-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Sgkwyrdx7iJAC33lFEQd4fpGxBqVrOvJOFoTgGdMQliMFVWA61NEzyCGd2GB26Hp CX2hlXWe03GzTUFT1rMnlA== 0000315523-96-000008.txt : 19960517 0000315523-96-000008.hdr.sgml : 19960517 ACCESSION NUMBER: 0000315523-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 96566258 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 March 31, 1996 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 May 14, 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)
March 31, December 31, 1996 1995 --------------- ---------------- ASSETS Cash and equivalents $ 2,922 $ 5,226 Federal income taxes receivable 393 381 Other current assets 228 227 --------------- ---------------- Total current assets 3,543 5,834 --------------- ---------------- Property, plant & equipment 14,728 13,291 Accumulated depreciation, depletion and amortization (3,507) (3,475) --------------- ---------------- Net property, plant and equipment 11,221 9,816 Other assets 1,641 1,819 --------------- ---------------- Total assets $ 16,405 $ 17,469 =============== ================ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 119 $ 312 Accrued salaries 30 73 Accrued reclamation 339 304 Other accrued liabilities 16 51 --------------- ---------------- Total current liabilities 504 740 Estimated reclamation liability 535 885 Stockholders' equity Common stock 15 15 Additional paid-in capital 15,583 15,583 Retained earnings (232) 246 --------------- ---------------- Total liabilities and stockholders' equity $ 16,405 $ 17,469 =============== ================ 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 March 31, ------------------------------- 1996 1995 -------------- ------------- Sales $ - $ 386 Cost applicable to sales - 453 -------------- ------------- Gross (Loss) - (67) General and administrative expenses 564 560 Prospecting costs 194 246 Mineral property abandonments - 28 -------------- ------------- Loss from operations (758) (901) Royalty income 180 180 Other income, net 77 187 -------------- ------------- Loss before income tax provision (501) (534) Income tax provision (23) (61) -------------- ------------- Net loss $ (478) $ (473) -------------- ------------- Loss per common share $ (0.03) $ (0.03) -------------- ------------- Weighted average common and common equivalent shares outstanding 14,739 14,820 ============== ============= 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)
Three Months Ended March 31, --------------------------- 1996 1995 ------------- ---------- Net cash used in operations $ (867) $ (856) ------------- ---------- Net cash provided by (used in) investing activities: Capital additions and property acquisitions (1,437) (724) Proceeds from sale of property plant and equipment - (17) ------------- ---------- (1,437) (741) ------------- ---------- Net cash provided by (used in) financing activities: Repurchase of common stock - (52) ------------- ---------- - (52) ------------- ---------- Increase (decrease) in cash and equivalents (2,304) (1,649) Cash and cash equivalents at beginning of year 5,226 12,014 ------------- ---------- Cash and cash equivalents at end of period $ 2,922 $ 10,365 ============= ========== Three Months Ended Supplemental Disclosures of Cash Flow Information March 31, --------------------------- 1996 1995 ------------- ---------- Cash paid during the period for: Interest $ - $ - Income taxes $ - $ 123 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 month period ended March 31, 1996 are not necessarily indicative of the results which may be expected for the year ending December 31, 1996. These interim condensed 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, 1995. Note 2 - 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 3 - 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 $1,851,000. The required surety is in the form of a certificate of deposit in the amount of $800,000 and a letter of credit in the amount of $1,051,000. The certificate of deposit is reflected in Other assets in the accompanying condensed consolidated statements of financial position. Note 4 - Subsequent Events On May 10, 1996 the Company received a $2.5 million, 8.75% fixed rate loan from Pegasus Gold Corporation (Pegasus). The loan is repayable over a 50 month period beginning June 1, 1996. The loan is collateralized by the Company's interest in Montana Tunnels. In lieu of loan payments by the Company, Pegasus will retain the $60,000 per month Montana Tunnels royalty payments that it would otherwise make to the Company. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Financial Condition Liquidity Cash and cash equivalents decreased during the first three months of 1996 by $2,304,000 primarily as a result of cash invested in property, plant and equipment (principally development of the Illinois Creek, Alaska property ) of $1,437,000 and net cash used in operating activities of $867,000. No gold sales were made during the first three months of 1996 resulting in a net use of cash in operations for the period. It is the Company's goal to commence mining on the Illinois Creek Mine in the summer of 1996. The Company estimates that the cost necessary to develop the Illinois Creek Mine and place it into production will be approximately $26.6 million, including approximately $4.7 million in working capital and $4 million in property acquisition costs which may be paid by the issuance of Company Common Stock. The Company intends to use its internal cash resources and the proceeds from borrowings to finance the development and construction costs. The Company has obtained a commitment for a $22 million facility to finance the development and construction costs of the Illinois Creek Project. The Company will need to promptly finalize, and commence use of funds from this facility, in order for the Company to commence mining in the summer of 1996. Closing is subject to several conditions, including completion of a satisfactory due diligence report from an independent engineering firm, the Company's receipt of necessary permit approvals, completion of documentation satisfactory to the Lender, and transfer of title to the property. Transfer of the property is contingent upon the payment of the $4 million purchase price. The Company has agreed with North Pacific Mining Company (NPMC) that, concurrent with the transfer of title to the Company, NPMC will receive a first perfected priority security interest in the property (subject to subordination to a lender providing financing for the project upon terms reasonably acceptable to NPMC). If commercial production has not been achieved on the property by December 16, 1999, the Agreement with NPMC will terminate, and the property will revert to NPMC. Failure of the Company to complete this financing may jeopardize severely the Company's ability to complete development of the Illinois Creek Project. Moreover, since December 31, 1995, the Company has utilized the substantial portion of its working capital for further development of the Illinois Creek Project. Any delay in construction, and future operation, of the Illinois Creek Project could create significant liquidity problems for the Company. It is expected that the Company will be a guarantor of the $22 million facility until it has been demonstrated that the Illinois Creek Mine is operating in a manner satisfactory to the lender. There can be no assurance when, or if, this will occur, and the Company could have a substantial debt burden without other resources to make repayment. In addition, it is expected that the final loan documentation will include covenants restricting the Company's future business activities without the lender's consent, including other project financing and the payment of any dividends. Such restrictions could affect the Company's operations and future plans. The Company has filed a Notice of Intent to Operate with the Idaho Department of Lands describing the Company's proposed gold and silver mining activities in the Thunder Mountain Project. If the Thunder Mountain Project is sufficiently attractive to warrant continued development and the necessary permits and financing are obtained, it is possible that construction could commence in 1997. Management estimates that substantial capital would be required for construction of facilities and other development activities at Thunder Mountain. The Company has neither sought or obtained commitments for outside financing for the Thunder Mountain Project. The Company's ability to obtain outside financing for the Thunder Mountain Project or other future projects will depend, among other things, upon the price of gold and perceptions of future prices. Therefore, availability of funding is dependent largely upon factors outside the Company's control, and cannot be predicted. The Company does not know from what specific sources it will be able to derive any required funding. Any such financing, if available, could increase the indebtedness of the Company or dilute current stockholders' positions. If the Company acquires such funding through debt, a substantial portion of the Company's cash flow may need to be devoted to the payment of principal and interest on such debt, which could render the Company more vulnerable to competitive pressure or economic downturns. If the Company is not able to raise additional funds (and there can be no assurance that it can, or that if it can, such funds will be on terms acceptable to the Company) it will not be able to fund certain exploration and development activities on its own. Capital Investment During the first three months of 1996 the Company invested $1,096,000 to develop the Illinois Creek, Alaska property. In addition the Company invested approximately $341,000 to further explore its Mexico properties and develop the Thunder Mountain, Idaho property. Over the next 12 months, the Company plans to invest approximately $21.5 million in development, including approximately $21,000,000 at Illinois Creek, Alaska, and $500,000 at Thunder Mountain, Idaho. In addition, the Company plans on investing approximately $500,000 on exploration activities in Mexico. Results of Operations The Company sustained a net loss for the first quarter of 1996 of $478,000, compared with a net loss of $473,000 for the same period of 1995. Fluctuations in the Company's results of operations typically arise 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 during any given period and (4) asset dispositions. Change in the Volume of Gold Sold and Selling Price of Gold The following table analyzes the variance in gold sales revenue for the quarter ended March 31, 1996 and 1995:
Revenue Variance Analysis Quarter Ended March 31, 1996 1995 ---------- ------------ Ounces of gold sold - 1,000 Average price realized per ounce $ $ 386 - Variances Lower volume ($386,000) ($1,498,000) Higher prices - 12,000 ---------- ------------ Decrease in gold sales revenue over the comparable period of the preceding year ($386,000) ($1,486,000) ---------- ------------
The decrease in the ounces sold is the result of the termination of production and the commencement of rinsing at the Company's Goldstrike Mine on October 1, 1995. The small amount of gold recovered during the rinsing process is recorded as a reduction to the rinsing costs. Change in Cost Applicable to Sales There were no costs applicable to sales for the first quarter of 1996, compared to $453,000 or $453 per ounce for the same period of 1995. The fluctuation in the cost of gold sold is a result of the change from period to period in the mix of production from the Company's mines and the change in production throughout the life of each mine as illustrated in the following table.
Quarter Ended March 31, 1996 1995 ------------------- Goldstrike Mine ------------------- Ounces of gold produced - 2,168 Ounces of gold sold - 1,000 Per ounce statistics: Cash production costs incurred $ - $ 186 Depreciation, depletion, amortization and reclamation accruals - 1 ------ ------ Production cost per ounce produced $ - $ 187 ====== ====== Gold sales revenue $ - $ 386 ------ ------ Production cost per ounce sold - 405 Change in inventories - (79) Mining Taxes - 3 Production royalties - 124 ------ ------ Costs applicable to sales - 453 ------ ------ Gross (Loss) $ - $ (67) ====== ======
Mineral Property Abandonments No property abandonments were charged to operations for the first three months of 1996 compared to $28,000 for the same period of 1995. Asset Dispositions For the first three months of 1996, no gains or losses were recorded. During the same period of 1995, a $3,000 gain was recorded as the result of asset disposals. Other Factors Other operating expense, including general and administrative expense and prospecting costs, was $758,000 for the first three months of 1996 compared to $834,000 for the same period of 1995. Other income, primarily interest, was $77,000 for the first three months of 1996 compared to $187,000 for the same period of 1995. PART II -- OTHER INFORMATION Item 5. Other Information On May 10, 1996 the Company received a $2.5 million, 8.75% fixed rate loan from Pegasus Gold Corporation (Pegasus). The loan is repayable over a 50 month period beginning June 1, 1996. The loan is collateralized by the Company's interest in Montana Tunnels. In lieu of loan payments by the Company, Pegasus will retain the $60,000 per month Montana Tunnels royalty payments that it would otherwise make to the Company. 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 March 31, 1996. 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: May 15, 1996 By: /s/ James A. Knox James A. Knox, President Date: May 15, 1996 By: /s/ Daniel J. Stewart Daniel J. Stewart, Controller, (Principal Accounting Officer) EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 1,000 3-MOS DEC-31-1996 MAR-31-1996 2,922 0 393 0 0 3,543 14,728 3,507 16,405 504 0 15 0 0 15,351 16,405 0 257 0 0 758 0 0 (501) (23) (478) 0 0 0 (478) (0.03) 0
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