common Stock is Idaho Stock Transfer Company, P.O. Box 2196, Coeur d'Alene, Idaho 83816-2196. ITEM 2. LEGAL PROCEEDINGS The Company is not currently involved in any legal proceedings and is not aware of any pending or potential legal actions. ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES During 1999, Mine Systems Design, Inc. was issued 49,200 shares of restricted Common Stock for office rent, the use of office equipment, technical and clerical services. No cash value was ascribed to the services. No cash consideration was received by the issuer. These securities were issued in reliance on the exemption from registration requirements provided by Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"). Also, during 1999, the Company issued 30,100 shares of restricted Common Stock to Officers, Directors and other individuals for professional and other services related to the Company's operation. No cash value was ascribed to the services. No cash consideration was received by the issuer. These securities were issued in reliance on the exemption from registration requirements provided by Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"). In 1998, the Company sold 92,400 shares of Common Stock under its Regulation D,504 Offering. The Offering price was $0.25 per share. All of these shares of Common Stock were sold to Mine Systems Design, Inc. There were no underwriters for this Offering and therefore, no underwriting discounts or commissions were paid. In Idaho the Offering was being made under the State of Idaho Securities Act 30-1434(m), Mining Exemption. The Offering Circular was approved by the State of Idaho, Department of Finance. The securities were offered under 17 CFR CH II 230.504 "Exemptions for limited offerings and sales of securities not exceeding $1,000,000". The Company's Offering was for up to 2,000,000 shares of Common Stock at a minimum price of $0.25 which satisfies the $1,000,000 limit for a 12 month period provided by Rule 504. The Company is not a blank check company and was not subject to Exchange Act reporting requirements at the date of the stock sale. The Company terminated the 504 offering as of December 31, 1998. In 1998, the Company issued 18,000 shares of restricted Common Stock to Officers and Directors for professional services related to the Company's operation. No cash value was ascribed to the services. No cash was received by the issuer. These securities were issued in reliance on the exemption from registration requirements provided by Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"). In 1997, the Company sold 228,816 shares of Common Stock under its Regulation D, 504 Offering. The Offering price was $0.50 per share. There were no underwriters for this Offering and therefore, no underwriting discounts or commissions were paid. In Idaho the Offering was being made under the State of Idaho Securities Act 30-1434(m), Mining Exemption. In the State of Washington the Offering was made under a state law exemption. The Offering Circular was approved by the State of Idaho,Department of Finance. The securities were offered under 17 CFR CH II 230.504 "Exemptions for limited offerings and sales of securities not exceeding $1,000,000". The Company's Offering was for up to 2,000,000 shares of Common Stock at a minimum price of $0.25 which satisfies the $1,000,000 limit for a 12 month period provided by Rule 504. The Company is not a blank check company and was not subject to Exchange Act reporting requirements at the date of the stock sale. In 1997, the Company issued 14,000 shares of restricted Common Stock to individuals for nominal services. No cash value was ascribed to the services. No cash consideration was received by the issuer. These securities were issued in reliance on the exemption from registration requirements provided by Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"). ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Company's By-Laws allow for the indemnification of Directors, Officers, Agents and Employees in regard to their carrying out the duties of their offices as allowed by the Idaho Business Corporation Act. The Company's By-laws are filed as an exhibit herewith. PART F/S The audited financial statements of the Company for the years ended December 31, 1997 and December 31, 1998 and related notes are included. The 1997 statements were audited by LeMaster & Daniels, PLLC while the 1998 statements were audited by Nathan Wendt, CPA. Unaudited financial statements are provided for the year ending December 31, 1999. NEW JERSEY MINING CO. (A Development Stage Company) FINANCIAL STATEMENTS DECEMBER 31, 1999 (unaudited) DECEMBER 31, 1998 DECMEBER 31, 1997 TABLE OF CONTENTS PAGE # ------ INDEPENDENT AUDITORS' REPORT 1998 19 INDEPENDENT AUDITORS' REPORT 1997 20 BALANCE SHEET 21 STATEMENT OF OPERATIONS 22 STATEMENT OF STOCKHOLDERS' EQUITY 22 STATEMENT OF CASH FLOWS 24 1998 NOTES TO FINANCIAL STATEMENTS 25 1997 NOTES TO FINANCIAL STATEMENTS 28 1998 INDEPENDENT AUDITOR'S REPORT [Nathan Wendt, C.P.A. LETTERHEAD] Board of Directors New Jersey Mining Company PO Box 1019 Kellogg, Idaho 83837 Directors: We have audited the accompanying balance sheet of New Jersey Mining Company as of December 31, 1998 and the related statements of operations and cash flow for the year then ended. These financial statements are the responsibility of New Jersey Mining Company. Our responsibility is to express an opinion on financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, 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 financial statements referred to above present fairly, in all material aspects, the financial position of New Jersey Mining Company at December 31, 1998, and the results of its operation and its cash flow for the year then ended, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 6 to the financial statements, the Company has generated a loss to date and is in the development stage. These conditions raise substancial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Nathan Wendt - ---------------- Certified Public Accountant Kellogg, Idaho December 29, 1999 1997 INDEPENDENT AUDITOR'S REPORT [LeMaster and Daniels, PLLC. LETTERHEAD] INDEPENDENT AUDITORS' REPORT To the Stockholders New Jersey Mining Company Kellogg, Idaho We have audited the accompanying balance sheet of New Jersey Mining Company (a development stage company)as of December 31, 1997. and the related statements of operations and cash flows for the year then ended, and the statement of stockholders' equity from inception (July 18,1996)through December 31, 1997. These 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 generally accepted auditing standards. 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 our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of New Jersey Mining Company as of December 31, 1997, the results of its operations and its cash flows for the year then ended, and the changes in its stockholders' equity from inception (July 18, 1996) through December 31, 1997, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 7 to the financial statements, the Company has generated a net loss to date and is in the development stage. These conditions raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty . /s/ LeMaster & Daniels, PLLC - ---------------------------- Spokane, Washington March 27, 1998 BALANCE SHEET ASSETS Dec. 31 Dec. 31 Dec. 31 1999 1998 1997 -------- --------- -------- Current Assets Cash $ 283 $ 85 $ 179 Property & Equipment Building $ 33,894 $ 33,894 $ 33,894 Equipment $246,536 $246,536 $210,975 Other Assets Deferred Development Costs $ 80,881 $ 80,881 $ 80,881 Investment in Plainview Mining Company, Inc. $148,000 Investment in Consil Corporation $ 85,500 $ 85,500 Mining Reclamation Bond $ 1,722 $ 1,722 $ 1,722 Goodwill $ 30,950 $ 30,950 Total Assets $479,765 $479,568 $475,651
LIABILITIES AND STOCKHOLDERS EQUITY Current Liabilities Accounts Payable & accrued expenses $ 0 $ 7,979 $ 15,160 Current Maturities of Capital Lease Obligations $ 10,800 $ 11,500 $ 10,000 Total Current Liabilities $ 10,800 $ 19,479 $ 25,160 Capital Lease Obligations (less current maturities) $ 13,808 $ 23,432 $ 28,582 Total Liabilities $ 24,608 $ 42,911 $ 53,742 Stockholders Equity Preferred Stock No shares issued Common Stock No Par Value, 20,000,000 shares authorized 1999 Dec. 31,1999 $647,836 13,457,934 Issued 1998 13,378,634 Issued $647,836 Treasury Stock $(136,300) $(136,300) (1,947,744 shares) 1997 11,730,564 Issued $466,083 Deficit Accumulated in the Development Stage $(56,379) $(74,879) $(44,174) Total Stockholders Equity $455,157 $436,657 $421,909 Total Liabilities and Stockholders Equity $479,765 $479,568 $475,651
STATEMENT OF OPERATIONS Dec. 31 Dec. 31 Dec. 31 1999 1998 1997 -------- ------- -------- Revenues $ 18,774 $ 761 $ -0- Operating and Administrative Expenses $ 274 $ 31,466 Net Income or (Loss and Deficit Accumulated in the Development Stage) $ 18,500 $(30,705) $(44,174) Basic Earnings (Loss) Per Share $ 0.002 $(0.003) $(0.004)
STATEMENT OF STOCKHOLDERS' EQUITY Common Stock Treasury Accumulated Stock Deficit Shares Amount Total ------- -------- -------- ---------- ------ Balance at Incorporation July 18, 1996 -0- $-0- $-0- $ -0- Issuance of common shares for New Jersey Joint Venture Interests Dec. 31, 1996 10,000,000 $207,968 $-0- $207,968 Issuance of common shares for cash 1997 228,816 $110,115 $-0- $110,115 Issuance of common shares for services 1997 14,000 $-0- $-0- $-0- Exchange of common shares for 743,874 shares of Plainview December 1997 1,487,564 $148,000 $-0- $148,000 Net Loss year ended December 31, 1997 $(44,174) $(44,174) Balance December 31, 1997 11,730,748 $466,083 $(44,174) $421,909 Retirement of Common Shares owned by Plainview Mining Company, Inc. and held as investment at December 31, 1998 (1,947,144) $(136,300) $(136,300) Issuance of common shares for cash 1998 117,218 $ 29,753 $ 29,753 Issuance of common shares for services 1998 18,000 $ -0- Exchange of Common Stock for 756,126 shares of Plainview Mining Company,Inc. December 1998 1,512,252 $152,000 $152,000 Net Loss year ended December 31, 1998 $(30,705) $(30,705) Balances December 31, 1998 11,430,890 $647,836 $(136,300) $(74,879) $436,657 Issuance of common shares for services 1999 79,300 $ -0- Net Income year ended December 31, 1999 $ 18,500 $ 18,500 Balances December 31, 1999 11,510,190 $647,836 $(136,300) $(56,379) $455,157
STATEMENT OF CASH FLOWS Dec. 31 Dec. 31 Dec. 31 1999 1998 1997 -------- ------- -------- INCREASE (DECREASE) IN CASH Cash Flows From Operating Activities Net Income (Loss) $ 18,500 $(30,705) $(44,174) Decrease in accounts payable and accrued expenses $( 7,979) $ (2,303) $ 12,191 Net cash used in operating activities $ 10,521 $(33,008) $(31,983) Cash Flows From Investing Activities Additions to property and equipment $ -0- $ (5,561) $(50,327) Additions to deferred development costs $ -0- $ -0- $(19,297) Proceeds from sale of equipment $ -0- $ 1,079 Proceeds from sale of investments $ -0- $ 4,500 Net cash used in investing activities $ -0- $ 18 $(69,624) Cash Flows From Financing Activities Proceeds from sale of common stock $ -0- $ 29,753 $110,115 Principal payments on capital lease obligations $(10,323) $(10,291) $ (4,894) Repayment of note payable to bank $(20,000) Proceeds from purchase of Plainview Mining Company $ 13,434 Net cash provided by financing activities $(10,323) $ 32,896 $ 85,221 Net Increase (Decrease)in Cash $ 198 $ (94) $(16,386) Cash, Beginning of Year $ 85 $ 179 $ 16,565 Cash, End of Year $ 283 $ 85 $ 179 Supplemental Schedule of Noncash Investing and Financing Activities Capital Lease Obligation for equipment acquired $ 6,641 $ 18,275 Acquisition of Plainview Mining Company, Inc. in Exchange for Common Stock $152,000 $148,000
NOTES TO FINANCIAL STATEMENTS 1998 NOTE 1- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization New Jersey Mining Company (the Company) was incorporated as an Idaho corporation on July 18, 1996. The Company was dormant until December 31, 1996 when all of the assets and liabilities of New Jersey Joint Venture (a partnership) were transferred to the Company in exchange for 10,000,000 shares of common stock. Such assets and liabilities, transferred at historical cost, consisted of: Assets acquired: Cash $ 16,565 Property & Equipment $176,267 Other Assets $ 63,306 --------- $256,138 Liabilities assumed: Accounts payable $ 2,969 Note payable to bank $ 20,000 Capitalized lease obligation $ 25,201 --------- $ 48,170 Net assets acquired December 31, 1997 $207,968 The Company owns and leases various patented and unpatented mining claims in the Coeur d'Alene Mining District near Kellogg, Idaho. The Company is considered to be a development stage company, as only nominal operations have occurred to date. Planned principal operations include commercial open pit mining and milling of ore to produce and sell gold concentrate. Summary of Significant Accounting Policies: a. Property and equipment - Property and equipment are stated at cost. No Depreciation has been recorded through December 31, 1998, as substantially all assets are under construction or have not yet been placed into service. Depreciation will be provided when the assets are placed into service, using straight-line and accelerated methods over the estimated useful lives of the assets. b. Deferred development costs - Certain costs of developing the Company's mining claims and related property have been capitalized. Such costs, consisting principally of clearing, drilling, blasting, and similar activities, less nominal sales of concentrate, will be amortized to expense based on production. If production does not commence, the costs will be charged to expense. c. Impairment - Impairment is recognized when it is probable that a loss will be incurred in the realization of a recorded asset. Management has determined that no impairment of assets has occurred at December 31, 1998, as adequate ore reserves are available for production and sale to recover all capitalized costs. d. Income taxes - Federal and state income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due and deferred tax assets and liabilities based on the differences between their tax bases for financial and tax purposes. Such differences relate principally to deferred development costs. In addition, a deferred tax asset is recognized for tax-basis operating losses being carried forward. A valuation allowance for deferred tax assets is also recognized when appropriate. e. Loss per share - Basic loss per share has been calculated on the basis of the weighted average number of shares outstanding during the year. f. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities. Significant estimates used in preparing these financial statements include those relating to the evaluation of asset impairment. Actual results could differ from these estimates. NOTE 2 - LEASES OF MINING CLAIMS The Company has been assigned mining leases with Gold Run Gulch Mining Company and William Zanetti. The leases provide for the Company's exploration, development, and mining of minerals on patented and unpatented claims through October 2008 and thereafter as long as mining operations are deemed continuous. The leases provide for production royalties of 5% of net sales of ores ore concentrates. Additional production royalties of 1% to 5% are due if the price of gold exceeds $544 per troy ounce. Also, advance royalties totaling $2,900 are required under the lease. The advance royalties, charged to expense as incurred, are accumulated and will be credited against the production royalty obligations. The lessors may terminate the leases upon the Company's failure to perform under the term of the leases. The Company may also terminate the leases at any time. Mine Systems Design, Inc., the majority shareholder of New Jersey Mining Company - 66.6%, has agreed to fulfill all mineral lease requirements necessary for mineral lease permits. NOTE 3 - PLAINVIEW MERGER In October 1997, the Company made an exchange offer for the outstanding common shares of Plainview Mining Company, Inc.(Plainview). The offer allowed Plainview's stockholders to exchange their shares on the basis of one share of Plainview stock for two shares of the Company's stock. Plainview was also a minority shareholder of the Company as a result of its participation as partner in New Jersey Joint Venture (see Note 1). At December 31, 1998, a total of 1,500,000 (100%) shares of Plainview had been exchanged for 3,000,000 shares of the Company. The Company is accounting for the business combination of Plainview on the purchase method. The estimated fair value of the Company's shares issued in the exchange ($0.10 per share) was used to reflect the purchase price of the investment. The acquisition of 1,947,144 shares of the Company's Common Stock owned by Plainview was accounted for in 1998 as a purchase of treasuruy stock, based on the fair value of the shares issued, $0.07, or $136,000. At March 12, 1998, Plainview's summarized (unaudited) balance sheet consisted of the following at fair values: Assets: Cash $ 12,750 Property & mining claims $ 30,000 Investment, at cost: Consil Corporaton $ 90,000 New Jersey Mining Company $136,300 (1,947,144 common shares) Goodwill $ 30,950 -------- Total Assets $300,000 Stockholders' equity $300,000 NOTE 4 - CAPITAL LEASE OBLIGATIONS The Company leases certain equipment under capital lease obligations. The capitalized cost of such equipment at December 31, 1998 totalled $54,273. Amortization of the cost has not begun (see note 1). Following are the future minimum lease payments and net capital lease obligations at December 31, 1998. Years Ending December 31 Amount ------------------------ ------- 1999 $19,681 2000 $12,601 2001 $ 6,073 2002 $ 3,282 ------- Total minimum payments required $41,637 Less Interest $ 6,705 ------- Net capital lease obligations $34,932 Less current maturities $11,500 ------- Noncurrent capital lease obligations $23,432 Interest expense totalled $8,893 for 1998. NOTE 5 - INCOME TAXES At December 31, 1998, the Company had deferred tax assets of $15,000, which were fully reserved by valuation allowances. For the year ended December 31, 1998, the Company has recognized the net tax benefit for its operating loss in the statement of operations, as valuation allowances offset such benefit. The Company has a tax-basis operating loss carry-forward of approximately $89,904 that is available to offset future taxable income through 2013. NOTE 6 - GOING CONCERN The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern, although the Company is in the development stage. As shown in the accompanying statement of operations, the Company incurred a net loss of $30,705 in 1998. The ability of the Company to recover its capitalized costs of assets and continue as a going concern is dependent upon the Company's evolution to the operating stage, the success of future operations, and obtaining additional capital and financing. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. 1997 NOTES TO FINANCIAL STATEMENTS NOTE 1- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization New Jersey Mining Company (the Company) was incorporated as an Idaho corporation on July 18, 1996. The Company was dormant until December 31, 1996 when all of the assets and liabilities of New Jersey Joint Venture (a partnership) were transferred to the Company in exchange for 10,000,000 shares of common stock. Such assets and liabilities, transferred at historical cost, consisted of: Assets acquired: Cash $ 16,565 Property & Equipment $176,267 Other Assets $ 63,306 --------- $256,138 Liabilities assumed: Accounts payable $ 2,969 Note payable to bank $ 20,000 Capitalized lease obligation $ 25,201 --------- $ 48,170 Net assets acquired December 31, 1997 $207,968 The Company owns and leases various patented and unpatented mining claims in the Coeur d'Alene Mining District near Kellogg, Idaho. The Company is considered to be a development stage company, as only nominal operations have occurred to date. Planned principal operations include commercial open pit mining and milling of ore to produce and sell gold concentrate. Cumulative statements of income and cash flows from inception (July 18, 1996) through December 31, 1997, are not presented, as the only activity not included in the 1997 financial statements is the above transfer. Summary of Significant Accounting Policies: a. Property and equipment - Property and equipment are stated at cost. No depreciation has been recorded through December 31, 1997, as substantially all assets are under construction or have not yet been placed into service. Depreciation will be provided when the assets are placed into service, using straight-line and accelerated methods over the estimated useful lives of the assets. b. Deferred development costs - Certain costs of developing the Company's mining claims and related property have been capitalized. Such costs, consisting principally of clearing, drilling, blasting, and similar activities, less nominal sales of concentrate, will be amortized to expense based on production. If production does not commence, the costs will be charged to expense. c. Impairment - Impairment is recognized when it is probable that a loss will be incurred in the realization of a recorded asset. Management has determined that no impairment of assets has occurred at December 31, 1997, as adequate ore reserves are available for production and sale to recover all capitalized costs. d. Income taxes - Federal and state income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due and deferred tax assets and liabilities based on the differences between their tax bases for financial and tax purposes. Such differences relate principally to deferred development costs. In addition, a deferred tax asset is recognized for tax-basis operating losses being carried forward. A valuation allowance for deferred tax assets is also recognized when appropriate. e. Loss per share - Basic loss per share has been calculated on the basis of the weighted average number of shares outstanding during the year. f. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities. Significant estimates used in preparing these financial statements include those relating to the evaluation of asset impairment. Actual results could differ from these estimates. NOTE 2 - LEASES OF MINING CLAIMS The Company has been assigned mining leases with Gold Run Gulch Mining Company and William Zanetti. The leases provide for the Company's exploration, development, and mining of minerals on patented and unpatented claims through October 2008 and thereafter as long as mining operations are deemed continuous. The lessors may terminate the leases upon the Company's failure to perform under the term of the leases. The Company may also terminate the leases at any time. The leases provide for production royalties of 5% of net sales of ores ore concentrates. Additional production royalties of 1% to 5% are due if the price of gold exceeds $535 per troy ounce. Also, annual advance royalties totaling $2,900 are are required under the leases. The advance royalties, charged to expense as incurred, are accumulated and will be credited against the production royalty obligations. NOTE 3 - PLAINVIEW MERGER In October 1997, the Company made an exchange offer for the outstanding common shares of Plainview Mining Company, Inc. (Plainview). The offer allowed Plainview's shareholders to exchange their shares on the basis of one share of Plainview stock for two shares of the Company's stock. Plainview was also a minority stockholder of the Company as a result of its participation as a partner in New Jersey Joint Venture (see note 1). Through December 31, 1997, a total of 743,874 (49.6%) shares of Plainview had been exchanged for 1,487,748 shares of the Company. Since less than a majority of Plainview's shares had been exchanged, the Company is accounting for the transaction as a step-by-step acquisition of Plainview. Accordingly, the equity method is used to report the Company's investment in Plainview at December 31, 1997. The estimated fair value of the Company's shares issued in the exchange ($0.10 per share) was used to reflect the purchase price of the investment. In early 1998, substantially all shares of Plainview were exchanged, and the companies were fully merged. The acquisition of 1,300,000 shares of the Company's common stock owned by Plainview will be accounted for in 1998 as a purchase of treasury stock, based on the fair value of the shares issued. At December 31, 1997, Plainview's summarized (unaudited) balance sheet consisted of the following: Assets: Cash $ 14,805 Property and minin claims $ 61,142 Investments, at cost: Consolidated Silver Corporation $ 51,047 New Jersey Mining Company (1,300,000 common shares) $ 88,293 -------- Total Assets $215,293 Liabilities Accounts payable $ 1,350 --------- Stockholders Equity $213,943 NOTE 4 - CAPITAL LEASE OBLIGATIONS The Company leases certain equipment under capital lease obligations. The capitalized cost of such equipment at December 31, 1997, totalled $47,632. Amortization of the cost has not begun (see note 1). Following are the future minimum lease payments and net capital lease obligations at December 31, 1997: Years Ending December 31 Amount ------------------------ ------- 1998 $ 16,918 1999 $ 16,918 2000 $ 9,921 2001 $ 4,943 2002 $ 3,282 -------- Total minimum payments required $ 51,982 Less Interest $ 13,400 -------- Net capital lease obligations $ 38,582 Less current maturities $ 10,000 -------- Noncurrent capital lease obligations $ 28,582 Interest expense totalled $6,889 for 1997. NOTE 5 - INCOME TAXES At December 31, 1997 the Company had deferred tax assets of $20,000 which were fully reserved by valuation allowances. For the year ended December 31, 1997, the Company has recognized no net tax benefit for its operating loss in the statement of operations, as valuation allowances offset such benefit. The Company has a tax-basis operating loss carryforward of approximately $60,000 that is available to offset future taxable income through 2012. NOTE 6 - RESTATEMENT: The Company's opening balances at January 1, 1997, have been restated herein to reflect a reduction of the amount of deferred development costs previously reported in the Companys's unaudited financial statements. The restatement resulted in a reduction of deferred development costs and common stock of $58,118. Opening balances, as they relate to the statement of cash flows, have similarly been restated. The restatement had no effect on the 1997 net loss. NOTE 7 - GOING CONCERN The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern, although the Company is in the development stage. As shown in the accompanying statement of operations, the Company incurred a net loss of $44,174 in 1997. The ability of the Company to recover its capitalized costs of assets and continue as a going concern is dependent upon the Company's evolution to the operating stage, the success of future operations, and obtaining additional capital and financing. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. ITEM 1. INDEX TO EXHIBITS Exhibit 3.1 Articles of Incorporation Exhibit 3.2 Bylaws Exhibit 10.1 Lease Agreement with Gold Run Gulch Mining Company Exhibit 10.2 Lease Agreement with William Zanetti Exhibit 10.3 Articles of Merger For Plainview Mining Company Inc. and New Jersey Mining Co. Exhibit 27.1 Financial Data Schedule SIGNATURES Pursuant to the requirements of Section 12 of the Securities Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. New Jersey Mining Company Date: January 3, 2000 By /s/ FRED W. BRACKEBUSCH ------------------ --------------------------------- Fred W. Brackebusch, President, Treasurer & Director Date: January 3, 2000 By /s/ GRANT A. BRACKEBUSCH ------------------ --------------------------------- Grant A. Brackebusch, Vice President & Director EX-3.1 2 Exhibit 3.1 State of Idaho Department of State CERTIFICATE OF INCORPORATION OF NEW JERSEY MINING COMPANY File number C 115780 I, PETE T. CENARRUSA, Secretary of State of the State of Idaho, hereby certify that duplicate originals of Articles of Incorporation for the incorporation of the above named corporation, duly signed pursuant to the provisions of the Idaho Business Corporation Act, have been received in this office and are found to conform to law. ACCORDINGLY and by virtue of the authority vested in me by law, I issue this Certificate of Incorporation and attach hereto a duplicate original of the Articles of Incorporation. Dated: July 18, 1996 /s/ Pete T. Cenarrusa SECRETARY OF STATE By /s/Cara Subel --------------------- JUL 18 9 12 AM '96 SECRETARY OF STATE STATE OF IDAHO ARTICLES OF INCORPORATION OF NEW JERSEY MINING COMPANY The undersigned, being over the age of eighteen (18) years, for the purpose of forming a corporation under the Idaho Business Corporation Act, hereby certifies and adopts the following Articles of Incorporation. ARTICLE I Name and Duration The name of this corporation shall be NEW JERSEY MINING COMPANY, and its existence shall be perpetual. ARTICLE II Purpose and Powers This corporation shall have unlimited power to engage in and to do any lawful act concerning any or all lawful business for which corporations may be incorporated under the Idaho Business Corporation Act, as amended. ARTICLE III Preemptive Rights Shareholders of this corporation shall not have preemptive rights to acquire additional shares offered for sale by this corporation. ARTICLE IV Cumulative Voting Shareholders of this corporation shall not have cumulative voting rights. ARTICLE V Registered Agent and Office The registered agent of this corporation and the street address of the registered office of this corporation are as follows: Registered Agent Registered Office Address Fred W. Brackebusch 89 Appleberg Road Kellogg, Idaho 83837 ARTICLE VI Shares 1. The aggregate number of shares which this corporation shall have authority to issue is 21,000,000 shares, of which 20,000,000 shares shall be Common Stock having no par value per share and 1,000,000 shares shall be Preferred Stock having no par value per share.Cumulative voting rights shall not exist with respect to any shares of stock of securities converted into shares of stock of the Corporation. 2. This corporation shall have the right to purchase its own shares from the unreserved and unrestricted capital surplus available, as well as from the unreserved and unrestricted earned surplus available. 3. The Board of Directors is hereby authorized, subject to the limitations prescribed by law and the provisions hereof, at its option, from time to time, to divide all or any part of the Preferred Stock into series thereof, to establish from time to time the number of shares to be included in any such series, and to fix the designation, powers, preferences and rights of the shares of each such series and qualifications, limitations or restrictions thereof, and to determine variations, if any, between any series so established, but all shares of the same class shall be identical except as to the following relative rights and preferences as to which there may be variations between series: (a) the number of shares constituting each such series and the distinctive designation of such series; (b) the rate of dividend, if any, and whether dividends shall be cumulative or noncumulative; (c) whether or not such series shall be redeemable and, if so, the terms and conditions upon which shares of such series shall be redeemable, including the date or dates after which they shall be redeemable, and the amount per share payable in cases of redemption, which amount may vary under different conditions and at different redemption dates; (d) the rights, if any of such series in the event of dissolution of the Corporation or upon any distribution of the assets of the Corporation, including with respect to voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of such series; (e)the extent, if any, to which such series shall have the benefit of any sinking fund provisions for redemption or purchase of shares; (f)whether or not the shares of such series shall be convertible and, if so, the terms and conditions of which shares of such services shall be so convertible; (g)the voting rights, if any, of such series; and (h) such other powers, designations, preferences and relative participating, optional or other special rights and such qualifications, limitations or restrictions thereon to the extent permitted by law. ARTICLE VII Directors 1. The initial directors of this corporation shall be two in number and their names and address is as follows: Name Address - ------- ----------------- Fred W. Brackebusch P.O. Box 1019 Kellogg, Idaho 83837 Grant A. Brackebusch P.O. Box 1019 Kellogg, Idaho 83837 2. The term of the initial directors shall be until the first annual meeting of the shareholders of this corporation and until their successor or successors are elected and qualified. 3. Only directors, the chief executive officer, if any, or the president, if any, will have the power to call meetings or special meetings of the shareholders. 4. To the fullest extent now or hereafter permitted by applicable law, a director of the corporation shall not be personally liable to the corporation or its shareholders for monetary damages arising from any conduct as a director, except: a. for any breach of the Director's duty of loyalty to the corporation or its shareholders; b. for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; c. for any transaction from which the director derived an improper personal benefit; or d. if required by statute, failing to meet the standards set forth in Idaho Code Section 30-1-48. Any repeal or modification of the foregoing paragraph by the shareholders of this corporation shall not adversely affect any right or protection of a director of this corporation existing prior to the time of such repeal or modification. 5. At such time when the Board of Directors shall consist of nine (9) or more members, in lieu of electing the whole number of Directors annually, the directors shall be divided into three (3) classes, each class to contain one- third of the total members, or as near as may be, the term of office of Directors of the first class to expire at the first annual meeting of shareholders after the election, that of the second class to expire at the second annual meeting after their election, and that of the third class to expire at the third annual meeting after their election. At each annual meeting after such classification the number of directors equal to the number of the class whose term expires at the time of such meeting shall be elected to hold office until the third succeeding annual meeting, if there be three (3) classes. ARTICLE VIII Indemnification This corporation shall provide any indemnification allowed by the Idaho Business Corporation Act and shall indemnify directors, officers, agents and employees as follows: 1. To the fullest extend now or hereafter permitted by applicable law, this corporation shall indemnify its officers and directors whether they are serving the corporation or, at its request, any other entity, as an officer, director or in any other capacity. 2. This corporation may indemnify other employees and agents to the extent as may be authorized by the Board of Directors or the Bylaws and be permitted by law, whether the employees and agents are serving this corporation or, at its request, any other entity. 3. The Board of Directors may take such action as is necessary to carry out these indemnification provisions and is expressly empowered to adopt, approve and amend from time to time such Bylaws, resolutions or contracts in implementing such provisions, including, but not limited to, implementing the manner in which determinations as to any indemnity or advancement of expenses shall be made, or such further indemnification agreements as may be permitted by law. 4. The foregoing rights if indemnification shall not be exclusive of any other rights to which those seeking indemnification may be entitled under any statute, provision or the Articles of Incorporation, Bylaws or other agreements. 5. No amendment or repeal of this Article shall apply to or have any effect on any right to indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal. ARTICLE IX Incorporator The name and address of the incorporator is: Name Address --------------------- ------------------------ Fred W. Brackebusch 89 Appleberg Road Kellogg, Idaho 83837 IN WITNESS WHEREOF, the incorporator has executed these Articles of Incorporation in duplicate this 15th day of July, 1996. /s/ Fred W. Brackebusch ------------------------------------ FRED W. BRACKEBUSCH, Incorporator CONSENT TO APPOINTMENT AS REGISTERED AGENT I, FRED W. BRACKEBUSCH, consent to serve as registered agent in the State of Idaho for the following corporation: NEW JERSEY MINING COMPANY. I understand that, as agent for the corporation, it will be my responsibility to accept service of process in the name of the corporation; to forward all mail and license renewals to the appropriate officer (s) of the corporation; and to immediately notify the Office of the Secretary of State of my resignation or of any changes in the address of the registered office of the corporation for which I am agent. 15 July 1996 /s/ Fred W. Brackebusch -------------- ------------------------- FRED W. BRACKEBUSCH EX-3.2 3 EXHIBIT 3.2 BYLAWS OF NEW JERSEY MINING COMPANY ARTICLE I Shareholders 1.01 Annual Meeting. The annual meeting of the Shareholders of NEW JERSEY MINING COMPANY (the "Corporation") shall be held within sixty (60) days after the end of the Corporation's fiscal year end. The failure to hold an annual meeting at the time stated in these Bylaws shall not affect the validity of any corporate action. 1.02 Special Meeting. Except as otherwise provided by law, special meetings of Shareholders of this Corporation shall be held whenever called by the Chief Executive Officer, the President or by the Board of Directors (the "Board"). 1.03 Place of Meetings. Meetings of Shareholders shall be held at Kellogg, Idaho, or at such place within or without the State of Idaho, as determined by the Board, pursuant to proper notice. 1.04 Notice. Written notice of each Shareholders' meeting stating the time and place and, in case of a special meeting, the purpose(s) for which such meeting is called, shall be given by or at the direction of any officer or any one or more Shareholders entitled to call such meeting of the Shareholders, either personally or by mail, charges prepaid, not less than (10) (unless a greater period of notice is required by law in a particular case), nor more than fifty (50) days prior to the date of the meeting, to each Shareholder of record entitled to vote, to the Shareholder's address as it appears on the current record of Shareholders of this Corporation. If mailed first class postage prepaid, such notice shall be deemed to be effective when mailed to the Shareholders at such address as provided above. If notice is sent to a Shareholder's address, telephone number or other number appearing on the records of the Corporation, the notice is effective when dispatched. 1.05 Waiver of Notice. A Shareholder may waive any notice required to be given by these Bylaws, or the Articles of Incorporation of this Corporation, or any of the corporate laws of the State of Idaho, before or after the meeting that is the subject of such notice. A valid waiver is created by any of the following three methods: (a) delivery to the Corporation of a writing, signed by the Shareholder entitled to the notice; (b) attendance at the meeting, unless the Shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; or (c) failure to object to a matter at the time of presentation of the matter. 1.06 Quorum. At any meeting of the Shareholders, a majority of all the Shares entitled to vote, represented by Shareholders of record in person or by proxy, shall constitute a quorum at a meeting of Shareholders, but in no event shall a quorum consist of less than one third (1/3) of the Shares entitled to vote at the meeting. When a quorum is present at any meeting, action on a matter is approved by a voting group if the votes cast within the voting group favoring the action exceed the votes cast within the voting group opposing the action, unless the question is one upon which by express provision of law or the Articles of Incorporation or of these Bylaws, a different vote is equired. Once a quorum is present, Shareholders may continue to transact business at the meeting notwithstanding the withdrawal of enough Shareholders to otherwise leave less than a quorum. 1.06 Proxy and Voting. Shareholders of record may vote at any Corporation meeting either in person or by proxy executed in writing. A proxy is effective when received by the person authorized to tabulate votes for the Corporation. A proxy is valid for eleven (11) months unless a longer period is expressly provided in the proxy. Subject to the provisions of the laws of the State of Idaho, and unless otherwise provided in the Articles of Incorporation, each holder of Shares of stock in this Corporation shall be entitled at each Shareholders' meeting to one vote on each matter submitted to a vote for every Share of stock standing in such Shareholder's name on the books of this Corporation. 1.08 Action Without a Meeting. Any action required or permitted to be taken at a meeting of the Shareholders may be taken without a meeting if a consent in writing setting forth the action so taken, shall be signed by all the Shareholders entitled to vote with respect to the subject matter thereof. Action taken by such unanimous consent is effective when all consents are in the possession of the Corporation, unless the consent specifies a later date. If the corporate laws of the State of Idaho require that notice of a proposed action be given to nonvoting Shareholders and the action is to be taken by unanimous consent of the voting Shareholders, the Corporation must give its nonvoting Shareholders written notice of the proposed action at least ten (10) days before the action is taken. The notice must contain or be accompanied by the same material that would have been required to be sent to the nonvoting Shareholders in a notice of meeting at which the proposed action would have been submitted to such Shareholders for action. 1.09 Conference Telephone. Meetings of the Shareholders may be effectuated by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at such meeting. 1.10 Adjournment. A majority of the Shares represented at the meeting, even if less than a quorum, may adjourn the meeting from time to time. At such reconvened meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally notified.If a meeting is adjourned to a different date, time or place, notice need not be given of the new date, time or place if a new date time or place is announced at the meeting before adjournment; however, if a new record date for the adjourned meeting is or must be fixed in accordance with the corporate laws of the State of Idaho, notice of the adjourned meeting must be given to persons who are Shareholders as of the new record date. ARTICLE II Board of Directors 2.01 Number, Tenure and Qualifications. The business affairs and property of this Corporation shall be managed by a Board of not less than one director nor more than nine (9) directors. The number of directors may at any time be increased or decreased by the Shareholders or by the Board at any annual, regular or special meeting. Directors need not be Shareholders of this Corporation or residents of the State of Idaho. As required by the Articles of Incorporation, when there are nine members of the Board, the members shall be divided into three classes to create a staggered Board. 2.02 Powers of Directors. The directors shall be elected, by the Shareholders at each annual Shareholders' meeting, to hold office until the next annual meeting of the Shareholders or until their respective successors are elected and qualified. 2.03 Powers of Directors. The Board shall have the entire management of the business of this corporation. In addition to the powers and authorities by these Bylaws and the Articles of Incorporation expressly conferred upon it, the Board may exercise all such powers of this Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed to be exercised or done by the Shareholders. 2.04 Regular Meetings. The regular meetings of the Board shall be held at such places and at such times as the Board, by vote, may determine, and, if so determined, no notice thereof need be given. 2.05 Special Meetings. Special meetings of the Board may be held at any time or place whenever called by any officer or two or more directors, notice thereof being given to each director by the officer calling or by the officer directed to call the meeting. 2.06 Notice. Notice of special meetings of the Board, stating the date, time and place thereof, shall be given at least two (2) days prior to the date of the meeting. Such notice may be oral or written. Oral notice may be communicated in person or by telephone, wire or wireless equipment, which does not transmit a facsimile of the notice. Oral notice is effective when communicated. Written notice may be transmitted by mail, private carrier or personal delivery; telegraph or teletype; or telephone, wire or wireless equipment which transmits a facsimile of the notice. Written notice is effective at the earliest of the following: (a) when dispatched, if notice is sent to the director's address, telephone number or other number appearing upon the records of the Corporation; (b) when received; (c) five (5) Days after its deposit in the U.S. mail if mailed with first class postage; (d) on the date shown on the return receipt requested, and the receipt is signed by or on behalf of the addressee. 2.07 Waiver of Notice. A director may waive notice of a special meeting of the Board either before or after the meeting, and such waiver shall be deemed to be equivalent of giving notice. The waiver must be in writing, signed by the director entitled to the notice and delivered to the Corporation for inclusion in its corporate records. Attendance of a director at a meeting shall constitute waiver of notice of that meeting unless said director attends for the express purpose of objecting to the transaction of business because the meeting has not been lawfully called or convened. 2.08 Conference Telephone. Meetings of the Board or any committee designated by the Board may be effectuated by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at such meetings. 2.09 Quorum of Directors. A majority of the members of the Board shall constitute a quorum for the transaction of business. When a quorum is present at any meeting, a majority of the members present thereat shall decide any question brought before such meeting, except as otherwise provided by law or the Articles of Incorporation or by these Bylaws. 2.10 Adjournment. Any meeting of the Board may be adjourned and continued at a later time, including a meeting at which a quorum is not present. Notwithstanding Section 2.06, notice of the adjourned meeting or of the business to be transacted there, other than by announcement at the meeting of which the adjournment is taken, shall not be necessary. At an adjourned meeting at which a quorum is present, any business may be transacted which could have been transacted at the meetings as originally called. 2.11 Action Without a Meeting. Any action required or permitted to be taken by the Board at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors. Action by consent is effective when the last director signs the consent, unless the consent specifies a later date. 2.12 Resignation and Removal. Any director of this Corporation may resign at any time by giving written notice to the Board, or to the chairperson, president or secretary of this Corporation. Any such resignation shall be effective when the notice is delivered, unless the notice specifies a later date. The Shareholders, at any meeting called expressly for that purpose, may remove from office, with our without cause, one or more directors and elect their successors. A director may be removed only if the number of votes cast for removal exceeds the number of votes case against removal. 2.13 Vacancies. Unless otherwise provided by law, if the office of any director becomes vacant by any reason other than removal, the directors may, by the affirmative vote of the majority of the remaining directors, though less than a quorum, choose a successor or successors who shall hold office for the unexpired term of the predecessor director. Vacancies in the Board may also be filled for the unexpired term by the Shareholders at a meeting called for that purpose, unless such vacancies shall have been filled by the directors. Vacancies resulting from an increase in the number of directors may be filled in the same manner. 2.14 Compensation. By resolution of the Board, each director may be paid expenses, if any, of attendance at each meeting of the Board, and may be paid a stated salary as director, or a fixed sum for attendance at each meeting of the Board, or both. No such payment shall preclude any director from serving this Corporation in any other capacity and receiving compensation therefore. 2.15 Presumption of Assent. A director of this Corporation who is present at a meeting of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless: (a) the director objects at the beginning of the meeting, or promptly upon the director's arrival, to the holding of the meeting or transacting business at the meeting; (c) the director's dissent or abstention from the action taken is entered in (d) the minutes of the meeting; or (c) the director shall file written dissent or abstention with the presiding officer of the meeting before such adjournment or to the Corporation within a reasonable time after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. 2.16 Committees. The Board may, by resolution adopted by a majority of the full Board, designate from among its members an Executive Committee and one or more other committees, each of which, to the extent provided in such resolution, shall have and may exercise all the authority of the Board, except no such committee shall have the authority to (a) authorize or approve a distribution except according to a general formula or method prescribed by the Board; (b) approve or propose to Shareholders action which the corporate law requires to be approved by Shareholders; (c) fill vacancies on the Board or on any of its committees; (d) amend the Articles of Incorporation; (e) adopt, amend or repeal Bylaws; (f) approve a plan of merger not requiring Shareholder approval; or (g) authorize or approve the issuance or sale or contract for sale of Shares, or determine the designation and relative rights, preferences and limitations on a class or series of Shares, except that the Board may authorize a committee, or a senior executive officer of the Corporation to do so within the limits specifically prescribed by the Board. 2.17 Advisory Directors. The Board may, by Resolution adopted by a majority of the Full Board, designate Advisory Directors, up to a maximum of five at no time, who shall have experience or knowledge to assist the board with particular issues or general operations of the company. The Advisory Directors will hold such designation at the pleasure of the Board and not for a specific term. Advisory Directors are not permitted to cast votes on issues before the Board. Advisory Directors, if attending a Board meeting at the request of the board, may be paid expenses, if any, of attendance of said meeting and may be paid a fixed sum for such attendance or a stated salary, as determined by the Board. 2.18 Limitation of Liability. A director of the corporation shall not be personally liable to the corporation or its shareholders for monetary damages arising from any conduct as a director, to the fullest extent now or hereafter permitted by applicable law. If the Idaho Business Corporation Act is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of this corporation shall be eliminated or limited to the fullest extend permitted by said Act, as so amended. Any repeal or modification of the foregoing paragraph by the shareholders of this corporation shall not adversely affect any right or protection of a director of this corporation existing prior to the time of such repeal or modification. ARTICLE III Officers 3.01 Positions. The officers of this Corporation may be a president, one or more vice-presidents, and a treasurer, as appointed by the Board. The Board shall appoint a secretary. The Board, in its discretion, may appoint a chairman from amongst its members to serve as chairman of the Board, who, when present, shall preside at all meetings of the Board, and who shall have such other powers as the Board may determine. No officer need be a Shareholder of this Corporation. One individual may hold more than one position at the discretion of the Board. 3.02 Additional Officers and Agents. The Board, at its discretion, may appoint a general manager, one or more assistant treasurers, and one or more assistant secretaries, and such other officers or agents as it may deem advisable, and prescribe the duties thereof. 3.03 Appointment and Term of Office. The officers of this Corporation shall be appointed annually by the Board at the first meeting of the Board held after each annual meeting of the Shareholders. If officers are not appointed at such meeting, such appointment shall occur as soon as possible thereafter. Each officer shall hold office until a successor shall have been appointed and qualified or until said officer's death or until said officer shall have resigned or shall have been removed in the manner hereafter provided. The appointment of an officer does not itself create contract rights. 3.04 Powers and Duties. If the Board appoints persons to fill the officer positions, such officer shall have the following powers and duties: a. President. The president shall be the chief executive officer of this Corporation, shall have general supervision of the business of this Corporation, and, when present, shall preside at all meetings of the Shareholders and, unless a chairman of the Board has been elected and is present, shall preside at meetings of the Board. The president, or any vice- president or such other person(s) as are specifically authorized by vote of the Board, shall sign all bonds, deeds, mortgages, and any other agreements, and such signature(s) shall be sufficient to bind this Corporation. The president shall perform such other duties as the Board shall designate. b. Vice-President. During the absence or disability of the president, the vice-president (or in the event that there be more than one vice-president, the vice-presidents in the order designated by the Board) shall exercise all functions of the president. Each vice-president shall have such powers and discharge such duties as may be assigned from time to time to such vice-president by the president or by the Board. c. Secretary. The secretary shall keep accurate minutes of all meetings of the Shareholders and the Board, and shall perform all the duties commonly incident to this office, and shall perform such other duties and have such other powers as the Board shall designate. In the secretary's absence, an assistant secretary shall perform the secretary's duties. d. Treasurer. The treasurer, an agent, or such other person as authorized by the Board shall have the care and custody of the money, funds, a valuable papers, and documents of this Corporation, and shall have and exercise, under the supervision of the Board, all the powers and duties commonly incident to this office. 3.05 Salaries. The salaries of the officers shall be fixed from time to time by the Board. No officer shall be prevented from receiving such salary by reason of the fact that said officer is also a director of this Corporation. 3.06 Resignation or Removal. Any officer of this Corporation may resign at any time by giving written notice to the Board, or to any officer of this Corporation. Any such resignation is effective when the notice is delivered, unless the notice specifies a later date. The Board, by vote of not less than a majority of the entire Board, may remove from office any officer or agent elected or appointed by it. The removal shall be without prejudice to the contract rights, if any, of the person so removed. The appointment of an officer or agent shall not of itself create contract rights. 3.07 Vacancies. If the office of any officer or agent becomes vacant by any reason, the directors may, by the affirmative vote of a majority of the directors, choose a successor or successors who shall hold office for the unexpired term. ARTICLE IV Certificates of Shares and Their Transfer 4.01 Issuance: Certificates of Shares. No Shares of this Corporation shall be issued unless authorized by the Board or a committee of the Board. Such authorization shall include the maximum number of Shares to be issued, the consideration to be received, and a statement that the Board considers the consideration to be adequate. Certificates for Shares of the Corporation shall be in such form as is consistent with the provisions of the Idaho Business Corporation Act and shall state: a. The name of the Corporation and that the Corporation is organized under the laws of the State of Idaho; b. The name of the person to whom issued; and c. The number and class of Shares and the designation of the series,if any, which such certificate represents. d. The certificate shall be signed by original or facsimile signature of two officers of the Corporation, and the seal of the Corporation may be affixed thereto. 4.02 Transfer of Stock. Shares of stock may be transferred by delivery of the certificate accompanied by either an assignment in writing on the back of the certificate or by a written power of attorney to sell, assign, and transfer the same on the books of this Corporation, signed by the person appearing on the certificate to be the owner of the Shares represented thereby, and shall be transferable on the books of this Corporation upon surrender thereof so assigned or endorsed. 4.03 Loss of Certificates. In case of the loss, mutilation, or destruction of a certificate of stock, a duplicate certificate may be issued upon such terms as the Board shall prescribe. 4.04 Transfer Books. For the purpose of determining Shareholders entitled to notice of or to vote at any meeting of Shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of Shareholders for any other proper purpose, the Board may fix, in advance, a record date for any such determination of Shareholders, such date in any case to be not more than seventy (70) days and, in case of a meeting of Shareholders, not less than ten (10) days, prior to the date on which the particular action requiring such determination of Shareholders is to be taken. If no record date is fixed for the determination of Shareholders entitled to notice of or to vote at a meeting of Shareholders, or Shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination of Shareholders entitled to vote at any meeting of Shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof. 4.05 Voting Record. The officer or agent having charge of the stock transfer books for Shares of this Corporation shall make a complete record of the Shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of Shares held by each. Such record shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any Shareholder during the whole time of the meeting for the purposes thereof. ARTICLE V Books and Records; Financial Statements 5.01 Books and Records. The Corporation: a. Shall keep as permanent records minutes of all meetings of its Shareholders and Board of Directors, a record of all actions taken by the Shareholders or Board without a meeting, and a record of all actions taken by a committee of the Board of Directors exercising the authority of the Board on behalf of the Corporation; b. Shall maintain appropriate accounting records; c. Or its agent shall maintain a record of its Shareholders, in a form that permits preparation of a list of the names and addresses of all Shareholders, in alphabetical order by class of Shares showing the number and class of Shares held by each; and d. Shall keep a copy of the following records at its principal office: (1) The Articles of Restated Articles of Incorporation and all amendments to them currently in effect; (2) The Bylaws or Restated Bylaws and all amendments to them currently in effect; (3) The minutes of all Shareholders' meetings, and records of all actions taken by Shareholders without a meeting, for the past three (3) years; (4) Its financial statements for the past three (3) years, including balance sheets showing, in reasonable detail, the financial condition of the Corporation as of the close of each fiscal year, and an income statement showing the results of its operations during each fiscal year prepared on the basis of generally accepted accounting principles or, if not, prepared on a basis explained therein; (5) All written communications to Shareholders generally within the past three (3) years; (6) A list of the names and business addresses of its current directors and officers; and (7) Its most recent annual report delivered to the Secretary of State of Idaho. 5.02 Financial Statements. Not later than four (four months after the close of its fiscal year, and in any event prior to the annual meeting of Shareholders, the Corporation shall prepare a balance sheet and income statement as of the close of the fiscal year. Upon written request, the Corporation shall mail to any Shareholder a copy of the most recent balance sheet and income statement. If the annual financial statements are reported upon by a public accountant, the accountant's report must accompany them. ARTICLE VI Indemnification of Officers, Directors, Employees and Agents 6.01 General. This Corporation shall provide any indemnification allowed by the Idaho Business Corporation Act and shall indemnify directors, officers, agents and employees as follows: 6.02 Officers and Directors. This Corporation shall indemnify its officers and directors to the fullest extent required or permitted by the Idaho Business Corporation Act, now or hereafter in force, whether they are serving the Corporation or, at its request, any other entity, as an officer, director or in any other capacity. 6.03 Implementation. The Board of Directors may take such action as is necessary to carry out these indemnifications provisions and is expressly empowered to adopt, approve and amend from time to time any Bylaws, resolutions or contracts in implementing such provisions, including, but not limited to, the manner in which determinations as to any indemnity or advancement of expenses shall be made, or such further indemnification agreements as may be permitted by law shall be implemented. 6.03 Other Employees and Agents. This Corporation shall indemnify other employees and agents to the extent as may be authorized by the Board of Directors or the Bylaws and be permitted by law, whether the employees and agents are serving this Corporation or, at its request, any other entity. 6.04 Non-Exclusivity. The foregoing rights of indemnification shall not be exclusive of any other rights to which those seeking indemnification may be entitled under any statute, provisions or the Articles of Incorporation, Bylaws or other agreements. 6.05 Pre-existing Rights. No amendment or repeal of this Article shall apply to or have any effect on any right to indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal. ARTICLE VII Amendments 7.01 By the Shareholders. These Bylaws may be amended or repealed by the affirmative vote of a majority of the Shares present at any meeting of the Shareholders if notice of the proposed amendment is contained in the notice of the meeting. 7.02 By the Board of Directors. These Bylaws may be amended or repealed by the affirmative vote of a majority of the whole Board of Directors at any meeting of the Board, if notice of the proposed amendment is contained in the notice of the meeting. However, the directors may not modify the Bylaws fixing their qualifications, classifications or term of office. CERTIFICATION The undersigned secretary of NEW JERSEY MINING COMPANY does hereby certify that the above and foregoing Bylaws of said Corporation were adopted by the Directors as the Bylaws of NEW JERSEY MINING COMPANY as of July 15, 1996, and that the same do now constitute the Bylaws of this Corporation. DATED this 15th day of July, 1996. /s/ FRED W. BRACKEBUSCH ------------------------ Secretary EX-10.1 4 EXHIBIT 10.1 MINING LEASE NEW JERSEY MINE AND VICINITY THIS MINING LEASE, dated as of October 18, 1993, is between GOLD RUN GULCH MINING COMPANY ("Lessor"), and MINE SYSTEMS DESIGN, INC. ("Lessee"). RECITALS A. Lessor owns certain real property more particularly described in Exhibit A attached hereto and made a part hereof. B. For the purpose of this Lease, the real property described in Exhibit A, including the surface and subsurface thereof, all mines, ores, metals, mineral rights and minerals thereon and thereunder, all veins, lodes, extralateral rights and mineral deposits now owned or hereafter acquired by Lessor extending from or onto or contained in said claims, properties and land; and all water and water rights therein, thereon or thereunder, are herein called the "Leased Premises." The parties agree that all timber shall be specifically excluded from this Lease except such timber as should be required for developing and mining ores and metals on the Leased Premises. C. Lessor and Lessee desire to enter into a mining lease covering the Leased Premises. AGREEMENT IN CONSIDERATION of the sum of $10.00 and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and the promises and covenants contained herein, the parties agree as follows: 1. GRANT. Lessor hereby grants, demises, leases and lets exclusively unto Lessee, its successors or assigns, the Leased Premises, including all flumes, ditches, easements, licenses, rights-of-way and other rights, heretofore reserved or granted in, upon or pertaining to the Leased Premises, together with all building and improvements heretofore used in connection with exploration for minerals, mining or milling, mining and milling machinery and equipment and personal property used in connection with mining, milling or exploration for minerals, situated on the Leased Premises, and now belonging to Lessor, for the purpose of exploring for, developing, mining (by any method including but not limited to in situ leaching, open pit and (strip mining), treating, extracting, milling, storing, shipping, removing and marketing therefrom all minerals, both metallic and nonmetallic, of every nature and kind, both known and unknown, excepting only sand, gravel, mine waste rock, oil, gas and other liquid or gaseous hydrocarbons (herein called "Leased Substances"). It is the purpose and intent of Lessor to lease, and Lessor does hereby lease, all of the lands or interest in lands owned by Lessor which adjoin the Leased Premises described above or which lie in the section or sections described in any location notices of patents for the claims included in the Leased Premises. Lessee, its successors or assigns, is further granted the exclusive right, insofar as Lessor lawfully may grant the right, to divert streams, to construct storage ponds, to remove lateral and subjacent supports, to cave, subside or consume the surface or any part thereof, to deposit earth, rocks, tailings, waste, lean ore and materials on any part of the Leased Premises, to leach the same, to construct, replace, maintain and remove all works, buildings, plants, structures, roads, communication and electrical systems, residences and offices as may be necessary or convenient in the exercise of Lessee's rights and privileges granted herein, and to commit waste to the extent necessary, usual or customary in carrying out any or all of the above rights, privileges and purposes. 2. TERM. This Lease is granted for a term ending fifteen (15) years from the date hereof and as long thereafter as Leased Substances are mined, processed or marketed from the Leased Premises on a continuous basis or unless sooner terminated under any of the provisions herein. For this purpose mining, processing or marketing operations shall be deemed continuous so long as all of said operations continue for a minimum of 24 months out of any 60-month period. 3. ADVANCE ROYALTY. Lessee has this day paid to Lessor the sum of $2,400 (the "Advance Royalty Payment"), in the form of a draft payable to the order of Lessor as an advance against production royalties which may hereafter become due during the term hereof. Annually hereafter, Lessee, on or before the anniversary date of this Lease, shall pay or tender to Lessor an Advance Royalty Payment of $2,400 for that part of the Leased Premises which Lessee elects to hold hereunder. All Advance Royalty Payments shall be cumulative in nature, and Lessee shall be entitled to take credit for each such payment against the Production Royalty payable to Lessor hereunder. 4. PRODUCTION ROYALTY. Lessor hereby reserves and Lessee shall pay as a production royalty 5% of the Net Smelter Return of all ores or concentrates of Leased Substances mined and shipped from the Leased Premises (the "Production Royalty"). In addition to the production royalty of 5% of the Net Smelter Return, Lessee shall pay a production royalty based on the portion of the Net Smelter Return which is due to the value of gold as follows: Price of Gold Additional Production Royalty Less than $400/troy ounce None $400 to $450 1% >$450 to $500 2% >$500 to $550 3% >$550 to $600 4% >$600 5% The price of gold to be used to calculate the additional production royalty is the price received by the Lessee and as adjusted for inflation by the Consumer Price Index to the December 1988 level. As used herein, "Net Smelter Return" means the amount paid by any smelter or other ore purchaser for ores or concentrates sold less actual costs of transportation and other costs in the course of handling, assumed by or charged to Lessee (including freight, insurance and tax) in making shipments from the Leased Premises or Lessee's mill to the smelter or other purchaser, less all charges for refining, sampling, assaying, and penalties, less all royalties or overriding royalties burdening the Leased Premises that exist on the date of this Lease or are created by Lessor after the date hereof, and less gross production, severance, general property and other taxes attributable to production from the Leased Premises. The Production Royalty shall be accounted for and paid monthly to Lessor within 30 days after the end of each calendar month within which the Leased Substances are sold. All payments shall be accompanied by a statement explaining the manner in which payment was calculated. No royalty shall be due or payable on any Leased Substances stockpiled on the Leased Premises until the sale or disposition thereof. Within 90 days after receiving the above-described statement of account, Lessor shall give notice of any objections to the statement, for any reason, touching upon its accuracy or inaccuracy, by mailing such objections to Lessee as provided in Section 24 below; and in default thereof, any inaccuracies in such statement shall be deemed waived by Lessor. 4. TITLE TO LEASED PREMISES. This Lease is executed and delivered expressly without warranty of any nature whatsoever on the part of Lessor, either expressed or implied, not even to the return of the consideration paid herefor. If Lessor owns less interest than the entire fee mineral estate, the Advance Royalty and Production Royalty to be paid Lessor may be reduced proportionately. 6. OBLIGATION TO PERFORM ASSESSMENT WORK. Lessee shall perform all assessment work required to maintain the unpatented mining claims that comprise the Leased Premises and shall record affidavits of such performance on behalf of Lessor as required or permitted. Lessee shall not be liable for loss of any or all of the Leased Premises for failure to perform assessment work, provided Lessee has performed work in a timely manner which it reasonably and in good faith, in accordance with generally accepted principles of the mining industry, believed was sufficient to satisfy such work requirements. 7. INSPECTION OF PROPERTY. Lessor, or its authorized agents or representatives, shall have the right to enter in or upon the Leased Premises during the regular business hours of Lessee for the purpose of inspection, but shall enter at their own risk and shall not unreasonably interfere with Lessee's operations. 8. CONDUCT OF OPERATIONS. 8.1 Use of Leased Premises. Lessee may use only so much of the surface of the Leased Premises as shall be reasonably necessary for the exploration for, development and mining of Leased Substances contemplated in this Lease. Lessee recognizes the surface of the Leased Premises has many uses, including mining, exploration, timber cultivation and production, and other activities. Lessor expressly reserves the right to use and manage the Leased Premises for all uses except exploration for, development and mining of Leased Substances as provided herein, provided Lessor shall not conduct or permit others to conduct any activities on the Leased Premises which unreasonably interfere with Lessee's rights hereunder. Lessee shall, wherever practicable, minimize interference to Lessor's activities as a result of Lessee's activities. 8.2 Use of Roads. Lessee shall have the right to use Lessor's existing road networks, whether currently existing or subsequently constructed, as are necessary to its exercise of the rights conveyed hereunder. The foregoing grant of rights is subject to any restriction or prohibition contained in any easements, permits, or licenses granting Lessor the right to utilize such roadways, including but not limited to absolute prohibitions against assignment, if any, hauling fees, traffic regulations, maintenance costs, construction costs, or other restrictions. Lessee in its use of roads, whether currently existing or hereafter constructed by either party, shall comply with all reasonable regulations promulgated by Lessor. Nothing contained herein shall prohibit Lessor from modifying or terminating any easement, license, or permit granting Lessor a right to use any road. 8.3 Damage to Premises and Reclamation. Lessee shall be liable to Lessor for damage to the Leased Premises (including any improvements, crops or livestock) caused by Lessee's exercise of its rights under this Lease. Lessee shall pay Lessor for said damage or, at Lessor's election, repair the damage. Disturbances of the surface of the Leased Premises normally incident to Lessee's activities which do not damage improvements, timber or other crops or livestock shall not be considered as damage to the Leased Premises. Lessee shall notify Lessor, in advance of its operations and activities hereunder and the location thereof which shall or may require the removal of timber and from the Leased Premises, and in the event that the operations of Lessee hereunder, in fact, result in the removal of timber from any portion of the Leased Premises, Lessee shall cause all merchantable timber so removed to be decked along a road on the Leased Premises from where it can be removed by Lessor without expense to Lessor. The determination of merchantability of any timber removed shall be governed by the standards then generally in effect in the wood products industry in the area where the Leased Premises are located. All merchantable timber shall be harvested in accordance with Lessor's specifications. Upon delivery of such merchantable timber to a pickup point on the Leased Premises, Lessee shall not be further liable to Lessor as a result of the cutting and removal of the merchantable timber. Nonmerchantable timber shall be considered a crop and damage thereto treated in the manner provided for in this Section. 9. INSPECTION OF ACCOUNTS AND RECORDS. Lessee shall keep accurate, clear and legible books of accounts and records pertaining to its operations hereunder, and Lessor shall have the right, either personally or through its representatives, and at its expense, to examine and inspect the books and records of Lessee pertaining to the exploration, mining, milling and shipping operations of Lessee on the Leased Premises. Any information acquired by Lessor or its representatives from any such inspection shall be treated as confidential. 10. TECHNICAL DATA. Lessee shall furnish Lessor, on an annual basis, with copies of all technical data pertaining to its operations hereunder, including but not limited to all geological, geophysical, geochemical, mapping, drilling, sampling, assay, and other data or information pertaining to Lessee's operations hereunder. Such data shall be treated as confidential. Notwithstanding the foregoing, Lessee shall not be obligated to disclose to Lessor any interpretive data or information. 11. CONTROL OF MINING. Lessor's sole right with respect to its Production Royalty shall be to receive the Production Royalty for Leased Substances, if any, from the Leased Premises. Lessee shall have full discretion in the exploration, development and operation of the Leased Premises and shall in no event be obliged to explore for, develop, drill, mine, mill or concentrate Leased Substances. 12. LESSER INTEREST. If Lessor owns less than the entire undivided interest in the Leased Substances, or in any tract included in the Leased Premises, then the Advance Royalty and Production Royalty shall be due Lessor only in the proportion that its interest bears to the whole undivided fee interest. Any interest in the Leased Premises and/or Leased Substances hereafter acquired by Lessor shall be automatically subject to this Lease. If any such acquisition changes Lessor's interest in the Leased Premises or Leased Substances, an appropriate adjustment will be made after Lessee receives written notice thereof from Lessor. 13. INDEMNITY. Lessee shall assume all liability in connection with its operations on the Leased Premises and shall hold Lessor harmless from any and all liability which may arise out of Lessee's development and operation of the Leased Premises. Lessee shall use its best efforts to ensure that the work performed by Lessee hereunder shall be in compliance with applicable environmental, safety and health requirements of federal, state and local governments. Upon the termination of this Lease, Lessee shall return the Leased Premises to Lessor free and clear of liens for labor done or work performed upon the Leased Premises or materials furnished to it for the exploration, development or operation thereof under the Lease, but Lessee shall have the right to dispute or contest the validity of such liens. Lessee's liability under this Section shall terminate upon termination of this Lease except for obligations incurred before the date of termination. 14. CROSS-MINING; OPERATIONS ON OTHER LANDS. Lessee shall have the right to use any roads, tunnels, shafts, pits, inclines and workings upon the Leased Premises for the purpose of transporting Leased Substances, water, slurries and waste materials from adjoining or nearby properties. For the purpose of enabling Lessee to conduct, to Lessee's best advantage and with operations, the operations of Lessee and the operations on such other lands may be conducted upon the Leased Premises and upon such other lands as a single mining operation, to the same extent as if all such properties constituted a single tract of land. Leased Substances from the Leased Premises may be commingled with ores and minerals from such other lands, provided that nothing herein shall relieve Lessee from its obligation for payment of the Production Royalty. In the event of and prior to such commingling, Lessee shall weigh, sample and assay the Leased Substances mined from the Leased Premises before they are commingled so as to allow allocation of the resulting concentrate to the respective properties from which derived. All such weighing, sampling, assaying and allocation shall be performed in accordance with good mining practices prevailing at the time. Lessee shall have the right to use so much of the surface and subsurface of the Leased Premises as is required for ingress and egress, conducting exploration and mining operations, stockpiling of Leased Substances and disposing of wastes both on the Leased Premises and on lands upon which Lessee or affiliated parties may be conducting mining operations; Lessee shall also have the right to use so much of such surface and subsurface of the Leased Premises as may be required for utility lines, camps, roads, drillsites, leach piles, tailings disposal sites, dumps, mills, smelters and other structures or facilities required in its exploration, development mining and milling activities. Lessee shall have the right to use, develop and store water on the Leased Premises for use in its development, mining and milling activities. Further, Lessee may use the Leased Premises for the mining, removal, treatment and transportation of minerals and materials from adjoining or nearby property, or for any mining or milling purpose connected therewith. Mining operations on adjacent properties shall be deemed mining operations on the Leased Premises for the purposes of Section 2 hereof. 15. TREATMENT; TAILINGS. Lessee shall have the right, but shall not be required, to beneficiate, concentrate, smelt, refine, leach and otherwise treat, in any manner, either wholly or in part at a plant or plants on the Leased Premises or on other lands, any Leased Substances or other materials mined or produced from the Leased Premises and from other lands. Such treatment shall be conducted in a careful and workmanlike manner. The tailings and residue from such treatment shall be deemed waste and may be deposited on the Leased Premises or on other lands. Lessor shall have no right, title or interest in any such tailings or residue remaining on the Leased Premises for a period of one year after the date on which this Lease has expired, or has been terminated by Lessee as to all of the Leased Premises. Any tailings or residue remaining after said date shall be deemed abandoned by Lessee and thereupon shall become the property of Lessor. 16. TAXES. During the time this Lease is in effect, Lessee shall pay, before delinquent, all general property taxes which may be assessed against the Leased Premises, including the Leased Substances covered by this Lease, and Lessee shall be entitled to deduct such amounts from Production Royalty payments to Lessor as set forth in Section 4. Lessee shall also pay, before delinquent, all taxes levied and assessed against any improvements placed by it upon the Leased Premises. Lessee shall not be required to pay any income or other taxes imposed on Lessor by reason of the receipt of any amounts to be paid Lessor under this Lease. 17. AREA OF MUTUAL INTEREST. If, during the term of this Lease, Lessor or Lessor's representative or agent shall locate or acquire any interest in any mining claim or property contiguous with or proximate to any of the property described on Exhibit A, all such claims and property shall be subject to this Lease, without any additional consideration therefor payable to Lessor, and all references in this Lease to the Leased Premises shall be deemed to include all such claims and property. Lessor agrees to notify Lessee promptly upon the location of each such claim or acquisition of property. Lessee and Lessor agree to execute and acknowledge an amendment to this Lease to include and describe each such claim or property and to file such amendment for recording in the real property records of the county where said claim or property is located. 18. FORCE MAJEURE. Lessee shall not be liable or in default under any provisions of this Lease for failure to perform any of its obligations hereunder during periods in which performance is prevented by any cause reasonably beyond Lessee's control, which causes hereinafter are called "force majeure." For the purposes of this Lease, the term "force majeure" shall include, but not be limited to, fires, floods, windstorms and other damage from the elements; strikes, war, insurrection, mob violence and riots; unavailability of materials, labor and transportation; lack of a reasonable market for Leased Substances mined from the Leased Premises; unavailability of smelting or refining facilities; interference, action, legislation or regulation by governmental or military authority, including a requirement by such authority that an environmental impact statement, plan of operation or similar statement or document be prepared or approved; litigation; and acts of God or acts of the public enemy. The duration of this Lease and of the time for completion of performance by Lessee of its rights and obligations hereunder shall be extended for a period equal to the period of disability as a result of the event of force majeure, provided Lessee gives Lessor written notice of the existence of the event of force majeure. All periods of force majeure shall be deemed to begin at the time Lessee stops performance hereunder by reason of force majeure. Notwithstanding the foregoing, the parties understand that an event of force majeure shall not excuse any obligation to make a payment of money required by this Lease. 19. FIRST RIGHT OF REFUSAL. If, at any time during the term of this Lease, Lessor shall, in response to a bona fide offer to purchase all or part of its interest in the Leased Premises from a third party, desire to sell or otherwise dispose of such interest, it shall notify Lessee in writing of the party to whom it desires to sell such interest and the price at which and the terms upon which it desires to sell the same, and Lessee shall, within 30 days of receipt of the notice, notify Lessor in writing whether it wishes to purchase such interest at the price and on the terms set forth in the notice. If Lessee elects to purchase such interest, Lessor shall be bound to convey, assign, or otherwise transfer such interest to Lessee promptly thereafter at such price and on such terms. If Lessee elects not to purchase such interest or fails to give notice of its intention within the 30-day period, Lessor shall be free to convey, assign, or otherwise transfer such interest to the third party at a price not less than stated in the notice or on more favorable terms than those stated in the notice. Any conveyance by Lessor to a third party shall be subject to the terms of this Lease. If Lessor shall not have so disposed of such interest to said third party within 90 days after receipt of notice that Lessee elects not to exercise its right of first refusal or after expiration of that party's 30-day period within which to give notice, the provisions of this Section shall again apply to the disposition by Lessor of any such interest. 20. ASSIGNMENT. Subject to the provisions of Section 19 above, the rights of either party hereunder may be assigned in whole or in part and the provisions hereof shall extend to their successors and assigns, but no change or division in ownership of the Leased Premises, Advance Royalty or Production Royalty, however accomplished, shall operate to enlarge the obligations or diminish the rights of either party under this Lease and neither Lessee nor its successors or assigns shall ever be required to make payments or to render reports or notices to more than one party. In the event Lessor's interest in the Leased Premises is now or hereafter owned by more than one party, Lessee may withhold further payments until all such owners have designated a single party to act for all of them hereunder in all respects, including but not limited to the giving and receiving of all notices and the receipt of all payments and reports. No such change or division in the ownership of the Leased Premises, Advance Royalty or Production Royalty shall be binding upon Lessee for any purpose until such person acquiring any interest has further furnished Lessee with the instrument or instruments, or certified copies thereof, constituting his claim of title from the original Lessor. Lessee shall have the right to subcontract with others for the performance of exploration, development and mining work hereunder, subject to all of the terms of this Lease, but no such subcontract shall relieve Lessee of its obligations to Lessor hereunder. 21. TERMINATION OF LEASE. 20.1 By Lessor. If Lessee fails to keep and perform all of the terms and conditions of this Lease on its part to be kept and performed, then Lessor may notify Lessee of the default in writing specifying the default. If within ten days after Lessee's receipt of such notice, in case of default arising through failure to account for royalties, or to make the monthly or annual payments herein mentioned, and within 30 days in the case of any other default, Lessee shall make such royalty or other payments, or commence and diligently thereafter proceed to correct such other default, this Lease shall continue in good standing. However, upon failure of Lessee to make such royalty or other payment within ten days or to commence within 30 days to cure any other default and diligently thereafter proceed to correct the same, Lessor may then, by written notice or demand, forthwith terminate this Lease and fully repossess itself of the Leased Premises, and without prejudice to any other rights which might otherwise accrue to Lessor for the violation of the terms hereof. After such default and termination of this Lease, Lessee shall have no further rights in or right to the possession of the Leased Premises or any part thereof, except for the purpose of accomplishing the removal of its machinery and equipment as set forth below in Section 22. 21.2 By Lessee. Lessee may terminate this Lease in whole or in part at any time and from time to time upon written notice delivered to Lessor which termination shall take effect upon any future date set forth in the notice, or, if no date is specified, upon the date of delivery of the notice with respect to that part of the Leased Premises specified in the notice. Upon such termination, all right, title and interest of Lessee under this Lease as to that portion of the Leased Premises specified in the notice shall terminate, and Lessee shall not be required to make any further payments, or to perform any further obligations hereunder as to said portion of the Leased Premises, except payments or obligations which then have accrued under the express provisions of this Lease and which have not been paid or performed. 21. REMOVAL OF EQUIPMENT. Lessee shall have the right, at any time within one year after the termination or expiration of this Lease, to remove all property, fixtures, structures, machinery or equipment erected or placed by Lessee on or in the Leased Premises. Lessor shall have the right to require Lessee to remove any or all such property, fixtures, structures, machinery or equipment within one year after the termination or expiration hereof. 23. RECORDING OF SHORT-FORM NOTICE. The parties hereby agree to execute a short-form counterpart of this Lease contemporaneous herewith for the sole purpose of recordation in the real property records sufficient to give record notice, pursuant to the laws of the state where the Leased Premises are located of the existence of this Lease. This Lease shall not be recorded without the written consent of Lessee. 24. NOTICES. Any notice required or permitted to be given hereunder shall be in writing and shall be delivered in person or sent by registered or certified mail, return receipt requested. Notices so mailed shall be deemed effective on the third business day after mailing. Until change of address is communicated, all notices shall be addressed to: Lessor: Gold Run Gulch Mining Company Box 469 Wallace, Idaho 83873 Lessee: Mine Systems Design, Inc. HC01 Box 246 Kellogg, Idaho 83837 25. GENERAL. 25.1 Modification. The parties hereto by mutual written agreement may, at any time and from time to time, amend this Lease and any of the terms hereof. 25.2 Further Documents. The parties hereto further agree to execute all such further documents and do all such further things as may be necessary 25.3 Entire Agreement. This is the entire agreement between the parties and no modification shall be effective unless in writing and executed by the parties hereto. 25.4 Law. The terms and provisions of this Lease shall be interpreted in accordance with the laws of the state where the Leased Premises are located. IN WITNESS WHEREOF, this instrument is executed as of the date above written. LESSOR: LESSEE: GOLD RUN GULCH MINING COMPANY MINE SYSTEMS DESIGN, INC. By: /s/ H. Magnuson By:/s/ Fred W. Brackebusch ----------------------- --------------------- Title: President Title: President ----------------------- -------------------- STATE OF IDAHO ) ) ss. COUNTY OF SHOSHONE ) On this 27th day of September, 1993, before me, the undersigned, a Notary Public in and for the State of Idaho, personally appeared Fred W. Brackebusch, known to me and to me known to be the President of MINE SYSTEMS DESIGN, INC., a corporation whose name is subscribed to the foregoing instrument and acknowledged to me that said officer executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day in this certificate first above written. /s/ Ronald E. Eggart Notary Public for the State of Idaho Residing at Kellogg, Idaho My commission expires: 1/18/97 STATE OF IDAHO ) ) ss. COUNTY OF SHOSHONE ) On this 18th day of October, 1993, before me, the undersigned, a Notary Public in and for the State of Idaho, personally appeared H.F. Magnuson, known to me and to me known to be the President of GOLD RUN GULCH MINING COMPANY, a corporation whose name is subscribed to the foregoing instrument and acknowledged to me that said individual executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day in this certificate first above written. /s/ Teresa Glover Notary Public for the State of Idaho Residing at Wallace, Idaho My commission expires: 5/8/98 EXHIBIT A TO MINING LEASE Description of the Premises covered by Exploration Agreement and Option to Lease between Gold Run Gulch Mining Company (Grantor), and Mine Systems Design (Grantee), dated October 18, 1993, covering real property located in Shoshone County, Idaho and shown on Exhibit B, Property Map, to wit: a. Blue Jay, Key Hole, Coleman Placer, and Amended Coleman Patented Mining Claims, Mineral Survey 1998A, containing 57.780 acres. b. New Jersey Mill Site Patented Mining Claim, Mineral Survey 1998B, containing 3.971 acres. c. Scotch Thistle, Triangle Fraction, Homestake, Center, North, South, and Best Unpatented Mining Claims, IMC Serial Nos. 29642 through 29648. d. Mineral rights only to SE 1/4 NW 1/4, NE 1/4 SW 1/4, and part of SW 1/4 NE 1/4, all in Section 10, Township 48N, Range 3E, B.M., containing 107.83 acres. EX-10.2 5 EXHIBIT 10.2 MINING LEASE GRENFELL ESTATE THIS MINING LEASE, dated as of September 15, 1993, is between WILLIAM ZANETTI ("Lessor"), and MINE SYSTEMS DESIGN, INC. ("Lessee"). RECITALS A. Lessor owns certain real property more particularly described in Exhibit A attached hereto and made a part hereof. B. For the purpose of this Lease, the real property described in Exhibit A, including the surface and subsurface thereof, all mines, ores, metals, mineral rights and minerals thereon and thereunder, all veins, lodes, extralateral rights and mineral deposits now owned or hereafter acquired by Lessor extending from or onto or contained in said claims, properties and land; and all water and water rights therein, thereon or thereunder, are herein called the "Leased Premises." The parties agree that all timber shall be specifically excluded from this Lease except such timber as should be required for developing and mining ores and metals on the Leased Premises. C. Lessor and Lessee desire to enter into a mining lease covering the Leased Premises. AGREEMENT IN CONSIDERATION of the sum of $10.00 and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and the promises and covenants contained herein, the parties agree as follows: 1. GRANT. Lessor hereby grants, demises, leases and lets exclusively unto Lessee, its successors or assigns, the Leased Premises, including all flumes, ditches, easements, licenses, rights-of-way and other rights, heretofore reserved or granted in, upon or pertaining to the Leased Premises, together with all building and improvements heretofore used in connection with exploration for minerals, mining or milling, mining and milling machinery and equipment and personal property used in connection with mining, milling or exploration for minerals, situated on the Leased Premises, and now belonging to Lessor, for the purpose of exploring for, developing, mining (by any method including but not limited to in situ leaching, open pit and (strip mining), treating, extracting, milling, storing, shipping, removing and marketing therefrom all minerals, both metallic and nonmetallic, of every nature and kind, both known and unknown, excepting only sand, gravel, mine waste rock, oil, gas and other liquid or gaseous hydrocarbons (herein called "Leased Substances"). It is the purpose and intent of Lessor to lease, and Lessor does hereby lease, all of the lands or interest in lands owned by Lessor which adjoin the Leased Premises described above or which lie in the section or sections described in any location notices of patents for the claims included in the Leased Premises. Lessee, its successors or assigns, is further granted the exclusive right, insofar as Lessor lawfully may grant the right, to divert streams, to construct storage ponds, to remove lateral and subjacent supports, to cave, subside or consume the surface or any part thereof, to deposit earth, rocks, tailings, waste, lean ore and materials on any part of the Leased Premises, to leach the same, to construct, replace, maintain and remove all works, buildings, plants, structures, roads, communication and electrical systems, residences and offices as may be necessary or convenient in the exercise of Lessee's rights and privileges granted herein, and to commit waste to the extent necessary, usual or customary in carrying out any or all of the above rights, privileges and purposes. 2. TERM. This Lease is granted for a term ending fifteen (15) years from the date hereof and as long thereafter as Leased Substances are mined, processed or marketed from the Leased Premises on a continuous basis or unless sooner terminated under any of the provisions herein. For this purpose mining, processing or marketing operations shall be deemed continuous so long as all of said operations continue for a minimum of 24 months out of any 60-month period. 3. ADVANCE ROYALTY. Lessee has this day paid to Lessor the sum of $500 (the "Advance Royalty Payment"), in the form of a draft payable to the order of Lessor as an advance against production royalties which may hereafter become due during the term hereof. Annually hereafter, Lessee, on or before the anniversary date of this Lease, shall pay or tender to Lessor an Advance Royalty Payment of $500 for that part of the Leased Premises which Lessee elects to hold hereunder. All Advance Royalty Payments shall be cumulative in nature, and Lessee shall be entitled to take credit for each such payment against the Production Royalty payable to Lessor hereunder. 4. PRODUCTION ROYALTY. Lessor hereby reserves and Lessee shall pay as a production royalty 5% of the Net Smelter Return of all ores or concentrates of Leased Substances mined and shipped from the Leased Premises (the "Production Royalty"). In addition to the production royalty of 5% of the Net Smelter Return, Lessee shall pay a production royalty based on the portion of the Net Smelter Return which is due to the value of gold as follows: Price of Gold Additional Production Royalty Less than $400/troy ounce None $400 to $450 1% >$450 to $500 2% >$500 to $550 3% >$550 to $600 4% >$600 5% The price of gold to be used to calculate the additional production royalty is the price received by the Lessee and as adjusted for inflation by the Consumer Price Index to the December 1988 level. As used herein, "Net Smelter Return" means the amount paid by any smelter or other ore purchaser for ores or concentrates sold less actual costs of transportation and other costs in the course of handling, assumed by or charged to Lessee (including freight, insurance and tax) in making shipments from the Leased Premises or Lessee's mill to the smelter or other purchaser, less all charges for refining, sampling, assaying, and penalties, less all royalties or overriding royalties burdening the Leased Premises that exist on the date of this Lease or are created by Lessor after the date hereof, and less gross production, severance, general property and other taxes attributable to production from the Leased Premises. The Production Royalty shall be accounted for and paid monthly to Lessor within 30 days after the end of each calendar month within which the Leased Substances are sold. All payments shall be accompanied by a statement explaining the manner in which payment was calculated. No royalty shall be due or payable on any Leased Substances stockpiled on the Leased Premises until the sale or disposition thereof. Within 90 days after receiving the above-described statement of account, Lessor shall give notice of any objections to the statement, for any reason, touching upon its accuracy or inaccuracy, by mailing such objections to Lessee as provided in Section 24 below; and in default thereof, any inaccuracies in such statement shall be deemed waived by Lessor. 4. TITLE TO LEASED PREMISES. This Lease is executed and delivered expressly without warranty of any nature whatsoever on the part of Lessor, either expressed or implied, not even to the return of the consideration paid herefor. If Lessor owns less interest than the entire fee mineral estate, the Advance Royalty and Production Royalty to be paid Lessor may be reduced proportionately. 6. OBLIGATION TO PERFORM ASSESSMENT WORK. Lessee shall perform all assessment work required to maintain the unpatented mining claims that comprise the Leased Premises and shall record affidavits of such performance on behalf of Lessor as required or permitted. Lessee shall not be liable for loss of any or all of the Leased Premises for failure to perform assessment work, provided Lessee has performed work in a timely manner which it reasonably and in good faith, in accordance with generally accepted principles of the mining industry, believed was sufficient to satisfy such work requirements. 7. INSPECTION OF PROPERTY. Lessor, or its authorized agents or representatives, shall have the right to enter in or upon the Leased Premises during the regular business hours of Lessee for the purpose of inspection, but shall enter at their own risk and shall not unreasonably interfere with Lessee's operations. 8. CONDUCT OF OPERATIONS. 8.1 Use of Leased Premises. Lessee may use only so much of the surface 8.2 of the Leased Premises as shall be reasonably necessary for the 8.3 exploration for, development and mining of Leased Substances 8.4 contemplated in this Lease. Lessee recognizes the surface of the 8.5 Leased Premises has many uses, including mining, exploration, 8.6 timber cultivation and production, and other activities. Lessor 8.7 expressly reserves the right to use and manage the Leased Premises 8.8 for all uses except exploration for, development and mining of 8.9 Leased Substances as provided herein, provided Lessor shall not 8.10 conduct or permit others to conduct any activities on the Leased 8.11 Premises which unreasonably interfere with Lessee's rights 8.12 hereunder. Lessee shall, wherever practicable, minimize 8.13 interference to Lessor's activities as a result of Lessee's 8.14 activities. 8.2 Use of Roads. Lessee shall have the right to use Lessor's existing road networks, whether currently existing or subsequently constructed, as are necessary to its exercise of the rights conveyed hereunder. The foregoing grant of rights is subject to any restriction or prohibition contained in any easements, permits, or licenses granting Lessor the right to utilize such roadways, including but not limited to absolute prohibitions against assignment, if any, hauling fees, traffic regulations, maintenance costs, construction costs, or other restrictions. Lessee in its use of roads, whether currently existing or hereafter constructed by either party, shall comply with all reasonable regulations promulgated by Lessor. Nothing contained herein shall prohibit Lessor from modifying orterminating any easement, license, or permit granting Lessor a right to use any road. 8.3 Damage to Premises and Reclamation. Lessee shall be liable to Lessor for damage to the Leased Premises (including any improvements, crops or livestock) caused by Lessee's exercise of its rights under this Lease. Lessee shall pay Lessor for said damage or, at Lessor's election, repair the damage. Disturbances of the surface of the Leased Premises normally incident to Lessee's activities which do not damage improvements, timber or other crops or livestock shall not be considered as damage to the Leased Premises. Lessee shall notify Lessor, in advance of its operations and activities hereunder and the location thereof which shall or may require the removal of timber and trees from the Leased Premises, and in the event that the operations of Lessee hereunder, in fact, result in the removal of timber from any portion of the Leased Premises, Lessee shall cause all merchantable timber so removed to be decked along a road on the Leased Premises from where it can be removed by Lessor without expense to Lessor. The determination of merchantability of any timber removed shall be governed by the standards then generally in effect in the wood products industry in the area where the Leased Premises are located. All merchantable timber shall be harvested in accordance with Lessor's specifications. Upon delivery of such merchantable timber to a pickup point on the Leased Premises, Lessee shall not be further liable to Lessor as a result of the cutting and removal of the merchantable timber. Nonmerchantable timber shall be considered a crop and damage thereto treated in the manner provided for in this Section. 9. INSPECTION OF ACCOUNTS AND RECORDS. Lessee shall keep accurate, clear and legible books of accounts and records pertaining to its operations hereunder, and Lessor shall have the right, either personally or through its representatives, and at its expense, to examine and inspect the books and records of Lessee pertaining to the exploration, mining, milling and shipping operations of Lessee on the Leased Premises. Any information acquired by Lessor or its representatives from any such inspection shall be treated as confidential. 10. TECHNICAL DATA. Lessee shall furnish Lessor, on an annual basis, with copies of all technical data pertaining to its operations hereunder, including but not limited to all geological, geophysical, geochemical, mapping, drilling, sampling, assay, and other data or information pertaining to Lessee's operations hereunder. Such data shall be treated as confidential. Notwithstanding the foregoing, Lessee shall not be obligated to disclose to Lessor any interpretive data or information. 11. CONTROL OF MINING. Lessor's sole right with respect to its Production Royalty shall be to receive the Production Royalty for Leased Substances, if any, from the Leased Premises. Lessee shall have full discretion in the exploration, development and operation of the Leased Premises and shall in no event be obliged to explore for, develop, drill, mine, mill or concentrate Leased Substances. 12. LESSER INTEREST. If Lessor owns less than the entire undivided interest in the Leased Substances, or in any tract included in the Leased Premises, then the Advance Royalty and Production Royalty shall be due Lessor only in the proportion that its interest bears to the whole undivided fee interest. Any interest in the Leased Premises and/or Leased Substances hereafter acquired by Lessor shall be automatically subject to this Lease. If any such acquisition changes Lessor's interest in the Leased Premises or Leased Substances, an appropriate adjustment will be made after Lessee receives written notice thereof from Lessor. 13. INDEMNITY. Lessee shall assume all liability in connection with its operations on the Leased Premises and shall hold Lessor harmless from any and all liability which may arise out of Lessee's development and operation of the Leased Premises. Lessee shall use its best efforts to ensure that the work performed by Lessee hereunder shall be in compliance with applicable environmental, safety and health requirements of federal, state and local governments. Upon the termination of this Lease, Lessee shall return the Leased Premises to Lessor free and clear of liens for labor done or work performed upon the Leased Premises or materials furnished to it for the exploration, development or operation thereof under the Lease, but Lessee shall have the right to dispute or contest the validity of such liens. Lessee's liability under this Section shall terminate upon termination of this Lease except for obligations incurred before the date of termination. 14. CROSS-MINING; OPERATIONS ON OTHER LANDS. Lessee shall have the right to use any roads, tunnels, shafts, pits, inclines and workings upon the Leased Premises for the purpose of transporting Leased Substances, water, slurries and waste materials from adjoining or nearby properties. For the purpose of enabling Lessee to conduct, to Lessee's best advantage and with greater economy and convenience, the mining, removal, handling and disposition of Leased Substances from the Leased Premises, and minerals from other lands in which Lessee or affiliated parties may be conducting mining operations, the operations of Lessee and the operations on such other lands may be conducted upon the Leased Premises and upon such other lands as a single mining operation, to the same extent as if all such properties constituted a single tract of land. Leased Substances from the Leased Premises may be commingled with ores and minerals from such other lands, provided that nothing herein shall relieve Lessee from its obligation for payment of the Production Royalty. In the event of and prior to such commingling, Lessee shall weigh, sample and assay the Leased Substances mined from the Leased Premises before they are commingled so as to allow allocation of the resulting concentrate to the respective properties from which derived. All such weighing, sampling, assaying and allocation shall be performed in accordance with good mining practices prevailing at the time. Lessee shall have the right to use so much of the surface and subsurface of the Leased Premises as is required for ingress and egress, conducting exploration and mining operations, stockpiling of Leased Substances and disposing of wastes both on the Leased Premises and on lands upon which Lessee or affiliated parties may be conducting mining operations; Lessee shall also have the right to use so much of such surface and subsurface of the Leased Premises as may be required for utility lines, camps, roads, drillsites, leach piles, tailings disposal sites, dumps, mills, smelters and other structures or facilities required in its exploration, development mining and milling activities. Lessee shall have the right to use, develop and store water on the Leased Premises for use in its development, mining and milling activities. Further, Lessee may use the Leased Premises for the mining, removal, treatment and transportation of minerals and materials from adjoining or nearby property, or for any mining or milling purpose connected therewith. Mining operations on adjacent properties shall be deemed mining operations on the Leased Premises for the purposes of Section 2 hereof. 15. TREATMENT; TAILINGS. Lessee shall have the right, but shall not be required, to beneficiate, concentrate, smelt, refine, leach and otherwise treat, in any manner, either wholly or in part at a plant or plants on the Leased Premises or on other lands, any Leased Substances or other materials mined or produced from the Leased Premises and from other lands. Such treatment shall be conducted in a careful and workmanlike manner. The tailings and residue from such treatment may be deposited on the Leased Premises or on other lands. Lessee shall be responsible for compliance with all State and Federal laws and regulations relating to reclamation of the tailings and pollution caused by the tailings. 16. TAXES. During the time this Lease is in effect, Lessee shall pay, before delinquent, all general property taxes which may be assessed against the Leased Premises, including the Leased Substances covered by this Lease, and Lessee shall be entitled to deduct such amounts from Production Royalty payments to Lessor as set forth in Section 4. Lessee shall also pay, before delinquent, all taxes levied and assessed against any improvements placed by it upon the Leased Premises. Lessee shall not be required to pay any income or other taxes imposed on Lessor by reason of the receipt of any amounts to be paid Lessor under this Lease. 17. AREA OF MUTUAL INTEREST. If, during the term of this Lease, Lessor or Lessor's representative or agent shall locate or acquire any interest in any mining claim or property contiguous with or proximate to any of the property described on Exhibit A, all such claims and property shall be subject to this Lease,without any additional consideration therefor payable to Lessor, and all references in this Lease to the Leased Premises shall be deemed to include all such claims and property. Lessor agrees to notify Lessee promptly upon the location of each such claim or acquisition of property. Lessee and Lessor agree to execute and acknowledge an amendment to this Lease to include and describe each such claim or property and to file such amendment for recording in the real property records of the county where said claim or property is located. 18. FORCE MAJEURE. Lessee shall not be liable or in default under any provisions of this Lease for failure to perform any of its obligations hereunder during periods in which performance is prevented by any cause reasonably beyond Lessee's control, which causes hereinafter are called "force majeure." For the purposes of this Lease, the term "force majeure" shall include, but not be limited to, fires, floods, windstorms and other damage from the elements; strikes, war, insurrection, mob violence and riots; unavailability of materials, labor and transportation; lack of a reasonable market for Leased Substances mined from the Leased Premises; unavailability of smelting or refining facilities; interference, action, legislation or regulation by governmental or military authority, including a requirement by such authority that an environmental impact statement, plan of operation or similar statement or document be prepared or approved; litigation; and acts of God or acts of the public enemy. The duration of this Lease and of the time for completion of performance by Lessee of its rights and obligations hereunder shall be extended for a period equal to the period of disability as a result of the event of force majeure, provided Lessee gives Lessor written notice of the existence of the event of force majeure. All periods of force majeure shall be deemed to begin at the time Lessee stops performance hereunder by reason of force majeure. Notwithstanding the foregoing, the parties understand that an event of force majeure shall not excuse any obligation to make a payment of money required by this Lease. 19. FIRST RIGHT OF REFUSAL. If, at any time during the term of this Lease, Lessor shall, in response to a bona fide offer to purchase all or part of its interest in the Leased Premises from a third party, desire to sell or otherwise dispose of such interest, it shall notify Lessee in writing of the party to whom it desires to sell such interest and the price at which and the terms upon which it desires to sell the same, and Lessee shall, within 30 days of receipt of the notice, notify Lessor in writing whether it wishes to purchase such interest at the price and on the terms set forth in the notice. If Lessee elects to purchase such interest, Lessor shall be bound to convey, assign, or otherwise transfer such interest to Lessee promptly thereafter at such price and on such terms. If Lessee elects not to purchase such interest or fails to give notice of its intention within the 30-day period, Lessor shall be free to convey, assign, or otherwise transfer such interest to the third party at a price not less than stated in the notice or on more favorable terms than those stated in the notice. Any conveyance by Lessor to a third party shall be subject to the terms of this Lease. If Lessor shall not have so disposed of such interest to said third party within 90 days after receipt of notice that Lessee elects not to exercise its right of first refusal or after expiration of that party's 30-day period within which to give notice, the provisions of this Section shall again apply to the disposition by Lessor of any such interest. 20. ASSIGNMENT. Subject to the provisions of Section 19 above, the rights of either party hereunder may be assigned in whole or in part and t he provisions hereof shall extend to their successors and assigns, but no change or division in ownership of the Leased Premises, Advance Royalty or Production Royalty, however accomplished, shall operate to enlarge the obligations or diminish the rights of either party under this Lease and neither Lessee nor its successors or assigns shall ever be required to make payments or to render reports or notices to more than one party. In the event Lessor's interest in the Leased Premises is now or hereafter owned by more than one party, Lessee may withhold further payments until all such owners have designated a single party to act for all of them hereunder in all respects, including but not limited to the giving and receiving of all notices and the receipt of all payments and reports. No such change or division in the ownership of the Leased Premises, Advance Royalty or Production Royalty shall be binding upon Lessee for any purpose until such person acquiring any interest has further furnished Lessee with the instrument or instruments, or certified copies thereof, constituting his claim of title from the original Lessor. Lessee shall have the right to subcontract with others for the performance of exploration, development and mining work hereunder, subject to all of the terms of this Lease, but no such subcontract shall relieve Lessee of its obligations to Lessor hereunder. 21. TERMINATION OF LEASE. 20.1 By Lessor. If Lessee fails to keep and perform all of the terms and conditions of this Lease on its part to be kept and performed, then Lessor may notify Lessee of the default in writing specifying the default. If within ten days after Lessee's receipt of such notice, in case of default arising through failure to account for royalties, or to make the monthly or annual payments herein mentioned, and within 30 days in the case of any other default, Lessee shall make such royalty or other payments, or commence and diligently thereafter proceed to correct such other default, this Lease shall continue in good standing. However, upon failure of Lessee to make such royalty or other payment within ten days or to commence within 30 days to cure any other default and diligently thereafter proceed to correct the same, Lessor may then, by written notice or demand, forthwith terminate this Lease and fully repossess itself of the Leased Premises, and without prejudice to any other rights which might otherwise accrue to Lessor for the violation of the terms hereof. After such default and termination of this Lease, Lessee shall have no further rights in or right to the possession of the Leased Premises or any part thereof, except for the purpose of accomplishing the removal of its machinery and equipment as set forth below in Section 22. 21.2 By Lessee. Lessee may terminate this Lease in whole or in part at any time and from time to time upon written notice delivered to Lessor which termination shall take effect upon any future date set forth in the notice, or, if no date is specified, upon the date of delivery of the notice with respect to that part of the Leased Premises specified in the notice. Upon such termination, all right, title and interest of Lessee under this Lease as to that portion of the Leased Premises specified in the notice shall terminate, and Lessee shall not be required to make any further payments, or to perform any further obligations hereunder as to said portion of the Leased Premises, except payments or obligations which then have accrued under the express provisions of this Lease and which have not been paid or performed. 21. REMOVAL OF EQUIPMENT. Lessee shall have the right, at any time 22. within one year after the termination or expiration of this Lease, to 23. remove all property, fixtures, structures, machinery or equipment 24. erected or placed by Lessee on or in the Leased Premises. Lessor 25. shall have the right to require Lessee to remove any or all such 26. property, fixtures, structures, machinery or equipment within one 27. year after the termination or expiration hereof. 23. RECORDING OF SHORT-FORM NOTICE. The parties hereby agree to execute a short-form counterpart of this Lease contemporaneous herewith for the sole purpose of recordation in the real property records sufficient to give record notice, pursuant to the laws of the state where the Leased Premises are located of the existence of this Lease. This Lease shall not be recorded without the written consent of Lessee. 24. NOTICES. Any notice required or permitted to be given hereunder shall be in writing and shall be delivered in person or sent by registered or certified mail, return receipt requested. Notices so mailed shall be deemed effective on the third business day after mailing. Until change of address is communicated, all notices shall be addressed to: Lessor: William Zanetti Box 500 Osburn, Idaho 83849 Lessee: Mine Systems Design, Inc. HC01 Box 246 Kellogg, Idaho 83837 25. GENERAL. 25.1 Modification. The parties hereto by mutual written agreement may, at any time and from time to time, amend this Lease and any of the terms hereof. 25.2 Further Documents. The parties hereto further agree to execute all such further documents and do all such further things as may be necessary to give full effect to these presents. 25.3 Entire Agreement. This is the entire agreement between the 25.4 parties and no modification shall be effective unless in writing 25.5 and executed by the parties hereto. 25.5 Law. The terms and provisions of this Lease shall be interpreted in accordance with the laws of the state where the Leased Premises are located. IN WITNESS WHEREOF, this instrument is executed as of the date above written. LESSOR: LESSEE: WILLIAM ZANETTI MINE SYSTEMS DESIGN, INC. By: /s/ William Zanetti By: /s/ Fred W. Brackebusch ------------------------------- STATE OF IDAHO ) ) ss. COUNTY OF SHOSHONE ) On this 26th day of August , 1993, before me, the undersigned, a Notary Public in and for the State of Idaho, personally appeared Fred W. Brackebusch, known to me and to me known to be the President of MINE SYSTEMS DESIGN, INC., a corporation whose name is subscribed to the foregoing instrument and acknowledged to me that said officer executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day in this certificate first above written. /s/ Ronald E. Eggart Notary Public for the State of Idaho Residing at Kellogg, Idaho My commission expires: 1/18/97 STATE OF IDAHO ) ) ss. COUNTY OF SHOSHONE ) On this 16th day of September, 1993, before me, the undersigned, a Notary Public in and for the State of Idaho, personally appeared William Zanetti, known to me, an individual whose name is subscribed to the foregoing instrument and acknowledged to me that said individual executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day in this certificate first above written. /s/ Ila M. Wild Notary Public for the State of Idaho Residing at Osburn, Idaho My commission expires: June 1994 EXHIBIT A TO MINING LEASE Description of the Premises covered by Mining Lease between William Zanetti (Lessor), and Mine Systems Design, Inc. (Lessee), dated September 15, 1993, covering real property located in Shoshone County, Idaho to wit: a. Fee land lying south of Interstate 90 right-of-way in the SE 1/4 Section 4, Township 48 N, Range 3 E, known as the Grenfell Estate, containing approximately 60 acres. EX-10.3 6 EXHIBIT 10.3 FILED 98 MAR 27 AM 10:10 SECRETARY OF STATE STATE OF IDAHO ARTICLES OF MERGER NEW JERSEY MINING COMPANY PLAINVIEW MINING COMPANY, INC. (1) Merger of New Jersey Mining Company and Plainview Mining Company, Inc. According to these Articles Of Merger, New Jersey Mining Company and Plainview Mining Company, Inc., both Idaho Corporations, hereby merge with New Jersey Mining Company being the surviving corporation. (a) Plan of Merger The Board of Directors of New Jersey Mining Company approved an exchange offer on September 29, 1997 whereby shareholders of Plainview Mining Company, Inc. would be offered 2 shares of the common stock of New Jersey Mining Company for each share of common stock of Plainview Mining Company, Inc. The Board of Directors of Plainview Mining Company, Inc. approved the exchange offer and recommended that their shareholders accept the exchange offer. On December 30, 1997, New Jersey Mining Company and Plainview Mining Company, Inc. approved a merger agreement which involved Plainview Mining Company, Inc. delivering all of its assets to New Jersey Mining Company in exchange for stock with 2 shares of New Jersey Mining Company common stock being exchanged for each share of common stock of Plainview Mining Company, Inc., with New Jersey Mining Company to be the surviving corporation. The merger agreement was contingent upon the approval of shareholders of Plainview Mining Company, Inc. (b) Shareholder Approval The approval of the shareholders of Plainview Mining Company, Inc. was necessary to merge with New Jersey Mining Company. The approval of the shareholders of New Jersey Mining Company was not necessary under 30-1-1103 (7), however the majority shareholder of New Jersey Mining Company, who holds more than 50% of the outstanding shares of common stock, approved the merger. (c) Approval by Shareholders of Plainview Mining Company, Inc. (i) Description of Outstanding Shares Plainview Mining Company, Inc. has 1,500,000 shares of common stock authorized, and all 1,500,000 shares were issued when the merger vote was held at a Special Meeting of Plainview Mining Company, Inc. on January 27, 1998. There are no other classes of stock or shareholders of Plainview Mining Company, Inc. The number of votes entitled to be cast on the merger proposal was 1,500,000. (ii) Results of the Vote The total number of votes cast for the merger plan was 886,841 by the shareholders of common stock of Plainview Mining Company, Inc., and there were no dissenting or disputed votes. Therefore, the merger was approved by the shareholders of Plainview Mining Company, Inc. (2) Effective Merger Date The effective date of this merger of New Jersey Mining Company and Plainview Mining Company, Inc. is March 12, 1998. By: /s/ Fred W. Brackebusch /s/ Fred W. Brackebusch President, New Jersey Mining Company President, Plainview Mining Inc. Attest: /s/ Tina C. Brackebusch /s/ Ron E. Eggart Secretary, New Jersey Mining Company Secretary, Plainview Mining Co., Inc STATE OF IDAHO ) ) ss. County of Shoshone ) On this 13th day of March , in the year 1998, before me, the undersigned, a Notary Public in and for the State of Idaho, personally appeared FRED W. BRACKEBUSCH, known to me to be the President of NEW JERSEY MINING COMPANY, the corporation that executed the within Articles of Merger, and acknowledged to me that he executed the same for and on behalf of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate above written. /s/ Ronald E. Eggart Notary Public in and for the State of Idaho Residing at Kellogg, Idaho Commission expires 1/18/2003 STATE OF IDAHO ) ) ss. County of Shoshone ) On this 13th day of March, in the year 1998, before me, the undersigned, a Notary Public in and for the State of Idaho, personally appeared FRED W. BRACKEBUSCH, known to me to be the President of PLAINVIEW MINING COMPANY, INC., the corporation that executed the within Articles of Merger, and acknowledged to me that he executed the same for and on behalf of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate above written. /s/ Ronald E. Eggart Notary Public in and for the State of Idaho Residing at Kellogg, Idaho Commission expires 1/18/2003 EX-27 7 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 This schedule contains summary financial information extracted from the Financial Statements of New Jersey Mining Company for the years ending December 31, 1999, December 31, 1998 and December 31, 1997 and is qualified in its entirety by reference to such financial statements. YEAR YEAR YEAR DEC-31-1999 DEC-31-1998 DEC-31-1997 DEC-31-1999 DEC-31-1998 DEC-01-1997 283 85 79 0 0 0 0 0 0 0 0 0 0 0 0 283 85 79 280,430 280,430 244,869 0 0 0 479,765 479,568 475,651 10,800 19,479 25,160 0 0 0 0 0 0 0 0 0 647,836 647,836 466,083 0 0 0 479,765 479,568 475,651 0 0 0 18,774 761 0 0 0 0 0 0 0 274 31,466 44,174 0 0 0 0 0 0 18,500 (30,705) (44,174) 0 0 0 18,500 (30,705) (44,174) 0 0 0 0 0 0 0 0 0 18,500 (30,705) (44,174) 0.002 (0.003) (0.004) 0.002 (0.003) (0.004)
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