SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 12, 1996
USMX, INC.
(Exact name of registrant as
specified in its charter)
Delaware 0-9370 84-1076625
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
Incorporation) No.)
141 Union Boulevard
Suite 100 (303) 985-4665 80228
Lakewood, Colorado (Registrant's (Zip Code)
(Address of telephone number,
principal executive including area code)
offices)
USMX, INC.
Item 5. Other Events
USMX, Inc.'s principal focus during 1996 has been the development
efforts at its Illinois Creek Project in Alaska. It was the Company's
goal to achieve gold production at Illinois Creek by the end of 1996.
However, due principally to the high costs that would be incurred in
order to complete the necessary hydrologic test of the leach pad liner
and to commence the leaching operation during the winter months, the
Company has decided to defer commencement of gold production. In
connection with the decision to defer production at Illinois creek and
the Company's efforts to reduce administrative expenses, the Company
terminated 14 employees in November 1996.
The Company needs additional financing in order to commence gold
production at Illinois Creek. The company filed a preliminary
prospectus with the Ontario Securities Commission in Canada on
November 1, 1996 and a Registration Statement with Securities and
Exchange Commission in the United States relating to a proposed public
offering of its common stock. The offering will be made only by means
of a prospectus. Subject to obtaining additional adequate financing
and the successful test of the liner, the Company forecasts commencing
start-up activities in the spring of 1997.
In July 1996, the Company entered into Credit Agreements with N M
Rothschild & Sons Limited ("Rothschild") for a $22,000,000 facility to
partially finance the development of the Project. Among other things,
the Company agreed to make a $1,500,000 equity contribution by
September 30, 1996 to its subsidiary which is the owner of the
Project. The Company was unable to comply with this requirement. The
Company also agreed in its Credit Agreements with Rothschild that it
would not permit its (a) current ratio to be less than 2.0 to 1.0; (b)
consolidated tangible shareholders' equity to be less than
$17,500,000; and (c) total consolidated liabilities to exceed 175% of
its consolidated tangible shareholders' equity. Rothschild has agreed
with the Company to waive these conditions and to not take any actions
until December 31, 1996 due to the Company's inability to meet these
requirements, conditioned upon the Company's agreements to, among
other things, file a prospectus by November 1, 1996 with appropriate
securities regulatory authorities in Canada and complete an offering
in which the Company receives net proceeds of no less than $9,000,000
by December 31, 1996, adjust the price which Rothschild may elect to
convert its $2,500,000 loan into the Company's common stock to the
price of which the shares are sold in the public offering (or in an
earlier private placement) and to pay to Rothschild a fee of $100,000
which fee is payable from the proceeds of the public offering. In
addition, the Company agreed that of the $7,500,000 then on deposit in
a special Proceeds Account for use on Project expenditures,
approximately $2,400,000 would be distributed to pay accounts payable,
approximately $4,500,000 would be transferred back to Rothschild and
available to be advanced in accordance with the Credit Agreements and
approximately $600,000 would remain in the Proceeds Account and
available for disbursement in accordance with the Credit Agreements.
As of the date of this Report, the $2,400,000 has been distributed to
pay accounts payable and approximately $3.8 million of the $4,500,000
has been disbursed in connection with the Project. The Company also
greed that it would establish an additional proceeds account with its
presently available cash and disburse these funds in accordance with a
budget agreed to by Rothschild. The Company also agreed to establish
arrangements for the monitoring by Rothschild of completion of the
Project and payment of associated costs. The Company and Rothschild
have agreed that an amended development plan for the Project will be
submitted by the Company for Rothschild's approval by December 2,
1996.
If the Company is unable to meet the conditions in its amended
Credit Agreements with Rothschild or to otherwise maintain compliance
with its credit obligations to Rothschild, it risks a possible
foreclosure of Rothschild's security interest in the Project and legal
action for monetary damages against the Company. The Company does not
presently have capital resources available to satisfy its obligations
to Rothschild. Accordingly, if the Company's proposed public offering
is unsuccessful, the Company would need to obtain other financing or
attempt to merge or engage in another form of business combination
with an entity with available cash resources. The Company has made no
such arrangements and there can be no assurance that the Company would
be successful in obtaining any such arrangements.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
10(a) First Amendment to USMX, INC. Credit Agreement,
dated as of November 15, 1996, by and between USMX, INC.
and N M Rothschild & Sons Limited
10(b) First Amendment to credit Agreement, dated as of
November 15, 1996, between USMX OF ALASKA, INC. and N M
Rothschild & Sons Limited
10(c) Guarantor's Acknowledgment of First Amendment to
USMX OF ALASKA, INC. Credit Agreement dated November 15,
1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
USMX, INC.
(Registrant)
Date: November 20, 1996 By:/s/ Donald E. Nilson
--------------------------------
Donald E. Nilson, Vice President
Finance, Chief Financial Officer
and Secretary