2-Apr-2007
Annual Report
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Cautionary Statement about Forward-Looking Statements
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Plan of Operation
The Company's plan of operation for the next twelve months, subject to maintaining sufficient funds, is to pursue litigation with Hecla Mining Company over the operation of the Lucky Friday Mine, as described in Item 3, Legal Proceedings.
In order to finance the legal costs associated with the litigation and appeal, the Company has raised capital by selling unregistered shares of its common stock in a private placement offering. The Company anticipates that the sale of additional shares of common stock will be required in the next twelve months to continue funding of its litigation. If the Company is unable to raise additional capital, it may have to cease operations. The Company's operations have been funded solely by the receipt of advance royalties from Hecla Mining Company of $1,500 per month, and from the occasional sale of the Company's common stock in private placement. The Company has no other source of funds.
The Company's properties have been leased to Hecla since 1968 and capital improvements on the property are paid by Hecla in accordance with the terms of the lease. The Company has no long-term debt, and current assets consist almost entirely of cash.
Results of Operations
The Company had no operations in 2006 or 2005. General and administrative costs in 2006 decreased by $56,159 over 2005, primarily due to a decrease of $50,939 in legal expenses related to the litigation with Hecla Mining Company. The Company reported a net loss of $25,486 in 2006, compared to a net loss of $85,162 in 2005. General and administrative costs in 2005 decreased by $180,323 over 2004, primarily due to a decrease in legal fees of $152,051 and a decrease in consulting costs $32,104, partially offset by an increase in accounting fees of $9,245.
Liquidity and Capital Resources
During the year ended December 31, 2006 the Company sold 100,000 shares in private placement transactions at an average price of $0.725 per share. The Company financed its obligations during the year ended December 31, 2006 by the sale of these shares and by the advance royalties of $1,500 per month received from Hecla Mining Company.
Cash flows for the year ended December 31, 2006 were as follows:
During the twelve month period ended December 31, 2006, the Company's cash position decreased by $14,050. During this period the Company used $58,450 in operating activities and realized $72,500 from the sale of 100,000 shares of the Company's common stock at an average price of $0.725.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
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