ITEM 1. BUSINESS
Results of Operations.
Earnings and Cash Flows from Operating Activities.
For the year ending June 30, 2004, Gold Hill Corporation
("the Company") realized a net loss which is detailed
in the financial section of this report.
The net loss was due to exploration expenses
related to the Tonopah - N. Goldfield gold prospect
located in Nevada, and to the drilling and
completion of the West Star 1-6 oil and gas
well located in Oklahoma.
Summary of Business this Year
ITEM 1: BUSINESS
Mineral Exploration.
During the year, the company continued its search
for gold prospects in northern Nevada along the famous
Carlin and Battle Mountain gold trends. Study is also
continuing of several past gold camps off-trend,
particularly Tonopah and Goldfield in central Nevada.
As previously reported, the Company conducted extensive
surveys over these gold trends using a proprietary detection
method referred to as the Frequency Analyzer which has
deep penetration capability as well as long-range detection.
The search resulted in locating a large gold anomaly
on the northwest end of the Carlin gold trend in the pediment
about six to eight miles northeast of the small community of
Paradise Valley. The survey was followed up by
staking 108 lode mining claims on public lands
controlled by the Bureau of Land Management (BLM). The
prospect was named Spring City Gold Prospect, so-named for
the long-abandoned small gold-silver camp of Spring City
located 3 miles beyond the prospect in rugged mountain
terrain. Spring City is totally abandoned, population zero.
The gold anomaly on this prospect appears to be exceptionally
large with major potential in gold.
The Spring City Gold Prospect is considered a high risk venture
because of its location in the pediment area in the range front
where there are no rock outcrops to study and where the prospect
is concealed beneath several hundred feet of barren alluvium eroded
off the adjoining mountain range composed of late flow volcanics.
From management’s studies, the anomaly is large and at moderate
depths. The Spring City district has attracted many companies
from time to time, including several majors such as Newmont and
Amax, but none has drilled in the pediment area. Depth to
mineralization is estimated at approximately 500-750 ft.
Six preliminary drill holes have been permitted and bonded with
the BLM. Drilling has been delayed there due to our
exploration activities on the N. Goldfield prospect.
Early in 2003, management completed its exploration survey of
the Tonopah-Goldfield area in central Nevada searching for hidden
gold deposits around the famous gold-silver camps. A strong
anomaly was detected in the pediment area about 10-15 miles
north of the old gold mining camp of Goldfield in Esmeralda County.
Subsequently, 64 lode mining claims were staked to cover the anomaly.
Four preliminary drill holes were permitted and bonded with the BLM.
In early December, after waiting months for an available drill rig, two
of the permitted holes were drilled. The first drill hole encountered
an epithermal quartz vein, the host rock for the important gold-silver
deposits of the area. The hole was considered a geological success,
although the gold-silver values were only slightly anomalous. The
second drill hole missed the vein. However, from the results of hole
#1, management was very encouraged and secured permits
from the BLM to drill follow-up holes in an attempt to find ore deposits
in the vein zone. The prospect is considered shallow with depths under
300 feet to the top of the vein. Total drilling depths are expected
to be under 1,000 feet initially.
During March and April, 2004, management conducted
a grid survey of the North Goldfield property on
150 - 300 ft centers using its proprietary frequency
analyzer. This work resulted in detection and outline
of a large gold-silver structural anomaly in a
quartz epithermal vein system extending southerly
from Drillhole GN-1 (Goldfield North-1). Other
anomalies were also detected further south
suggesting that our prospect may be part of an
important trend of undiscovered gold deposits.
Subsequently, in late April, management staked an
additional large block of lode claims to cover
these newly-found anomalies. During June and July, 2004
eleven shallow holes (total 6,000’) were drilled
southerly of GN-1 in the epithermal vein system.
Although abundant quartz veining and iron oxide
were encountered, the gold values were very weak.
Management continues to be encouraged geologically.
more drill holes are planned to the south where
Strong anomalies have been detected. The anomalous
Area is over three miles in length trending towards
Goldfield.
ITEM 2:
ITEM 2: PROPERTIES
Oil and Gas Properties.
The Company is also continuing to focus efforts toward
oil and gas exploration. The Company is currently
participating with Oil Creek Production Company
in search of oil and gas prospects in east-central
Oklahoma where several prospects have been identified.
The prospects are considered “wildcat” plays with
significant potential, but as “wildcats” these prospects
should be considered high-risk.
The prospects currently under study have potential
of 1 to 5 million barrels each, which if successful could
favorably impact the share value of Gold Hill stock.
One of these prospects was drilled.
In May 2004, Gold Hill participated in a well with
West Star Producing Company to earn a 25%
working interest in the South Wanette Layton Oil
unit, which includes 1520 unitized acres, five
stripper wells, a tank battery and flow lines. The
well was drilled to a depth of 4,000 feet and
completed in the Calvin oil sand which was the
main objective at about 3,860 ft. Initial production
was about 200-300,000 cu ft of gas/day with
small amounts of oil. Management believes it to
be an edge well and should be given a sand frac
to reach out into the sand channel where porosity
and permeability should be much greater. The well
has been shut in since its completion in May. The
well will be given a sand frac as soon as a rig is
available. Large amounts of oil are expected in
the channel.
The Layton oil sand was encountered in the
well at about 3,100 feet and had good
development.
An oil reserve study made of the Layton oil
sand unit (1,520 ac) indicates potentially recoverable
oil reserves by improved waterflood methods to be
over 2 million barrels, including perhaps as much
as 1 million barrels recoverable by primary methods.
The Layton oil zone has not yet been adequately
drained by previous production due to well spacing
and failed waterflood attempts.
Management will operate the well through completion
after which West Star will continue as operator of the
unit. Development of the Layton and Calvin zones
will be pursued by subsequent drilling.
ITEM 3:
ITEM 3: OPERATIONS
General Operations.
Gold Hill will continue its conservative policy of
avoiding debt and maintaining very low overhead
costs. No salaries will be paid or allowed to
accrue at this time. Gold Hill will not be
charged for the use of office space currently
provided by its principals.
Private Placement.
Gold Hill is continuing to make a private placement of
its shares of its common stock in order to
finance a portion of the costs of the projects
described above. During this quarter, the Company
sold 55,000 shares at $1.00 per share.
Competition and Risks.
The business environment is very
competitive and there are a number of significant risks
associated with oil and gas, and mineral exploration and
production, including operations as well as exploration.
Gold Hill Corporation intends to seek
high-potential
prospects as well as lower-risk, lower-potential development ones.
However, the major effort will be towards wildcat prospects with
potential of 1,000,000 bbls or greater.
Regulation.
The domestic exploration for mineral, including oil and
gas is subject to various state and federal environmental
laws, rules, and regulations.
Operators in the industry are subject to the Clean Water Act and
damages which could arise out of environmental pollution.
Corporate History. Gold Hill Corporation is an exploration company
focused on large wildcat major oil, gas, and gold prospects, which if
successful will significantly impact upon the value of the Company's
stock. In addition to the Nevada Gold prospecting, Gold Hill is active in
oil and gas exploration.
Although Gold Hill is a public company, it is considered to be a
developing company and its stock does not presently trade.
Management's policy is to withhold stock trading until an
important discovery is made.
Gold Hill's management is comprised of experienced and successful
explorationists who are qualified to carry forth the goals and
aspirations of the company. The primary goal of the company is to
discover a major deposit while avoiding debt. At the same time, the
company is focusing on retaining a large interest in each prospect so
that a discovery will have a dramatic impact on stock value to the
benefit of the shareholders.
Gold Hill's executive and operations offices are located in Oklahoma
at 2233 West Lindsey,
Suite 117, Norman, Oklahoma 73069 (telephone
405-321-8371). Unless the context otherwise requires, the term "Gold
Hill" as used herein refers to Gold Hill Corporation.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS
The annual shareholder's meeting for the fiscal year ending
June 30, 2004 was previously held by shareholders
representing the majority of shares outstanding.
The present slate of officers were re-elected to serve
for the upcoming year. They are:
Earl W. Smith (1) President and Director
T. J. Simek (2) Vice-President and Director
Paul W. Smith (3) Director
Susan Nash, Ph.D. (4)
Secretary-Treasurer
(1) Earl W. Smith, President and Director: Mr. Smith has been actively
involved in geological exploration and development since 1954, after
receiving B.S. and M.S. degrees in Geology from the University of
Oklahoma. He served as regional exploration geologist for Samedan Oil
Corporation from 1954-1961. In
addition to exploration geology in both
mining and the oil industries, Mr. Smith possesses corporate management
experience, serving as the president of Siskon Corporation, a public
company engaged in mining exploration, from 1970-1981. Since 1981, he
has been a successful independent geologist.
(2) T.J. Simek, Vice President and Director: Mr. Simek has been
engaged in the oil and gas industry since 1959, gaining expertise
in
virtually every aspect of drilling and completion operations. In
addition to field operations management, Mr. Simek is actively involved
in land acquisition and leasing. Since 1978, Mr. Simek has served as
the president of Simek Oil Properties, Inc., a private company engaged
in oil drilling, completing, and producing.
(3) Paul W. Smith, Director: Mr. Smith has developed and
supervised
geological and geophysical field investigations for oil and gas, as
well as gold exploration and development. Further, he has developed
computer modeling programs that result in more accurate processing of gravity
and magnetic data. While his degrees are in Geology (B.S. Oklahoma, 1982,
M.S. Oklahoma, 1992), he has obtained additional training in geophysics,
as well as valuable field experience, especially in the Nevada Basin and
Range Province. In addition, he has managed oil and gas exploration
and development programs, including the acquisition of existing production.
(4) Susan Smith Nash, Ph.D. Secretary-Treasurer: Dr. Nash's
academic
credentials include a B.S. in Geology, an M.A. in English, and
extensive graduate work in economics. She holds a Ph.D. in
English from the University of Oklahoma. She has worked
on projects relating to the petroleum industry and economic
diversification in several countries, including Kazakhstan,
Uzbekistan, Azerbaijan, Colombia, Venezuela, and other
countries in South America.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Markets for Common Stock.
The market for Gold Hill's Common Stock is
inactive at the present time, but the Company will be
seeking an over-the-counter or lesser market depending
upon its asset growth. Or, Gold Hill may seek an industry
buyer or merger.
Private Placement.
The company is seeking to privately place shares
of its restricted common stock at $1.00 per share.
These units may only be offered and sold to
those who meet the suitability standards for investment
as expressed in an offering circular that accompanies
the
private placement memorandum.
Dividends.
Gold Hill paid no cash dividends during the
fiscal year ended June 30, 2004. No dividends will be
paid in the immediate future. All profits and proceeds
are to be reinvested in the company.
There is no open
market for Gold Hill stock at this time, and none will be
developed until conditions change to the satisfaction
of management.
At June 30, 2004, 5,293,322 shares of common stock
were outstanding. There are approximately 140
shareholders.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Gold Hill is considered a developing company, and
management plans to obtain operating capital through
joint ventures,
geological consulting services, and private
placements of restricted stock. The proceeds of private
placements will be used to fund the acquisition of favorable
oil and gas prospects and testing of its Nevada gold prospects.
Private Placement.
Further efforts will continue to make a
private placement of restricted stock at $1.00 per
share.
The company plans to maintain a minimum price for the private
placement restricted stock at $1.00 per share for an additional
six months, and that the effort would be extended for that time.
In the event of drilling successes, Gold Hill may continue to
market restricted stock in a private placement at a higher price
per share, depending upon market conditions. In line with its
conservative policies, the management of Gold Hill will not market
more stock than its immediate capital needs in order to keep the
number of shares outstanding at a minimum.
Oil and Gas Leases.
Gold Hill is looking at additional oil and
gas prospects to lease in the forthcoming year.
Salaries and Operations Overhead.
It was agreed that Gold Hill will continue its policy of paying no
salaries to its officers and directors, and that it will continue
to use the offices of its directors rent-free.
Stock Options.
It was agreed that no stock options will be offered at
this time.
ITEM 8:
ITEM 8:
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report
thereon of Ron Kirkpatrick, C.P.A., are contained within this report.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-K as prescribed
by the Securities and Exchange Commission. All material adjustments
which, in the opinion of
Management, were necessary for a fair
presentation of the results for the interim periods have been reflected.
Gold Hill Corporation
Balance Sheet
June 30, 2004
Current Assets
BANK OF OKLAHOMA
$ 205,414.49
BANK OF OKLAHOMA 77,967.50
ARVEST MONEY MARKET 104,336.59
A/R - Stockholders 2,075.51
Paradise Valley Bond 4,309.00
Tonopah Gold Bond 942.00
Treasury Fund Account 100,866.31
A/R -
Stockholders 2,075.51
----------------------
Total Current Assets $ 495,911.40
Fixed Assets
FURNITURE AND FIXTURES $ 588.46
WEST-STAR 1-6 146,951.00
TANGIBLE EQUIPMENT 31,952.75
ACCUMULATED DEPRECIATION
(32,091.21)
--------------
Total Fixed Assets 147,401.00
Total Assets $ 643,312.40
Current Liabilities none
Equity
COMMON STOCK $ 1,066,400.00
RETAINED EARNINGS (579,158.34)
PAID-IN CAPITAL 247,904.00
Current Income (Loss) ( 91,833.26 )
----------------
Total Equity $ 643,312.40
Total Liabilities and Equity $ 643,312.40
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE
OFFICERS
OF THE REGISTRANT
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
There were no salaries or other compensation paid to executives during
the fiscal year ending June 30, 2004. The Company resolved to not pay
salaries or compensation to executives during the upcoming year.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Not applicable.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Oil Creek Production, a privately-held corporation owned by Simek and
Smith is the manager of the West Star 1-6 well through completion
at cost. West Star Producing Company is wholly owned by director,
Paul Smith. Mr.Smith will retain a small royalty in the Nevada
gold properties.
Management stock. Part of Gold Hill's restricted stock is owned
or controlled directly or indirectly by present
management as follows:
Direct Indirect
T. J. Simek Director 810,235
Paul W. Smith Director 540,157
Earl W. Smith Director 1,080,394
Susan Smith Nash secretary-treasurer
110,000 50,000
Total Direct shares: 110,000
Indirect shares: 2,480,786
Stock owned by management, acquired in the open market:
Direct
Indirect
Susan Smith Nash
Secretary-Treasurer 1,000
Earl W. Smith Director 89,470
Stock Options.
The Company does not have a plan to grant any stock
options to any of its officers or directors.
SIGNATURES
Pursuant to the requirements of Sections 13 and 14 (D) of the
Securities
Exchange Act of 1934, the registrant has duly caused this report to
be
signed on its behalf of Undersigned, there unto duly authorized.
GOLD HILL CORPORATION