0000315523-95-000005.txt : 19950811 0000315523-95-000005.hdr.sgml : 19950811 ACCESSION NUMBER: 0000315523-95-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950810 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: USMX INC CENTRAL INDEX KEY: 0000315523 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 841076625 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09370 FILM NUMBER: 95560444 BUSINESS ADDRESS: STREET 1: 141 UNION BLVD STE 100 CITY: LAKEWOOD STATE: CO ZIP: 80228 BUSINESS PHONE: 3039854665 MAIL ADDRESS: STREET 1: 141 UNION BLVD SUITE 100 CITY: LAKEWOOD STATE: CO ZIP: 80228 FORMER COMPANY: FORMER CONFORMED NAME: U S MINERALS EXPLORATION CO DATE OF NAME CHANGE: 19880222 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X]Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1995 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ___________ to ____________ Commission File Number 0-9370 ____________________ USMX, INC. (Exact name of registrant as specified in its charter) ____________________ Delaware 84-1076625 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 141 Union Boulevard, Suite 100 Lakewood, Colorado 80228 (Address of principal executive offices) (Zip Code) (303) 985-4665 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class of Common Outstanding at Stock August 10, 1995 ---------------- --------------- $.001 par value 14,643,519 PART I -- FINANCIAL INFORMATION Item 1. Financial Statements USMX, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) (Amounts in Thousands)
June 30, December 31, 1995 1994 ------------ ------------ ASSETS Cash and equivalents $ 9,000 $ 12,014 Deferred mining and processing costs 2,480 2,344 Federal income taxes receivable 617 274 Other current assets 219 291 ------------ ------------ Total current assets 12,316 14,923 ------------ ------------ Property, plant & equipment 11,340 11,210 Accumulated depreciation, depletion and amortization (3,433) (3,418) ------------ ------------ Net property, plant and equipment 7,907 7,792 Other assets 1,776 1,475 ----------- ----------- Total assets $ 21,999 $ 24,190 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 605 $ 197 Accrued salaries 63 32 Accrued reclamation 369 493 Other accrued liabilities 48 96 ----------- ----------- Total current liabilities 1,085 818 Estimated reclamation liability 361 361 Stockholders' equity Common stock 15 15 Additional paid-in capital 15,810 15,844 Retained earnings 4,728 7,152 ----------- ----------- Total liabilities and stockholders' equity $ 21,999 $ 24,190 =========== =========== The accompanying notes are part of the condensed consolidated financial statements.
USMX, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended June 30, ------------------------------------------------- 1995 1994 1995 1994 -------- -------- -------- -------- Sales $ 392 $ 4,627 $ 778 $ 6,499 Costs applicable to sales 460 3,920 913 5,669 -------- -------- -------- -------- Gross profit (68) 707 (135) 830 General and administrative expenses 690 626 1,250 1,135 Prospecting costs 230 171 476 337 Mineral property abandonments & impairments 1,443 - 1,471 - -------- -------- -------- -------- Loss from operations (2,431) (90) (3,332) (642) Gain on sale of assets - - - - Royalty income 180 180 360 360 Other income, net 142 116 329 219 -------- -------- -------- -------- Income (loss) before income tax provision (2,109) 206 (2,643) (63) Income tax provision (158) (10) (219) - -------- -------- -------- -------- Net income (loss) $ (1,951) $ 216 $ (2,424) $ (63) -------- -------- -------- -------- Income (loss) per common share $ (0.13) $ 0.02 $ (0.16) $ (0.00) ======== ======== ======== ======== Weighted average common and common equivalent shares outstanding 14,823 14,904 14,824 14,860 ======== ======== ======== ======== The accompanying notes are part of the condensed consolidated financial statements.
USMX, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in Thousands)
Six Months Ended June 30, -------------------------- 1995 1994 --------- --------- Net cash provided by (used in) operations $ (1,166) $ 895 --------- --------- Net cash provided by (used in) investing activities: Capital additions and property acquisitions (2,217) (1,518) Proceeds from sale of property, plant and equipment 414 380 Other - 232 --------- --------- (1,803) (906) ========= ========= Net cash provided by (used in) financing activities: Repurchase of common stock (52) (3,200) Proceeds from issuance of common stock 7 268 --------- --------- (45) (2,932) ========= ========= Decrease in cash and equivalents (3,014) (2,943) Cash and cash equivalents at beginning of year 12,014 15,720 --------- --------- Cash and cash equivalents at end of period $ 9,000 $ 12,777 ========= =========
Supplemental Disclosures of Cash Flow Information
Six Months Ended June 30, -------------------------- 1995 1994 ----------- --------- Cash paid during the period for: Interest $ - $ - Income taxes $ - $ (978) The accompanying notes are part of the condensed consolidated financial statements.
USMX, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1 - General The accompanying interim condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for the interim periods presented have been included. Operating results for the three and six month periods ended June 30, 1995 are not necessarily indicative of the results which may be expected for the year ending December 31, 1995. These condensed interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 1994. Certain 1994 amounts in the accompanying financial statements have been reclassified to conform to classifications used in 1995. Note 2 - Deferred mining and processing costs Deferred mining and processing costs in the accompanying consolidated balance sheets represent mining, crushing, pad loading and processing costs associated with ounces of gold in various stages of production as follows:
Ounces of Gold at ----------------------- June 30, December 31, 1995 1994 -------- ---------- Gold bullion and dore 2,700 1,200 Gold in process 5,600 9,100 -------- ---------- Total estimated ounces in process 8,300 10,300 ======== ==========
Note 3 - Property, Plant and Equipment During the second quarter of 1995 the Company received final payment for the sale of its interest in the Kinsley Mountain Project in Elko County, Nevada to Alta Gold Co. ("Alta"). The Company received a cash payment of $400,000 and Alta common stock with a market value of $200,000 based on the average closing price of the stock over the 30 trading days prior to issuance. The payment was in addition to cash of $400,000 and Alta common stock with a market value of $200,000 previously received. The cash proceeds and discounted value of the stock received were recorded as a reduction to the carrying value of the property on the Company's books. The carrying value of the property was reduced to zero and a $1,000 loss was recorded during the second quarter of 1995. USMX, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 3 - Property, Plant and Equipment (concluded) In October 1992, the government of Puerto Rico granted an Exclusive Exploration Permit covering the Cala Abajo copper-gold deposit to the Company's majority owned subsidiary, Southern Gold Resources (USA), Inc. (Southern Gold). Through June 30, 1995, the Company expended approximately $1,040,000 on the Cala Abajo property. In June 1995, the Commonwealth of Puerto Rico adopted legislation which amended the island's mining law to prohibit future mining of metallic deposits by open pit methods. Although the Company is considering various strategies and responses, the effect of the mining law, as currently amended, is to render the Company's plan for development of the Cala Abajo deposit uneconomic. As a result, the Company recorded an impairment loss of $1,040,000 during the second quarter of 1995. Note 4 - Income Taxes The income tax provisions were computed using the expected annual effective income tax rate. The effective income tax rate varies from the statutory rate primarily due to differences in tax and book treatment of statutory depletion on mining properties. Note 6 - Commitments and Contingencies Reclamation Surety Pursuant to the mining reclamation and bonding regulations of the State of Utah, Department of Natural Resources and the Bureau of Land Management, the Company has provided reclamation surety for the Goldstrike Mine in the amount of $2,251,000. The required surety is in the form of a certificate of deposit in the amount of $1,000,000 and a letter of credit in the amount of $1,251,000. The certificate of deposit is reflected in Other assets in the accompanying condensed consolidated statements of financial position. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Financial Condition Liquidity The Company remains in strong financial condition with working capital at June 30, 1995 of $11,231,000. Cash and cash equivalents decreased during the first six months of 1995 by $3,014,000 primarily as a result of cash invested in property, plant and equipment (principally the development of mineral properties) of $2,217,000 and cash used in operating activities of $1,166,000, partially offset by proceeds from the sale of property, plant and equipment of $414,000. Net cash used in operating activities is primarily the result of declining production from the Company's Goldstrike mine and reduced gold sales during the period. At June 30, 1995 the Company had on hand 2,700 ounces of gold bullion and dore with a market value at that date of approximately $1,037,000. Based on the current status of the Company's properties and development plans, management believes that cash and cash equivalents on hand, refined gold available for sale, anticipated cash flow from operations and the unused portion of its bank line of credit should be adequate to fund internally exploration, development and currently scheduled capital requirements for the next 12 months. The Company is engaged in feasibility studies with respect to two mining properties. Each of these properties would require a significant amount of capital to develop. In addition, the Company engages in on-going active evaluations of various opportunities in the mining business which may require significant amounts of capital. Accordingly, it may be necessary for the Company to use its existing internal resources, as well as external sources of capital. Capital Investment During the first six months of 1995 the Company invested $823,000 in exploration activities primarily on its Mexico properties. In addition the Company invested approximately $1,330,000 to further develop the Illinois Creek, Alaska property, the Thunder Mountain, Idaho property and the Cala Abajo, Puerto Rico property. Over the next 12 months, the Company plans to invest approximately $3.5 million in exploration and development activities, including approximately $1,000,000 in Mexico, $2,000,000 at Illinois Creek, Alaska, and $500,000 at Thunder Mountain, Idaho. Results of Operations Fluctuations in the Company's results of operations arise primarily from four factors: (1) changes in the volume of gold sold and the selling price of gold, (2) changes in the cost of gold sold, (3) the cost of mineral properties abandoned or impaired during any given period and (4) asset dispositions. Three months ended June 30 The Company recorded a net loss for the second quarter of 1995 of $1,951,000, compared with net income of $216,000 for the same period of 1994. Change in the Volume of Gold Sold and Selling Price of Gold The following table analyzes the change in gold sales revenue for the quarter ended June 30, 1995 and 1994:
Revenue Variance Analysis Quarter Ended June 30, 1995 1994 --------------------------------------- ------------ ------------- Ounces of gold sold 1,000 12,075 Average price realized per ounce $392 $383 Variances Lower volume ($4,244,000) ($1,112,000) Higher prices 9,000 373,000 --------------------------------------- ------------ ------------- Decrease in gold sales revenue over the comparable period of the preceding year ($4,235,000) ($739,000) --------------------------------------- ------------ ------------- The 1995 increase in the average price realized per ounce is attributable to the favorable gold price during the second quarter of 1995 compared to the same period of 1994. The decrease in ounces sold is the result of reduced production from the Company's Goldstrike Mine and management's decision not to sell all available gold production. At June 30, 1995 the Company had on hand 2,700 ounces of gold bullion and dore valued at approximately $1,037,000. Change in Costs Applicable to Sales Costs applicable to sales totaled $460,000 or approximately $460 per ounce, net of silver credits, for the second quarter of 1995, compared to $3,920,000 or $325 per ounce for the same period of 1994 as set forth in the following table.
Quarter Ended June 30, 1995 1994 ----------------------------------------------------------------------------- Goldstrike Mine ------------------------ Ounces of gold produced 1,509 10,961 Ounces of gold sold 1,000 12,075 Per ounce statistics: Cash production costs incurred $ 231 $ 228 Depreciation, depletion, amortization and reclamation accruals (3) 58 -------- -------- Production cost per ounce produced $ 228 $ 286 ======================================== ======== ======== Gold sales revenue $ 392 $ 383 ---------------------------------------- -------- -------- Production cost per ounce sold 343 260 Change in inventories (19) 51 ---------------------------------------- -------- -------- Cost of gold sold 324 311 Mining Taxes 3 2 Production royalties 136 12 ---------------------------------------- -------- -------- Costs applicable to sales 463 325 ---------------------------------------- -------- -------- Gross profit $ (71) $ 58 ======================================== ======== ========
Production royalties amounted to $136 per ounce of gold sold during the second quarter of 1995, compared to $12 per ounce of gold sold for the same period of 1994. The increase is the result of required monthly minimum royalty payments and reduced gold sales during the second quarter of 1995. Mineral Property Abandonments and Impairments Mineral property abandonments and impairments charged to operations amounted to $1,443,000 for the quarter ended June 30, 1995, compared to none for the same period of 1994. Mineral properties that management determined no longer hold sufficient promise to justify the cost to maintain and which had historical cost totaling $403,000 were written off during the second quarter of 1995, compared to none for the same period in 1994. The properties abandoned during the second quarter were the Jalisco Copper, Mexico ($164,000), La Cienega, Mexico ($111,000), Tule Canyon, Nevada ($65,000) and Divide, Nevada ($63,000) properties. The Company recorded an impairment loss of $1,040,000 during the second quarter of 1995 compared to none for the same period of 1994. See Note 3 to the condensed consolidated financial statements for details. Asset Dispositions During the second quarter of 1995 the Company received final payment for the sale of its interest in the Kinsley Mountain Project in Elko County, Nevada to Alta Gold Co. ("Alta") and recorded a related loss of $1,000. See Note 3 to the condensed consolidated financial statements for details. Six months ended June 30 The Company recorded a net loss for the six month period ended June 30, 1995, of $2,424,000, compared with a net loss of $63,000 for the same period of 1994. Change in the Volume of Gold Sold and Selling Price of Gold The following table analyzes the change in gold sales revenue for the six month period ended June 30, 1995 and 1994:
Revenue Variance Analysis Six Months Ended June 30, 1995 1994 --------------------------------------- ------------ ------------ Ounces of gold sold 2,000 17,075 Average price realized per ounce $389 $381 Variances: Lower volume ($5,739,000) ($1,776,000) Higher prices 18,000 593,000 --------------------------------------- ------------ ------------ Decrease in gold sales revenue over the comparable period of the preceding year ($5,721,000) ($1,183,000) ======================================= ============ ============
The 1995 increase in the average price realized per ounce is attributable to the generally favorable gold price during the first six months of 1995 compared to the same period of 1994. The decrease in ounces sold is the result of reduced production from the Company's Goldstrike Mine and management's decision not to sell all available gold production. At June 30, 1995, the Company had on hand 2,700 ounces of gold bullion and dore valued at approximately $1,037,000. Change in Costs Applicable to Sales Costs applicable to sales totaled $913,000 or approximately $457 per ounce, net of silver credits, for the six month period ended June 30, 1995, compared to $5,669,000 or $332 per ounce for the same period of 1994 as set forth in the following table.
Six Months Ended June 30, 1995 1994 ------------------------------------------------------------------------------------------- Goldstrike Mine ------------------------ Ounces of gold produced 3,676 19,131 Ounces of gold sold 2,000 17,075 Per ounce statistics: Cash production costs incurred $ 204 $ 257 Depreciation, depletion, amortization and reclamation accruals (1) 55 ----------------------------------------- -------- --------- Production cost per ounce produced $ 204 $ 312 ========================================= ======== ========= Gold sales revenue $ 389 $ 381 ----------------------------------------- -------- --------- Production cost per ounce sold 374 349 Change in inventories (49) (40) ----------------------------------------- -------- --------- Cost of gold sold 325 309 Mining Taxes 3 3 Production royalties 129 20 ----------------------------------------- -------- --------- Costs applicable to sales 457 332 ----------------------------------------- -------- --------- Gross profit $ (68) $ 49 ========================================= ======== =========
Production royalties amounted to $129 per ounce of gold sold during the first six months of 1995, compared to $20 per ounce of gold sold for the same period of 1994. The increase is the result of required monthly minimum royalty payments and reduced gold sales during the first six months of 1995. Mineral Property Abandonments and Impairments Mineral property abandonments and impairments charged to operations amounted to $1,471,000 for the six month period ended June 30, 1995, compared to none for the same period of 1994. Mineral properties that management determined no longer hold sufficient promise to justify the cost to maintain and which had historical cost totaling $431,000 were written off during the first six months of 1995, compared to none for the same period in 1994. The properties abandoned during the first six months were the Jalisco Copper, Mexico ($164,000), La Cienega, Mexico ($111,000), Tule Canyon, Nevada ($65,000), Divide, Nevada ($63,000), Jedadiah, Utah ($15,000) and Ancho Canyon, New Mexico ($13,000) properties. The Company recorded an impairment loss of $1,040,000 during the first six months of 1995 compared to none for the same period in 1994. See Note 3 to the condensed consolidated financial statements for details. Asset Dispositions During the first six months of 1995 the Company received final payment for the sale of its interest in the Kinsley Mountain Project in Elko County, Nevada to Alta Gold Co. ("Alta") and recorded a related loss of $1,000. See Note 3 to the condensed consolidated financial statements for details. PART II -- OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. The annual meeting of stockholders was held on May 23, 1995 in Lakewood, Colorado. Three proposals were submitted by management as described in the Company's Proxy Statement dated April 14, 1995, and were voted upon and adopted by stockholders at the meeting. The table below briefly describes the proposals and results of the stockholder votes. Election of three directors to group I, to serve until the annual meeting of stockholders in 1998 and until their respective successors shall have been duly elected and qualified: For Withhold George J. Allen 12,075,938 224,293 Werner G. Nennecker 12,074,618 225,613 Robert Scullion 12,076,768 223,463
Votes in Votes favor Opposed Abstained Not Voted To approve the increase in the number of shares reserved under the Corporation's 1987 Stock Option Plan from 1,200,000 shares to 2,000,000 shares 8,671,685 781,157 123,006 2,724,383 To approve an extension of the term of options from three years to ten years under the Corporation's Non-Discretionary Stock Option Plan for non-employee directors 11,234,544 711,209 178,534 175,944
Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits - None (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended June 30, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. USMX, INC. (Registrant) Date: August 10, 1995 By: /s/ Donald E. Nilson Donald E. Nilson, Vice President - Finance, Secretary, Chief Financial Officer Date: August 10, 1995 By: /s/ Daniel J. Stewart Daniel J. Stewart, Controller, (Principal Accounting Officer) EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 2ND QTR 10-Q
5 1,000 Dec-31-1994 Jan-01-1995 Jun-30-1995 6-MOS 9000 0 617 0 2480 12316 11340 3433 21999 1085 0 0 0 15 20538 21999 778 1467 913 4110 0 0 0 (2643) (219) (2424) 0 0 0 (2424) (0.16) (0.16)