-----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, UQKhJrkKMM+ZcUTozs8mF08pr+zDzA57sDyuucxmbnmves4lXb0uVYv3VVfu6g7P cS/ri89UjuI6cjXx2kdPIA== 0000898430-97-000572.txt : 19970222 0000898430-97-000572.hdr.sgml : 19970222 ACCESSION NUMBER: 0000898430-97-000572 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970213 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CASMYN CORP CENTRAL INDEX KEY: 0000772320 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 840987840 STATE OF INCORPORATION: CO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14136 FILM NUMBER: 97531496 BUSINESS ADDRESS: STREET 1: 1335 GREG ST #104 CITY: SPARKS STATE: NV ZIP: 89431 BUSINESS PHONE: 7023315524 MAIL ADDRESS: STREET 1: 1335 GREG STREET STREET 2: SUITE 104 CITY: SPARKS STATE: NV ZIP: 89431 FORMER COMPANY: FORMER CONFORMED NAME: SUMMA METALS CORP DATE OF NAME CHANGE: 19940503 10-Q 1 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________ FORM 10-Q [X] Quarterly report under Section 13 or 15 (d) of the Securities Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996 -------------------------- OR [_] Transition report under section 13 or 15 (d) of the Exchange Act COMMISSION FILE NUMBER 0-14136 CASMYN CORP. ----------------------------------------------------------------------- (Exact name of registrant as specified in Charter) COLORADO ----------------------------------------------------------------------- (State or other jurisdiction of incorporation) 84-0987840 ----------------------------------------------------------------------- (IRS Employer Identification No.) 1335 GREG STREET, UNIT #104 SPARKS, NEVADA 89431 (702) 331-5524 ---------------------------------------------------------------------------- (Address and Telephone Number of Principal Executive Offices) Check whether the issuer (1) filed all reports required to be filed by section 13 or 15 (d) of the Exchange Act during the past 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 [_]. As of February 13, 1997, 12,752,633 shares of the issuer's common stock were outstanding. This report contains 14 pages. CASMYN CORP. FORM 10-Q INDEX
Page No. ---- PART I. Financial Information: Condensed Consolidated Balance Sheets - September 30, 1996 and December 31, 1996 3 Condensed Consolidated Statements of Operations - Three Months ended December 31, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows - Three Months ended December 31, 1996 and 1995 5 Notes to Condensed Consolidated Financial Statements 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II. Other Information: Item 6 - Exhibits and Reports on Form 8-K 14 Signatures 14 Exhibits 15
2 CASMYN CORP. CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS ------ DECEMBER 31, SEPTEMBER 30, 1996 1996 ------------------------------------- CURRENT ASSETS: Cash and cash equivalents $ 799,543 $ 4,046,194 Accounts receivable, net 563,498 210,748 Inventories 677,246 517,837 Prepaid expenses and other assets 208,857 15,295 --------------------------------- Total current assets 2,249,144 4,790,074 INVESTMENT IN AND ADVANCES TO AFFILIATES 3,179,342 2,748,031 PROPERTY AND EQUIPMENT, NET 15,275,941 14,101,782 DUE FROM RELATED PARTIES, NET 189,320 211,708 OTHER ASSETS 446,586 465,544 --------------------------------- TOTAL ASSETS $ 21,340,333 $ 22,317,139 ================================= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 2,092,923 $ 2,024,973 Accrued taxes from acquisition 953,493 993,660 Payable to joint venture - 623,000 Accrued liabilities 100,806 303,864 Current portion of long-term debt 94,015 107,471 --------------------------------- Total current liabilities 3,241,237 4,052,968 LONG-TERM DEBT 54,936 71,230 CONVERTIBLE DEBT 5,000,000 5,000,000 --------------------------------- Total Liabilities 8,296,173 9,124,198 --------------------------------- STOCKHOLDERS' EQUITY: Preferred stock, $.10 par value; 20,000,000 shares authorized; none outstanding - - Common stock, $.04 par value; 300,000,000 shares authorized; 12,752,633 and 12,512,133 shares issued and outstanding 510,105 500,485 Additional paid-in capital 27,635,191 25,735,368 Accumulated deficit (13,995,644) (12,389,109) Foreign currency translation adjustment (1,105,492) (653,803) --------------------------------- Total stockholders' equity 13,044,160 13,192,941 --------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 21,340,333 $ 22,317,139 =================================
SEE ACCOMPANYING NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS. 3 CASMYN CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
1996 1995 ----------- ----------- REVENUES: Precious metals $ 622,506 $ - ----------- ----------- COSTS AND EXPENSES: Mineral operations 816,846 - General and administrative expenses 567,971 359,867 Compensatory stock option expense 74,042 198,850 Depreciation, depletion and amortization 113,573 11,576 Mineral exploration expense 418,975 206,492 Mergers and acquisitions 113,822 63,332 ----------- ----------- 2,105,229 840,117 ----------- ----------- LOSS FROM OPERATIONS (1,482,723) (840,117) ----------- ----------- OTHER INCOME (EXPENSE): Equity in net loss of affiliate (277,068) (418,410) Interest income, net 25,842 49,223 Gain on sale of investment 126,000 - Other income (expense), net 1,414 (7,393) ----------- ----------- Other income (expense), net (123,812) (376,580) ----------- ----------- NET LOSS $(1,606,535) $(1,216,697) =========== =========== NET LOSS PER COMMON SHARE $ (.13) $ (.14) =========== =========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 12,624,508 8,604,637 =========== ===========
SEE ACCOMPANYING NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS. 4 CASMYN CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
1996 1995 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS $(1,606,535) $(1,216,697) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation, depletion and amortization 113,573 11,576 Equity in net loss of affiliate 277,068 418,410 Compensatory stock option expense 74,042 198,850 Amortization of debt issue costs 15,000 15,000 Gain on sale of investment (126,000) - Other non-cash expense 56,640 - Increase in accounts receivable (352,750) (50,147) Increase in inventories (159,409) - Increase in prepaid expenses and other assets (23,641) (481,414) Increase in accounts payable 67,950 16,765 Increase (decrease) in accrued liabilities (243,225) 161,553 (Increase) decrease in amounts due from related parties 22,388 (44,864) ----------- ----------- Net cash used in operating activities (1,884,899) (970,968) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Decrease in cash due to change in accounting for investment in VETI* - (459,708) Proceeds from sale of assets 900,000 - Decrease in long-term deposits 4,958 77,545 Investment in and advances to affiliates (708,379) (2,095,956) Purchase of property and equipment (2,685,732) (334,261) ----------- ----------- Net cash used in investing activities (2,489,153) (2,812,380) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 1,410,500 4,750,002 Issuance of common stock for exercise of stock options 198,340 - Repayments of long-term debt (29,750) (98,760) ----------- ----------- Net cash provided by financing activities 1,579,090 4,651,242 ----------- ----------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (451,689) 3,561 ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,246,651) 871,455 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,046,194 4,938,945 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 799,543 $ 5,810,400 =========== =========== (CONTINUED)
SEE ACCOMPANYING NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS. 5 CASMYN CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995 (CONTINUED)
1996 1995 ------------------- CASH PAID FOR INTEREST $ 22,528 $ 18,764 =================== NONCASH INVESTING AND FINANCING ACTIVITIES: Issuance of common stock for services $226,561 $ - Conversion of common stock to preferred stock - 270,700 Receipt of investment for sale of asset 1,000 - Reduction of payable to joint venture and investment in joint venture 623,000 - - --------------------------------------------------------------- * IMPACT ON THE COMPANY'S DECEMBER 31, 1995 CONDENSED CONSOLIDATED BALANCE SHEET RESULTING FROM THE CHANGE FROM CONSOLIDATION TO THE EQUITY METHOD OF ACCOUNTING FOR THE INVESTMENT IN VETI: Current assets $ 439,673 Investment in and advances to affiliates (654,853) Property and equipment, net 141,688 Other assets 3,024 Current liabilities (389,240) --------- Decrease in cash due to change in accounting for investment in VETI $(459,708) =========
6 CASMYN CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The accompanying condensed consolidated financial statements are unaudited; however, in the opinion of management, such statements include all adjustments (which are of a normal, recurring nature) necessary for a fair statement of the results for the interim periods. The financial statements included herein have been prepared by Casmyn Corp. (the "Company") pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information not misleading. The organization and business of the Company, accounting policies followed by the Company and other information are contained in the notes to the Company's consolidated financial statements filed as part of the Company's September 30, 1996 Form 10-K. The Form 10-K should be read in conjunction with this quarterly report. Consolidated financial statements for the fiscal years ended prior to September 30, 1996 included the financial statements of Vector Environmental Technologies, Inc. ("VETI") on a consolidated basis due to the Company having a voting controlling interest in VETI and accounting for the acquisition of its investment in VETI as a combination of entities under common control. This voting controlling interest arose through the provisions of the Preferred Shares held by the Company, whereby each Preferred Share was entitled to the equivalent of four (4) common share votes. Effective September 30, 1996, the Company converted these Preferred Shares into common shares and thereby relinquished its voting control of VETI. Therefore, as of September 30, 1996, the investment in VETI has been recorded in the consolidated balance sheet using the equity method of accounting and this method of accounting has been applied prospectively from that date. The consolidated statement of operations for the quarter ended December 31, 1995 reflects an equity method presentation retroactive to the beginning of the period. RECENTLY ISSUED ACCOUNTING STANDARDS - SFAS No. 123, Accounting for Awards of Stock-Based Compensation, was issued by the FASB in October 1995, and established financial accounting and reporting standards for stock-based employee compensation plans and for transactions where equity securities are issued for goods and services. The Company adopted the provisions of SFAS No. 123 during the first quarter of the year ending September 30, 1997. This statement requires expanded disclosures of stock-based compensation arrangements with employees and encourages (but does not require) compensation cost to be measured based on the fair value of the equity instrument awarded. Companies are permitted, however, to continue to apply APB No. 25, Accounting for Stock Issued to Employees, which recognizes compensation cost based upon the intrinsic value of the equity instrument awarded. The Company will continue to apply APB Opinion No. 25 to its stock-based compensation awards to employees and will disclose the required pro forma effect on net income and earnings per share. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 7 2. INVESTMENT IN AND ADVANCES TO AFFILIATES The Company's investment in and advances to affiliates at December 31, 1996 and September 30, 1996 include the following:
DECEMBER 31 SEPTEMBER 30 -------------------------- Investment in VETI $ 757,536 $1,034,604 Advances to VETI 2,414,248 1,712,421 Other 7,558 1,006 ------------------------- Total $3,179,342 $2,748,031 =========================
Summarized financial information of VETI for the three months ended December 31, 1996 and 1995 is as follows:
1996 1995 -------------------------- Sales $ 235,555 $ 240,779 Net loss (843,168) (917,073)
3. INVESTMENT IN NEWGOLD INCORPORATED On May 7, 1996, the Company entered into a 50:50 joint venture with Newgold Incorporated ("Newgold"), a public company based in Reno, Nevada, for the development of the Relief Canyon Mine located in Pershing County, Nevada ("Relief Canyon"). The Company committed to contribute $1,398,000 for its 50% interest in the venture. As of September 30, 1996, the Company had contributed approximately $775,000 toward its 50% interest in this venture and had recorded the remaining $623,000 commitment as a payable to joint venture. On October 7, 1996, the Company sold its interest back to Newgold for $900,000 cash, 1,000,000 restricted shares of Newgold common stock and a release from the remaining $623,000 of its commitment. The Company recorded a gain of $126,000 on this transaction. The Company has recorded its investment in the 1,000,000 restricted common shares of Newgold received in the sale described above at a nominal value of $1,000. These shares were assigned this nominal value based upon the fact that Newgold shares are not widely traded at this time. 8 4. SUMMARY OF STOCKHOLDERS' EQUITY TRANSACTIONS During the three months ended December 31, 1996, the Company has recorded the following activity in its stockholders' equity accounts:
Foreign Number of Additional Currency Total Common Common Paid-in Accumulated Translation Stockholders' Description Shares Stock Capital Deficit Adjustment Equity - ----------------------------------------------------------------------------------------------------------------------------------- Balances September 30, 1996 12,512,133 $500,485 $25,735,368 $(12,389,109) $ (653,803) $13,192,941 Private placement of units 155,000 6,200 1,404,300 - - 1,410,500 Issuance of shares for consulting services 25,000 1,000 225,561 - - 226,561 Deferred compensation - - 74,042 - - 74,042 Exercise of stock options 60,500 2,420 195,920 - - 198,340 Foreign currency translation adjustment - - - - (451,689) (451,689) Net loss - - - (1,606,535) - (1,606,535) ------------------------------------------------------------------------------------------------------ Balances at December 31, 1996 12,752,633 $510,105 $27,635,191 $(13,995,644) $(1,105,492) $13,044,160 ======================================================================================================
On November 8, 1996, the Company completed a private placement of 155,000 units for net proceeds of $1,410,500. Each unit consists of one share of the Company's restricted common stock plus one warrant; two warrants plus $10.00 will entitle the holder to purchase one share of the Company's common stock. The warrants are exercisable for a period of two years. During the three months ended December 31, 1996, the Company issued 25,000 restricted common shares to an investment banking company for services to be rendered during the current fiscal year. 5. ZIMBABWE CREDIT FACILITY On January 24, 1997, Casmyn Mining Zimbabwe (Private) Limited ("CMZ"), a wholly owned subsidiary of the Company, obtained a $5,000,000 short term credit facility which provides the company with the ability to draw down short term loans to fund operating and capital expenditures. Loans under this facility can be drawn down in minimum increments of $500,000 for up to 180 days but not past the maturity date of the facility. All borrowings under the facility must be repaid on or before one year from the date of the first funding. Interest on borrowings under this facility is at LIBOR plus 2.25% per annum ("pa"); 1% pa paid as a funding fee at the time of borrowings and LIBOR plus 1.25% pa paid at maturity. In addition the Company paid a $50,000 arrangement fee and is required to pay a quarterly commitment fee of 0.15% on the unused portion of the facility. The facility also provides a refinancing fee of 0.5% of the outstanding loan on the day prior to any refinancing if the lender is not a party to the refinancing. The facility is secured by pledge of substantially all of the assets of CMZ plus the guarantee of the Company. In addition, CMZ is required to hedge a portion of forward gold production through the lender if at any time the gold price offered by the Reserve Bank of Zimbabwe falls below $350 per ounce. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The business activities of the Company center around mineral resource development. The primary focus to date has been the acquisition and exploration of precious mineral resource properties in Zimbabwe, Zambia and South Africa. The Company has acquired certain mineral properties in South Africa, a prospecting license in Zambia and is presently conducting mining operations at the Zimbabwe mining properties. In addition, the Company has positioned itself in the environmental industry through an equity investment in VETI which is focused primarily on the development, manufacture, sales and management of water treatment equipment and facilities. RESULTS OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 1995 Revenues for the three months ended December 31, 1996 were $622,506 representing sales of approximately 1,713 ounces of gold produced in Zimbabwe. There were no gold sales in the three months ended December 31, 1995 as the acquisition of the Zimbabwe mines did not occur until January 31, 1996. The Company completed the first phase of a major capital improvement program in the current quarter. Prior to completion of this phase, the mines operated on a limited basis. As a result of this commissioning process, gold production was delayed to activate "state of the art" production circuits so as to provide sustainable production capacities. Due to these low gold production levels, fixed and variable mineral operations expenses of $816,846 exceeded revenues from gold sales by $194,340. Total costs and expenses excluding the $816,846 related to gold production were $1,288,383 for the three months ended December 31, 1996, compared to $840,117 for the three months ended December 31, 1995, an increase of $448,266. General and administrative expenses were $567,971 for the three months ended December 31, 1996 compared to $359,867 for the three months ended December 31, 1995, an increase of $208,104. Compensation and benefits increased $75,067 due to expanded operations, primarily in Zimbabwe. Travel expenses increased $30,893 in the three months ended December 31, 1996 compared to the three months ended December 31, 1995 due mainly to increased travel between Zimbabwe, Zambia and South Africa related to the Company's operations in those countries. In addition, the Company incurred travel expenses in the three months ended December 31, 1996 related to conducting a tour of the Zimbabwe mining operations for a group of twelve mining analysts to conduct due diligence for the preparation of independent research reports. Professional services and other general and administrative expenses increased $102,144 for the three months ended December 31, 1996 compared to the three months ended December 31, 1995 due to expansion of the Company's worldwide operations, primarily in Zimbabwe. Compensatory stock option expense decreased $124,808 for the three months ended December 31, 1996 compared to the three months ended December 31, 1995 due to the vesting of fewer compensatory stock options in the three months ended December 31, 1996. 10 Mineral exploration expenses were $418,975 for the three months ended December 31, 1996 compared to $206,492 for the three months ended December 31, 1995, an increase of $212,483. This increase is due to the Company's mineral exploration program that is presently under way at the Luswishi Property located in the Zambian Copperbelt. Merger and acquisition related expenses increased $50,490 in the three months ended December 31, 1996 to $113,822 due to the Company's interest in developing new business opportunities around the world. Total other expense, net was $(123,812) for the three months ended December 31, 1996, compared to $(376,580) for the three months ended December 31, 1995, a decrease of $252,768. This decrease was due to a reduction in the equity in the net loss of VETI of $141,342, a gain on the sale of the Company's interest in a mining joint venture of $126,000 (see Note 3 to the Condensed Consolidated Financial Statements) and an increase in other income of $8,807, offset by a decrease in net interest income of $23,381. The Company anticipates that, in the short term, expenditures related to upgrading the mining properties in Zimbabwe will exceed revenues derived from the sale of gold from the mines. Additionally, the Company anticipates that expense levels experienced in the three months ended December 31, 1996 relating to active exploration programs in various countries will continue for the foreseeable future. The Company charges to expense all mineral resource exploration and development costs until the mineral property to which they relate is determined to have resources for which recovery is economically feasible. Costs are then capitalized until the mineral property to which they relate is placed into production, sold, abandoned or written down where there is an impairment in value. Capitalized costs are to be charged to future operations on a unit-of-production basis. CAPITAL RESOURCES AND LIQUIDITY At December 31, 1996, the Company had negative working capital of $992,093, including $799,543 in cash and cash equivalents. Management anticipates that the net use of cash by operations will increase during the foreseeable future due to expenditures on mineral resource development projects in South Africa, mineral exploration and facility upgrades at the Zimbabwe mining properties and a mineral exploration program currently underway in Zambia. The Company will use current cash and cash equivalents to fund the on-going projects in the short term and anticipates that it will be able to secure additional debt and/or equity financing to fund longer term projects although there can be no assurance that any such financing will be secured or the amounts thereof. As evidence of the Company's ability to secure debt or equity financing, on July 19, 1995 the Company placed a $5,000,000, 2.5%, unsecured Convertible Debenture, due July 31, 2000, ("Debenture") with Societe Generale, Paris, France ("Holder") for net proceeds of $4,700,000. Interest is payable semi-annually commencing January 31, 1996, which, at the election of the Company, may be paid through the issuance of shares of common stock of the Company. During the fiscal year ended September 30, 1995, the Company completed private placements of 405,000 Common Shares and 714,286 units for total net proceeds of $7,002,859. Additionally, in the year ended September 30, 1996, the Company received $12,975,683, net of commissions and other expenses related to the transactions, through issuance of 1,159,091 units, consisting of warrants and shares of restricted common stock in exempt private transactions. On November 8, 1996, the Company completed a private placement of 155,000 units for net proceeds of $1,410,500. Each unit consists of one 11 share of the Company's restricted common stock plus one warrant; two warrants plus $10.00 will entitle the holder to purchase one share of the Company's common stock. The warrants are exercisable for a period of two years. On January 24, 1997, Casmyn Mining Zimbabwe (Private) Limited ("CMZ"), a wholly owned subsidiary of the Company, obtained a $5,000,000 short term credit facility which provides the Company with the ability to draw down short term loans to fund operating and capital expenditures. Loans under this facility can be drawn down in minimum increments of $500,000 for up to 180 days but not past the maturity date of the facility. All borrowings under the facility must be repaid on or before one year from the date of the first funding. Interest on borrowings under this facility is at LIBOR plus 2.25% per annum ("pa"); 1% pa paid as a funding fee at the time of borrowings and LIBOR plus 1.25% pa paid at maturity. In addition the Company paid a $50,000 arrangement fee and is required to pay a quarterly commitment fee of 0.15% on the unused portion of the facility. The facility also provides a refinancing fee of 0.5% of the outstanding loan on the day prior to any refinancing if the lender is not a party to the refinancing. The facility is secured by a pledge of substantially all of the assets of CMZ plus the guarantee of the Company. In addition, CMZ is required to hedge a portion of forward gold production through the lender if at any time the gold price offered by the Reserve Bank of Zimbabwe falls below $350 per ounce. Net Cash Used in Operating Activities. Net cash used in operating activities was $1,884,899 for the three months ended December 31, 1996 due to net loss (before depreciation and other non-cash items) of $1,196,212 which was due primarily to the increased expenses related to the Zimbabwe mining operations and increased compensation and benefits; net cash used in operations of $779,025 from increases in accounts receivable, inventory, prepaid expenses and other assets, and decreases in accrued liabilities; and net cash provided by operations of $90,338 due to increases in accounts payable and decreases in amounts due from related parties. Net cash used in operating activities was $970,968 for the three months ended December 31, 1995 due to net loss (before depreciation and other non-cash items) of $572,861; net cash used in operations of $576,425, from increases in accounts receivable, prepaid expenses and other assets, and increases in amounts due from related parties; and net cash provided by operating activities of $178,318 due to increases in accounts payable and accrued liabilities. Net Cash Used in Investing Activities. Net cash used in investing activities was $2,489,153 for the three months ended December 31, 1996 due to the purchase of property and equipment of $2,685,732, primarily at the Zimbabwe mining properties, advances to affiliates of $708,379 and net cash provided by investing activities of $904,958, primarily from the sale of the Company's investment in a mining joint venture (see Note 3 to the Condensed Consolidated Financial Statements). Net cash used in investing activities was $2,812,380 for the three months ended December 31, 1995 due to investments in and advances to affiliates of $2,095,956, purchases of property and equipment of $334,261, a decrease in cash of $459,708 due to a change in accounting for the Company's investment in VETI, and net cash provided of $77,545 due to decreases in long-term deposits. Net Cash Provided by Financing Activities. Net cash provided by financing activities was $1,579,090 for the three months ended December 31, 1996 due to the Company receiving $1,410,500 from the proceeds, net of costs, from a private placement of units and $198,340 from the exercise of stock options, offset by the repayment of long-term debt of $29,750. Net cash provided by financing activities was $4,651,242 for the three months ended December 31, 1995 due to the receipt of 12 $4,750,002 from the collection of subscriptions receivable from the issuance of common stock, offset by repayment of long-term debt of $98,760. 13 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibits 10.1 $5,000,000 Short Term finance facility with Barclays Bank of Zimbabwe Limited 27 Financial Data Schedule B. Forms 8-K 1. The Company filed an 8-K on October 1, 1996, reporting that on August 30, 1996, at the direction of the holders, the Company converted 2,707,000 preferred shares of the Company into 2,707,000 common shares of the Company pursuant to the terms of the preferred stock agreement. 2. The Company filed an 8-K on October 15, 1996, reporting that on September 30, 1996, the Company reacquired 606,061 shares of its restricted common stock and returned 5,680,514 shares of WestAmerica Corporation ("WestAmerica") restricted common stock, thereby undoing the transaction entered into May 24, 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 hereunto duly authorized. Casmyn Corp. /s/ Dennis E. Welling February 13, 1997 By _____________________________ Dennis E. Welling, Controller 14 EX-10.1 2 BANKING FACILITIES EXHIBIT 10.1 24 January 1997 The Directors, Casmyn Mining Zimbabwe (Private) Limited, PO Box 785, 13 Josiah Chinamano Road, Bulawayo BANKING FACILITIES Dear Sirs, Following our discussions to provide Casmyn Mining Zimbabwe (Private) Limited ("Casmyn") with its financial requirements, we are please to offer the following facilities which will be subject to the terms and conditions mentioned herein. 1 Facilities: Short term finance facility (the "Facility") of US$5 million, consisting of short term loans, Drawn for periods up to 180 days, but subject to condition 4 below. 2 Purpose: Development of Turk and Lonely mines. 3 Drawdown: Available immediately upon acceptance. Drawdowns under the Facility to be minimum of US$500,000. Casmyn may cancel undrawn amounts of the Facility from the date six months after acceptance, by giving the Bank at least 7 days' notice. Requests for drawdowns must be supported by evidence for operating costs or capital expenditures (such as invoices) in the Turk and Lonely project, and must accord with the expenditure programme to be agreed between Casmyn and the Bank. 4 Service and repayment: To be serviced initially from the reclamation of dumps at Turk and Lonely mines This Facility is repayable upon demand, but subject to this overriding condition, repayment shall be refinance of the Facility within 12 months of first drawdown. If not refinanced within 12 months, any outstanding amount is to be repaid in full, or refinanced by us, at our discretion, on the first anniversary of first drawdown (the "Expiry Date"). Drawings of the short term loans under the Facility will not be allowed to mature after the Expiry Date. 5 Interest: Interest will be charged on the loans under this Facility at a rate of LIBOR, plus a margin or 2.25% p.a. LIBOR means the percentage rate per annum quoted to Barclays Bank of Zimbabwe Limited by Barclays Bank plc, London, relating to period of drawing of the loan. Of the interest charge, interest amounting to a rate of LIBOR plus 1.25% p.a. is payable in arrears at the maturity of each drawn short term loan; interest amounting to a rate of 1% p.a. is debited as drawing/rollover of cash loan 6 Fees and charges: a) An arrangement fee of US$50,000 is payable on acceptance of this Facility. b) A commitment fee is payable quarterly in arrears, at a rate of 0.15% per quarter of amounts of the Facility undrawn and uncancelled on the day of calculation. The commitment fee calculation will commence from date 90 days after the date of this letter. c) Refinance fee: we expect to continue our lending relationship during the life of the Casmyn project by taking part in a larger term facility To that end, if this Facility is refinanced so that Barclays Bank of Zimbabwe Limited has no further part in the term finance, we shall charge a refinance fee of 0.5% of the loan amount outstanding on the day prior to the date of refinancing. If refinancing by Barclays/BZW, and Barclays Bank of Zimbabwe Limited continues to have a part of the term loan, no refinance fee will be payable. d) All fees and charges connected with the completion of this offer, including the obtaining, valuing and perfection of security, are for the account of Casmyn. 7 Security It is a condition of the Facility that the following security be held by the Bank, and that the facility will only be made available once the proposed security is held by the Bank, unless otherwise agreed by the Bank in writing. a) Unlimited guarantee from Turk Mine (Private) Limited b) General Notarial Covering Bond ("GNCB") FRO Z$60 million over all assets at Turk Mine (Private) Limited c) Unlimited guarantee from Greenhorn Mine (Private) Limited d) Cession of book debts for Z$60 million from Casmyn e) Cession over all financial investments from Casmyn f) Cession over all shares of subsidiaries of Casmyn g) Guarantee from Casmyn Corp for the equivalent of US$5 million h) Subordination of Casmyn Corp debt to bank debt. We recognize that Casmyn has granted a GNCB to the Muir family, so that the security listed at d), e) and f), above will rank behind the Muir GNCB. However, before drawdown we wish to be appraised in writing of, and satisfied by, the terms of the Muir GNCB. In addition, by acceptance of this letter, Casmyn agrees to provide the security detailed above and to allow the Bank without delay to register its securities. All securities must be in form satisfactory to the Bank. 8 Proceeds account: All income from the sale of gold by Casmyn in Zimbabwe is to be received in a Foreign Currency Account ("FCA") domiciled with us. Any sum of money at any time standing to the credit of Casmyn with the Bank in the FCA or in any currency upon any other account may be applied by the Bank, once the Bank has made written demand for the repayment of amounts under this Facility, in or towards the payment of any indebtedness now or subsequently 2 owing to the Bank by Casmyn, and the Bank may use any such money to purchase any currency or currencies required to effect such application. 9 Covenants: a) Casmyn agrees to hedge, or arrange for Casmyn Corp to hedge, as much of the gold output from its Zimbabwean operations as the Bank requires. Further, Casmyn agrees to give Barclays de Zoete Wedd Limited, London, ("BZW") exclusive right to undertake the required hedging programme, provided always that BZW remains price competitive with alternative quotations that Casmyn or Casmyn Corp may seek. Without prejudice to the Bank's reliance on this clause as it sees fit, we shall ask Casmyn to hedge at least part of its production if the price offered by the Reserve Bank of Zimbabwe for delivered gold falls below US$350 per ounce at any time. b) Casmyn agrees not to pay any dividend during the term of the Facility without prior written agreement from the Bank. c) Casmyn and subsidiaries of Casmyn shall not create or permit to subsist (other than in favour of the Bank) any encumbrance by way of security over any or all of the assets presently or in the future belonging to Casmyn or its subsidiaries without prior written consent of the Bank, except those encumbrances in existence at the date of this letter and the details of which were disclosed in writing to us prior to this date, provided that the amount secured by any such encumbrances is not at any time increased. d) Casmyn Corp shall not reduce its interest in Casmyn, nor in its Zimbabwean operations. 10 Monitoring: Casmyn's quarterly management accounts are to be provided to the Bank within 45 days of the respective quarter end, and audited annual accounts are to be provided within 3 months of accounting year end. In addition, monthly production and revenue figures are to be provided within 30 days of month end. 11 General Terms and Conditions (see annexure) 12 Acceptance: This offer of the Facility remains open for acceptance for 30 days from the date of this letter. Casmyn's acceptance of the Facility shall be signified by the return of the following documents to us at the address shown above: a) a certified true copy of a resolution of Casmyn's board of directors accepting the Facility on the terms and conditions set out in this letter and authorising a specified person or persons to countersign the enclosed copy of this letter. b) the copy of this letter signed by the person or persons specified in clause 12 a) above and returned unamended to us. c) the copy of the annexure to this letter initialled by the person or persons specified in clause 12 a) above and returned unamended to us. We look forward to opening a banking relationship with Casmyn. Yours faithfully, 3 Robert Schofield Senior Corporate Manager We acknowledge receipt of the original of this letter and hereby accept the Bank's offer of banking facilities subject to the terms and conditions stipulated in this letter and annexure which terms and conditions are fully understood and accepted by the company. For and on behalf of Casmyn Mining Zimbabwe (Private) Limited _________________________ Authorised signatory 4 ANNEXURE TO FACILITY LETTER FOR COMPANIES 11 GENERAL TERMS AND CONDITIONS 11.1 The Bank reserves the right to alter the interest rate charged from time to time should the cost of funding the lending increase through circumstances beyond its control or should changes in Government monetary policy occur. 11.2 Notwithstanding Condition 4 of the main letter, the facilities offered shall in accordance with normal banking practice become immediately payable upon demand being made by the Bank. The Bank is not obliged to serve notice in making such demand. 11.3 The company undertakes to ensure that all company assets excluding debtors, are fully insured at all times. 11.4 The company undertakes to advise the Bank of any changes to its present management operations and accounting system or any other changes that may have a bearing on the facilities presently offered. 11.5 If the company fails to make payment to the Bank by due date of any amount due in terms of this or other facilities or become insolvent, or be provisionally or finally sequestrated, or provisionally or finally wound up, or be unable to pay its debts to the Bank as they become due, or be placed under provisional or final judicial management or enter into a scheme of arrangement with its creditors, or pass a resolution for the winding up of the company, or should the company commit any act of insolvency or enter into any compromise with its creditors or make default in the performance of any undertaking term or condition of the facility, or if the company acts in any way which, in the reasonable opinion of the Bank, may have a material adverse effect on the company's ability to perform its obligations under this facility, all amounts then outstanding, plus all charges accrued thereon, together with interest as defined in paragraph 5 (and any subsequent changes in rates that have occurred) shall immediately become due and payable. 11.6 In the event of the Bank taking any proceedings to recover any amount due to it, the amount due shall be determined and proved by a certificate signed by any Manager or Accountant of this Bank and such certificate shall be prima facie proof of the amount due by the company and the onus shall be on the company to disprove the accuracy of the figures. 11.7 All costs and other charges arising from the need to recover any liabilities which may include legal charges to a legal practitioner as well as collection commission, will be for the company's account. Similarly, all charges relating to registration, recording or maintaining the security required in terms of the facility, shall be for the company's account. 11.8 The company undertakes to provide details of outside borrowings when called upon to do so. 11.9 In the event that the Bank is required to withhold tax or pay any increased charges in respect of interest/discount on the facilities granted to the company, the company will be responsible 5 for this cost which will be debited to the company's account as and when it is incurred. 11.10 All amounts paid to the Bank in repayment of these facilities will be applied firstly to the payment of interest accrued and any fees or charges due, and, thereafter, to the reduction of capital. 11.11 In the event that the company breaches or is unable to comply with any of the terms or conditions without the Bank's prior consent then the Bank reserves the right to an immediate review of the facilities and, in need, demand immediate repayment of all amounts outstanding at that date. 11.12 It is incumbent on the company to ensure the authenticity and correctness of all entries appearing on the Bank's statement sheets and to verify the interest charges to the account against the prevailing rates of interest advised by the Bank, reporting any inconsistency or discrepancy found to the manager of the branch within three months after the despatch of the statement. 6 SUBORDINATION AGREEMENT BY COMPANY In consideration of Barclays Bank of Zimbabwe Limited (hereinafter called "The Bank") making or continuing advances or granting other credit or banking facilities to _____________________________ (hereinafter called "The Company"), _____________________________ (hereinafter called "the Creditor") agrees and declares and this memorandum witnesseth that the payment of all sums presently due or owing to the creditor by the company and of any further sums which may from time to time hereinafter be owing to the Creditor by the Company shall be postponed to the payment of all moneys which are now or at any time hereafter may become due or owing to the Bank by the Company, from any account whether operated solely, or jointly with any person or persons or body corporate and whether as principal, surety or otherwise and including all interest commissions, charges and costs arising therefrom or from any security which the Bank may hold for the indebtedness of the Company. The Creditor agrees that all moneys otherwise payable to it as aforesaid shall be paid in full to the Bank, and that no payment shall be made by the Company to the Creditor on account of amounts owing by the Company to it, until all amounts owing by the Company to the Bank are paid in full, and no further payments are, or will become, owing by the Company to the Bank for any reason whatever. Should the Company in fact make any payment to the Creditor on account of its claim against the Company, the Creditor undertakes forthwith to pay the amount thereof to the Bank, and should the Creditor fail to do so, the Bank may forthwith and without notice institute proceedings against the Creditor in any competent court for the recovery of the said amount from the Creditor. Should the Company be subject to a winding up order, or an order for judicial management; or go into voluntary liquidation, or in appropriate cases, should the Company's estate be sequestrated, surrendered or assigned, or should the Company enter into any arrangement or composition with its creditors; all sums received by the Creditor from the liquidator, judicial manager, trustee or assignee, as the case may be, or as a result of such liquidation, composition or arrangement, shall be paid or assigned by the Creditor to the Bank until all moneys due to the Bank from the Company shall have been paid in full. The Creditor hereby agrees to execute such further deeds, documents or assignments and do all such other acts or things as may be necessary to carry out the intent of this agreement, and require the Company to record in its books and records a statement to the effect that payment of sums due to the Creditor has been postponed in accordance with the terms hereof. EXECUTED on behalf of _______________________________ the Creditor, by ______________________________ a Director, he being duly authorised hereto, at ____________ on this ______ day of _______________, 19__. AS WITNESSES: 1 ________________________________ ___________________________________ DIRECTOR 2 ________________________________ 7 To: BARCLAYS BANK OF ZIMBABWE LIMITED I/We hereby cede assign deliver and pledge to BARCLAYS BANK OF ZIMBABWE LIMITED (hereinafter referred to as "the Bank") its successors and assigns all documents and instruments whether negotiable or not including specifically and without in any way limiting the generality of the foregoing all bills for collection promissory notes post dated cheques shares stocks certified transfer deeds and all other temporary documents of title to stocks and shares bonds debentures savings account balances and fixed deposit receipts (the said documents and instruments being hereinafter referred to as "the securities") which I/we may deposit leave with or deliver to the Bank or which may be obtained by the Bank together with all dividends interest or other sums of money or rights which may be or become due or claimable in respect of the securities and I/we declare that I am/we are the lawful owner(s) or legal holder(s) of the securities and I/we agree that the said securities shall be held by the Bank in pledge as a continuing and covering security for any sum or sums of money which I/we may now or at any time hereafter owe or be indebted to the Bank its successors and assign from whatever cause arising and whether such indebtedness be a direct indirect or contingent liability and whether any debt or liability has incurred or not and whether such indebtedness or liability be incurred by me/us or any one or more of us individual or jointly with others or by any firm in which I/we or any one or more of us have or hold or may hereafter have or hold any interest and whether such indebtedness or liability arise from money lent and advanced overdrawn accounts drafts promissory notes bills of exchange or other instruments whether negotiable or otherwise already or hereafter to be made signed accepted or endorsed by me/us or any one or more of us or others with whom I/we or any one or more of us may be interested or concerned or any renewals thereof or through any acts of suretyship or guarantee or other undertaking already or hereafter to be signed by me/us or any one or more of us individually or jointly with others or otherwise howsoever arising including interest commission the costs of realization as hereinafter provided and all other usual charges and expenses. I/We authorize the Bank at its discretion to perfect and complete by registration transfer or otherwise to any nominee or nominees without reference to me/us the securities or any of them and I/we do hereby expressly waive any claim for loss of market or otherwise which might arise by reason of any delay in effecting transfer or re-transfer of any securities and agree that all charges of and incidental to such completion shall be at my/our joint and several expense and the carrying out of all necessary formalities in execution therewith entirely at my/our risk. If the Bank by letter delivered to me/us or addressed to me/us at 13 JOSIAH CHINAMANO ROAD, BULAWAYO and sent by post calls upon me/us to deposit additional approved security and/or to pay any amount due to the Bank whether returned or not and if within twenty-four hours from the delivery of such letter or where the letter is sent by post within twenty-four hours from the time of the posting of such letter such additional approved security is not deposited and/or the said amount is not paid the Bank will have the right to treat as immediately due and payable the whole of my/our indebtedness or liability to the Bank secured hereby (whether the due date shall have arrived or not) and I/we hereby irrevocably authorise and empower the Bank ____ ______ _______ then or at any time thereafter without any further authority or consent from me/us to sell call up collect or dispose of the securities or any of them in such manner and on such terms and conditions as the Bank may deem necessary and to grant valid and effectual receipts for all sums of money paid to the Bank in respect of any such sale calling up collection or disposal and to assign code and transfer the securities with power to the Bank to institute any legal proceedings which the Bank may this necessary. The Bank will have the right to apply the proceeds of any such sale calling up collection or realisation after deducting all costs of and incidental thereto and the costs of any legal proceedings towards liquidating any indebtedness of me/us to the Bank secured hereunder and if after all my/our indebtedness to the Bank secured hereunder whether the same shall be due at the time or not 8 has been paid and there remains a surplus such surplus shall be paid over to me/us but should there be any shortfall I/we jointly and severally undertake to pay such shortfall on demand provided nevertheless that the Bank shall be entitled either before or during or after the realization or other disposal of the securities to ______ for the recovery of any moneys owing to the Bank and to attach any other property belonging to me/us or any one or more of us just as if this pledge had not been given. I/We agree that it shall always be in the entire discretion of the Bank to determine the extent nature and duration of advances to be made and of facilities allowed or to be allowed to me/us. I/We further authorise and empower the Bank to receive and grant receipts in my/our name for all or any dividends interests or other sums of money which may accrue or become payable in respect of any securities deposited hereunder such sum so recovered to be applied in reduction of my/our indebtedness to the Bank. In the event of any securities carrying or being entitled to rights the Bank shall have the right but shall not be bound at my/our expense to take up such rights and to debit my/our account with all amounts paid in respect of such rights. I/We agree that the Bank shall not be responsible for any loss from or through any brokers or agents employed in the sale of securities or for any deterioration in _______ securities while in the possession of the Bank. I/We agree that an account certified by any Manager or Accountant of the Bank showing the amount of my/our indebtedness from time to time and of any interest due or accrued and all dividends _______________ of the sale disposal or realization of the securities or any of them shall be prima facie proof of the correctness of the matters contained in such account and shall be sufficient to enable the Bank to obtain provisional sentence in any competent court of law. Finally, I/we do hereby absolve the Bank from all liability whatsoever should it fail to collect any interest dividends income and benefits however named or described without any exception arising from or by virtue of the securities fail to take up any rights aforesaid fail to register transfer of any securities within the requisite periods laid down by the Rules of any Stock Exchange or under any statute relating to the stamping documents or in any way fail or omit to protect my/our interest relating to the securities. For the purpose of any sale assignment transfer collection or other disposal of the securities or any of them and for all purposes of and incidental thereto or for any other purpose arising hereunder I/we do hereby nominate constitute and appoint the General Manager of the Bank for the time being or any recognized Manager of any Branch for the time being of the said Bank as my/our true and lawful Attorney and Agent irrevocably and in _________ with power of substitution. As Witness my/our hand/s at _________________ _______________ this ___________________________ day of _____________, 19__. AS WITNESSES: 1. ___________________________ 2. ___________________________ 9 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS SEP-30-1997 OCT-01-1996 DEC-31-1996 264 536 563 0 677 2,249 15,741 (465) 21,340 3,241 5,050 0 0 510 12,534 21,340 623 623 817 817 1,288 0 54 (1,607) 0 (1,607) 0 0 0 (1,607) (0.13) 0
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