XML 20 R7.htm IDEA: XBRL DOCUMENT v3.19.2
1. Basis of Presentation
6 Months Ended
Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation

The unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three and six month periods ended June 30, 2019 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2019.

 

For further information refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

 

Going Concern Consideration

 

At June 30, 2019, the Company’s consolidated financial statements show negative working capital of approximately $2.7 million and accumulated deficit of approximately $26.9 million.  In addition, the Company has a net loss of $1,193,499 for the six month period ended June 30, 2019, and the Company has had recurring operating losses for most of the prior periods.  These factors indicate that there may be doubt regarding the ability to continue as a going concern for the next twelve months. 

 

The continuing losses are principally a result of the falling prices of antimony and the Company’s antimony operations and production costs incurred in Mexico.

 

Regarding the antimony division, prices decreased approximately 13% in the first six months of 2019 compared to the same period in the prior year.  For the six months ended June 30, 2019, the average sale price for antimony was approximately $3.73 per pound compared to a price of $4.28 per pound for the six months ended June 30, 2018. During 2018, we endured supply interruptions from our North American supplier, but shipments have resumed, although at a lower level than years prior to 2018. A new supply agreement negotiated with our North American supplier in 2017 has helped us with cash flow from our antimony division in 2018, but falling prices for antimony have caused us to see a need for a better supply agreement in 2019.

 

In 2017, we reduced costs for labor at the Mexico locations which has resulted in a lower overall production costs in Mexico and we adjusted operating approaches at Madero that resulted in decreased operating costs for fuel, natural gas, electricity, and reagents for 2018 and 2019. In June of 2019, we again reached agreement with our miners in Mexico to reduce labor costs, and we completed installation of one of the large rotating furnaces (LRFs) we obtained from the Lanxess transaction, which has resulted in lower operating costs. The Company’s 2019 plan involves ramping up production at our antimony properties in Mexico, and installing additional LRFs obtained from Lanxess. Our expectations are that in the second half of 2019 we can substantially increase the antimony output from our Mexican properties from the 2018 production. We are producing and selling antimony metal directly from Mexico to customers which will save us approximately $0.38 per pound in processing costs and freight. In addition, a new leach circuit expected to come on line during 2019 in Mexico will result in more extraction of precious metals. The portion of the precious metals recovery system at the Madero smelter is complete and the cyanide leach circuit being built at the Puerto Blanco plant is expected to be completed and tested in the third quarter of 2019. We expect to be receiving income from the production of precious metals some time during the third quarter of 2019. We believe that with the lower cost per pound due to increased production and the savings from shipping metal directly from Mexico, we will have positive cash flow for Mexican antimony production by the end of the year and that we will be selling precious metals produced from Los Juarez before the end of 2019. Our orders for antimony were slow during the latter part of the second quarter of 2019, which we believe was caused by the uncertainties of trade with China.

 

Over the past several years, the Company has been able to make required principal payments on its debt from cash generated from operations without the need for additional borrowings or selling shares of its common stock. The Company plans to continue keeping current on its debt payments in 2019 through cash flows from operations while we continue with the expansion of our Mexican operation. As of August 14, 2019, we have received payment and are in the process of completing a common stock private placement for $444,160 to complete the precious metals circuit at our Puerto Blanco milling facility, and to make cost saving repairs at our Montana smelter. Management believes that the actions taken to increase our capital, and to increase production and revenue from both antimony and precious metals, along with a reduction in production costs, will enable the Company to meet its obligations for the next twelve months.