UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2005
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number: 000-28837
NEW JERSEY MINING COMPANY
(Exact name of registrant as specified in its charter)
| Idaho | 82-0490295 |
| (State or other jurisdiction | (IRS employer identification no.) |
| of incorporation) |
89 Appleberg Road, Kellogg, Idaho 83837
(Address of principal executive offices)
Registrant’s telephone number, including area code: (208) 783-3331
| Common Stock | The OTC-Bulletin Board |
| Title of each class | Name and exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(D) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period as the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.
Yes x No ¨
At May 5, 2005, 21,934,500 shares of the registrant’s common stock were outstanding.
NEW JERSEY MINING COMPANY
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 2005
TABLE OF CONTENTS
[The balance of this page has been intentionally left blank.]
2
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
NEW JERSEY MINING COMPANY
(An Exploration Stage Company)
BALANCE SHEET
March 31, 2005
(Unaudited)
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | $ | 114,378 | |
| Accounts receivable | 24,814 | ||
| Total current assets | 139,192 | ||
| Building and equipment | 650,631 | ||
| Mineral properties and deferred development costs | 852,274 | ||
| Total assets | $ | 1,642,097 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||
| Current liabilities: | |||
| Accounts payable | $ | 28,459 | |
| Accrued payroll and payroll-related expenses | 5,365 | ||
| Obligation under capital lease, current | 13,009 | ||
| Total current liabilities | 46,833 | ||
| Accrued reclamation costs | 12,500 | ||
| Obligation under capital lease, noncurrent | 54,012 | ||
| Total liabilities | 113,345 | ||
| Stockholders’ equity: | |||
| Preferred stock, no par value; 1,000,000 | |||
| shares authorized; no shares issued or outstanding | |||
| Common stock, no par value; 50,000,000 shares | |||
| authorized; 21,934,500 shares issued and outstanding | 3,154,557 | ||
| Deficit accumulated during the development stage | (1,625,805 | ) | |
| Total stockholders’ equity | 1,528,752 | ||
| Total liabilities and stockholders’ equity | $ | 1,642,097 | |
The accompanying notes are an integral part of these financial statements.
3
NEW JERSEY MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
For the Three-Month Periods ended March 31, 2005 and 2004 and for the period from inception
(July 18, 1996) through March 31, 2005
(Unaudited)
| From Inception | |||||||||
| (July 18, 1996) | |||||||||
| March 31, | March 31, | Through | |||||||
| 2005 | 2004 | March 31, 2005 | |||||||
| Sales of concentrate | $ | 24,814 | $ | 24,814 | |||||
| Cost of sales | 38,342 | 38,342 | |||||||
| Gross profit (loss) | (13,528 | ) | (13,528 | ) | |||||
| Costs and expenses: | |||||||||
| Expenses paid with common stock: | |||||||||
| Management fees | 23,313 | 213,712 | |||||||
| Directors fees | 58,450 | ||||||||
| Services | 9,800 | $ | 1,500 | 44,240 | |||||
| Exploration | 5,500 | 25,500 | |||||||
| Exploration expense | 21,760 | 35,717 | 640,150 | ||||||
| General and administrative expenses | 89,261 | 58,773 | 571,525 | ||||||
| Total operating expenses | 149,634 | 95,990 | 1,553,577 | ||||||
| Other (income) expense: | |||||||||
| Royalty and other income | (432 | ) | (818 | ) | (62,250 | ) | |||
| Write-off of goodwill | 30,950 | ||||||||
| Write-off of investment | 90,000 | ||||||||
| Total other (income) expense | (432 | ) | (818 | ) | 58,700 | ||||
| Net loss | $ | 162,730 | $ | 95,172 | $ | 1,625,805 | |||
| Net loss per common share-basic | $ | 0.01 | $ | Nil | $ | 0.11 | |||
| Weighted average common | |||||||||
| shares outstanding-basic | 21,733,238 | 19,606,478 | 14,583,136 |
The accompanying notes are an integral part of these financial statements.
4
NEW JERSEY MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
For the Three-Month Periods ended March 31, 2005 and 2004 and for the period from inception
(July 18, 1996) through March 31, 2005
(Unaudited)
| From Inception | |||||||||
| (July 18, 1996) | |||||||||
| March 31, | March 31, | Through | |||||||
| 2005 | 2004 | March 31, 2005 | |||||||
| Cash flows from operating activities: | |||||||||
| Net loss | $ | (162,730 | ) | $ | (95,172 | ) | $ | (1,625,805 | ) |
| Adjustments to reconcile net loss to net cash | |||||||||
| used by operating activities: | |||||||||
| Depreciation | 1,898 | 1,898 | |||||||
| Write-off of equipment | 11,272 | 11,272 | |||||||
| Write-off of goodwill | 30,950 | ||||||||
| Write-off of investment | 90,000 | ||||||||
| Stock issued for: | |||||||||
| Management fees | 23,313 | 213,712 | |||||||
| Directors fees | 58,450 | ||||||||
| Services | 9,800 | 1,500 | 44,240 | ||||||
| Exploration | 5,500 | 25,500 | |||||||
| Change in | |||||||||
| Accounts receivable | (24,814 | ) | (24,814 | ) | |||||
| Other assets | 2,346 | 1,722 | |||||||
| Accounts payable | 20,348 | 66,630 | 25,489 | ||||||
| Accounts payable to related party | (1,000 | ) | |||||||
| Accrued payroll and related payroll expenses | (350 | ) | 5,365 | ||||||
| Accrued reclamation costs and other liabilities | 12,500 | ||||||||
| Net cash used by operating activities | (124,689 | ) | (28,042 | ) | (1,129,521 | ) | |||
| Cash flows from investing activities: | |||||||||
| Purchases of building and equipment | 5,357 | (85,804 | ) | (374,783 | ) | ||||
| Purchases of mineral property | (5,904 | ) | |||||||
| Deferral of development costs | (13,755 | ) | (225,535 | ) | |||||
| Net cash used by investing activities | 5,357 | (99,559 | ) | (606,222 | ) | ||||
| Cash flows from financing activities: | |||||||||
| Exercise of stock purchase warrants | 599,500 | ||||||||
| Sales of common stock, net of issuance costs | 85,000 | 373,500 | 1,283,807 | ||||||
| Principal payments on capital lease | (3,054 | ) | (51,455 | ) | |||||
| Payments on note payable to bank | (20,000 | ) | |||||||
| Net cash provided by financing activities | 81,946 | 373,500 | 1,811,852 | ||||||
| Cash of acquired companies | 38,269 | ||||||||
| Net change in cash | (37,386 | ) | 245,899 | 114,378 | |||||
| Cash, beginning of period | 151,764 | 346,268 | 0 | ||||||
| Cash, end of period | $ | 114,378 | $ | 592,167 | $ | 114,378 | |||
| Interest paid in cash | $ | 1,725 | $ | 4,767 | |||||
| Non-cash investing and financing activities: | |||||||||
| Common stock issued for: | |||||||||
| Buildings and equipment | $ | 3,000 | |||||||
| Mineral properties and deferred development costs | $ | 65,000 | $ | 264,300 | |||||
| Acquisitions of companies, excluding cash | $ | 743,653 | |||||||
| Capital lease obligation for equipment acquired | 93,275 |
The accompanying notes are an integral part of these financial statements.
5
NEW JERSEY MINING COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation:
The unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three-month period ended March 31, 2005 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2005.
For further information refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2004.
2. Description of Business
New Jersey Mining Company (“the Company”) was incorporated as an Idaho corporation on July 18, 1996. The Company's primary business is exploring for and developing gold, silver and base-metal resources in Idaho.
Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operation
General
This report contains both historical and prospective statements concerning the Company and its operations. Prospective statements (known as "forward-looking statements") may or may not prove true with the passage of time because of future risks and uncertainties. The Company cannot predict what factors might cause actual results to differ materially from those indicated by prospective statements.
Plan of Operation
The Company is executing its plan to continue exploration for gold, silver and base metal deposits in the greater Coeur d’Alene Mining District of northern Idaho. The Company has three advanced-stage properties with reserves. One of the properties, the Silver Strand, owned by the Company is in the advanced permitting stage with the U.S. Forest Service (USFS) and will be readied for production once operating permits are received. A Decision Notice has been issued by the USFS indicating a Finding of No Significant Impact of the Silver Strand mining operation, but the Decision is still subject to appeal thus delaying any work at the mine. At the Golden Chest mine production commenced in May 2005 from the Katie Dora vein which was developed by a ramp in 2004. It is planned to mine about 4,000 tonnes grading 13 grams/tonne gold in 2005 from the Katie Dora reserves. The third advanced property, the Coleman vein in the New Jersey Area of Interest has an open pit which can be operated to fill out the
6
mill production capacity. It is planned to mine and process about 2,000 tonnes grading 3 grams/tonne gold from the Coleman pit in 2005.
The Company has upgraded its mineral processing plant, the New Jersey mill, to add the flotation process which was needed to produce marketable concentrates for buyers. The mill has been successfully commissioned and sulfide concentrates were produced and sold to Barrick Goldstrike Mines, Inc. in Nevada. Other gold-bearing products are produced and sold to gold refiners. Currently, the mill is starting to process ore produced at the Golden Chest mine. Ore from the Coleman open pit will be used to fill the mill operating schedule.
An exploration drilling program may be executed in 2005 depending on the availability of funding. Drilling would be done at the Golden Chest mine to test the continuity of deep mineralization discovered in 2004 on the Idaho vein. Drilling would also be done at the Scotch Thistle prospect in the New Jersey Area of Interest where higher grade gold mineralization was discovered in 2004. A third drilling project may be executed at the Silver Button prospect discovered in 2004.
The Company has sufficient funding to execute the planned production schedule for the next 12 months, as well as fund necessary management tasks such as auditing/accounting and SEC reporting. However, additional funding would be needed to execute the exploration plan or fund the development of the Silver Strand mine in 2005, should final approvals be obtained. Plans are being reviewed to secure additional funding.
The Company currently has seven employees and uses consultants or contractors for project tasks. Up to three additional employees may be hired if the production schedule is increased.
Item 3. Controls and Procedures
An evaluation was performed by the Company’s president and principal financial officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. And on that evaluation, the Company’s president and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2005, in ensuring that all material information required to be filed in this quarterly report has been made known to them in a timely fashion.
There has been no change in the Company’s internal controls over financial reporting during the quarter ended March 31, 2005, that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.
[The balance of this page has been intentionally left blank.]
7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
Neither the constituent instruments defining the rights of the registrant’s securities filers nor the rights evidenced by the registrant’s outstanding common stock have been modified, limited or qualified.
In February 2005, the Company sold 9,100 units for $0.55 to an accredited investor. Each unit consisted of one share of common stock plus one-half of a warrant with each full warrant exercisable to purchase a share of common stock for $0.80 until April 1, 2006. In March 2005, the Company sold 200,000 units for $0.40 to an accredited investor. Each unit consisted of one share of common stock plus one warrant exercisable to purchase a share of common stock for $0.60 until April 1, 2007. The securities issued in both of these transactions were issued pursuant to exemptions from registration under Section 4(2) and Rule 506 of Regulation D of the Securities Act of 1933 as amended.
On January 3, 2005, the Company exercised the Option to Lease the Golden Chest mine in accordance with the exploration agreements with Metaline Contact Mines and Prichard Creek Resource Partners LLC. The Company issued 130,000 shares of restricted common stock upon the signing of these leases and the securities were issued pursuant to exemptions from registration under Section 4(2) and Rule 506 of Regulation D of the Securities Act of 1933 as amended.
The Company issued 46,625 shares of restricted common stock to President Fred W. Brackebusch for management services rendered in the first quarter of 2005. A price of $0.50 per share was used to calculate the number of shares to be issued. The securities were issued pursuant to exemptions from registration under Section 4(2) and Rule 506 of Regulation D of the Securities Act of 1933 as amended.
In January 2005, the Company issued 10,000 units at a price of $0.55 to sophisticated investors for exploration services related to a geophysical survey at the Silver Strand mine. Each unit consisted of one share of common stock plus one-half of a warrant with each full warrant exercisable to purchase a share of common stock for $0.80 until April 1, 2006. The securities were issued pursuant to exemptions from registration under Section 4(2) and Rule 506 of Regulation D of the Securities Act of 1933 as amended.
During the first quarter of 2005, the Company issued 17,975 shares at an average price of $0.55 to various accredited and sophisticated individuals for services performed. The securities were issued pursuant to exemptions from registration under Section 4(2) and Rule 506 of Regulation D of the Securities Act of 1933 as amended.
Item 3. Defaults Upon Senior Securities
The registrant has no outstanding senior securities.
Item 4. Submission of Matters to a Vote of Security Holders
None
8
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
Exhibits
| 31.1 | Section 302 Certification of Chief Executive Officer and Chief Financial Officer | |
| 32.1 | Section 906 Certification of Chief Executive Officer and Chief Financial Officer |
Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| NEW JERSEY MINING COMPANY | ||
| By: | /s/ Fred W. Brackebusch | |
| Fred W. Brackebusch, its | ||
| President, Treasurer, & Director | ||
| Date: May 14, 2005 | ||
| By: | /s/ Grant A. Brackebusch | |
| Grant A. Brackebusch, its | ||
| Vice President & Director | ||
| May 14, 2005 | ||
[The balance of this page has been intentionally left blank.]
9