Investors continue to await such details. In the interim, the Company continues to promote prospects for the new fuel. On March 26th, Silverado announced plans to develop a commercial production plant in Alaska “with federal sponsored assistance” and said that talks with foreign governments were proceeding.” But Silverado did not identify the federal agency to which it was referring or identify those “foreign governments.”
Still, the Company maintained that the low-rank coal would be processed in a “proprietary” manner “which involves the crushing and fine grinding of sub-bituminous coal followed by a hydrothermal treatment.” How would this differ from the patented process assigned to EERC in April 2000? Silverado did not say.
The Company did say that it “expected to receive federal government financial and political support shortly.” Silverado has yet to announce any federal funding for its project, but some political support has materialized. On March 28th the Company announced that it had received a letter from U.S. Senator Frank H. Murkowski of Alaska endorsing “Silverado’s low-cost, clean burning energy fuel oil substitute.” According to the Company, the letter from Senator Murkowski, who serves as Chairman of the Senate Energy and Natural Resources Committee, said that the alternative fuel project “could satisfy a considerable portion of the United States energy requirements in an inexpensive, environmentally friendly, and timely manner.” The letter also pointed out that the “ability to transform the low-rank coal into a liquid fuel will enhance the handling and shipping of the fuel to new markets in the U.S. and overseas.”
A spokesperson for the Senate Energy and Natural Resources Committee confirmed to us that Senator Murkowski had written the letter. The Senator’s enthusiasm is understandable. Any solution to the fuel crisis would be welcome. And a process that is both environmentally friendly and economical would satisfy a variety of needs.
Will the Senator’s faith be justified? Is Silverado on the brink of something special? On April 12th Silverado filed its Form 10-Q report for the quarter ended February 28, 2001. The Company continues to face financial challenges. At the end of February, Silverado’s had just $1,058 in cash – which is only a positive sign when you consider the fact that it had no cash at the end of its last fiscal year in November 2000. And although the Company recently described itself as a “major gold producer in Alaska, the 10-Q reported gold inventory worth only $17,179 (down from November 2000). Revenues from gold sales for the quarter were a meager $1,655, while the costs associated with those sales were $40,000, while additional expenses totaled almost $298,000. This includes about $40,000 paid for “management services” to a group of companies – Tri-Con Mining Ltd., Tri-Con Mining Inc., Tri-Con Mining Alaska Inc. and Anselmo Holdings Ltd. - all of which are controlled by Silverado’s President and CEO Gary Anselmo. At the same time, liabilities have continued to increase, from about $3.7 million last November to $3.9 million in February.
The Form 10-Q does not paint a pretty financial picture – a fact that was not lost on the Company’s auditors. Indeed, according to those auditors, current uncertainties about Silverado’s ability to obtain necessary financing and operate profitably, “raises substantial doubt about the Company’s ability to continue as a going concern.”
Can Silverado address these financial challenges? Since the end of February, the Company has raised $495,000 through private placements and warrant exercises, but that would put only a small debt in its outstanding liabilities. Is there more funding on the horizon, and will it be sufficient to meet the Company’s current financial needs as well as to satisfy those past due debts?
Then, of course, there is the matter of funding those proposed fuel facilities. The Form 10-Q makes only a brief reference to Silverado’s plans to develop an alternative fuel. First, it states that “[t]he Company plans to retrofit” one of its gold mills “as part of a program to create the world’s first commercial low-rank coal-water fuel demonstration facility.” Then it says that “the Company is exploring other business opportunities including the development of low-rank coal-water fuel as replacement fuel for oil fired industrial boilers and fuel generators.”
That’s it. Silverado’s lofty plans encapsulated in two brief sentences. The Form 10-Q makes no mention of any proprietary process, the potential sources of funding for the project, or joint ventures with any government, domestic or foreign. After a year of press releases, telephone conference calls and “newsletters,” the Company has little to say about the enterprise in its public filings.
Now there’s a nugget that merits consideration. |
