SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission file number: 1-316 INDEPENDENCE LEAD MINES COMPANY (Exact name of registrant as specified in its charter) 	Arizona		 82-0131980 (State or other jurisdiction (IRS Employer Identification No.) of incorporation) 510 Cedar Street Wallace, Idaho 83873 (Address of principal executive offices) Registrant's telephone number, including area code: (208) 753-2525 Common Stock None Title of each class 	Name of each 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 such filing requirements for the past 90 days. Yes [X] No [ ] The number of outstanding shares of the registrant's common stock at June 30, 2000 was 4,308,793 shares. INDEPENDENCE LEAD MINES COMPANY QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000 TABLE OF CONTENTS 	Page PART I - FINANCIAL INFORMATION 	Item 1:	Financial Statements . . . . . . . . . . . . . . . . . 	1 	Item 2:	Management's Discussion and Analysis 	 	of Financial Condition and Results of Operations . . . 	1 PART II - OTHER INFORMATION 	Item 1:	Legal Proceedings . . . . . . . . . . . . . . . . . . .	2 	Item 2:	Changes in Securities . . . . . . . . . . . . . . . . .	3 	Item 3:	Defaults upon Senior Securities . . . . . . . . . . . .	3 	Item 4:	Submission of Matters to a Vote of Security Holders . . 3 	Item 5:	Other Information . . . . . . . . . . . . . . . . . . .	3 	Item 6:	Exhibits and Reports on Form 8-K . . . . . . . . . . . 	3 SIGNATURES 	[The balance of this page has been intentionally left blank.] PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. The unaudited financial statements of the Company for the periods covered by this report are included elsewhere in this report, beginning at page F/S-1. The unaudited financial statements have been prepared by the Company in accordance with generally accepted accounting principles for interim financial information with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. 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 have been included. Operating results for the six-month period ended June 30, 2000 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2000. For further information refer to the financial statements and footnotes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 incorporated by reference herein. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS FOR THE PERIOD ENDED JUNE 30, 2000. Six months Ended June 30, 2000 Compared to six months Ended June 30, 1999. During the six months ended June 30, 2000 the Company realized income of $358,085 from settlement of the litigation discussed in Item 1 (Legal Proceedings). General and administrative expenses decreased to $17,317 for the six-month period ended June 30, 2000 as compared to $114,411 for the six-month period ended June 30, 1999. The decrease is principally attributed to reduced legal expenses incurred in 2000 related to the Company's litigation described in Item 1 (Legal Proceedings). For the quarter ended June 30, 2000, the Company experienced a net loss of $2,631, or $0.001 per share, compared to a loss of $8,814, or $0.002 per share, during the comparable period in the previous year. During the quarter, the company sold a portion of the surface rights on its mining claims for a selling price of $103,000. During the second quarter 1999, the company's loss of $8,814 resulted principally from legal charges of $93,426, partially offset by net timber sales of $86,739. LIQUIDITY AND CAPITAL RESOURCES. The Company is the owner of fifteen patented and seventeen unpatented mining claims. This claim group ("the property") is situated Northwest of Hecla Mining Company's Lucky Friday Mine in the Coeur d'Alene Mining District, Shoshone County Idaho. Adjacent is the community of Mullan and U.S. Interstate Highway 90. Pursuant to the terms of an agreement dated February 8, 1968, among Hecla Mining Company ("Hecla"), Day Mines, Inc. ("Day"), Abot Mining Company ("Abot"), and the Company (the "Unitization Agreement"), the Eastern portion of the Company's Property (approximately five-eighths of the Property) was unitized with certain adjoining and near-by properties owned by Day and Abot into a unitized area, consisting of 55 claims, (known as the "DIA Area"). Under the terms of the Unitization Agreement, ores and minerals in place are owned by the parties thereto in the following percentages: 	Day (now Hecla by merger)	47.70% 	Independence 	46.30% 	Abot	 6.00% By a second agreement also dated February 8, 1968 (the "Lease Agreement"), Hecla leased the DIA Area for a period of fifty (50) years, subject to a 30-year extension, for the purpose of conducting mineral exploration and development of the DIA Area and mining such commercial ore as may be discovered in the DIA Area by Hecla. The Lease Agreement provides that all costs and expenses incurred in the exploration, development, and operation of the DIA Area are to be paid by Hecla subject to the right of Hecla to be reimbursed for such costs and expenses, together with all -1- advance royalties paid, out of any future net profits realized from the operation of the DIA Area. After recovery of Hecla's costs and expenses and amounts paid as advance royalties, and the establishment of a three month working capital reserve, net profit royalties are to be paid to the Company and the other property owners as follows: 	Day (now Hecla by merger)	19.08% 	Independence	 18.52% 	Abot 	2.40% Under the terms of the Unitization Agreement, one-half of the first net profit royalties received by the Company are to be paid over to Day (now Hecla) until Day recovers the sum of $450,000. The relationship of the parties to the Agreement may, under certain circumstances, be converted to a joint venture at the option of the property owners, where after the property owners would become participating, non- operating working interest owners who would share profits and expenses in connection with the DIA Area in the same ratio as exists pursuant to lease arrangement with Hecla described above. Until Hecla commences to pay net profit royalties and during such period as the Lease Agreement is in effect, Hecla is obligated to pay an advance royalty to the Company of $750 per month subject to increase to $1,500 if production for the DIA Area exceeds 2,000 tons per month. The Company currently receives an advance royalty of $1,500 per month, whish is recorded in the financial statements as deferred income. Pursuant to the terms of the February 8, 1968, agreements, Hecla will be obligate to pay a royalty of 18.52 percent of defined net profits after Hecla has recouped its costs to explore and develop this property from the new discovery to Independence Lead Mines Company. The current officers and directors of the Company serve without compensation and are not considered by the Company to be employees. 	PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company reported in its Form 10-K for the fiscal year ending December 31, 1998, that two legal proceedings were pending involving the Company. H.F.Magnuson & Company filed suit in Shoshone County, Idaho in case #CV98-34222 to enforce two promissory notes involving a total sum of $86,100 plus accrued interest of $12,632 as of December 31,1998. The notes were executed by Independence Lead Mine Company's former directors, R.M.MacPhee and Dale Lavigne in favor of H.F.Magnuson & Company. H.F.Magnuson & Company, the Plaintiff in the action, also sought an award of attorney fees and costs. Independence Lead Mines Company, Inc. denied any liability of Independence Lead Mines Company under those notes. A second action was also filed by H.F.Magnuson & Company and former directors, R.M.MacPhee, Dale B.Lavigne and Wray Featherstone in Shoshone County, Idaho case #CV98-34225 against Independence Lead Mines Company and its existing directors, Bernard C. Lannen, Gordon Berkhaug, Forrest Godde and Robert Bunde to validate 60,000 shares of Independence Lead Mines Company stock issued to them prior to May 22, 1997. The Plaintiffs also sought monetary damages from the Defendants in excess of $10,000 plus attorney fees and costs. All Defendants denied the validity of those 60,000 shares and denied any liability for monetary damages. Independence Lead Mines Company and the other Defendants filed counterclaims against Plaintiffs in both suits. Both of the above cases were consolidated in a single proceeding in Shoshone County, Idaho in May, 1999. During the latter part of 1999, the Plaintiffs and the Defendants in the consolidated case attended mediation conferences in an effort to reach a settlement of the claims and issues existing between the parties. A settlement agreement and mutual release was entered into between the parties and that agreement was fully executed by all parties in January, 2000. By stipulation of the parties, the above cases were dismissed on January 25, 2000 with prejudice and without costs or attorney fees. The settlement resulted in a cash payment to Independence Lead Mines Company and cancellation of the two promissory notes in the principal amount of $86,100 plus all accrued interest. The 60,000 shares of stock that were claimed by Independence Lead Mines Company to have been over-issued were returned to Independence Lead Mines Company and the Company has cancelled those certificates to correct the over-issuance. All parties denied each other's claim and allegations throughout the litigation. The conclusion of the above proceedings ends all pending legal proceedings involving Independence Lead Mines Company, Inc. -2- ITEM 2. CHANGES IN SECURITIES. Neither the constituent instruments defining the rights of the registrant's securities holders nor the rights evidenced by the registrant's outstanding common stock have been modified, limited or qualified. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. The registrant has no outstanding senior securities. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of the registrant's security holders during the period covered by this report. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. EXHIBITS. The following exhibit is filed as part of this report: Exhibit 27.0	Financial Data Schedule REPORTS ON FORM 8-K. 	No reports on Form 8-K were filed by the registrant during the period covered by this report. [The balance of this page has been intentionally left blank.] -3- 	INDEPENDENCE LEAD MINES COMPANY 	TABLE OF CONTENTS 	Page Balance Sheets as of June 30, 2000 and December 31, 1999 . . . F/S-2 Statements of Operations for the six Months Ended June 30, 2000 and 1999 . . . . . . . . . . . . . . . . .	F/S-3 Statements of Cash Flow for the six Months Ended June 30, 2000 and 1999 . . . . . . . . . . . . . 	F/S-4 Notes to Interim Financial Statements . . . . . . . . . . . . .	F/S-5 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . F/S-6 	[The balance of this page has been intentionally left blank.] F/S - 1 INDEPENDENCE LEAD MINES COMPANY (AN EXPLORATORY STAGE COMPANY) BALANCE SHEET - UNAUDITED 	ASSETS 					 JUNE 30, 2000		DECEMBER 31, 1999 					 -------------		---------------- 						 				 CURRENT ASSETS: 	Cash	 $ 206,042 	 $ 5,298 	Royalties Receivable	 1,500	 1,500 	Investments 	2,908 	2,908 				 -------- 	-------- 		Total current assets	 210,450 	 9,706 				 ------- -------- PROPERTY AND EQUIPMENT, at cost: 	Equipment 	0 	0 	Less accumulated depreciation	 0 	0 			 	----- 	----- 0 0 	Mining property 	2,945,407 	3,048,407 			 	------------	 ---------- 		Total property and equipment 	2,945,407	 3,048,407 OTHER ASSETS: 		Unrecovered exploration costs	 187,920 	187,920 			 	---------- 	---------- 			Total assets 	$3,343,777	 $ 3,246,033 		 		========== 	=========== 	LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: 	Accounts payable 	$ 1,844 	$ 28,711 	Advances payable 	0 	86,100 	Interest payable 	0 	20,381 	Loans from Shareholders 	0 	42,000 	Income taxes accrued 	12,300 	0 			 	------- 	------- 			Total current liabilities	 14,144	 177,192 			 	-------- 	-------- DEFERRED INCOME:	 328,250 	319,250 			 	-------- -------- STOCKHOLDERS' EQUITY: 	Common Stock, $1.00 par value, 		Authorized 5,000,000 shares; 		issued 4,371,993 and out- 		standing 4,333,357 shares 		at 12/31/99; issued	4,308,793 and outstanding 4,223,357 shares at	03/31/2000 4,308,793;	4,371,993 	Treasury Stock at cost	 (48,234) 	(19,116) 	Additional Paid-In 		Capital (Deficit)	 (108,293)	 (121,873) 			 	--------	 -------- 			 	4,152,266 	4,231,004 	Less deficit accumulated during 		the exploration stage 	(1,150,883) 	(1,481,413) 	Total Stockholders equity	 3,001,383 	2,749,591 			 	----------- ----------- 		Total liabilities and 		 stockholders' equity	 $3,343,777 	$3,246,033 			 ========== ==	======== The accompanying notes are an integral part of these financial statements F/S - 2 INDEPENDENCE LEAD MINES COMPANY (AN EXPLORATORY STAGE COMPANY) STATEMENTS OF OPERATIONS AND DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE - UNAUDITED 					QUARTER	 	SIX MONTHS	 QUARTER	 	 SIX MONTHS 					ENDED	 	 ENDED		 ENDED		 ENDED 					JUNE 30, 00	 JUNE 30, 00 	 JUNE 30, 99	 JUNE 30, 99 ---------- ---------- ----------- ----------- 						 		 		 			 		 Revenue	 		 $ 0		 $ 0	 	$ 86,739	 	$ 86,739 					 -------		 -------		 ---------	 	--------- Expenses Licenses and fees 439 817 0	 30 Office expense			 0 343 17	 17 Office services		 150 300 0 	 200 Shareholder Relations	 884	 2,425 385 	 1,141 Consulting		 2,474 2,474 0 0 Transportation		 1,501 4,236 0 	 0 Accounting		 0 923 0 	 0 Legal	 485 5,799 93,426 113,023 ----- ----- ------ ------- 	Total expenses	 5,933 17,317 	 93,828	 114,411 ------ ------ ------ ------- Loss from Operations $(5,933)	 $(17,317)	 $(7,089)	 $(27,672) Other Income and (expense) Interest, net	 2,102 2,063 	 (1,725)	 (3,134) Legal settlement	 0 358,085 0 0 ----- ------- ----- ----- Total other Income 2,102	 360,148 (1,725) (3,134) ------ ------- ----- ----- NET INCOME (LOSS) before Income Taxes $(3,831) $342,831 $(8,814) $(30,806) Provision for income taxes (1,200) (12,300) 0 0 ------ ------- ----- ----- NET INCOME (LOSS) $(2,631) $330,531 $(8,814) $(30,806) DEFICIT, accumulated during the exploration stage, beginning of period	 (1,148,252) (1,481,414) (1,382,014) (1,360,022) --------- --------- --------- --------- DEFICIT, accumulated during the exploration stage, end of period $(1,150,883) $(1,150,883) $(1,390,828) $(1,390,828) ============ ============ =========== ============ Gain (Loss) per share $(0.001) $0.077 $(0.002) $(0.007) Weighted average common shares outstanding 4,221,357 4,271,357 4,369,993 4,369,993 ____________________ The accompanying notes are an integral part of these financial statements. 	F/ S - 3 INDEPENDENCE LEAD MINES COMPANY (AN EXPLORATORY STAGE COMPANY) STATEMENTS OF CASH FLOW - UNAUDITED 		SIX MONTHS 	SIX MONTHS 		 ENDED	 ENDED 		 JUNE 30, 2000	 MARCH 31, 1999 		 ------------	 ----------- 								 		 Operating Activities: 	Net income (loss)	 $330,531	 $ (30,806) Adjustments to reconcile net loss to net cash used in operating activities: 	0 	0 Changes in operating assets and liabilities: 	(Increase) decrease in accounts receivable 0	 0 	Increase (decrease) in accounts payable	 (26,867) 	20,136 	Increase (decrease) in advances payable	 (86,100) 	0 	Increase (decrease) in deferred income	 9,000 	9,000 	Increase (decrease) in interest payable	 (20,381) 	3,843 	Increase (decrease) in taxes payable	 12,300	 0 --------- ------ Net cash used in operating activities	 218,483 	 2,173 --------- ------ Investing activities: 	Purchase of Company's capital stock	 (29,239)	 0 ------- ------ Net cash used in investing activities 	(29,239) 	0 ------- ------ Financing activities: 	Proceeds from the sale of land 	103,000 	0 	Retirement of director's shares	 (48,000) 	0 	Repurchase and retirement of common stock 	(1,500) 	0 	Repayment of long-term debt 	(42,000) 	0 ------ ----- Net cash provided by financing activities 	 11,500 	0 ------- ----- Net increase (decrease) in cash 	200,744	 2,173 Cash and cash equivalent, beginning of period	 5,298 	 55,678 ------- ------ Cash and cash equivalent, end of period 	$ 206,042 	 $ 57,851 ======== ======= Disclosure of accounting policy 	For the six months ended June 30, 2000 and June 30, 1999, the Company 	had no cash equivalents. Supplemental disclosure of cash flow information: 	Cash paid during the year for: 		Interest	 $ 916 	$ 0 		Income taxes 	30 	30 The accompanying notes are an integral part of these financial statements. 	F/S - 4 INDEPENDENCE LEAD MINES COMPANY NOTES TO INTERIM FINANCIAL STATEMENTS - UNAUDITED Financing information presented in the Company's quarterly reports follow the policies set forth in its Annual Report on Form 10-K filed with the Securities and Exchange Commission. In accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q, and Rule 10-01 of Regulation S-X, these quarterly reports do not include all of the information and footnotes. In the opinion of the Company's management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 30, 2000 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2000. 1.	Nature of business: 	Independence Lead Mines Company ("the Company") is a corporation organized under the laws of the State of Arizona on September 16,1929. The Company is the owner of fifteen patented and fourteen unpatented mining claims. This claim group (the "property") is situated Northwest of Hecla Mining Company's Lucky Friday Mine in the Coeur d'Alene Mining District, Shoshone County Idaho. The Company's property is part of the "DIA Area" which is currently being developed and mined by Hecla Mining Company. The Company has been in the development stage since its inception. The Company's only recurring source of funds is a monthly advance royalty from Hecla Mining Company of $1,500. The Company has incurred operating losses since inception. The financial statements do not contain any adjustments which might be necessary if the Company is unable to continue as a going concern. 2. Common stock: In September 1997 the capitalization of the Company was increased from 4,000,000 shares to 5,000,000 shares. During the six months ended June 30, 2000 the Company purchased 61,000 shares of the Company's common stock on the open market at an average price of $0.49 per share. These purchases bring the total treasury shares held by the Company to 99,436 shares. [The balance of this page has been intentionally left blank.] F/S - 5 	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. 						INDEPENDENCE LEAD MINES COMPANY 						By:	/s/ Bernard C. Lannen 							 --------------------- 							 Bernard C. Lannen, its 							 President 							 Date: August 14, 2000 						By:	/s/ Wayne Schoonmaker 							 --------------------- 						 	Wayne Schoonmaker, its 							 Principal Accounting Officer 							 Date: August 14, 2000 F/S-6