UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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 0-11226
GOLDEN CYCLE GOLD CORPORATION
(Exact name of registrant as specified in its charter)
COLORADO 84-0630963
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2340 Robinson Street, Suite 209,
Colorado Springs, Colorado 80904
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 471-9013
_____________________________________________________________________
(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 the filing requirements for the past
90 days. YES XX NO
Number of Shares outstanding at September 30, 1997: 1,870,050
PART I. - FINANCIAL INFORMATION
GOLDEN CYCLE GOLD CORPORATION
BALANCE SHEETS
September 30, December 31,
1997 1996
(Unaudited)
_________ _________
Assets
_________________________________________
Current assets:
Cash and cash equivalents $ 12,906 $ 36,268
Short-term investments 2,029,377 2,305,866
Interest receivable and other
current assets 36,063 9,876
_________ _________
Total current assets 2,078,346 2,352,010
Investment & other assets
Note receivable 242,500
242,500
Deposit, Rent, Philippines 1,865 -
Assets held for sale (net) 132,680 132,680
Investment in mining joint venture (Note 2) - -
_________ _________
Total investment & other assets 377,044 375,180
Property and equipment 42,415 15,881
_________ _________
Total assets $ 2,497,805 $ 2,743,071
Liabilities and Shareholders' Equity
_________________________________________
Accounts payable and accrued liabilities $ 12,785 $ 18,710
Shareholders' equity:
Common Stock - no par value.
Authorized 3,500,000 shares;
issued and outstanding
1,870,050 shares 7,051,954
7,054,562
Additional paid-in capital 1,927,736 1,927,736
Accumulated deficit (6,473,490) (6,258,703)
Foreign currency translation (21,180) 766
_________ _________
Total shareholders' equity 2,485,020 2,724,361
_________ _________
$ 2,497,805 $ 2,743,071
<FN>
See Accompanying Notes to Financial Statements
GOLDEN CYCLE GOLD CORPORATION
STATEMENTS OF OPERATION AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS ENDED
September 30, 1997 and 1996
(Unaudited)
Three Months Ended
September 30,
____________________
1997
1996
_________ _________
Revenue:
Distribution from mining joint
venture in excess of
carrying value $ - $ -
Other, consulting fees - -
_________ _________
Total operating revenue - -
Expenses:
General and administrative (147,497) (104,754)
_________ _________
Operating income (loss) (147,497) (104,754)
Other income:
Interest and other income 30,597 16,458
Gain on asset sold 450 -
_________ _________
Total other income 31,047 16,458
_________ _________
Net income (loss) $(116,449) $ (88,296)
_________ _________
Income (loss) per share $ (0.06) $ (0.05)
Weighted average common
shares outstanding 1,870,050 1,748,050
ACCUMULATED DEFICIT:
Beginning of period $(6,357,040) $(6,302,109)
_________ _________
End of Period (6,473,490) (6,390,405)
<FN>
See Accompanying Notes to Financial Statements
GOLDEN CYCLE GOLD CORPORATION
STATEMENTS OF OPERATION AND ACCUMULATED DEFICIT
FOR THE NINE MONTHS ENDED
September 30, 1997 and 1996
(Unaudited)
Nine Months Ended
September 30,
____________________
1997
1996
_________ _________
Revenue:
Distribution from mining joint
venture in excess of
carrying value $ 250,000 $ 250,000
Other, consulting fees - 27,602
_________ _________
Total operating revenue 250,000 277,602
Expenses:
General and administrative (551,695) (297,989)
_________ _________
Operating income (loss) (301,695) (20,387)
Other income:
Interest and other income 85,459 33,121
Gain on asset sold 1,450 -
_________ _________
Total other income 86,909 33,121
_________ _________
Net income (loss) $(214,786) $ 12,734
_________ _________
Income (loss) per share $ (0.11) $ 0.01
Weighted average common
shares outstanding 1,870,050 1,659,717
ACCUMULATED DEFICIT:
Beginning of period $(6,258,703) $(6,403,139)
_________ _________
End of Period (6,473,490) (6,390,405)
<FN>
See Accompanying Notes to Financial Statements
GOLDEN CYCLE GOLD CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
September 30, 1997 and 1996
1997 1996
__________ __________
Cash flows from operating activities:
Net Income (loss) $ (214,786) $ 12,734
Adjustments to reconcile net income
(loss) to net cash used by
operating activities:
Depreciation expense 7,445 3,038
Increase in interest receivable
and other current assets (26,187) (24,538)
Increase in accounts receivable - (261)
Decrease in accounts payable
and accrued liabilities (5,925) (3,822)
__________ __________
Net cash used by
operating activities (239,452) (12,849)
__________ __________
Cash flows provided (used) by investing activities:
Decrease (increase) in short-term
investments, net 276,489 (746,935)
Increase in rental deposits (1,865) -
Purchases of property and equipment (33,980) (10,523)
__________ __________
Net cash provided (used) by
investing activities 240,645 (757,459)
__________ __________
Cash flows from financing activities:
Foreign currency translation loss (21,946) -
Proceeds from (cost of) issuance
of Common Stock (2,608) 1,063,410
__________ __________
Net cash provided (used) by
financing activities (24,554) 1,063,410
__________ __________
Net increase (decrease) in
cash and cash equivalents (23,362) 293,102
Cash and cash equivalents, beginning of nine months 36,268 9,840
__________ __________
Cash and cash equivalents, end of nine months $ 12,906 $ 302,942
<FN>
See Accompanying Notes to Financial Statements
GOLDEN CYCLE GOLD CORPORATION
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements (other than the Balance Sheet at
December 31, 1996) are unaudited but, in the opinion of management, include
all adjustments, consisting solely of normal recurring items, necessary for
a fair presentation. Interim results are not necessarily indicative of
results for a full year.
These financial statements should be read in conjunction with the
financial statements and notes thereto which are included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996. The
accounting policies set forth in those annual financial statements are the
same as the accounting policies utilized in the preparation of these
financial statements, except as modified for appropriate interim financial
statement presentation.
(2) INVESTMENT IN JOINT VENTURE
The Company accounts for its investment in the Cripple Creek & Victor
Gold Mining Company (the "Joint Venture") on the equity method. During 1992,
the Company's investment balance in the Joint Venture was reduced to zero.
Joint Venture distributions in excess of the investment carrying value are
recorded as income, as the Company is not required to finance the Joint
Venture's operating losses or capital expenditures. Correspondingly, the
Company does not record its share of Joint Venture losses incurred subsequent
to the reduction of its investment balance to zero. To the extent the Joint
Venture is subsequently profitable, the Company will not record its share of
equity income until the cumulative amount of previously unrecorded Joint
Venture losses has been recouped. As of September 30, 1997, the Company's
share of accumulated unrecorded losses from the Joint Venture was $ 5,520,458.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company's principal mining investment and source of cash flows has
been its interest in the Joint Venture, and in 1996 proceeds from the sale
of Common Stock (see discussion below). The Joint Venture engages in gold
mining activity in the Cripple Creek area of Colorado. The Company's Joint
Venture co-venturer is Pikes Peak Mining Company ("Pikes Peak"), a
wholly-owned subsidiary of Independence Mining Company.
The Company's rights and obligations relating to its Joint Venture
interest are governed by the Joint Venture Agreement. The Joint Venture is
currently operating in the Initial Phase, as defined. In accordance with the
Joint Venture Agreement, Pikes Peak manages the Joint Venture, and is
required to finance all operations and capital expenditures during the
Initial Phase.
The Initial Phase will terminate after Initial Loans, as defined, have
been repaid and Net Proceeds (defined generally as gross revenues less
operating costs including Pikes Peak's administrative fees) of $58 million
have been distributed to the venture participants in the proportion of 80% to
Pikes Peak and 20% to the Company. Initial Loans generally constitute funds
loaned to the Joint Venture, and interest thereon, to finance operations and
mine development by either Pikes Peak or third-party financial institutions
and are repayable prior to distributions to the venture participants. The
Manager reported that Initial Loans, payable to Pikes Peak, of approximately
$151 million were outstanding at September 30, 1997. Under the Agreement as
amended in 1991, the Joint Venture has not earned or distributed any Net
Proceeds.
After the Initial Phase, the Joint Venture will distribute metal in kind
in the proportion of 67% to Pikes Peak and 33% to the Company, and the
venture participants will be responsible for their proportionate share of the
Joint Venture costs.
During the Initial Phase, the Company is entitled to receive a Minimum
Annual Distribution of $250,000. Minimum Annual Distributions received after
1993 constitute an advance of Net Proceeds. Accordingly, such Net Proceeds
advances will be recouped from future Net Proceeds distributions allocable to
the Company. Based on the amount of Initial Loans payable to the Manager and
the recurring operating losses incurred by the Joint Venture, management of
the Company believes that, absent a significant and sustained increase in the
prevailing market prices for gold, it is unlikely that the Company will
receive more than the Minimum Annual Distribution from the Joint Venture in
the foreseeable future.
Cash used by operations was approximately $239,000 in the nine months
ended September 30, 1997, compared to cash used by operations of approximately
$13,000 in the corresponding period of 1996. Cash used by operations during
the 1997 period increased from the 1996 period by approximately $226,000,
primarily due to commencement of activities in the Philippines by the
Company's Philippine subsidiary, Golden Cycle Philippines, Inc. ("GCPI") and
increased salary expense.
The Company's working capital was approximately $2,066,000 at September 30,
1997 compared to $1,419,000 at September 30, 1996. Working capital increased
by approximately $647,000 at September 30, 1997 compared to September 30,
1996. The increase resulted primarily from the sale of 100,000 shares of the
Company's common stock in December 1996 to the MIDAS mutual fund for
aggregate proceeds of $1,000,000. The shares are "restricted" under the
federal securities laws, although the Company has registered the 100,000
shares for public resale. The exercise of options for an aggregate of 27,000
shares of the Company's common stock by two Directors of the Company during
1996 provided an additional $132,000.
During 1997, the Company has budgeted approximately $240,000 to support
GCPI in its search for gold and copper mining opportunities in the
Philippines. On October 1, 1997 the First Supplemental Agreement to the BGA
Agreement was signed between the Company's Philippine subsidiary, Golden
Cycle Philippines, Inc. ("GCPI") and Benguet Corporation ("BC"). This
agreement covered the addition to the BGA of approximately 1,000 acres of
mineral claims held by BC. Under the terms of this agreement, GCPI will
earn a 50% interest in these claims in exchange for funding the first 10
million Peso's of exploration work (approximately $300,000). The claim area
lies in the center of the Eastern Mindanao Gold Belt, immediately north of
the Kingking Project and south of the old, high gold tenor, Hijo mine.
GCPI's work will be conducted in a phased exploration program which has
been designed to delimit in detail the previously identified gold deposition.
The initial exploration phase includes soil sample gathering for geochemical
analysis, detailed geological mapping, and the sampling of the identified
surface gold mineralization. To insure accuracy, all samples will be
prepared and assayed by major internationally recognized contract
laboratories. This first exploration phase should be completed by the end
of January 1998.
If opportunities to economically develop Philippine operations are
available, and the Company elects to pursue them, the Company may be required
to allocate a significant portion of its existing working capital to fund
such activities and additional working capital not currently on hand may also
be required. There is no assurance that the Company will be able to obtain
such additional capital, if required. Furthermore, if such operations are
commenced, it is unlikely they would generate positive cash flow and/or profit
for several years.
Results of Operations
The Company incurred a net loss for the nine months ended September 30,
of approximately $215,000 in 1997, compared to net income of approximately
$13,000 in the 1996 period. Foreign currency translation losses amounted to
approximately $22,000 during the nine months ended September 30, 1997. The
Philippine peso was trading at September 30, 1997 at approximately 33 Pesos
to the US dollar. Presently it is trading in a range of 34.5 to 35.5 to the
US dollar.
The change to net loss for the first nine months of 1997 compared with
the net income of the corresponding period in 1996 was due to an increase of
approximately $254,000 in general and administrative expenses during the 1997
period, which increase primarily related to activities of GCPI in the
Philippines and, to a lesser extent, increases in salaries. The increase in
expenses was partially offset by increased interest income in the 1997 period.
The Company accounts for its investment in the Joint Venture by the
equity method. During 1992, the Company's investment balance in the Joint
Venture was reduced to zero. Joint Venture distributions in excess of the
investment carrying value are recorded as income, as the Company is not
required to finance the Joint Venture's operating losses or capital
expenditures. Correspondingly, the Company does not record its share of
Joint Venture losses incurred subsequent to the reduction of its investment
balance to zero. To the extent the Joint Venture is subsequently profitable,
the Company will not record its share of equity income until the cumulative
amount of previously unrecorded Joint Venture losses has been recouped. As
of September 30, 1997, the Company's share of accumulated unrecorded losses
from the Joint Venture was $5,520,458.
The Joint Venture incurred a net loss of $ 5.847 million for the nine
months ended September 30, 1997. The Joint Venture recorded net income of
$1.93 million for the year ended December 31, 1996. The Joint Venture
incurred net losses of $3.654 million and $9.350 million in 1995 and 1994,
respectively.
PART II - OTHER INFORMATION
Item 1 through 4 are not being reported due to a lack of circumstances
that require a response.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
None.
SIGNATURES
Pursuant to 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.
THE GOLDEN CYCLE GOLD CORPORATION
(Registrant)
/s/ Birl W. Worley Jr.
Birl W. Worley Jr.
President & C.E.O.
/s/ R. Herbert Hampton
R. Herbert Hampton,
Vice President, Finance
October 30, 1997