-----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, HO1bl5Zi08eSvsKqeJtmDRjHf/ytSNNrr/ZbZiGdXYJ+5FgIuNRjhNkIQbYrIqYG QsmBk7yxREENi7/xLgQA3w== 0000938347-95-000011.txt : 19951121 0000938347-95-000011.hdr.sgml : 19951121 ACCESSION NUMBER: 0000938347-95-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951114 FILED AS OF DATE: 19951114 DATE AS OF CHANGE: 19951117 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: USMX INC CENTRAL INDEX KEY: 0000315523 STANDARD INDUSTRIAL CLASSIFICATION: 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: 95593285 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 September 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 November 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)
September 31, December 31, 1995 1994 -------------- ------------- ASSETS Cash and equivalents $ 6,039 $ 12,014 Deferred mining and processing costs 1,894 2,344 Federal income taxes receivable 662 274 Other current assets 210 291 -------------- ------------- Total current assets 8,805 14,923 -------------- ------------- Property, plant & equipment 13,008 11,210 Accumulated depreciation, depletion and amortization (3,446) (3,418) -------------- ------------- Net property, plant and equipment 9,562 7,792 Other assets 1,773 1,475 -------------- ------------- Total assets $ 20,140 $ 24,190 ============== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 408 $ 197 Accrued salaries 83 32 Accrued reclamation 817 493 Other accrued liabilities 128 96 -------------- ------------- Total current liabilities 1,436 818 Estimated reclamation liability 573 361 Stockholders' equity Common stock 15 15 Additional paid-in capital 15,583 15,844 Retained earnings 2,533 7,152 -------------- ------------- Total liabilities and stockholders' equity $ 20,140 $ 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 Nine Months Ended September 30, --------------------------------------------- 1995 1994 1995 1994 -------- ------- ------- -------- Sales $ - $ 3,697 $ 778 $ 10,196 Costs applicable to sales 128 3,164 1,041 8,834 -------- ------- ------- -------- Gross profit (128) 533 (263) 1,362 General and administrative expenses 642 556 1,892 1,689 Prospecting costs 129 194 605 532 Abandonments & impairments 1,641 40 3,112 40 -------- ------- ------- -------- Loss from operations (2,540) (257) (5,872) (899) Gain on sale of assets - - - - Royalty income 180 180 540 540 Other income, net 120 145 449 364 -------- ------- ------- -------- Income (loss) before income tax provision (2,240) 68 (4,883) 5 Income tax provision (45) (321) (264) (321) -------- ------- ------- -------- Net income (loss) $(2,195) $ 389 $(4,619) $ 326 -------- ------- ------- -------- Income (loss) per common share $ (0.15) $ 0.02 $ (0.31) $ 0.02 ======== ======= ======= ======== Weighted average common and common equivalent shares outstanding 14,720 14,924 14,787 14,857 ======== ======= ======= ======== 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)
Nine Months Ended September 30, ---------------------- 1995 1994 -------- -------- Net cash provided by (used in) operations $(2,186) $ 2,186 -------- -------- Net cash provided by (used in) investing activities: Capital additions and property acquisitions (3,972) (3,134) Proceeds from sale of property, plant and equipment 456 380 Other (52) (34) -------- -------- (3,568) (2,788) -------- -------- Net cash provided by (used in) financing activities: Repurchase of common stock (227) (3,200) Proceeds from issuance of common stock 6 290 -------- -------- (221) (2,910) -------- -------- Decrease in cash and equivalents (5,975) (3,512) Cash and cash equivalents at beginning of year 12,014 15,720 -------- -------- Cash and cash equivalents at end of period $ 6,039 $12,208 ======== ========
Supplemental Disclosures of Cash Flow Information
Nine Months Ended September 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 nine month periods ended September 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 Due to adverse weather conditions at the Company's Goldstrike Mine in Utah, no cyanide was added to the process solutions between November of 1994 and June of 1995. After adding cyanide in June, gold recovery increased in July, but declined sharply in August and September. This unexpected decline in gold recovery triggered a reevaluation of the estimated remaining recoverable gold ounces in the heaps and the remaining estimated life of mine costs through the anticipated closure of the property in 1997. As a result, the Company recorded an impairment loss of $1,620,000 during the quarter ended September 30, 1995. 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 ------------------------------ September 30, December 31, 1995 1994 ------------- ------------ Gold bullion and dore' 4,931 1,200 Gold in process - 9,100 ------------- ------------ Total estimated ounces in process 4,931 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. 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. In October 1995, the Company was advised that, as a result of the reclamation work accomplished by the Company at the Goldstrike Mine, the required surety had been reduced by approximately $404,000. Management is in the process of effecting reductions in the certificate of deposit and the letter of credit outstanding to reflect the reduced requirement. 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 September 30, 1995 of $7,369,000. Cash and cash equivalents decreased during the first nine months of 1995 by $5,975,000 primarily as a result of cash invested in property, plant and equipment (principally the development of mineral properties) of $3,972,000 and cash used in operating activities of $2,186,000, partially offset by proceeds from the sale of property, plant and equipment of $456,000. 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 September 30, 1995 the Company had on hand 4,931 ounces of gold bullion and dore' with a market value at that date of approximately $1,894,000. Management believes that the Company's cash and cash equivalents on hand, refined gold available for sale and the unused portion of its bank line of credit should be adequate to fund internally exploration and development activities planned by the Company for the next 12 months. The Company is engaged in feasibility studies with respect to two of its mining properties. The feasibility study for one of these properties, Illinois Creek, Alaska, is expected to be completed by the end of 1995. If the decision is made by the Company to proceed with plans to mine this property, substantial capital expenditures will be necessary, and the Company will need to utilize outside sources of capital. While the Company has made preliminary inquiries regarding outside sources of financing for this project, it does not intend to seek commitments for such financing unless and until a positive feasibility report is finalized. In addition, the Company engages in on going active evaluations of various opportunities in the mining business which may require significant amounts of capital. The Company may need additional sources of capital to exploit these opportunities. Capital Investment - - ------------------ During the first nine months of 1995 the Company invested $1,034,000 in exploration activities primarily on its Mexico properties. In addition the Company invested approximately $2,923,000 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 assets abandoned or impaired during any given period and (4) asset dispositions. Three months ended September 30 - - ------------------------------- The Company recorded a net loss for the third quarter of 1995 of $2,195,000, compared with net income of $389,000 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 September 30, 1995 and 1994:
Revenue Variance Analysis Quarter Ended September 30, 1995 1994 --------------------------------------- ------------ ------------ Ounces of gold sold 0 9,500 Average price realized per ounce N/A $389 Variances Lower volume ($3,697,000) ($3,246,000) Higher prices 0 181,000 --------------------------------------- ------------ ------------ Decrease in gold sales revenue over the comparable period of the preceding year ($3,697,000) ($3,065,000) ======================================= ============ ============
The decrease in ounces sold is the result of reduced production from the Company's Goldstrike Mine and management's decision not to sell any of the available gold production. At September 30, 1995 the Company had on hand 4,931 ounces of gold bullion and dore' valued at approximately $1,894,000. Change in Costs Applicable to Sales - - ----------------------------------- Costs applicable to sales were $128,000 for the third quarter of 1995 and represented minimum royalties paid, compared to $3,164,000 or $334 per ounce for the same period of 1994 as set forth in the following table.
Quarter Ended September 30, 1995 1994 - - ------------------------------------------ --------------- Goldstrike Mine --------------- Ounces of gold produced 2,037 8,690 Ounces of gold sold - 9,500 Per ounce statistics: Cash production costs incurred $ 198 $ 261 Depreciation, depletion, amortization and reclamation accruals $ 1 $ 63 ------ ------ Production cost per ounce produced $ 199 $ 324 ====== ====== Gold sales revenue $ - $ 389 ------ ------ Production cost per ounce sold - 296 Change in inventories - 20 ------ ------ Cost of gold sold - 316 Mining Taxes - 3 Production royalties - 15 ------ ------ Costs applicable to sales - 334 ------ ------ Gross profit $ - $ 55 ====== ======
Production royalties amounted to $59 per ounce of gold produced during the third quarter of 1995, compared to $17 per ounce of gold produced for the same period of 1994. The increase is the result of required monthly minimum royalty payments and reduced gold production during the third quarter of 1995. Asset Abandonments and Impairments - - ---------------------------------- Asset abandonments and impairments charged to operations amounted to $1,641,000 for the quarter ended September 30, 1995, compared to $40,000 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 $21,000 were written off during the third quarter of 1995, compared to $40,000 for the same period in 1994. The Oscar property in Nevada was the only property abandoned during the third quarter of 1995. The Company recorded an impairment loss of $1,620,000 related to deferred mining and processing costs during the third quarter of 1995, compared to none for the same period of 1994. See Note 2 to the condensed consolidated financial statements for details. Asset Dispositions - - ------------------ During the third quarter of 1995 and 1994 no gains or losses were recorded as the result of asset disposals. Nine months ended September 30 - - ------------------------------ The Company recorded a net loss for the nine month period ended September 30, 1995, of $4,619,000, compared to net income of $326,000 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 nine month period ended September 30, 1995 and 1994:
Revenue Variance Analysis Nine Months Ended September 30, 1995 1994 ---------------------------------------- ------------ ------------ Ounces of gold sold 2,000 26,575 Average price realized per ounce $389 $384 Variances Lower volume ($9,428,000) ($4,966,000) Higher prices 10,000 718,000 ---------------------------------------- ------------ ------------ Decrease in gold sales revenue over the comparable period of the preceding year ($9,418,000) ($4,248,000) ======================================== ============ ============
The 1995 increase in the average price realized per ounce is attributable to the generally favorable gold price during the first nine 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 September 30, 1995, the Company had on hand 4,931 ounces of gold bullion and dore' valued at approximately $1,894,000 Change in Costs Applicable to Sales - - ----------------------------------- Costs applicable to sales totaled $1,041,000 or approximately $521 per ounce, net of silver credits, for the nine month period ended September 30, 1995, compared to $8,834,000 or $333 per ounce for the same period of 1994 as set forth in the following table.
Nine Months Ended September 30, 1995 1994 - - --------------------------------------- ------------------ Goldstrike Mine ------------------ Ounces of gold produced 5,714 27,822 Ounces of gold sold 2,000 26,575 Per ounce statistics: Cash production costs incurred $ 202 $ 259 Depreciation, depletion, amortization and reclamation (0) 57 -------- ------ Production cost per ounce produced $ 202 $ 316 ======== ====== Gold sales revenue $ 389 $ 384 -------- ------ Production cost per ounce sold 577 330 Change in inventories (252) (18) -------- ------ Cost of Goods sold 325 312 Mining Taxes 6 3 Production royalties 189 18 -------- ------ Costs applicable to sales 521 333 -------- ------ Gross profit $ (131) $ 51 ======== ======
Production royalties amounted to $189 per ounce of gold sold during the first nine months of 1995, compared to $18 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 nine months of 1995. Asset Abandonments and Impairments - - ---------------------------------- Asset abandonments and impairments charged to operations amounted to $3,112,000 for the nine month period ended September 30, 1995, compared to $40,000 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 $452,000 were written off during the first nine months of 1995, compared to none for the same period in 1994. The properties abandoned during the first nine months of 1995 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), Ancho Canyon, New Mexico ($13,000) and Oscar, Nevada ($21,000). The Company recorded an impairment loss relating to the Cala Abajo, Puerto Rico, property of $1,040,000 during the first nine months of 1995 compared to none for the same period in 1994. See Note 3 to the condensed consolidated financial statements for details. The Company recorded an impairment loss related to deferred mining and processing costs of $1,620,000 during the first nine months of 1995 compared to none for the same period in 1994. See Note 2 to the condensed consolidated financial statements for details. Asset Dispositions - - ------------------ During the first nine 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 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 September 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: November 14, 1995 By: /s/ Donald E. Nilson Donald E. Nilson, Vice President - Finance, Secretary, Chief Financial Officer Date: November 14, 1995 By: /s/ Daniel J. Stewart Daniel J. Stewart, Controller, (Principal Accounting Officer) EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 3RD QTR 10-Q
5 1,000 Dec-31-1994 Jan-01-1995 Sep-30-1995 9-MOS 6039 0 662 0 1894 8805 13008 3446 20140 1436 0 0 0 15 18116 20140 778 1767 1041 6650 0 0 0 (4883) (264) (4619) 0 0 0 (4619) (0.31) (0.31)
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