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Mining Finance

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MAY 20, 1940
Mining Finance
The Problem
The Mining Engineer and Promotion
The Prospector and Promotion
Promotion of Small Mines
Abuses Attending Mine Promotion
Attempts to Remove Abuses
Blue-Sky Legislatlon
Canadian Legislation
British Columbia
Legi slation in South America
New Trends in Promotion
Effect of Sew Trend8 in the United
Securities Act of 1933
Aims of the Act
The Securities Act and the Mineral industry
Speculative Features of Mining
Objectionable Features of the SecuritiesAct
Objectionable Features as Noted by the Mineral
Modifications by the Securities Act Commission
important Features of the Act as Emphasized by
The Commission
TAB1*12 OF COl'ifFNTS (cont.)
Methods of Financing
Sources of Capital
Methods of Obtaining Capital
Financing the Prospect
Financing the Operation
Amount of Capitalization
The Problem
A problem In mine finance presupposes the existence
of a -known orebody of commercial importance that can be
The solution of a problem in mine finance is
the successful method in which any responsible and honest
individual# promoter or promoting engineer# obtains the
funds necessary to carry out the exploitation of the known
ore deposit*
This exploitation may or may not return the
original investment plus adequate rate of interest dependent
upon the hazard or risk involved*
Legitimate and successful promotion fosters
development of an industry and bridges the gap between
first conception and actual operation and production*
successful promotion may be conducted by any individual#
with or without engineering training and experience*
has been customary to turn over the promotion to individuals
adept at salesmanship who might have known nothing of the
engineering phases involved and who retained a lion's share
of the capital Invested and the subsequent profits# if any*
The Mining Engineer and Promotion
mining engineer# In
former times# in money matters regarding a project under his
supervision and care# was confined to the per~ton cost of
mining and benefiolating the ore and to the amount of capital
necessary to erect the plant for operation.
The owner or
promotion group dealt with the questions of marketing the
mine products# profits, dividends'and similar financial
These financial considerations were considered
too intricate for the engineer who presumably lacked business
and legal knowledge# and were handled by others.
cost of mining and treatment#
along with erection and
tenace of mine plant is still solely the work of the
engineer# but along with that has come new fields where
his training and experience is of value.
There is an oppor*
tunity for the mining engineer to enter the field of mining
promotion and many of the individuals within the profession
have successfully done so.
these opportunities.
Present~day conditions increase
Certain pertinent facts must be known
in legitimate promotion, or true engineering promotion#
before capital will be made available for development and
The Pro9pect or and Promotion
Promoters# individuals or groups# in the mineral
industry know the Inability of prospectors or owners of
small showings to interest engineers representing mining
and exploration companies of moans.
inability is primarily due to lack of essential information.
The prospector# owner or lessee# if not an experi*
enced mining man#, must rely on a mining engineer to gather
this essential Information and to put it in presentable
The character# training and experience of the
mining engineer mu3t stand investigation as well as the
material he presents.
True representation of all conditions
to be considered should be accurate in every instance and
subject to verification by any competent mining engineer.
All estimates should be based only on facts known to exist.
Results of the entire operation should be reduced to dollars
and cents.
An estimate of any legitimate mining enterprise
when operated under competent management and controlled by
reliable and experienced mine operators will hold out in
The prospector, owner or lessee, should recognize
the fact that the mortality rate of prospects is very high,
and also that a prospect is not a mine.
The proper and
straightforward examination of a prospect requires more care
and deductive reasoning along various lines, scientific
and otherwise, than to go into a mine and check up on ore
reserves., positive, probable and possible.
The real problem
regarding a prospect involves the question of whether there
is ore or not.
Mining scouts are cautioua~-to save their
employers a loss and also to protect their own reputation.
Monied interests, on the other hand, depend largely upon
reports and statistics because of organization.
There is a
need for claim owners to curb their impatience and not turn
their rights oyer to stock promoters to handle with subsequent
loss of time and value and probable litigation.
the aversion to allowing anyone to open up their properties
results in great loss.
Promotion of Small Mines
The owners of small mines also are unable to inter­
est the larger mining and exploration companies because of
the ultimate size of the operation.
These companies are
Interested first in size even in preliminary investigation
and their time is too valuable to be dissipated on small
It may be that the examining engineer has been
experienced'"in-large mining districts or on large mines and
has a tendency to assume that production under 500 tons a day
is too small to bo worth considering.
Those guiding the
operation of large groups naturally play for safety, and this
may result In some cases to turning down good possibilities.
The large mines of the present were once small
mines and are also probably approaching exhaustion.
the disappearance of small independent mines came the
elimination of the independent consultant, which may or may
not be the concern of the mining profession.
There is the question of what can be done to meet
the growing specialization of investment solely in big prop­
Although it is a good theory that the successful
mining operation should be carried on by those best qualified
by experience and financial means, there may bo some danger
that with their assurance in financial and technical effici­
ency these groups may overreach human ability to handle
successfully ever growing intricacies.
The small operation, if it has merit, should
receive every consideration, and there are undoubtedly great
possibilitiestoday in these projects#
The small operation
has possibilities under management of engineers experienced
in the type of operation, but may be worthless under incom­
petent financial conditions#
Abuses Attending Mine Promotion
enterprises are hard to finance
at any time, and this is due probably more to abuses attending
the promotion of capital than for any other reasons•
supposes, of course, economic times when capital is available
and the investing public is not above speculation.
In former days, little was known of the mining
districts and money was raised on the assumption that every
claim staked out and recorded covered a bonanza#
The results
gave rise to many abuses which are directly responsible for
the hardship in obtaining money for mines, especially from
the general public#
The playing for stakes among the promoters
diverted the Investors' money to their personal gain, whereas
the funds should have been used on development and as working
Strenuous efforts were used to support this money
market by means of elaborate prospectuses which strained at
the truth and made many promises.
The Individuals and groups seeking capital for
mining projects still contend with the resistance built up
by the investing public because of faulty financing.
ing conditions and the world's economic affairs today are
another barrier to copo with.
Mine operators have not been
able to raise funds for assistance, and the larger mining
companies have not seemed willing to take former risks due
to marketing conditions»
Conditions during the last ten
years have brought to light the fact that when the public
funds are curtailed by sentiment, legislation, or realiza­
tion of the instability of the mines, the promoters are forced
to cease activities#
The small stockholder and speculator
invests only to realize dividends or to find a buyer for his
shares at a higher price than he originally paid#
He does
not invest with any intention of financing an industry.
Attempts to Remove Abuses
Editorials and articles have been published in the
leading mining and technical journals pleading for considera­
tion of the source of finance--the investing public—
stability, and curtailment of the Illegitimate promotion
that fleeced the Investor.
State legislatures passed
enactments within their own boundaries; often these enact­
ments were sponsored by Better Business Bureaus, Chambers of
Commerce, and other agencies of investment, bankers, brokers
and stock exchanges#
The acts served as day-to-day changes
to suit a chosen few and did not regulate the sale and
distribution of securities by a fixed law#
Blue-Sky Legislation
The first of the so-called blue-sky laws was passed
in Kansas in 1911, and all states except Nevada and Delaware
adopted some form of similar legislation by 1933.
were tvro olasses of blue-sky legislation, one to become
effective when and if evidence of fraud had been established
and on© to anticipate and foreatall fraudulent promotion
bo for© harm was done.
The California Act,, established in'
California in 1917, was a combination of the two classes of
blue-sky legislation and was considered theoretically perfect
The California Act was the basis of subsequent controversy
within the state boundaries, and it was determined that the
act was faulty in many ways.
The California Act called for
the impounding of funds until a sufficient sum had been
raised for mine development and operation.
This placed the
small mine and prospect upon the same basis as a great fi­
nancial structure.
The miner or prospector was thus forced
to turn over his property to a promoter who could finance
the expense of organization and secure a permit to sell stock
One of the important facts resulting from the investigation
of the practicability of the California Act was the decision
that the blue-sky legislation could not undertake to foresee
and prevent all the wrongs that may arise in a corporation
or industry.
Canadian legislation
The Canadian Mineral Industry attempted to solve
the problem of legitimate mine finance and to stamp out
fraudulent promotional activities.
‘They also recognized the
fact that the financing of a mining enterprise was an out­
standing problem*
Blue-sky laws as set up in the United
States had been adopted by the provinces of Canada.
imate enterprise was relieved somewhat, but, on the other
hand# illegitimate schemes were born anew and flourished
to a greater degree*
The Supremo Court of Canada declared
the b l u e s t a t u t e s wore invalid in respect to the Dominion
The province of Ontario subsequently adopted the
Security Frauds-Prevention Act in 1928, and all other
provinces# except hew Brunswick, followed its example and
placed the new legislation upon their statute books.
Security Frauds-Prevention Act combined effectively the
registration, investigation and publicity of all promotional
In the registration of securities, all promoters
and salesmen with bad reputations were sifted out,
tion of all. doings of promoters, salesmen and of financing
of companies formed at the instigation of promoters was
carried out.
Thorough publicity was thrown upon all doubt­
ful transactions, and the public or group acting as a jury
was permitted to judge for itself regarding the facts
The new statute proved to be elastic because
it was capable of covering a great deal, or very little,
It proved to be drastic because it contained
penalties that could hold or bite.
It also proved elastic
because it was moulded by experience Into very useful equip­
It enabled the provinces to control the officers and
the employers of Dominion companies who engaged In selling
securities and to investigate all such companies.
It further
proved to be of no burden to those of good repute^ and it
was, therefore, considered permanent»
( Britioh Columbia ’■.-:';
The action taken by the province of British Columbia
for protection of tho mine investor is another example of
the trend of the past decade toward stamping out fraudulent
mine promotion*
Although it was recognized that the majority
* of stock purchasers were speculators, it was deemed neces­
sary that gamblers alone wore not worthy of consideration*
The encouragement of legitimate mine promotion and specula­
tion was desired, but any transaction that traded on public
ignorance and credulity was to bo entirely suppres sed•
Experience with previous mining booms had demonstrated the
fact that it was difficult to obtain money as a consequence,
in crder to finance further mining development and exploration«
The recovery of mineral values was due entirely to the skill
of the mining and metallurgical engineers and not to the
promoters and brokers.
The government was called upon to
provide protection for the innocent investors against the
unscrupulous promoters and brokers without the enactment of
blue-sky legislacion©
The protection of the public needed
only the ensuring that there would be no falsification or
misrepresentation of facts regarding the mining project*
was known from experience that the registration of engineers
did not necessarily protect the public against incompetence
and untrustworthineas; but, as a rule, the professional
opinions of reputable engineers, based on geological
knowledge, on the potentialities of an unproven mine would
commonly coincide *
^here should be no room for wide dif­
ference in presentation of demonstrable facts, such aa the
value of an orebody which is based on careful sampling, or
the amount of what is known as positive ore.
was provided to prevent the illegitimate diversion of capital
that was made available for mining investment.
was provided by the Companies Act, Mineral Survey and Develop**
ment Act, and the Engineering Act*
Facilities were provided
through government agencies by which the investing public
could get the facts regarding any proposed mining venture.
Legislation in South America
Probably the first law to be put, into operation
with the backing of a government was the Chilean Law No. 4112,
dated January 12, 1927.
This law created a mining bank which
granted loans for mining enterprises, with capital fixed at
$40,000,000 Chilean currency ($>5,000,000) and was authorized to
issue bonds with the state#s guarantee for that sum at an
Interest of 7^ per annum, with cumulative amortization of
10$ per year,
The mining bank was created to foster the
establishment of treatment plants by means of loans when
the proved ore reserves were favorable$ to construct plants
that would use metallurgical processes or machinery already
industrially proven or that had had commercial success in
similar instances.
No loans were permitted for systems of
benefaction where a commercial product was not made, nor
for use of machinery recently Invented, nor for exploitation
of Ciinea.
wo loans wore, to be greater than $1,500,000,
Chilean currency^ except for smelters and similar plants or
auxiliary plants, where loans could rise to $3,000,000,
'tijihing bank could grant loans only
to''.mining enterprises in ^which :75^ ■of the capital was held
by Chilean citizens or by foreigners with five.' years res­
idence in the country.
fhe great difficulties that arise
in the true appraisal of a minds possibilities, with its
tremendous risks, have acted as a strong deterrent in
keeping other governments from aiding, creating, or finan­
cing similar credit institutions.
.Now Trends in Promotion
ihe political and socialistic trend of the past
decade brings 3to attention the fact that the old order of
raising money for mining projects is disappearing and in
the future the investors must be given a square deal and
an equal chanco with the owner and the broker.
Ihero will
be phases of the old order in existence in the future to
some extent, but, by eliminating the old abuses, the public
will invest in legitimate mining operations,
fhe new order
will/create its own abuses which in turn will need to be
The mineral industry will always have the owner
who wants to sell for exorbitant prices, or who insists on
heavy cash payments which always burden mining enterprises,
or who expects someone to pay him for taking a chance in
developing his property,
’fhe greatest risk to the miner
is in the fact thati if his proposition is not of value
and is consistent with the hazards of the project, he will
find few buyers.
Property owners, promoters, and organizers should
get together, anticipating and insuring tho greatest co­
operation of each group toward the development and production
of mineral resources *
Shares should be divided justly among
owners, promoters, and the investing public, with all
finances obtained to be used on tho property, and with
everyone waiting until the enterprise succeeds before
dividing any, returns.
Sffeot of hew -.Trend's Irv the United dtatea
the United htate3 have been
keenly aware of the political and socialistic trend.
recognized the fact that the attitude of the public with
regard to the Qnllsting and soliciting of capital for new
and old ventures had changed greatly during the years
folloviring the finahclal collapse in 1929, and that in our
form of government the public must be given the opportunity
to take a largo share in the development of industry,
public froze to the offering of gilded stock certificates
based upon free andunlimitod Coinage.
Past experience' had
proved that tho blue-sky legislation could not copo with
the fraudulent promotor and, in fact, granted him more
leeway for his operatione.
Securities Act of 1953
'fhe United States Government in 1953 passed the
Securities Act*. By the. passing of this act, the means
appeared available for cleaning up some of tho abuses of
our methods of raising capital for industry*
This new
'-Securities -.'Aovi; -inras. modeled after the British Companies Act
of 1900*
The losses suffered by the public have been duo to
.■ ■■■'
worthless securities
that were based upon unsoundcalcula­
tions and mismanagement*
The Securities Act makes possible
a greater degree of protection than formerly existed for the
uninformed investor*
It has been felt that the public have
long nursed the thought that the officers, directors and
financiers of industrial organizations have hesitated to
assume the.responsibility
the enterprises that
of determining the
they manage or sponsor*
Aims of the Act
The Act aims to make available all necessary
information toward the legitimate promotion and development
of a project so that the interested parties, public, and
sponsors are able to draw up a contract*
fere with private financing«
It does not inter­
The province of the Act is
where the mails or instruments of interstate commerce are
employed, and where the corporate offerings through salesmen
and investors are removed from the state of operations*
The fundamental principle of the Act, that investors should
be partners in the enterprise and as such are entitled to
such information that will let them know of what their part­
nership consists, is essential to any sound program of
corporate finance*
The Securities Act and the Mineral Industry
The new Act is of special Interest to members of
the mining profession and those active in the industry.
Scientific mining, based upon truth, has little to fear from
the Act.
Although the liability encompassed in the Act
seems to be all-inclusive and thus draws criticism, the Act
itself is a most constructive piece of legislation toward •
the encouragement of legitimate mining enterprises«
'the provisions of the Act, the mining engineer and associ­
ated experts cannot help but assume a new position of
prominence within their own industrial activities.
new legislative act will probably limit the extensive booming
of prospects and rich finds in old workings.
The financing
of operations may be delayed, for funds will not be available
until after the prospective buyer of the securities has the
facts and perhaps weighs the hazards*
Speculative Features of Mining
The development of mines is a highly speculative
venture*and there is no possible way of reducing the specula­
tive phases by passage o f fany law*
These speculative phases
are based upon the physical properties of any mineral deposit
The expectation of determining all of the truth about a mine
before development and subsequent operation is very alight*
Due to tho speculative features of mining, mining finance
possesses different characteristics from those that are
usually present in ordinary industrial financing.
In tho
average manufacturing industry, the industry deals with tho
problem of the successful distribution of the product as its
major difficulty, while in mining the discovery and develop­
ment of a source of supply is its first consideration.
The emphasis on the continuous need for new b rings
about the element of speculation different in character than
that found in other industries*
of course, the speculative
element is less in the developed mines but remains as an
important item.
This fact emphasizes the need for adequate
exchange Of information between the management and the in­
This need increases dlreotly in Importance propor-
tionately as the speculative phases of the projoct increase•
The Securities Act Commission has as its problem in the mining
field the preparation of the exemption for the small public
offering in its most practical and desired form and, second,
to fit the mechanics of registration to meet the needs of
the industry.
Is the Securities Act workable?
Dike mo3t every
other legislative experiment in the pa st ten years , it has
••'.•vbad.'•'-runv the'' gauntlet- of ■ very skeptical and wary In­
dustrial leaders.
There has been a great deal of criticism,
from the legitimate sponsors of industry as well as the
fraudulent promoters.
The technical journals in all
Industrial fieId 3 have carried comments from operators and
professional men, these comments both for and against the Act.
In the light of its being the child of political groups as
well as a renewed effort to "protect the public", the public 1s
attitude has been,.■"What.1s wrong with it?" rather than, "The
idea is good, let*a curtail its possible abuses and make it
Objectionable Features of the Securities Act
it was noted in the first period of its life that
only a very small percentage of those registering with the
commission ever tried to comply with the requirements of the
That fact can be answered with the assumption, first, .
that the requirements were too rigid, and second, that a great
number of the applicants were promoting Illegitimate enter­
prises and were wary of probable effective penalties.
is no doubt that the requirements needed modification,
especially when certain industries, such as mining, were
Certain standards can be set up, but a blanket
measure is seldom practical for the good of everyone.
A fundamental objection was the apparent action of
the Commission in actually and unmistakably approving or dis­
approving the merits of a security without openly assuming
that responsibility.
This appears to be outside of Its
province, for the principal aim of the Act is to present all
necessary Information to investors so that they may enter
Into the contract with true knowledge concerning the enter­
Day-to-day changes to favor certain groups are not
in order#
To give the burden or responsibility of passing
upon the merits of any enterprise to any governmental’regu*
latory body is too dangerous to be even considered as within
the jurisdiction of the most paternalistic government*
Among other objections are the delays in administration and the inability of individuals to gather the data and
prepare the presentation without aid of counsel.
This, gather­
ing of data and its presentation offer difficulties to many*
but it insures the use of the services of trained and
experienced engineers who are better equipped, as a rule,
for this task*
Objectionable Features as Noted by the Mineral Industry
How has the Act been received by the mineral
it was to be expected that many individuals were
either for or against it*
Those against it possibly received
more attention, and their objections were given greater pub­
Their objections are worthy of note*
The Act as
administered does not assist legitimate financing of mineral
properties because of too many stop orders.
There should be
no attempt of the Commission to fix a value on any undeveloped
mining claim or to pass judgment upon its true worth*
members of the mineral industry reserve this right because
of their training and long experience in considering the
economic phases of such a venture *
The registration form is too comprehensive, asking
too much information that is too detailed and technical.
The registration statements as required give too much space
and emphasis to details to which a wiae investor attaches
little, if any> imp6rtahce#
.These, statements are of little
value and of great dangers, ad they may misrepresent and set
up false standards•
Tho p*eparation of the statement of
registration is too dlfficult and too expensive.
The legitimate distributors of securities are
afraid of the law, as there is too much responsibility
attached to it to undertake the distribution of a speculative
security ilk© avprimary mining issue.
The responsibility
of the Mundefwriter11 should be lessened.
Complaints are numerous about the administration
of tho Act along with its delays and the application of the
There arises the possibility of too much power
in the Commission,with more and more power sought.
gives rise to a bureaucratic form of governing which is not
ajCceptable where individual initiative has long been in
Although it was noted that the public was getting
a1 run for its money In the stock market for the first time
in history, many active in the industry are discouraged over
tho outlook for financing primary mining ventures.
Modifications by the Securities Act Commission
Tho Securities Act Commission with the collaboration
of mining exports undertook a modification of the registration
Rules were passed exempting from registration
the securities whose offerings were in amounts of less than
A new form, the A-O-X, which applies to every state
| in the U n i t e d s t a t e s , Canada, Mexico,, and South America#•
was^ adopted ;tc> comply with features as found in the mineral
fhe future will, no doubt, bring about more
changes and modifications in the administration and the re*
quirements for registration to make the Act more v/orkable*
Important Features of the Act as Emphasized by the Commission
The Commission insists that a security, to be
registered, does not require the approval of 'the. Commission
regarding its" merits.
The Securities Act was. adopted to
regulate Interstate traffic in securities, and tho inconveni­
ence encountered is outweighed by the conservation of capital*
The Act is a democratic statute whose object is to got the
facts to the investor, the man to whom the securities are
offered, by which he can form a judgment as to whether or
not he will buy the security offered him*
The requirements
for registration still remain, that full and frank disclosure
of facts.must be made to the investor for investment purposes*
Methods of Financing
Very few mines finance their own development, and
at several stages in the development there may arise need
for more and more capital*
To obtain capital one must know
the usual sources of capital and the methods of obtaining the
capital from these known source a »
Sources of capital
There are six very common sources of capital*
six sources are t
Personal friends
' 3#
Established raining and exploration companies
Investment bankers
Stock brokers
Present shareholders*
Methods of obtaining capital
The sources of capital listed above may release
funds through six very common methods*
These six methods ares
Selling.shares by direct personal contact.
Offering pf shares to public direct*
Optioning shares to bankers or brokers.
Offering rights to shareholders*
Assessing shareholders.
; 6*
Issuing bonds through bankers*
The proper understanding of the availability of capital with
its subsequent release for an enterprise may be enlightened
by dividing mining operations into two distinct classes*
These two classes a
The prospect which needs development#
The property that needs equipment# plant#
further development and working capital#
Financing the prospect
ay finance a prospect by following a method
that was very common in the early days of grass-root dis­
Let us take# for example# a discovery of rich
ore outcropping on the surface# and discovered by a prospector
who has financed his own grubstake#
After making the proper
location# the prospector remained on the property until hia
supplies were nearly gone# working the deposit from the sur­
face and extracting the high grade ere#
Journeying to the
nearest recorders1 office# he would properly record his find
and sell the high-grade material he had packed in#
to his claim or claims with new supplies# he would continue
to work the high-grade and sack his product for another trip
to his base of supplies#
Following this method# he could
retain complete financial control of his project and be
sole owner and manager# employing more men and installing
more equipment to further develop the project# which was
continuing to pay its own way#
As long as the owner could
set aside a certain part of the return against a heavy and
sudden demand for capital# he could carry on without additional
This property would then enter the second elasslficatlon#
that of a proved property# and would sooner or later need
more capital if production was increased#
'Hbturning^Ato'^our' discovery# we will consider the
prospector whp has been grubstaked by another individual or
group of individuals#
After properly locating his find and
extracting an amount of the high-grade# the prospector would
journey to the nearest recorder and then to his base of
His backers would form a small company and then
investigate the discovery to determine the conditions neces­
sary for further development,
Because of the necessary
sharing of the discovery# a partnership or preferably a
small company would be formed in order to immediately develop
the property to bring It tc full production as rapidly as
Should the grubstake group have very limited
'■ • ■
finance available# the entire group would need to turn over
a part of the control and obtain the money by borrowing from
friends or investment bankers# or by selling shares direct
to the public#
Whereas the invidivual owner may find it pos­
sible to finance the.development of the prospect by means of
the returns from the high-grade because of no division of
the profits# the larger group needs greater capitalization
because the division of profits allows only a part of the
returns to each individual backing the project# which further
limits the amount set aside for further development#
it was considered that the greatest prof11 from exploitation
of a mineral deposit could be realized by bringing it into
maximum production as soon as possible#
D u e t o present
government regulation and legislation, especially with regard
to taxes, this principle should be reconsidered*
The above method of financing has faded from the
records along with the scarcity of high-grade deposits# un­
limited market and bonanza districts.
It may be possible to
finance very promising prospects in such a manner even today*
but conditions which make It likely are too unfavorable•
an individual or small family are content to live under very
meagre conditions, they may retain entire control of the de­
posit and extract just sufficient for a day-to-day existence
with the knowledge that the deposit may fail in value at any
This sudden loss of value may be due to geological
conditions such as pinohiiig out of the vein, barren areas in
the vein over undetermined distances, or loss of vein by
faulting *
Lack of development and established reserves would
result in a complete shut-down until new capital could make
continuation of the ops ration possible#
A method of financing the high-grade grass root
prospect has been considered.
Now let us turn to the low-
grade and the promising prospect#
The method of financing
either the low-grade or the promising prospect is essentially
the same in its primary stages of development, so they will
be considered together*
The prospector, after locating an area that exhibits
mineralization and evidence of natural concentration of
mineral content that promises existence of a commercial ore
deposit, records the location at the nearest recorder9s
The assay returns on his.samples packed in showing
only low values, the prospector realizes that he must have
aid in deveiopihg his property or else sell outright all
claim to title-and piossible future profits.
cr M s
grubstake backers, when such a group exists, have a great
deal of capital available, they may carry on the preliminary
Rather than risk all of their own private means
in the speculative venture, they will form a syndicate or
•company and share their returns for a return sharing of the
|risks and hazards#
Financial aid may be obtained from investment bankers
or banks#
In the case of new mines, investment bankers and
others in control of large sums, will decline to furnish the
necessary capital due to the high speculation involved.
Established mining and exploration companies are organized
for the purpose of developing new prospects, but unless the
properties present possibilities of large scale operation
in the future, they are not likely to enter a contract #
development of the project will heighten the interest of the
larger monied groups#
The formation of a company with the
issuing of securities to the public and permitting large
numbers of small investors to share the hazards and the
profits la the most common means of obtaining the necessary
The aid of a mining engineer or one who by training
and experience is capable, is necessary in determining the
future earnings, if any, of the discovery#
'The preliminary
examination and development proving favorable and warranting
further expenditures for continuation, the owners are now
ready for the more extensive development that will eventually
bring the enterprise to full production.
promising prospects and low-grade
deposits requires great care in planning, financing and manage*
Very few mines, if any, are able to receive sufficient
capital for operation except by the formation of a recognized
form of business organization such as a syndicate, company,
trust or corporation#
Mining conditions today require the
expenditure of a great deal of capital before profits can be
The exact point in the development of a prospect
at which it passes from the merely promising prospect stage
to the proved property is hard to define#
As soon as. com­
petent engineers can establish minimum ore reserves, cost of
production#and the life of the mine by estimation, the item
of speculation is reduced somewhat#
We are now ready to
consider the financing of the two types or classes of mines,
for the methods are essentially the same.
Financing the operation
Various means of financing the operation can be
used, assuming that tpe prospector has made and recorded his
find and is now seeking financial aid#
A few of these
methods follow#
Example A#
After the discovery, duly staked and
recorded,3 the locators release the property to a larger
group on an option basis; the option to provide bash payments
plus a small interest in the company, and to run for a def­
inite length of time#
The larger group has sufficient
capitalization bp guarantee and to carry out the preliminary
exploration and development work.
The development work giving such unusual results,
the capitalization was increases and a number of shares of new
stock were exchanged for each of the old shares.
In order to
finance the mine plant proposed, the shareholders were given
an opportunity to purchase more shares, one share for a cer­
tain number of shares held.
A further sum was raised by the
issuing of gold bonds due at a specified date.
The operation
progressing made possible another increase in capitalization,
end again stockholders could buy one share of the new issue
for a certain number of shares held.
Later, and before the
retirement period of the bond 3 , rights were again issued per­
mitting shareholders to purchase on a new ratio, the purpose
of this issue being to retire the bonds.
At no time had there been a public offering of the
treasury shares.
After the shares were listed on the Stock
Exchange, those interested could sell their holdings to the
The issuing of the rights to purchase shares permits
fairnoss between all of the stockholders«
No underwriting
was necessary and the underwriting cost was eliminated.
is necessary that there exist a good, market for the shares
to raise funds by this means.
The market price for the shares
must be above that of the price specified in the offer to
shareholders to provide an incentive for exercising the rights
Example B.
After the discovery, duly staked and
recorded, the locators interest an established mining company
which agrees to develop the property*
The finance for proving the property was provided
directly by the mining company*
Development continued for a
number of years and considerable tonnage was proved.
An ex*
ploitation program having been mapped out which involved
tremendous capital, the mining company decided to have the
project underwritten by banking interests*
Convertible bonds
were floated with an authorized capitalization of a number of
shares , of which the mining company owned half.
The float­
ing of the bonds was made possible by the prestige of the
mining company and the banking syndicate*
Because of a deferment period before any dividends
from the operation could be expected, it was decided to
offer convertible bonda to the public instead of stock.
Example C »
After the discovery, duly staked and
recorded, the locators interest an established mining company
In the property*
The owners had considerable experience in
mining and had great faith in the possibilities.
Not wishing
to release the title of the enterprise at some future date,
the owners would not offer It on an option basis.
A contract
was entered into between the owners and mining oompany on a
long-term basis, long enough to exhaust the mine.
Under this
arrangement, the mining company was given exclusive control
ana management of all operations#
profits were divided
between the parties of the contract on a percentage basis
previously agreoQ updh*
Thl^s method permits a mining
company to obtain control of a property without a large
Initial expenditure in acquiring title*
To the owners it
provides for a sour ce of capita1 along wi th good management
and eliminates the possibilities of difference among the
owners regarding the operation*
Example D,
After the discovery, duly staked and
recorded, the discoverer, having confidence in his training
and experience, undertakes to promote the mine*
a companyI the owner retains one-fifteenth of the number of
authorized shares 'in exchange for the claims.
The remainder
of the claims were sold to friends, neighbors and acquaint­
Professional fees, service fees, and wages were paid
for with shares on the basis of current prices*
assessments were levied and a good proportion was paid*
shares on which the assessments were delinquent were sold
After a period of discouraging work, it was necessary
for the owner-promotor to mortgage all personal property to
Before all of the new funds had been depleted, a
rich body of ore was struck, which solved the financing of
the mine*
Initial dividends were paid a year later*
This procedure of raising finance was commonly
used many years ago, but Is little used at present*
financing of mines by assessing the stock is fraught with
many dangers*
It permits the practice of selling short by
It also provides for suppressing good news,
levying an assessment and freezing out discouraged share­
holders and ones that could not afford to pay the assessment*
Example E#
After the discovery, duly staked and
recorded, the looators sold the claims outright to an exist­
ing company#
This company developed a considerable tonnage
and could not carry out the financing of the subsequent
development and production#
A large mining corporation
acquired 70 percent interest and sublet 55 percent to a group
for a cash option price#
The new group formed a syndicate
to finance the further development of the project*
After a
sufficient sum was spent to warrant the exercise of the
Option, the ayndlcate purchased the original company’s 30
percent interest and transferred 35 ye rcent interest to
another mining company*
The corporation retained its 15
A company was formed and 40 percent of the number
of shares issued, of no par value, were retained by the three
interests promoting the project*
Shares were sold to the
public and the public paid four-fifths of the capitalization
for three-fifths interest#
At a later date, the capitaliza­
tion was increased and convertible gold debenture bonds were
issued and underwritten by a very prominent banking company*
These bonds were almost fully subscribed by the shareholders,
at par*
This method illustrates the ability of widely known
and influential. mining interests to finance worthy projects#
Example F#
After the discovery, duly staked and
recorded, an exploration company undertook to develop the
property under certain terms#
A holding company was formed
with one-fifth of the shares going to the owners in payment
for title to the property*
The exploration company took
an option on the remainder of the shares divided into blocks
of equal number of shares#
«Vhen a block is taken down, the
money goes into the treasury and is expended in development
under the direction of the exploration company.
A minimum
must be spent monthly and a minimum must be kept in the
An additional block must be taken down and paid
for when the bank balance falls below the minimum.
to do so automatically calcels the option, with the explora­
tion company retaining the shares representing its expendi­
Under this method, the original owners retain &
20 percent interest v/ithout making any expenditure other than
that in acquiring the claims*
Amount of Capitalization
The amount at which a new company is capitalized
is a factor of utmost importance*
Every company beginning a
project needs sufficient money to carry out its purpose.
mining, the purpose would be to develop a mineral deposit
with later production that would enable the investors to share
Engineering estimates are the basis on which the
amount of capital necessary is determined#
is determinedonly by accident*
The exact amount
It is common practice to
capitalize for more than the amount necessary, but overcapi­
talization is very dangerous#
Reserve funds are necessary
to cover ©mei’goncy or unforeseen expenditures# and surplus
cash can always be returned to the subscribers#
top much of the capitalized value for promotional or inter- ,
mediary profits is known as "stock-watering” .
This form of
overcapitalization is greatly in disfavor and one of the
principal reasons why mining finance is not readily sold to
the public #
If there is any suspicion that a company is
overcapitalized# financial support will be difficult to
'* -
Insufficient capital will not make a mining project
Whenever a group operates on this basis# it
must realize that a drastic refinancing program is inevitable
Many mines fail and are labeled as bad possibilities because
of abuses attending lack of money.
Niggardly development
programs# low wages# unsafe practices# ill feeling, local
prejudices# and many other factors arise from insufficient
Kow much money is going to be needed for the neces­
sary work?
During the stages when a mine requires financing#
there is often no background of actual costs of mining and
milling# no
recovery records# no established earning power
nor tangible fixed assets.
Engineering valuation will estab­
lish certain amounts that are based on common practices and
cost comparisons of similar undertakings.
All mining pro­
jects are individual operations with unforeseen factors#
nature of mining must be understood and allowed for#
Upon what principle, if any, or upon what basis
should mining companies be capitalized?
There are three
common basbs for capitalization that are utilized in practice
as follows!
y' ■ ■
Basis of earnings
Basis of cost
Basis of capital requirements*
. -v
Are earnings a proper basis of capitalization?
the outset of the enterprise, actual earnings cannot be
accurately calculated.
After a body of ore of reasonable
amount and grade has been proven, the earnings are so large
that dividends can be paid upon a huge capitalization.
Earnings, of course, are dependent upon such economic faotors
as metal prices, marketing facilities, competition, and
others but will have a proportionate chance, all things
being equal.
Earnings as a basis for capitalization will
function better when development work has progressed to the
stage wpere* production can begin,
is the cost of the mining property a better basis
i of capitalization?
If costs were taken as a basis, it would
be impossible for a mining man to secure control of the com*
pany ho formed and at the same time make its capitalization
large enough to provide the finance for its development.
The tendency to reduce the purchase price to a minimum when
in the market for mineral properties is good business on the
part of the buyer.
Should the buyer obtain the property at
his price and then capitalize on that basis, he may have
insufficient funds.
Should he pay an exorbitant price and
then capitalize on the amount of the purchase, ho will overcapitalize.
The question of earnings versus coat as a basis
of capitalization is brought to attention.
earnings as a basis is better than costs as a basis.
should never put into the operation any amount that he would
hot receive back plus a fair interest during the life of the
Costs as basis of capitalization may be satisfactory
in the organization of ordinary commercial and industrial
companies, but it is not satisfactory in the promotion of
Is the basis of capital requirements satisfactory
in the capitalization of a mining enterprise?
Capital re­
quirements of making a mine probably enter into the calcula­
tions more than any other factor when computing the capital*
It is customary to look ahead from the time of
discovery of the deposit to the time of full production and
to determine the financial requirements of the operation.
The discoverers or the group with title think it necessary
to retain the majority share interest in the organization
If a large block of stock is authorized, this group
w i l l cause to be issued to themselves one-half or more of
the total capitalization of the company,
'This price of
fully-paidup shares Ia pure stock-watering.
tion is thus presont at the outset.
If the raining operation
is divided up into the different stages of its life, capital
requirements will bo the best basis for capitalization.
The mining operation can he divided into:
(1) the grub­
stake stage, (0) the surface drilling, trenching and
development stage, (3) the proving-up stage, such as shaftsinking, drifting and cross-cutting, and (4) the production
By calculating the capital requirements for each
stage and organizing a company with that amount in Its
treasury, a sufficient amount will be obtained that will
be a minimum.
To control the operation, one-half of the
capitalization would be issued to those with title*
attaining each successive 3tage, the pa?©ceding company
formed would be reorganized by selling out its assets to a
larger company of its own creation.
By this method, each
investor receives a return in proportion to the risks he
takes and obtains ah Increasing return with each successive
/The original owner retains, throughout,
sufficient control of the company.
The best plan to follow in financing a mine would
be to capitalize on its early stag© requirements, and after
the mine has been proven, capitalize on its future earnings
Mining proper
that require development involve
•-"the./8peou^atlvev:eXemeht-;''tO' such a high degree that careful
financial planning is absolutely necessary.
Faulty financing
has and will be the cause of the inability to secure capital
for valuable properties, while the questionable properties
draw more of the public money than their prospects justify.
There are three factors that determine the success
or failure of any ordinary new business adventure of any kind
These factors in order are:
Competitive conditions and possible chances
in the field to be entered.
The energy, efficiency, and good intent
of the management.
The financial set-up of the enterprise in
relation to the capital demands of the
business and the proportion of the profit
going to the different classes of investors
and to organizers.
Mining enterprise demands more than the above factors.
must be an available body of mineral of such dimensions and
value that it can be made into a mine.
For successful mine
financing, there is no substitute for careful examination and
conservative reports to insure the presence of such available
body of mineral,
hue to the great loss from commencing
operations without adequate capital, no project should be
undertaken until that adequate capital is available.
Th© ownors and legitimate' promoters should receive
a fair reward and th© investing public should receive a
reasonable return for
By protecting the public
and rewarding the prospector and small operator and making
it easy to obtain;money, the value of our mineral resources
can be released for the good of all*
Property owners look
askance at the new Securities Act, while the promoters are
bitter against it*
All this Act asks is that all facts be
put on record and made available when any enterprise is set
up for financing*
The Act will become workable as the light
of experience modifies its provisions*
There is no legist
lative cure-all that will protect the public from its own
lilning operations may be divided into two distinct
classes for financial consideration*
These classes ares
The prospect that needs development
The property that needs equipment, plant,
further development and working capital*
As very few mines finance their own development,
the promoter or owner must contact one or more of six common
sources of capital*
These sources ares
Personal friends
Established mining and exploration companies
Investment bankers
Stock brokers
Present shareholders*
The sources lieted above may release funds through
the six common methods*
These methods followt
Selling shares by direct personal contact
Offering of shares to public direct
Optioning shares to bankers and brokers
Offering rights to shareholders
Assessing shareholders
Issuing bonds ."through bankers*
The established mining and exploration companies*
it appears, offer the best source of capital* whether for
the prospect or the proved property*
This is due to the
complexities of modern mining with a large initial expendi­
ture necessary before profits can be realised*
legislation until modified also apjeears to favor these com­
They are better able to undertake primary mining
ventures because of the lack of public funds*
qualified by experience and ability*
They are best
These companies* however*
may turn down many promising prospects because they are so
entrenched that only the large ops ration is worthy of their
Competitive conditions under normal times Will tend
to enable the owner to obtain favorable terms*
The monop-
ollstlc tendencies of the companies have restricted the
opportunity for the speculative public to participate in
big profits* but they offer advantages also*
The exact amount of capitalization for a mine is
often difficult to determine *
Haw prospects offer little or
i no background upon which the capitalization can be ha god*
I trho proven rain© of for a mono Information regarding its future
| earning power, and this will serve as a "basis for its
Both overcapitalization and insufficient capital­
ization should: be shunnod*
The faults of both are many, and
many worthwhile projects are labeled as Impossibilities as
a result.
The basis of capitalization may be divided into
threegroups which are in common use#
They are:
1. ;:Basis of earnings
Basi3 of cost
Basis of capital requirements.
Of these three groups> the basis of capital requirements is
the best for mining enterprises.
Overcapitalization is com­
mon upon this basis., but if the raining ops ration is divided
into stages and the requirements for each stage calculated,
the danger is absent.
Basis of first cost may be satisfac­
tory for many industrial organizations, but it is not
successful in mining.
Basis of earnings is satisfactory far
i the proven mine> but not for the prospect where a large
development program must be undertaken.
•f l V
Bailiet, Letson 'financing for Exploration" Mining
Review Vol. 32, pp. 19-22, February 28, 1930.
Benitez, F. "Chilean Government Pioneers in Providing
Financial Aid to Mining Industry" Engineering and
Mining Journal Vol. 126, pp. 574-576.
Carstarphen, F. C. "R.F.C, Loans for Mining"
Magazine Vol. 25, no, 8, pp. 13-16.
Carstarphen, F. C. "Securities Act of 1933 as Applied
to Mining” Mines Magazine Vol. 24, no# 2, pp. 21-22.
Crabtree, E. H. "Presenting Mines to Buyers"
Mining Journal Vol. 16, no. 21, p. 3.
Gage, H. L. "Financing Prospects and Mines” Arizona
Mining Journal Vol. 15, no. 12, p. 7 and 36.
Johnesse, F. E. "Difficulties of the Mining industry"
Arizona Mining Journal Vol. 20, no# 22, pi 7.
Lamb, H . Mortimer
British Columbia"
pp. 962-964#
"Protection of the Mine Investor in
Canadian Mining Journal Voli 49,
Landis, J# M. "Mine Financing as Viewed by Securities
and Exchange Commission" Mining Congress Journal
Vol. 22, no, 12, pp. 11-13.
Lovelace, M. B. "observations on Mine Financing"
Arizona Mining Journal Vol. 18, no. 3, pi 5.
Mathews, Philip S # "Practical and Legal Aspects of
Mine Financing (California)" Mining and Metallurgy
Vol. 17, no. 352, pp. 193-195.
Modification of the California Securities. Act— Report
of Publicity Committee, Southern Chapter, California
Mining Association. Arizona Mining Journal Vol. 14,
no. lo, pp. 5—6#
Neff, H. N. "Application of the Securities Act to the
Mining Industry" Mining Congress Journal Vol. 24, no.
2, pp. 64-67; no. 3, pp. 47-53 and 65#
Oke, Major A. Livingstone "Finding Capital for Small
Mines" London Mining Journal Vol. 191, no. 5231, p. 875
Parson, A. B* "Financing Prospects and Mines”
.1.1'.:^:• Seriesr Choice of Methods in Mining and
Rogers, A. W* "Effect of Security Fraud-Prevent!on
Laws on M n i n g Finance” Canadian Mining and Metal*
lurgical Bulletin Mo# 243, pp. 386-392.
Silverstein, Harry S. "The Federal Securities Act
and its Effect on the Mining Industry” Mining Congress
Journal Vol. 23, no* 6* pp* 17-10 and 46*
Stirrett, J. R* "De-Wataring Mining Stocks * A
Proposed Means of Avoiding the Present Over-Capitali*
zation of Mining Prospects under Development”
Canadian Mining Journal Vol# 51, pp. 365*366*
Warner, Robert iC* "Weighing New Offerings of Mining
Securities” Engineering and Mining Journal Vol* 136,
pp. 500*501#
Incorporated under the laws of the State of New Mexico
164 shares capital stocks-no par value
The Royal Turk Mining Corporation has registered the
securities by filing certain information with the commis­
The Commission has not passed on the merits of any
securities registered with it*
This prospectus omits certain of the Information contained
in the Registration•Statement filed with the Securities and Ex­
change Commission.
Items of information which are thus omitted
may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the rules and regulations of s
the Commission*
413 Electric Building, Billings, N. M#
60S Midland Building, St* Paul, Minn*
September 11, 1939
0 F
P H 0 S P E C T u s
Acquisition of Property*•* * *••»•**••*•••••**«•.••*«*••••56
Annual Ropor ts> ••«•»*•*•* • ••*••**•««••••» •***•*•***••*•«00
Attorneys • ***.*• »* » *** * *;•** * ** • •*»*»•*••» •• •• *••***••**•* 67
Audi tor ?s Cer tif lea to •«»• • *• •* * ••• *«•»*##•**•*••*•••••*• 74.
,Capital Securities«• •••»•••»•••••• •* •*■"•**•*■••***••*•**.**66
Cost of Socurlties to Owners••*»*•**••««••*»«••»••••«••• 44 ^
Description of Project••«•«•••••••••••»••••••* ** #* *** *••45
Difference Between Cost to Promoters & Book V a l u e •.•55
Distr ibu tAon of Securities«»•••••••••••••«••#••*•••••••• 59
Es timated Cost of Exploration and Development ***••*•**•*63
Experts named in Statement
Financial Statement*••****•*••*«*••*••**«***•»**»*••••**60
.Legal'Matters **•*•««•*»#♦**•••*.#.*-•■•■••***•*•**.••«•'•••*•••67
Management and Control**• **••*'*«•*••*•***•*•**• *««••*#•*65
present Status of Property******* *•«••••* *********« * **« *58
proceeds of Securities Being Registered* *«•*«•**•« *** * * *44
Promotion* ** * ** * ** ** * * **•***•••*•••••*••***••**••••*•**•62
Pr oniotor s S t ook **«***«*•* »•*•** ** «**••*•** «**»**»* *««** *54
Property««* *** * ** ** * •• »««*•«*•* .♦***,*•••**«•*©«•***•«*•*• 57
Proposed Program of Exploration and Development**•••*»•*61
Provision for Return of Investment* ***********«•«••«•*»*64
Purchase of Equipment #*.*••»»« *•««•*• t,#***** *••***»*«••• *59
Test of Materials«* ** * **** *«* ** **••••* **••»«*•«*••* ** * **61
Terms of Offering*•*•••*•*••*••******••••••***••••**•»•*62
Per Unit
Net Proceeds to registrant from
securities being registered,•.1,186,398*00
.75 (estimated)
Underwriting discounts and com*
.25 (estimated)
Other expense of registrant in
connection with sale of secu­
rities (See Note). . « « 0
Price to theoPublic*#*.•......••.1,581,864.00
1.00 (estimated)
The selling agents respectively are to pay all costa
of sales> Including prospectuses, which will be furnished by
the registrant, and the coat of same will be deducted from
each individual a g e n t * s 2 6 ^ commission aa paid, each paying for
what he received*.
Set forth in the following Table is the effective cost per
unit of securities of the registrant to the persons or classes
of persons therein indicated #
(Col. A)
: :
(Col. B)
f v:
No. of Units
Public (in this offering).. •* 1,581,864
Eff. Cost
Eff. Cost
Per Unit
Promoters (Names)
J. P. Sperry & Assoc# ......... 1,600,000
J . F . Sperry«.* * • • . > •
J . s' • S
Oliver Ebert.................
: 0 li fford John son.....•. ......
2 ,324
Sullivan 1 Riebeth....«.««•«.
0. C . Coulter•.«.••■....««..«
Ebert & Company .«. #■#. ##»#«* •• 1*000,000
''Vi*dor# alters
). •7
7. None*,'-''
;:Ea.Oh "other 'Par ty7or Ola a3;
(Cash sales only)
'Soe. ;H0gIstratIph':''Stat@meht**> # •
for nahas'/.:'
'■ ,;Total
. .♦.#.#*** ♦#4,340, 000
7'7',*Of:■'these, :'06*OSO shares were' Issued in lieu of cash but wore
■■limluded as .boi^'vsoid-for cash under ins true felons from, the State
■o f ,Now.. Moxio6*Cv'|.v"
Gold .;haa booh; icriown to exist In the'Big Horn Canyon of N o w .■''
■loxico :for
ly ioiotm*
years,:'.but its extent and value wore ©ixly vague**
PuringthO' year a 193-5 and-1936# a group of' ©eh assom-
;bled a ; group.;o f .mining.-claims:principally along .the west bank- of
:the .Big.:-'HornvBlver, comprising apppoxiraatoly 1700 acres, and
another group ;lhm1937 obtained a .mining lease- -from the Crow
Indiana approved by the M * 6 ♦ Bepartment of the interior for
about 1466 acres principally on the east bank*
This lease was
to fun ten years from July• 1937, and provided a .bonus of ten;
;cenfca 7per;#r re ,;ahmxaiiy;;plus a royalty of -thirty per cent of >-all g old:mined, wifch cancellation by the Secretary of the Interior possible on. thirty, day.® notice, if-.paymenti oroperatlona
are hot satisfactory* to date, exploration work has kept this
leaae currently in force*
7-The Royal Turk lining Corporation was organized October 7,
1936, to take over the Interests of both groups and to carry
out the necessary financing, exploration and mining operations*
Stock was issued to both groups who- served as the promoters on
the basis of values established by the Directors of the Corpora
tion who were, of course, also its promoters, receiving their
2,600,000 shares of stock on the basis
$0.03 which seemed to the Directors
of a cash equivalent of
to be reasonable under the
The property is located about forty miles south of Billings,
New Mexico, extending north and south along the Big Horn River
for approximately 131 miles and crossing the State line into
^olorRdp between 0. S. Highways 310 and 87.
No good roads serve
the immediate area and access to the canyon la possible only
by water at both ends, one of which
la near Kane, Colorado,
and by land at about three points.
Several preliminary investigations have been made by en­
gineers and geologists, but they are not conclusive nor do
they warrant a statement, that gold is present in commercial
The engineers stated that the Corporation should
first carry on exploratory work to find gold in commercial quan
titles and then plan on the purchase and operation of a ladder
dredge, .
The Crow lease required that actual efforts to recover gold
tie made by September 10, 1937, and accordingly, limited drag
line and wash plant operations wore started.
These1 operations
have continued intermittently on a small accessible area, but
no profitable gravel has been found.
Core drilling equipment was purchased September 2J& 1937,
drilling was started October 18, 19$7, and 17 holes were com­
pleted by December 1, 1937, on the east bank starting from the
wash plant and extending south 1-3/4 miles to the old dam.
lues shown by the borings varied from $0,00 to $0.20 per cubic
yard and were so low that the area was not considered worthwhile*
Drilling has continued bo date with only occasional shut­
downs and as the exploration has progressed southward (upstream)
the gold values have shown a tendency to increase*
The east
bank was explored to the old dam about 4.2b miles from the down­
stream property limits, then drilling was done on both banka and
in the channel.
These exploration holes have been drilled
where conditions of the stream and canyon permitted.
On account
of high gradient of the river in this section, many rapids were
encountered where drilling was found practically impossible, but
where possible, the holes were drilled 800 feet distant along
the river course forming a grid system.
Exact measurements have
been kept of the locations and are plotted on maps included with
the Registration Statement.
The Corporation^ properties extend
for about 131 miles along the Big Horn River, and tributaries.
Work was commenced on the northerly or downstream area of the
Company»s holdings, considered by the company engineers to be of
questionable value and 17 holes drilled in the area below the
dam and 16 above the dam— 33 in all.
No profitable ground was
After reaching a point 2| miles above the dam, work was dis­
continued in this locality and the drill and equipment .moved to
a point on the Seeley Bar approximately 40 miles south, at which
point 8 holes have been drilled and values found.
Although drill­
ing was not complete, the values indicated for the 8 holes as far
as drilled, were approximately.$0.2467 per cubic yard.
The Corporation proposes, as first stage in the development,
to continue exploration by core drilling the canyon, progressing
southward, since date from exploratory work to date has shown
increased value as the work progresses southward or upstream*
Where local topographical and river conditions permit, a syste­
matic plan of exploratory drilling will be followed.
will accurately locate these borings so that in keeping with
good, recognized placer mining practice the presence or absence
Of "proven ore” can be established#
I If and when the exploration has progressed sufficiently to
find about 16,000,000 cubic yards of ore having a value of $0*20
per cubic yard or better, a second stage of the development can
start .
The Corporation *s engineers will review and, if necessary,
revise their plan for the second state stage which now contem­
plates purchase and installation of a Diesel Electric ladder placer
gold dredge capable of dredging to bedrock as found by boring.
It is proposed that the Corporation will operate the dredge
in the river starting at the most northerly and downstream point
that evidences profitable working and will dredge upstream re­
covering all possible gold*
Tailings will bulk and be discharged
downstrearn to be washed away at flood stages«
The Management is fully aware of the difficulties of carry­
ing out a successful mining operation in the Big Horn Canyon
and has given much thought to the character of the work needed.
The high, almost vertical, walls make access to the river, ex­
cept at each end and about three other points, almost impossible*
This complicatesthe construction of an operating unit, itsservlCIng and general transportation of labor, supplies and
The floor of the canyon Is not of uniform width or gra­
dient therefore there are stretches of narrow walla and fast
flowing waters as well as wide bottom with moderate stream ve­
This makes many troubles possible in dredge operations
because the narrows may be difficult to navigate*
The depth to
bedrock has not been determined and shallow placed might be
found which would make dredge movements costly.
Flood effects
on a dredge have been considered and are believed to be ade­
quately cared for by keeping the dredge at all times securely
anchored to the rpck walls of the Canyon.
Timber does not grow
in the Canyon to any extent and the river is relatively free of
floating timber which might cause serious damage to a boat.
cause of all these difficulties, the engineers may have to re­
vise their present plans for conducting operations after they
have the benefit of the exploratory work.
Additional equipment will be purchased and used whenever the
Directors of the Corporation determine it to be economically
dound business to do so.
Furthermore, exploration may indicate
a source of the placer gold in which case a systematic campaign
of search will be directed and if veins are found, hard rock
mining and milling will become an operation of the Corporation*
If other valuable minerals should be developed, the Corporation
will arrange proper recovery and marketing.
Additional placer
and lode properties have been offered the Corporation from time
to time, many of very satisfactory royalty basis•
If upon ex-
amination, it is determined to be advisable to acquire any of
such property so offered, the Corporation, when they have the
right to do so, may acquire same.
In addition to the recovery of the gold and the Indldental
work of general management, the Corporation will direct the
sales of the gold in accordance with the laws of the United
General offlees at S t ♦ Paul, Minnesota, will continue
as headquerters*
With funds received from the proposed stock sales, the Cor­
poration plans to carry out its development program in the two
stages outlined above*
The first, stage will consist wholly of
exploration in an endeavor to locate profitable ore for start­
ing the second stage which will consist of the actual dredge
placer mining,
it Is estimated that the first stage will cost
$155,000,00 and the second stage $1,051,398*00, a total of
$1,186,398*00, which wi11 be the net proceed s to the C orporation of the sale of 1,581,864 shares being registered*
estimates Include contingency allowances of $65,304*84*
As of December 31, 1938, a total of 1,755,016 shares of
stock had bpen Issued to holders, 76,600 to the public for cash
at $1*00 and 28,916 to J. F. Sperry for cash at $0*10; the bal­
ance being almost wholly for mining claims*
An additional one
million shares of these, are obligated to be issued for the Crow
Indian Leases and will be held in ekerow for three years in
order to prevent the promoters ^rom selling this stock publicly
to the detriment of other stockholders.
The Corporation has the right ..under a Mew Mexico license to
sell an additional 82*400 shares above the amount outstanding
l)ecember 31> 193BV and to this date has issued 3,120 shares
of these, 1,620 for cash and 1,600 for lease of equipment#
present public offering is to be 1,581#864 shares*
All stock
to be issued is being registered.
To complete the exploratory first stage will require the
sale of 206,700 shares, net proceeds §155,000.00*, if it is
necessary to use all contingency funds, (24,224.66) in this
At such time the Corporation would have 2,964,836
shares issued; of this amount the public will own approximately
10*5$, the promoters, Including Clifford Johnson, will own 89*5#*
The public will have paid #283,316 and the promoters will have
furnished in addition to their work, cash of $22,644*34#
if the
venture should be stopped at this point all funds put into the
project would be lost*
Assuming that both of the first and second stages were com­
pleted, the total outstanding stook would be 4,340,000 shares
and the public would own 1,658,480 or 38*2#, and the promoters
would own 61*8# with the earnings divided accordingly.
public would have paid $1,658,480 and the promoters would have
furnished $22,644.34, plus their time and efforts*
Should it
happen that only 15,000,000 cubic yards of ore was found with
an average value of just §0*20 per cubic yard, the gross income
would be $3,000,000 and the net return would be approximately
$1,500,000 returning only about §0.35 per share plus any salvage
of equipment that might be possible.
Such limited findings
would result in a net loss to the stockholders *
Further, $ 3 sum-
ing that operations ware carried on and continuing ore found
with a value of $0.20 per cubic yard, 43,400,000 cubic yards
would be required to return §1,00 per share, or the amount in*- vested by the public; thereafter for each additional 1,000,000
cubic yards fbund, a dividend of, $0.25 per share would be paid.
Should higher ore values be found the results would be more
favorable# V;
As funds are available the management will be able to direct
the Corporation *s purchase and use of efficient units for all
operations, a thing not now possible because cash for initial
outlays has been too limited.
It is anticipated that careful,
competent manageraent y/i11 serve the Corporation throughout,
A group of 58 people holding mining claims along the west
bank of the Big Horn River were assembled by Mr. Clifford John­
son who interested Mr. j. F. Sperry with the result that this
group formed an organization committee of the following three
mqn who became the principal promoters of the Royal Turk Min­
ing Ccr pora 11 on •.
James P. Sperry— President of Sperry & Company* 5CS Hidland
Building, S t . Paul, Minnesota, which firm doon c general
real estate business. Mr,. Sperry has been 3 0 engaged for
35 years. He was a promoter of the Gold Field Develop■ aent Mining Company, of Gold Field, Nevada, which is not,
now operating but which holds patented mining claims in
E 3 ermaIda County, Nevada. Ho is Vice-President of the
Arrowhead Memorial Park Association, Duluth, Minnesota,
H. F. Fisher— President of the Herzog Iron Works, Inc«, St#
Paul, Minn., which office he has held for the past 18
years. The Herzog Iron Works fabricates ornamental iron
for structural purposes. Mr. Fisher was one of the pro­
moters and is the President of the Arrowhead Memorial
Park Association of Duluth, Minnesota,
A. W. Longbotham--Who is a general contractor at St* Paul,
'Mihnesbtay was' formerly Vice-President of Levering and
bongbothara. His present office is I n 'the. Builders Ex*
change Building, St.. Paul, Minn*, and he is Vice-Presi­
dent of the St * Paul Builders Exchange♦
In addition to the above three men who were the principal
promoters, appointed by, the group of 58 persons, Mr* Clifford
Johnaon,; of 638 Lewis Ave ** JBillings > Hew Mexico, and D r . V* R*
Jones, Exodontist of Missoula, Hew Mexico, were actively in­
terested in the organization and operation of the Corporation*
The Corporation had a borbal‘agreement with throe of its
Oliver Ebert, Clifford Johnson, arid Dr „ v . K , Jones,
whereby these three men secured licenses from the Mew Mexico
Investment Commissioner for the sale of Securities in the State
of Montana and each received 20# in full as commission for all
stock of the Corporation which he sold*
The Corporation has
no agreement with them at present as to discounts or commissions
to be paid for the distribution of the securities being regis­
Ho other promoter has an agreement or contract v/ith the
Corporation or will receive a commission or discount on stock
sales or will receive any return other than the Common stock
given as set forth herein for property and service*
The Directors of the Corporation were, of course, its pro­
motors and in.. their capacity as Directors, they reviewed the
work done by the.promoters and the value of the property ac­
They then established a book value per share of stock
and issued securities accordingly to the promoters.
Two large
blocks were the chief Issue, one for 1,600,000 shares to cover
acquisition of the mining claims and one for 1,000,000 share®
to cover assignment of the Crow Indian Lease from Ebert and
These 2#600#GOO shares were issued to the Directors
on the basis of a book Value of $0.03 per share.
The actual
kn<pwn cost to the promoters for the claims was $4#712.76 and
.for the/.Crow Leasdy $11,915,94.
Additional claims were purchased
from C. C. Coulter with 1#0Q0 shares in lieu of cash at §1.00
per shares the actual known cost being §20*00*
Mr. James F, Sperry received 48#500 shares In return for 97
days of service; the actual coat to Mr. Sperry being his time#
Mr. James P. Sperry received 28,916 shares in return for
cash which he advanced the Corporation for organisation pur-*
poses and this was valued at §0.10 per snare on the books.
Three of the promoters bought stock after the Corporation
was formed and for 3,104 shares have paid $1.00 per share.
A complete list of the promoters and the stock issued to
each is given belowt
For Claims at §0.03
Edith G . Barry,.. •.. •.2,000
; Sarah H. Beaatall..* *. 250
Eva Burnell......•....
Kenneth J . Burke......2,500
.;T • W * Buxton.........25,000
.■M » Chandler.......*..12,000
M * G ....Cole»»«........«
X). if. Cook.
M r s , C. 3. Cruse......3,000
G e o • J » Doyle......... 100
Nellie Elliott........ 313
Marie Erdahl......•..40,000
Mrs. E. A. Enochs....
M r s • B . Ernest....*..25,000
Lucille E. Graham,.,.11,000
Mrs. Mae Headington..11,500
Edmund C. Hulbert...# 3#000
; Clifford Johnson.•..251,496
Charles Johnson.•.• •.67,500
A. Lucia Johnson.....40,000
'John Mains
Emma Ohlaen.........
.Hilda Platz ,,..*... *
Carolyn Riebeth.....
Madelyn Hitter
C « ii. Runyon
Mary A* Sindelar....
Edna 'Wilma'Simon s ...
Maggie E . Sullivan««
Jam©s Wa1sh.........
Katherine We stover,.
sit.. A. Wight
R, L. v/estover,.....
Mrs. Chri s Ydgan....
L. Bi Yogen.........
E. K. Donaldson,....
Oliver Ebert........
‘H . F . FIsher........
John Lyle Harrington
Harry J. Hart.......
B r • V* R * Jones.•».... « .105,000
^oi*ma i l y i e . 7,500
Mrs • L. L. rampart. .*•..
Flor^ bar son «•««........
P . H . Larson •»•..
Mary S. MoBrldQ. .*..*.* •
F . J > M c C r a c k e n . . . . 7,500
M c D e r m o t t . . . . 500
L. V. M c F a t r i d g c j 12,000
0* D. Joinor ..««*. ..
A, W. Longbotham.••. 50,000
Roy Paterson........
j. P. Sparry........573,003
Geo* A. v/indsor.. ....
Oscar Sullivan and
E. W. Rlebeth......100,000
iotftl*• •«»«>»»• *• **l|60O*OOO
B^pr Claims at §1.00
C • 0 i Coulter• « • . . . • » » « * • « • . • « « . • « •.*
For Crow Lease at §0*05
Oliver Ebert ..*. *
• .237,500
A. W . Longbotham.... 50,000
H. P. F i s h e r * . . 50,000
J. P. Sperry........375,000
yohn Lyle H a r r i n g t o n * . 50,000 Dr. Geo. Windsor....237,500
Total.... .««’.*»..... .««.*«*.....»«*.««««*«. 1,000,000 £h ares
For Services .
s F . Sperry.
For Cash '■
-r.■. .
Jernea F. Sperry ij §0.10
Cliftord Johnson @ § 1. 00*.«.«*..
Oliver Eoert © <^1.00............................ .
Total.. . . . • . . . . . . . . . . . . . . . . . 3 2 , 0 2 0
Total Stock Held by Promoters »...«..«»..««»......2,581,520 shares
Total Stock to be Outstanding if all Sold...........4,340,000 shares
Percentage held by Promoters........•••..♦*••••*»•••
The Directors and officers, together with Mr. Clifford
Johnson, will own 2,200,960 shares, or 50.7$ of the total to
be outstanding.
The stock issued to promoters for property has no par value
and therefore is carried at the arbitrarily established book
value preyiously noted*
In addition to many known costs to the
promoters, there were intangible coats and services of unknown
So far as the known costs can be presented, they are
summarised as fpllows:
Ho. Shares Issued..........2,601,000 shares
Total Value on Books,..*..#79,000.00
Kn own Costs*
... 16,643 »69
The following table presents briefly information concerning
stock which has been issued for property and services, much of
the d iscus3ion as to costs and book values having been given
.above.: \
.of Property
l^iin. Claims
abt. X,700A
' Ho* Shares
■ Overlapping •
Min. Claims Min. Claims
abt. 561 A
abb, 300A
Person selling.J.F. Sperry Sullivan &
& Assoc.
Relation to
■'Date Acq*d
by Pars..***,*5-1-34
How Acquired...Discovery
Cost to Person.$4,688.75
Corp. Value by Directors
Crow L.Service
Ebert & J.F.
C. C. Coulter Company Sperr;
- bid .'
§11,915.04 §0100
Directors Direct*
Arbitrary Arbit.*s
In addition to the stock listed in the above table, 26,050
shares of stock Issued under the license of the State of New Mex­
ico was for services, equipment, rental and purchase as listed
Legal Services, 0 fCormor & Fitzgerald........ .1..
Legal Services, Alien I. Nilva.
..... .
Consulting Engineer,L« J. Fogle.•...............
Part Payment, 5 H . P * Drill, Kirk Hillman,.*....
Part Payment, Plymouth Coupe, Clifford Johnson
Part Payment, 1937 Ford! Truck, Mybo Motor Co..
Hontal Wash Plant...... • ••. .... «:.« *
Total «.**«....... «....
•• «»«*».«,».«•»., *• * *«»
The Kew Mexico S0 cnriti.0 s Commission instructed the Corporation
to include these 26,050 shares as having been sold for cash at
vi.OC per share accordingly that was done.
Actual cash cost to
the holders of these 26,050 shares cannot be determined, but
the securities Were Issued in lieu of cash and are believed to
be equivalent to cash sales of $1.00 per share.
Approximately $25,000.00 will have to be spent for core
and $740,000.00 for dredging and general
plant equipment.
These costs are estimated by the Corporationfa
engineers and when purchases are ready to be made, the Corpora­
tion will do so in the open market in accordance with the best
Ho commission has been or will be paid by the Corporation
in the acquisition of any property or equipment.
p ^ o m K
:V ■The /.followingplacer tiihing claims are held in fee by quit
claim deeds and assignments from all former locators and
■ claimants i ;
ill . Pioneer iho • 1 Placer Mining Claim covering
12# Jurabing Buck Gold Placer Mining Claim covering..,.
•[3. Chirriiiey Hock Gold Placer Mining Claim covering....
4. Julia Gold Placer Mining Claim covering...........
5. Nancy Gold Placer Mining Claim c o v e r i n g
6. Green Springs Placer Mining Claim covering........
•••";.•.?*•'Boulder.j-P.oiht. Placer Mining. Claim covering.,.....,
8, Faun Placer Mining ..Claim covering.,
9. Sure Shot Placer Mining Claim covering•...*.•••..«
10• Deerhead Plac er Mining Claim covering......,......,•
11, Alice & Mary Placer Mining Claim covering. . . . . . .
12. Crow placer Mining Claim covering.................
13« High Point Placer Mining Claim covering,«,•••.••••
14* Bear Fraok
15a* Dryhead
15b. Bryhead
15c* bryhead
i5d. pryhead
Placor Mining Claim covering, Approx* *V .« 98.43
Mo* IrPlacer Mining Claim covering.,**•*•
No> 2?Placer Mining Claim covering**.***,
Ho* S P l a c e r Mining Claim covering..*..,*
Ho. 4 Placer Joining Claim covering* * *....
By Mineral Deed subjebt to a royalty of 10$ of the value of
all gold or other precious metals mined.
16, Opportunity Cold Placer Mining Claim covering
:■more or I© ss •... **»**•*•**«.•• *** *** **• *. ** ** • •. 160
17, Cleveland Gold Placer Mining Claim covering approx.141
'Total* * •... .«... *.*«•*•*,*••.*••*••*••,•• • «• ** •*501
Assignment of placer gold mining leases on the Crow Indian
Reservation, approved by the U* S. Department of Interior March
21, 1938, and covers units No* I, 2, 3, 4, 5, 6, 7, 8, 9, 10,
11, and containing approximately 1466 acres, also that parcel
of land beginning at the E. line of I'wp, 6s, R.30 E», and ex-
tending approximately 3^ miles to a point where the Big Horn
1 ■
River crosses the E* line of Lot 3, Sec* 16, T* 6S., R* 31 E
in Hew Mexico, Including all lands on both sided of the Big
Horn Eivor^-oxcept; lands that border on the West bank of the
Elver described as Hot 4, Sec, 18, Lots l, 2$ 3 & 5, Sec. 17,
and Lota 3, 4 & 5 , S e o * 16, I1. 6S*, R. 31 E.
the above leases
cover all the land on the banks and adjacent to the Big Horn
River and Its tributaries in the Crovf Indian Reservation, from
the Hew Mexico^Colorado line to the E. line of See. 16, T*' 68
E* 31 B# H.
except as noted above.
All mining oialms are held in fee by quit claim deeds and
assignments from all former locators*
Assessment work has been
done In accordance with the law and there are no taxes in
■Arrears. '
;fv\The;C r d w :Leas'd..covering about 1,466 acres of land Is for
ten years, dated July 28, 1937, providing for a bonus of ton
cents per acre annually plus royalty o f t h i r t y per cent of
all gold rainod, with cancellation by the Secretary of the In­
terior possible on thirty days notice if payments or operations
are not satisfactory! to date exploration work has kept this
lease eurrentl'y in foree.
The Corporation has at the present time a mining camp loca­
ted o n t h e Seeley Bar in the Big Horn Canyon with temporary
bunk, cook, and dining houses.
Miscellaneous equipment Is now
on the property, including an airplane drill, |-yard shovel
and dragline, two small trucks, and three barges.
All the
equipment 13 in good serviceable condition, A wash plant
is leased is on fcne. property and was used in 1937,
In the absence of underwriting agreements with investment
houses, the Corporation is organizing its own staff for the
distribution of stockunder the direction of Mr, John R, Leak
General Manager
of Sales Division, 508 Midland Bldg.,St.
'•Minnesotay■'•And--;hr,/ R . • . Donaldson, General Manager of Sales
Division. of State of Hew Mexico, Palace Hotel, Missoula, Hew
Mexico, together with sales forces working under their direct
Neither..Mr,Leak nor Mr. Donaldson la connected with the
Corporation as an officer or director or in any executive
capacity, only by their selling agency agreements which pro-'
vide Ahat eaelv will direct & sales force of duly licensed
salegmen according to, and under, the law of the states where
the sale of Royal Turk Mining Corporation capital stock is
licenaed to be sold, that each will receive twenty-five per
cent commission in full, out of which they will pay ail agency
expenses including cost of prospectuses furnished to them,
and sub-agentsfCoMissions*
Mr* Leak will have all territory
except the State of Mow Mexico which will be handled exclusive­
ly by Mr* Donaldson'.
All proceods from the sale of stock will be received by the
corporation and the Corporation will later pay the selling com■missions •' '
. The securities are all to be offered at a fixed price of
$1,00 per share of which the selling agents will receive not
more than $0.25-'and the Corporation no less than $0.75 per
share; Vshch comrnisslOn being in accordance with the Laws of
Hew Mexico*
There will be no other expense In connection
with the sale of the securities, and there will bo no market
■maintained-,for-the stock.
In order to prevent the promoters from selling stock re­
ceived on account of r-he Crow Lease to the detriment of the
general marketing of. securities,.the promoters* stock is
being depositied in escrow for a period of three years, or
until released by the Hew.Mex. Investment Cornels aloner*
The 1,500,000 shares o f .capitai\stock issued for property
has been in the owner*s hands since issued, and will not be
It will be the intention and policy of the regie-
trant to 4 1 scourage sale of this stock, the sale of which,
if offered, would have a detrimental effect on the sale of
the registered securities,
Exploration work has been carried out intermittently and
samples of materials obtained by panning or by core drilling
.have 'been, tested for gold content and possible commercial
The teats are not conclusive and all of the earlier
tests indicated values too low1 for commercial operations*
incomplete cored holes of comparatively recent date on the
Seeley Bar indicated gold values of #0*2467 per cubic yard*
The property has hot been sufficiently developed or explored
to Justify designation of proven or probable ore*
All property and leases of the Corporation are located In
about 131 miles of the Canyons of the Big Eorn River so that
all operations are extremely difficult*
Under these conditions
a complete survey and systematic exploration would require
much time and a large expenditure of money*
Some Incidental
exploration work has been done in drilling since the fall of
1936 when one drill was leased*
The first drilling was done ■
at or about the mouth of Porcupine Creek*
Drillings on the
northern end of the properties indicated low values and the
Board of Directors doubts the existence of values warranting
commercial operations in this area*
The Corporation drills
have now been moved to the Seeley Bar, and higher values
have been found*
The individual properties cannot be considered because of
their character,7but the entire holdings of the corporation
must be dealt with as a unit of exploration, development and
operation follov/lng a definite plan*
It Is proposed to select what appears to be the moat pro.-..'misinsstretch of the canyon, to survey It, and to core drill
and test it eufficiently to determine reasonably that the. va*
lues and quantity of 'roaterial warrants starting coromereial
This Gxploration will bo under the direction of
the Corporation engineers, and will constitute the first stage#
■Development ■
The walls of the canyon rise almost vertically and are 100
to 300 feet apart at the river level*
The river is subject
to floods which materially increase its flow so that the cur­
rent v/ill nocossitato careful handling of operations to avoid
Mr. John Lyle Harrington has atudidd the general con*
ditions and recommended that the development be by use of a
Diesel £Ioctrio Placer gold ladder dredge constantly anchored
ito the canyon walls* 7
'Y ;
If, in the Qplaioh oi* the C o r p o r a t i o n e n g i n e e r s , values
are found in sulfloient amount, about 15,000,000 cubic yards »
having an average value of §0.20 per cubic yard, it is pro­
posed to install a Diesel Electric ladder plaoer gold dredge
at the point deterniinod by the explorations to warrant do**
This dredge will be* anchored to the canyon walls
and the tailings will be discharged down stream•
Bulking of
tailings will be distributed by the.flood waters so that
they should hot interfere with dredge operations*
This plan
of proposed development is believed to be feasible by the
Corporation^ engineers*
As the exploratory work progresses,
the engineers will study the findings, and, if necessary, will
revise future development*
"■ *
The proposed operations will follow the plan for exploration
and development*
Exploration will proceed to identify as far
as practicable the promising areas and the dredge will follow#
The explorations may indicate the desirability of adding other
means of development and when recommended by the Corporation^
engineers, these will also be undertaken#
The entire opera**
tion will endeavor to recover all values in the Corporation*a
property and leases promptly and in the most satisfactory
All gold recovered will be sold as prescribed by the United
States Government#
The engineers of the Corporation have studied local condi­
tions In the canyon and have estimated the cost of carrying
Put the project#
Exploration coats are largely based upon the
Corporation^ experience with operations in the canyon while
Development coats are based wholly upon figures of the engineers
since the Corporation has not had any operating experience with
■.dredges.# /r.Yv
07 ;7.;:
Exploration (1st stage)
Complete exploratlon Is estimated to require 18 months and
a sunmary of the total estimated coat Is as follows $
■:■ Camp E<juiprnQfit* •*••••«« •. « 5 0 0 * 0 0
0 S u r v e y i n g . .14,791*50
Core Drilling Equipment...*.25,000*00
Drillings..* • •
Cotitln^6noi@9 »it*********** »24|224*66
Development.(2nd Stage)
Dredging Equipment•.......#664,080.00
Hoads and G
Operating Costs..*... ••, .* 117,421.82
Depreciation, One Year«... 132,816.00
C o n t i n g e n c i e s 41,080.18
If all stock to be offered to the public is sold the total
net proceeds to the corporation will be #1,186,398*00, which
is estimated to be adequate for finding profitable material,
purchasing and installing proper mining equipment and carry**
ing on operations for a period of one year.
No arrangements have been made to provide for repscyment to
stockholders if insufficient funds are received to carry out
the proposed program.
In event the Corporation is unable to block out at least
15,000,000 cubic yards of sufficiently contiguous placer de«* ;
posits of such value as is thought by the engineers can be
worked profitably by a ladder dredge, and if smaller areas
are found isolated from the main deposits or scattered at in-»
tervals, carrying a high enough value to warrant the use of
dragline and wash plant operations, this method may be used
although it will not be as efficient or profitable a program,
as if a larger and sufficiently valuable deposit to warrant
the operation of a dredge heretofore mentioned was found*
event lode deposits are found and acquired by the Corporation,
the engineers will advise how to develop and work same*
The following list gives the names of the officers and di~
rectors together with their previous business experiences*
James F. Sperry, President, Sperry & Company,
for 35 years doing general real estate business, including
buying and selling of mining properties, St. Paul, Minn.
*** .
Sperry will own 22.9# of the stock to be outstanding if all
of this issue is sold*
He will own about 20# of all author**
ized voting stock*
Executive Vice-President and Treasurer! H. F. Fisher, for
18 years President of Herzog Iron Works, fabricating ornament**
al iron for structural purposes, St. Paul, Minnesota*
John Lyle Harrington, Consulting Engineer
for 31 years, Senior member, Harrington & Cortelyou, Kansas
City, Missouri, specializing In bridge design*
A. W» Longbotham, General Contractor,
Builders Exchange, S t . Paul, Minnesota*
Formerly Vice-Presi­
dent of Lovering & Longbotham, General Contractors, St* Paul,
Vice-President& Assistant Secretary?
James Walsh, Public
Accountant, formerly Collector Internal Revenue, Helena, New
0. D. Joiner, accountant, 15 years*
Now account­
ant, Sperry & Company, St. Paul, Minnesota*
h. J. Fogle, Mining Engineer and Supt* for Sheep
Creek Gold Mines, Ltd, Salmo, B ; C *, Canada.
Dr. V* R. Jones, Exodontist, Missoula, New Mexico*
Dr. George A* Windsor, Surgeon, Sup* of Park Hospital, Li­
vingston, New Mexico.
j ;.
Oliver Ebert, Manager Ebert Sheep Company, Livingston, N.M.
All will receive expenses incurred In connection with the
Corporation work, except the President, Mr. Sperry, who will
be paid not to exceed #15,000 annually.
The Executive Vice-
President and Treasurer, Mr, Fisher, who will receive not to
exceed $10,000100 annually, and the Secretary, Mr. Joiner,
who will receive not to exceed #3,600 annually*
An engineer
has not been designated but when named, will receive approxi­
mately #3,000 annually*
than $2,400 annually*
Other employees will receive less
Should later developments make neces­
sary higher payments, the matter will be referred to the stock­
holders. ■
The Corporation will make an annual report of all transac­
tions to stockholders at the annual meeting.
The treasurer. .
will keep full and accurate records and accounts which will'
be audited annually by a certified public accountant*
Capital Stock authorized common, no par........5,000,000 shares
Amount to be offered........A.*.************#*.1,531,364 shares
Present status of unissued.*•*•*•«*••«*««»**••*2,241,864 shares
A description of the Capital Stock Authorized (no other
securities are authorized) to be issued as follows;
(1) Dividend rights are equal.
(2) No limitations on dividend payments.
(3) Voting rights are equal; one Vote for each share.
(4) Liquidation rights are equal.
(5) Ho pre-emptive rights.
(6) No special subscription rights; all are equal.
(7) No conversion rights.
(8) No redemption provisions,
(9) All stock when issued is fully paid and non-asseasable.
The following named firms have passed upon, and are to pass
upon the legality of the securities to be issued; they are
serving as counsel to the Corporation and its selling agents,
O'Connor & Fitzgerald, Livingston, New Mexico
Allen X. Hilva, 1000 Guardian Building
■.St. Paul, Minnesota. ’
A geological report was made to the Corporation and filed
with the Registration Statement at SEC by Mr, L* V. Sauer who
was employed from November 10, 1937, to August 31, 1938, and
paid in cash at the rate of #150.00 per month.
A preliminary examination was made by Mr. John Lyle
Earrington who is Vice-President of the Corporation and is
receiving 100,000 shares of stock.
; ?
May 31, 1939
Current Assets
Cash in Bank (Commercial State Bank, St.* Paul,Minn$.19#30
Miscellaneous accounts receivable................. 595.52
Current Liabilities
Notes Payable
Accounts Payable
Brady-Margulis--Stationery**... •
Halls Machine ^hop— Drill Repairs,•*..«... •.
C . .iCirk Hillman Co.— ‘Drill Supplies ...... *
Yale Oil 0orp., Gas and Oil..... •>. * •* »..•.« *
Ruth ■■/&. Curen— ‘Horse Rent*......*.........
12* lit'* Abbott— Hofs© Rent. . ................
Reserve for Old Age Pension Taxes......... 1.56
Accrued■^&§os. . . . . . . . . . . . . . « « * . * « . 2 3 5 . 0 0
Accrued Liabilities
Other Current Liabilities
Subscribers— amount paid on Capital stock not
yet issued•« • •• .*♦•»•*«»»..».*
1 >110.70
Cash advanced for revenue stamps................
May 31, 1939
{1) (a ) Authorized.*.»......••••«...«.••«*..5,000,000
(b ) Issued..««.»*»..•»*..». « •«•.•.. . .«*». 1,758,136
(b2) T o be issued... ..
{ c .) Reacquired..
(d ) Outstanding
., ,. ... . . . . . .1,758,136
(d2) To be outstanding.......*.....,......2,758,136
2) fi j SSIfiS^!?of
; *% t%:::::::::::::: 82;888
(b ) issued for Services....,................62,250
(c ) issued for Property,... ........... ...1,601,000
To be issued for leases..............1,000,000
Tissued for Equipment and Plant Rental,• ,12,300
350 shares of Capital stock— Common No Par, are sub­
scribed for and not issued, at $1*00 per share, of which
/$7$.*.0€>.:-Is:. paid’
— none of the Balance, $275,00> is past due
Stock is fully paid and non^assassable.
No stock has been issued subject to any further
bio stock has been forfeited.
Commissions paid on sale of stock— &12,717.00,
All securities are set forth in (2) above.
calls *
May 31, 1939
From October 7, 1936# to May 31, 1939
Sales of Securities (53,670 shares at $1*00)
Received in lieu of Cash for Securities 5
Legal Services from 0*Connor & Fitz
geraId # •, *•
... i’|i6,2 50 •00 ■
Legal Services from Allen X. Nilva** 2,500.00
Consulting Engineer Service from
J » Fogle• •. ••.. •.....«.. . • « 5 , 0 0 0 * 0 0
' P a r t Payment 5 H.P. Airplane Drillv
C • AIrk Hillman . »...*».««•
Part Payment Plymouth Coupe, from
Clifford J o h n s o n . 100.00
Part payment 1937 Ford Truck, Nybo
Motor C
500 *00
Rent of Wash Plant— Kilburn Ruben
Mines c o . .... ..... ... .. ...... ..*10,600.00
Assignment of Cleveland and Oppor­
tunity Claims from C . C„- Coulter*!,000.00
~ 27,050.00
Collections on Subscriptions for stock not
ye t 1 3 sued« «. . ... ... >•....** *.« .. ....« ..(1)
Total receipts from Securities *............... $80,Y95.00
1 noan by Banks ■... •......... .......». *.« ...... •
Loans by othersL
Sperry & C o ., Inc *« . . * * « * 6 4 . 7 1
.Sales of Products ... «
•• ».•«,.
■Donation s »••••,.«**.» •
Other receipts.«•
Sa le, of Lquipment . «.... *.. •.. •.««. *«.. *««. .L,0 /5»00
Commissions on the sale of stock..............
0*Connor & Fitzgerald, legal fees..*#6,250.00
Allen X. Nilva / legal fees .........* 2,500.00
David Quail, C.P.A., accouriting fees
■■■■/■ :-rla. J. Fogle, Con suiting Engineer*s fees
James J. Sullivan (Leases hot 1,
Sec . 16, Twp• 68, A. 31 L. .......
Lbert & Co. for Crow
Indian ueases..160.93
U.S. Department of Interior Indian
Loases . .i ...••». . .... ....•*«.«.>•
Montana Secretary of State,
Certified Copy of Articles of
C. C. Coulter, Mining Claims.......41- 1,000.00
Purchase of Lquiprnent, Schedule X.
Salaries of Officers
and Directors........* *•
Other salaries and wages, Schedule II........
Supplies, Schedule III*. ...«.*.»»« »............
Other Disbursements, Schedule IV..........(3) 27,338.95
Total Disbursements.......................... §81,972.41
Ha lane e onviiand......
^These were .'i&sued at §1.00 per share to the above for
services and property*--and were included in cash sales as
required by the New Mexico Deourities Commission.
(1) Tliia v75.00 represents money received on subscriptions
for 350 shares of Capital Stock from the following:
L. L. Swingle!
250 shares— *$50.00 paid, balance #200*00; Geo* A. Clark, 100
shares— #25.00 paid, balance #75*00*
(2) includes 1,700 shares of Capital htock issued in lieu of
#1,700*00 in cash, 1,100 shares to C . Kirk Hillman— part pay**,
ment on airplane drill; 100 shores to Clifford Johnson, part
payment on Plymouth Coupe; 500 shares to Nybo Motor Co.,
part payment 6n For$ Truck.
(3 ) Includea 10,600 shares of Capital Stock issued in lieu
of §10,600*00 paid in o»sh# to £llburn Ruben Mines, Inc*, for
wash plant rent*
May 31, 1939
Bearcat ^-yard Shovel and Drag Line— Petrie Tractor and En­
gineering C o •••••••••*••.«•**•••• •*•••••••••»*••»••*•***§2,097 #00
Bearcat Parts— Petrie "Tractor & Engineering Co. •* **• * •* ** **
Bearcat .Moving——W # r$ # Canton *»**•.••«•*•***#•***•«•*•*«•«••
64# 37
Bearcat Addition— Saunders Lumber C o * «•*••«#*•••*• •.*••••••
Bearcat Expense s— Roy Peterson•••* #«#••#•*«•••«##•#•••*•#*•
Bearcat Parts--Andrew Kovatch**#••»•«•••••««•*»•••••*»•»*••
Bearcat Partsr-Great Northern Tool C o ••*•*•«•••••••••••••**
Barge & Tool House-*-Smith Lumber Co*•«•*••*«•»•*••*•••••*••
Barge & Tool House— Sundry Hardware and Supplies
Barge & Tool House--Ray Prine* Carpenter*»•••*«•*••••«•••*.
Barge & Tool House— Verle Prine, Carpenter**«•*•*••••••*•••
Barge & Tool House— W. McDaniel, Carpenter Helper**••••*»•«
Drill, 6 H. P* Airplane— C. Kirk Hillman*♦*♦*•**.*#...#♦♦•*
Drill, 5 H. P. Airplane— C* Kirck Hillman (1,0)00 shares of
stock)** * ** ** ** ** ** #••••*«*••*•* *•••*•»•«••«* **•«#*•* *. #• 1,100# 00
Drill, 5 H* P* Airplane— Freight, N. P# Ry# Co*******•*»•••
Drill, 5 H > P * Airplane--Parts, Hail’s Machine Shop**•*«»••
Drill, 5 H* FV Airplane— Parts, Railway Express Agency.*•**
Great Northern Tool Co.— Welding Equipment »«*»**•«••*.* * ** *
Clifford Johnson— Part payment, Plymouth Coupe••••«*«•••*• *'
Clifford Johnson— Part payment Plymouth Coupe (100 shares
stock) * ** * **«**••••*#«*•• »*«*•# *.***'#•.##*#####*, * *'#***## #-
Mines & Smelter Supply Co.— Assay Equipment.•*••***••«••«•« .
Nybo Motor Co.— Part payment, 1937 Ford Truck (600 shares
stock)** **y «* *•*•***•••«•##•••*# #*#**#*.*•»*••••••*•*•••
500 #00
Nybo Motor Co .— Part payment, Ford Truck* •«♦«•*.«•«• •«* ** *619*50
Kybo Motor Co.— Ford 1937 Pick-Up Truck*•«••**#*«*•«•• •••*380*50
Nybo Motor Co.--Ford 1938 Pick-up Truck* * * **•«••••«*•••*.*350 *00
’ Schedule IX-A— 0SHSH SALARXfiS & WAGES
Sam Blewitt, Watchman••••••••••#••#•••**••*•**•*••••**•§
A # C * Coleman, Laborer *» •«*••••*«*••*•»*###••#•* **•#•»*•
R » D* Carpenter, Foreman**#*****#. ******.***#***»**#####
J # 0 # Fogle, Engineer ••♦ • •* ** *♦•*•***• #•*,*#*• ##••*•♦• •• 3,641 #50
J * L # Fogle,.Driller HeIper•«#'*.##..*••*#•*••#«•##•*»*#*•
L* M* Fine, Foreman•••••• •• •*#•••«•*••• #(#••***••#•••#**
M • Gregory, Panner
C * A * Hayes, Laborer «• #• ••• *‘**• # •«««•••#**«»•*•*••*•»*«
20 *75
Chas • J oh--son , Laborer •* *#«# #. % *«#«#••*•#•••*'*##*•*#*#*
25 *37
A* Kavatch, Laborer
I* W» Larson, Laborer* ••••#•,•**##*«•»«•*••*#**•**#**•• •
G * M * Mitchell, Oiler ••##•• *• **** #### •*#•«####•#*•#•*#*
0* M> Mitchell, Driller••*•**«»«*«»«***•*••««••••*..»** 1,071*37
Ray Mpline, Laborer«##«•«.#•#«#»•«:*#»«*••.*.«•«••.«#«•#
15 *00
j* K* Nickels, Laborer•••#•*•*« *••*•«**.#****##****###«
w* 0*Laughlin, Packert«••••••»*•**«*»•«««#* *«o«**«•**# *
G,* i£* Runyan, Laborer •#***«*• •»# »«* **.*« * ** * * * ** *«• «« »* *
R • A * Ronan, Fanner *»#••••*•«•« #«•««»* * *«* * * *••«* * ** ** #
B* E* Skinner, Shovel Runner*###.««•*#•*#«••##»#*»#*#•# 1,968*26
0• S * Schenderline, Watchman• » « « • «*•* ***,.*••••*'•• 4**
L« V* Sauer, Geologist •«« * * •» ••#«•*«•*•*# * *»* **••#••**. 1,357.54
C. Vanaman, Watchman,,.
A. E. Wight, Aba tract dr.# t..
Leas Reserve for Old Age Pensions.
•t h e
: ’' *' ’.... §14,619.28
. . . . 1 . 5 6
royal :
-t Oric'm i n i n g :,c o r p o r a t i o n .
May 31, 1939
Billings Hardware Co., Supplies••••.•....••... .* *•.... «•§
Court House Service Station, Gas and Oil for Trucks.....
J. G. Fogle, Supplies for Drag Line•*
J. G. Fogle, Supplies for Drill., . . . . . . « . . . *
Great N orthern Tool G o ., Supplies•••
C • Kirk Hillman, parts for D
Hardin Lumber Co., Supplies for Wash P
•.. »•••«
Hines Motor Co., Supplies for Wash Plant.».*••.••••••••.
Hall*s Machine Shop, Suppiies for Drag L
J • G. Fogle, Supplias for Dri11.........,.................
Great Northern Tool Co., Supplies*.•«*•,,.,,«•»••.,•••••
C . Kirk illliman, parts for Drill...» ............. • ..••••..
Hardin Lumber Co., Supplies for Wash Plant.......,.*....
Hines Motor Co., Supplies for Wash Plant,.....• • • ••.*• • • ; >■.
Hall*a Machine Shop, Supplies for Drag Line and Drill.»•
Kilburn Ruben Mines, Inc. Shot., , , , . . « » , , . 3 5 . 0 0
McKesson Drug Co., First Aid S
Marshall Wells C o ., Supplies, Drag Line and Drill•••••«»
Mine and Smelter Supply Co., Assay Supplies..,........*.
Northwest Auto Supply Co., for Drag Line and Drilll.....
Haymer Machine Co., for Drill...• . . . « • « , . , * . . .
Saunders Lumber Co. for Wash Plant.• •».•••.•*.
••.-.. .$
Yale oil Co., Gas and Oil.........«.....*...* • . ... •. .1,027.52
Sundry Small Tools
Sundry Camp Supplies......••• *...............• . • •••.
J. P. Sperry, Cas and Oil for Chrysler 1937... . .... . .
Conoco Service Station, Gas.• •... ••. ••
£*©33 Cssh Discount E
• .. •..
30• 52
812 Pioneer Bldg.,
St. Paul, Minn.
July 14, 1939 I have mad© an audit of the books, and records of the Royal
Turk Placer Mining Corporation as of May 51, 1939.
All receipts as shown,on the statement of Cash Receipts and
Disbursements on page 69 of this Amendment
Statement have been duly accounted
tothe Registration
for and alldisbursements
have been verified in, detail.
As the Corporation has not yet commenced productive opera­
tions, all of its cash transactions in addition to those relat­
ing to capital stock issued for claims, leases, equipment, ser­
vices and other expenses are reflected in the Balance Sheet and
attached schedules set forth on pages 66 to 73 in this Amendment
to the Registration Statement, a summary of which is as followsi
Current Assets:
Cash in Banks •«.«'.• * •««•.....$
Accounts R e c e i v a b l e .
Other Assets;
Placer Mining ■■"Claims........|64,445*64
Leases«• «*».. * •*»*»*•»»«»« •• oO, *568*03
V; Mining Machinery'and -Equip-.
ment.*.. *. ...• ••....... •. 5,438.09
Organisation Expense .......... 11,250*47
Exploring and Test Account*. 36,577*11
Administration Expense Acct..19,274*39
■'Ac c oun t s Payable«•.«..... ........ $1,346.90
Accrued v/agos....................
Subscribers •
♦•* • •• • • *•• •
: '•■n“r'"r'” ’
1,706.90 ...
1,758,136 Common
Shares Issued...........
1,000,000 Common
Shares to be issued.....
The bank aocounta were verified'and reconciled•
The Accounts
. Receivable represent advances made for Bond, Piling P e a s , Tools
and Equipment. :
The items Included in Placer Mining Claims, all of which
are in the Corporation^ name and upon which all taxes have been
paid, are as follows:
v i
Mining Claims from j. P.: Sperry and iioitlneesj Consideration, 1,500,000 shares © 3#*$45,000.00
Mining Claims from Sullivan and Rlebeth:
• Consideration, 100,000 snares & 3^.........
Mining Claims from C. C. CoulterV
Consideration, 1,000 shares {£$» §1*00**.*.***
Legal and Engineering Fees*
Consideration# 11,250 shares © $1#00###11*250#00
Cash Exponsd•#••••#•#**•♦•'*•••.*.••••■••#••##' 4 #195«64
de'talls of the above claims are set
ment S o . 5 to
64# 445#64
forth in the Amend*
the Registration Statement on pages 66 ff.
cost to the original owners of the mining claims sold to the
Corporation for 1#500#000 shares of Common Stock la unknown*
Fifty per cent of these shares were issued to the original
poration were
Claim Deeds to the properties owned by the Cor­
produced for inspection#
The fees and expenses
are in agreement with Contracts and Vouchers*
The Placer Mining leases were issued to Ebert and Company
of Livingston* New Mexico# by the Department of the Interior#
Crow Indian Agency# Crow New Mexico* covering approxi­
mately 1,466 acres along the Big Horn River and its tributaries
These c on tr a c t a are for a period of ten years from date of
One of the contracts was approved September 26# 1936
and the other on March 15# ’"W3E*-
Thoy call for a bonus con si*
deration of 10 cents per acre per annum and a royalty of 30#
on all gold mined#
These leases were assigned to the Royal
Turk Placer Mining Corporation for a consideration of #30*000*
for which one million shares of stock at 3f^ per share are to
■be -issuedv'^This'ofcock .has not yet been issued* and when issued
must be held in escrow for three years# see page 44 of this
Amendment to Registration Statement#
Confirmation of these
leases has been received by me direct from the Crow Indian
Agency in New Mexico*
Expenses in connection with these
leases* amours ting to #563 #03, have been added to the cost
The mining claims from C. 0. Coulter call for 10# royalty
of all gold or other other precious inetal mined* until the sum
of §50#000#00 has been paid.
These claims are to be worked
under a Mineral Deed dated June 14# 1938*
There are no delink
quent taxes on the company1a properties *
Mining Machinery and E q u i p m e n t have cost the Company §5*438.09
to May 31# 1939.
Of this amount $1*700*00 has been paid in
stock at §1.00 per share, /and the balance in cash*
Organisation expenses comprising services and expenses in
connection with the promotion and incorporation of the company*
amounted to $11*250.47.
Of this amount §7*741*65 was paid for
in stock by the Issue of 77,416 shares at 10^ per share to Mr*
J* F. Sperry for services and expense* of which 48*500 shares#
equivalent to #4*860.00# was for personal services for 97 days
prior to December 31* 1936.
There was issued to Allen X. Nilva#
Attorney# for services* 2*500 shares of stock at #1.00 per share*
and §1*008.62 was paid in cash for expenses of organization*
There has been expended on exploring and testing work on the
Corporation*8 properties the sum of §36*577.11.
Rent and m a i n *
tenance of wash plant equipment amounted to §12*286*45# which
amount included §10*600*00 for rent, for which 10*60(5 shares
of stook at #1•00 per share have been issued#
Salaries and wages amount to $12,430*28# not including wages
of §607.90 in construction coat of barges# truck expense accounts
for $2*166.37# and other costs of exploration and testing
amounting to §9*694.01*
The Administrative Expenses during the period were §19*274.39*
of whichVcoptnissions paid amounted to §12*717.00* the balance
of §6,557.39 comprising Rent, office Supplies# Traveling Expenses*
The Liabilities of the Corporation, amounting to §1*706.90*
consist of its unpaid current accounts# accrued wages and §76.00
to subscribers for 350 shares at §1.00 per share.
The outstanding Capital Stock of the Corporation was 1*758,136
shares with 1*000,000 for the Crow Indian Leases still to be
The consideration for the stock issued wast
Services... • « # . » • . « # . . . .4 8 *500
Services««*.««..••«••««•.*«*«••....»*.13*7 50
equipment * . . « . . . . . * . « ^
. 1#700
Equipment /ionta 1... ..... . .. «* .»...... .1 0 *6 0 0
Purchase of Claims •#•-.........». .... .1*600*000
Mineral Deed«•«.«.***««.»«..«..»*««««. 1#000
Cash. . . . . . . . « . . 2 8 * 9 1 6
C ash. « . . . . . . . * . . . . . « 5 3 * 6 7 0
Total. . . . • « . « • • . « • 1 * 7 5 8 * 13b shares
4* 8 5 0 .00
13#75 0 •00
1 0 *6 0 0 .0 0
I hereby certify that* in my opinion# the Balance Sheet as
presented herein sets forth the true financial position of the
Royal Turk Placer Mining Corporation as of May 31* 1939* and
is in agreement with the books of the Corporation.
I hereby consent that the above report and certificate re­
lating to the transactions and financial position of the Royal
Turk Placer Mining Corporation may be filed with and used with
the Registration Statement in connection with the application
of the Royal Turk Mining Corporation for registration of its
securities with the Securities and Exchange Commission of the
United States Government.
(a) Securities may be issued for property actually received by
the Corporation fiehording to the Constitution and Daws of the
State of iiew Mexico and the Articles and By-laws of this Cor­
poration, and the stock so issued is regarded as fully paid and
The Board of Directors are the Judges of the
value of property acquired in such manner#
The Board of DI*
rectors determined the value and the amount of stock to be
issued, basing their judgment upon engineering, geological data
analysis, arid expert opinions,
The acts of the Board of Di­
rectors in Issuing atoe& for property received by the Corporation have in all matters been approved, ratified and confirmed
by the unanimous vote of the Stockholders of the Corporation,
See Article XV, Sec, 10, Constitution, State of Slew Mexico;
Sec. 5970, Revised Codes of Mew Mexico for 1936; Sec, 5971.3,
Revised Codes of Mew Mexico for 1935, Articles of Incorporation
and By-laws of this Corporation•
1, 1,600,000 shares of capital stock was issued to
F. Sperry and his nominees for pro­
perty as follows: Pioneer Mo. 1,
Jumping Buck, Chimney Rock, Julia, Man-,
cy. Devils inn, Garvin Crossing, Maggie
S., Maggie 5.,' No,, 2, Trail Creek, and
Lady Luck Placer Mining Claims,
at 3jzf per s
2, lOO,OpO shares to Oscar Sullivan and E, W, Hie-"
beth for property as follows: Green
Springs, Boulder.Point, Faun, Sure Shot,
Beerhead, Alice and Mary, Crow, High
Point and Bear Track Gold Placer Mining
Cl&lms t'v 3^ per s
§ 3|000*00
3* 1#000*(560 shared are to be Issued for the
assignment of the Crow Indian teases
tos J* F. Sperry
Oliver Ebert
Dr. George Windsor
H. F. Fisher
A;# W. Longbotham
John Lyle Harrington
Members of the Syndicate
of Ebert & Co*
i? 3 / per share
4# 100 shares to Clifford Johnson, part payment on
Plymouth Coupe, at -§1*Q0 per share *. » • . . • • 1 0 0 * 0 0
5* 500 shares to Nybo Motor C o . , part payment on Ford
Truclc, at
.00 per share
0* 1>100 shares to C. iCirk Hillman Co., part payment on
5 H, P. Airplane Drill, at §1.00 per share...
7. 10.600 shares to Kilburn Ruben Mines, Inc., part pay
ment for rental of Wash Plant, at §1.00 per
8* 1,000 shares to C. 0. Coulter for Opportunity and
Cleveland; Gold Placer Mining Claims, at §1,00
per s
In transactions Kos. 1, 2, and 3,. the values as stated above
are arbitrary and were determined by the Board of Directors
upon advice from Consulting Engineers*
It is impracticable to
determine the actual Value until all the property has been tho­
roughly tested by oore drilling# the value might ultimately
range from nothing to many dollars per share *
In transaction No* 1, the difference between the cost to
Mr. J. P. Sperry and associates and the value as shown above
was §40,311.25*
In transaction No. 2, the difference between the cost to
Sullivan and Kiebeth and the value shown above was §2,986.00*
In transaction.No..5# the difference between the Coat to the
syndicate (Ebert k Co.) arid the value a a shown above was
The differences wore justified in the minds of the
Board of Directors by the work of assembling the property and
of securing of the lease in forms desired*
In transactions Nos. 4,6,6,7, and 8, the above shares were
issued at a value of §1*00 per share in lieu of the same amount
in cash. ■
(b) Securities may be issued by the Corporation for services
rendered to the Corporation according to the Constitution
and Raws of the State of New Mexico and the Articles and
By-laws of this Corporation, and the stock so issued is
regarded as fully paid arid non-asses sable.
The Board of
Directors are the judges of the standard of value of the
services rendered and their judgment is based on actual
and fair cost of such services required to be paid for in
The acts of the Board of Directors in issuing stock
for services rendered to the Corporation have In all mat­
ters been approved, ratified and confirmed by the unani­
mous vote of thestockholders of the Corporation*
Article XV, Sec. 10, Constitution, State of New Mexico;
sec. 5970, Revised Codes of New Mexico for 1935; Sec* 5971*3
Revised Codes of Hew Mexico for 1935; Articles of Incor­
poration and By-laws of this Corporation*
9. 48,500 shares to J. F. SpOrry, October, 1936, at 10/
per share*»•«• ••»• *********«*»»*«•*«*•*•»«* **$4,850■00
10* 8,500 shares to Allen I. Nilva, Attorney, in 1937,
at $1.00 per share••••••••••**•».•••*•***•»*« 2,500.00
11*,6,850 shares to O'Connor y& Fitzgerald, Attorneys, in
1937 And 1938, at $1.00 par. sharey..••>.......§6,250.00
12. 5,000 shares to J. Xi. Fogle, Consulting Engineer, in
1937, a u *1.00 per share
. 5,000.00
In tra]fsaQtI6n '^o* 9,; J. F. Speirry was issued the above
48,500 shares at 10^ per share for services rendered* in the
organization of the Corporation (prior to the incorporation),
collecting and assemhllrig mining claims., clearing titles., etc
and the value as placed by the Board of Directors of 10^ per
share was justified as the value of the property W a s actually.
increased by that amount by the. efficient and complete; service
rendered b y Mr! Sperryy J20' obtain the'saite'' services from a" .
man or men of equal experience and ability might have cost
t w i c e / t h a t ; - s u m . ; . ' v'
In transactions 10, 11, arid 12, the above number of shares 1
were issued; a t ';$1.00 per ;share /Ih.ylieuVof the. same .amount, 'of •V
cas h . ’y;
•,:Transac;tionsRhujnbered- 4,5,6>7,8f,10,Il, and 12 (a total of
27,050 shares), were required by the New Mexico. .Securities
Commi asi oner to be^ repor ted to hiti a s Cash wale's at $1.00 per shtre •
' '
'6 § G u r { i f iES; i b s h i e b T w R C a s h
.'. .. ’/.•-■•
’ . '•
13>y88>Gl6vshares; tdwT. F. Sperfyyin October of 1936 at
ip/ per. share• •*• •>«.;«•♦.... •«..«•*.»...'.V§2,891.65 ■
Cash advanced as followst
New Mexico, Secretary of. State, Incorporation
foeS •..... * **.•’
•■« *....
§1,.373.00 ■
Attorney f e e . , ; . , . « v . .*-•>.*».•«•'• + ,100.00 1
Telephone and Telegraph.....
« ....«..... .H, . ....
.Recording fo@s» *«««. ••».«»«4<»
«* • >,»* •. *»•!•.»
Abstract/. Coats. *,*••• *..
''.25.00 '
>stock certificates and corporation seal....•« «•«
Jravoling expenses* *♦.* •• *>#v..* •.. •»• •««•
GffioQ expense••*••••••••*••*••««*•«••••••••«»*•
In transaction No.13,
issued to J. F*Sperry
the stated number
at 10^ per share
of shares were
for actual cash advanced
to the Corporation for incorporation expenses*
The value
pershare being placed on the stock toy the Board of
of 10^
arid was justified for the same reason as stated in transaction
No* 9*
■■ (Signed) ■ J, P. S.PKHHY
(Signed) DR* V. R* JONKS
(Signed) ^AS* A* WALSH
A Majority of the Board of Directors*
" t h e ROYAL TURK
mining corporation
Capital stock--No Par Value
Incorporated under the Laws of the State, of New Mexico
1,581,864 shares of registered Common Stock is to toe offered
to the Public at $1.00 per share, subject to the prior sale
and withdrawal*
Further information concerning these securities and their
issue is to be found in the Registration Statement on file with
the Securities and Exchange Commission, Washington, D* G*
Registration Statement may be inspected by any one at the
office of the Commission, without charge and copies of all or
any part of it may be obtained upon payment of the fee prescribe*
by the rules ahd regulations of the Commission*
lio dealer/ agent, or salesman or any other person has been
authorized by the Company to give any information or to make
any representations not contained in this Prospectus in con­
nection with the offer contained herein# and if given or made#
such information or representation must not be rolled upon*
mxxh OTRiI
413 Klee trio Building, Billings, M*#?
508 Midland Building# St* 'Paul# II
school op u m m
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