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