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, 2000
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
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(Exact name of registrant as specified in its charter)
COLORADO 84-0630963
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1515 South Tejon, Suite 201, Colorado Springs, Colorado 80906
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 471-9013
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________________________________________________________________________________
(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, 2000: 1,888,450
PART I. - FINANCIAL INFORMATION
GOLDEN CYCLE GOLD CORPORATION
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CONSOLIDATED
BALANCE SHEETS
September 30, December 31,
2000 1999
(unaudited)
--------------- ---------------
Assets
- --------------------------------------------------
Current assets:
Cash and cash equivalents $ 108,051 $ 152,581
Short-term investments 1,225,076 1,164,805
Interest receivable and other current assets 81,781 38,489
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Total current assets 1,414,908 1,355,875
Note receivable from sale of water rights 202,257 202,257
Assets held for sale - water rights (net) 132,680 132,680
Property and equipment, at cost:
Land 2,025 2,025
Mineral property development costs - -
Furniture and fixtures 8,500 8,500
Machinery and equipment 33,675 30,686
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44,200 41,211
Less accumulated depreciation (29,452) (33,144)
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14,748 8,067
Other assets - -
Investment in mining joint venture - -
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Total assets $ 1,764,593 $ 1,698,879
=============== ===============
Liabilities and Shareholders' Equity
- --------------------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 6,475 $ 14,078
Shareholders' equity:
Authorized 3,500,000 shares; issued
and outstanding 1,888,450 shares 7,116,604 7,116,604
Additional paid-in capital 1,927,736 1,927,736
Accumulated comprehensive loss (28,040) (28,040)
Accumulated deficit (7,258,182) (7,331,499)
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Total shareholders' equity 1,758,118 1,684,801
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$ 1,764,593 $ 1,698,879
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GOLDEN CYCLE GOLD CORPORATION
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CONSOLIDATED
STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS
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AND ACCUMULATED DEFICIT
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FOR THE THREE AND SIX MONTHS ENDED
September 30, 2000 and 1999
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
2000 1999 2000 1999
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Revenue:
Distribution from mining
joint venture in excess
of carrying value $ - $ - $ 250,000 $ 250,000
-------------- --------------- -------------- ---------------
Total operating revenue - - 250,000 250,000
Expenses:
General and administrative (63,761) (135,666) (243,447) (599,833)
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Operating income (loss) (63,761) (135,666) 6,553 (349,833)
Other income -
Interest and other income 27,390 13,464 66,764 50,442
Net income (loss) $ (36,371) $ (122,202) $ 73,317 $ (299,391)
-------------- --------------- -------------- ---------------
Income (loss) per share $ (0.02) $ (0.07) $ 0.04 $ (0.16)
============== =============== ============== ===============
Weighted average common
shares outstanding 1,888,450 1,878,450 1,888,450 1,878,450
============== =============== ============== ===============
ACCUMULATED DEFICIT:
Beginning of period $ (7,221,811) $ (7,138,613) $ (7,331,499) $ (6,961,424)
-------------- --------------- -------------- ---------------
End of period (7,258,182) (7,260,815) (7,258,182) (7,260,815)
============== =============== ============== ===============
GOLDEN CYCLE GOLD CORPORATION
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CONSOLIDATED
STATEMENTS OF CASH FLOWS
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FOR THE NINE MONTHS ENDED
September 30, 2000 and 1999
(Unaudited)
2000 1999
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Cash flows from operating activities:
Net income (loss) $ 73,317 $ (299,391)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation expense (3,692) 1,634
Decrease in interest receivable
and other current assets (43,292) (6,669)
Decrease in accounts payable
and accrued liabilities (7,603) (7,730)
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Net cash provided by (used in)
operating activities 18,730 (312,156)
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Cash flows from investing activities:
Decrease (increase) in short-term investments, net (60,271) 441,427
Exploration & development costs - -
Increase in other assets - (1,393)
Disposal (purchases) of property and equipment, net (2,989) 3,673
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Net cash provided by (used in)
investing activities (63,260) 443,707
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Net increase (decrease) in cash and
cash equivalents (44,530) 131,551
Cash and cash equivalents, beginning of period 152,581 13,734
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Cash and cash equivalents, end of period $ 108,051 $ 145,285
============== =============
GOLDEN CYCLE GOLD CORPORATION
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This Interim Report on Form 10-Q contains certain forward looking
statements. Actual results could differ materially from those projected in the
forward looking statements as a result of certain factors, described elsewhere
herein, including but not limited to fluctuations in the market price of gold
and uncertainties regarding the ability of the Joint Venture (as defined below)
to operate profitably.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements (other than the Balance Sheet at
December 31, 1999) 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, 1999. 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, 2000, the Company's share of accumulated
unrecorded losses from the Joint Venture was $11,938,458.
(3) EARNINGS PER SHARE
Earnings per share are computed by dividing net earnings by the weighted
average number of shares of common stock outstanding during each period. There
are no dilutive securities outstanding in either period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
- ---------------------------------------------------------------------------
RESULTS OF OPERATIONS
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Liquidity and Capital Resources
- -------------------------------
The Company's principal mining investment and source of cash flows has been
its interest in the Joint Venture. The Joint Venture engages in gold mining
activity in the Cripple Creek area of Colorado. The Company's Joint Venture
co-venturer is AngloGold Colorado Corp. ("AngloGold", formerly Pikes Peak Mining
Company), a wholly-owned subsidiary of AngloGold North America Inc., which is a
wholly owned subsidiary of AngloGold Limited.
The Company's rights and obligations relating to its Joint Venture interest
are governed by the Joint Venture Agreement (the "Agreement"). The Joint Venture
is currently, and for the foreseeable future will be, operating in the Initial
Phase, as defined in the Agreement. In accordance with the Agreement, AngloGold
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 in the
Agreement, have been repaid and Net Proceeds (defined generally as gross
revenues less operating costs including AngloGold's administrative fees) of $58
million have been distributed to the venture participants in the proportion of
80% to AngloGold 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 AngloGold or third-party financial institutions
and are repayable prior to distributions to the venture participants. AngloGold
(the "Manager") reported that Initial Loans, payable to AngloGold, of
approximately $188.8 million were outstanding at September 30, 2000. Under the
Agreement as amended, 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 AngloGold 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 provided by operations during the nine months ended September 30, 2000
was approximately $19,000 compared to cash used in operations of approximately
$312,000 during the nine months ended September 30, 1999. Prior to 1993, the
$250,000 Minimum Annual Distribution was classified as an investing cash flow;
beginning in 1993, the Minimum Annual Distribution was reflected as an operating
cash flow by reason of the fact that the Joint Venture investment balance was
reduced to zero during 1992, as discussed below under "Results of Operations".
The Minimum Annual Distribution was received from the Joint Venture January 24,
2000. No further distributions are expected from the Joint Venture during the
remainder of 2000.
Cash provided by operations during the 2000 period increased from the 1999
period by approximately $331,000 primarily due to decreased general and
administrative expenses.
The Company's working capital was approximately $1,408,000 at September 30,
2000 compared to $1,348,000 at September 30, 1999. Working capital increased by
approximately $60,000 at September 30, 2000 compared to September 30, 1999. The
increase was primarily due to decreased general and administrative expenses.
Management believes that the Company's working capital, augmented by the
Minimum Annual Distribution, is adequate to support operations at the current
level for several years, barring unforeseen events. Although there can be no
assurance, the Company anticipates the closure of its sale of certain Water
Rights to the City of Cripple Creek during the year 2000 which will provide
additional working capital. The Company anticipates that its Philippine
subsidiary will hold all work on a standby basis until the MPSA is awarded to
the claim owner. If opportunities to economically pursue or expand Philippine
operations, or any other opportunity becomes available, and the Company elects
to pursue them, additional working capital may also be required. There is no
assurance that the Company will be able to obtain such additional capital, if
required, or that such capital would be available to the Company on terms that
would be acceptable. Furthermore, if any such operations are commenced, it is
not presently known when or if a positive cash flow could be developed from the
properties.
Results of Operations
- ---------------------
The Company had net income, for the nine months ended September 30, of
approximately $73,000 in 2000, compared to net loss of approximately $299,000 in
the 1999 period.
The increase in net income for the first nine months of 2000 compared with
the corresponding period in 1999 was due to decreased general and administrative
expenses and increased interest revenue during the 2000 period.
The Company accounts for its investment in 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 received, 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, 2000, the Company's share of accumulated unrecorded losses from the Joint
Venture was $11,938,458.
The Joint Venture incurred a net loss of approximately $2.6 million for the
three months ended September 30, 2000 as compared to a net loss of $2.9 million
for the corresponding period in 1999. The Joint Venture incurred a net loss of
approximately $9.5 million for the nine months ended September 30, 2000 as
compared to a net loss of $7.7 million for the corresponding period in 1999. The
Joint Venture recorded a net loss of $7.4 million for the year ended December
31, 1999 compared to a net losses of $11.8 million and $10.8 million for the
years ended December 31, 1998 and 1997 respectively. There is no assurance that
the Joint Venture will be able to achieve profitability in any subsequent period
or to sustain profitability for an extended period. The ability of the Joint
Venture to sustain profitability is dependent upon a number of factors,
including without limitation, the market price of gold, which is near
historically low levels and volatile and subject to speculative movement, a
variety of factors beyond the Joint Venture's control, and the efficiency of the
Cresson mining operation.
Whether future gold prices and the results of the Joint Venture's
operations will reach and maintain a level necessary to repay the Initial Loans,
complete the Initial Phase, and thereafter generate net income cannot be
assured. Based on the amount of Initial Loans payable to the Manager and the
uncertainty of future operating revenues, management of the Company believes
that, without a significant and sustained increase in the prevailing market
price for gold, it is unlikely that the Company will receive more than the
Minimum Annual Distribution from the Joint Venture in the foreseeable future.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings.
The Sierra Club and the Mineral Policy Center served notice to the company
in a letter dated September 27, 2000, of their intent to sue Cripple Creek &
Victor Gold Mining Company (and potentially its joint venture partners,
including the company) for alleged violations of the U. S. Clean Water Act. This
Act provides that no court action can be brought for the 60-day period following
service of this notice. This matter is being investigated to assess the
allegations in the letter. Until the allegations in the notice (and in a
complaint, if one is served) have been investigated, it is not possible to
determine the merits of the allegations or the impact of an adverse decision.
Item 2 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
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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/ R. Herbert Hampton
President, C.E.O. and Treasurer
(as both a duly authorized officer of Registrant and
and as principal officer of Registrant
November 8, 2000