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 September 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 November 14, 1995
---------------- ---------------
$.001 par value 14,643,519
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
USMX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(Amounts in Thousands)
<CAPTION>
September 31, December 31,
1995 1994
-------------- -------------
<S> <C> <C>
ASSETS
Cash and equivalents $ 6,039 $ 12,014
Deferred mining and processing costs 1,894 2,344
Federal income taxes receivable 662 274
Other current assets 210 291
-------------- -------------
Total current assets 8,805 14,923
-------------- -------------
Property, plant & equipment 13,008 11,210
Accumulated depreciation, depletion and amortization (3,446) (3,418)
-------------- -------------
Net property, plant and equipment 9,562 7,792
Other assets 1,773 1,475
-------------- -------------
Total assets $ 20,140 $ 24,190
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 408 $ 197
Accrued salaries 83 32
Accrued reclamation 817 493
Other accrued liabilities 128 96
-------------- -------------
Total current liabilities 1,436 818
Estimated reclamation liability 573 361
Stockholders' equity
Common stock 15 15
Additional paid-in capital 15,583 15,844
Retained earnings 2,533 7,152
-------------- -------------
Total liabilities and stockholders' equity $ 20,140 $ 24,190
============== =============
<FN>
The accompanying notes are part of the condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
USMX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in Thousands, Except Per Share Amounts)
<CAPTION>
Three Months Ended Nine Months Ended
September 30,
---------------------------------------------
1995 1994 1995 1994
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Sales $ - $ 3,697 $ 778 $ 10,196
Costs applicable to sales 128 3,164 1,041 8,834
-------- ------- ------- --------
Gross profit (128) 533 (263) 1,362
General and administrative expenses 642 556 1,892 1,689
Prospecting costs 129 194 605 532
Abandonments & impairments 1,641 40 3,112 40
-------- ------- ------- --------
Loss from operations (2,540) (257) (5,872) (899)
Gain on sale of assets - - - -
Royalty income 180 180 540 540
Other income, net 120 145 449 364
-------- ------- ------- --------
Income (loss) before income tax provision (2,240) 68 (4,883) 5
Income tax provision (45) (321) (264) (321)
-------- ------- ------- --------
Net income (loss) $(2,195) $ 389 $(4,619) $ 326
-------- ------- ------- --------
Income (loss) per common share $ (0.15) $ 0.02 $ (0.31) $ 0.02
======== ======= ======= ========
Weighted average common and common equivalent
shares outstanding 14,720 14,924 14,787 14,857
======== ======= ======= ========
<FN>
The accompanying notes are part of the condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
USMX, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in Thousands)
<CAPTION>
Nine Months Ended
September 30,
----------------------
1995 1994
-------- --------
<S> <C> <C>
Net cash provided by (used in) operations $(2,186) $ 2,186
-------- --------
Net cash provided by (used in) investing activities:
Capital additions and property acquisitions (3,972) (3,134)
Proceeds from sale of property, plant and equipment 456 380
Other (52) (34)
-------- --------
(3,568) (2,788)
-------- --------
Net cash provided by (used in) financing activities:
Repurchase of common stock (227) (3,200)
Proceeds from issuance of common stock 6 290
-------- --------
(221) (2,910)
-------- --------
Decrease in cash and equivalents (5,975) (3,512)
Cash and cash equivalents at beginning of year 12,014 15,720
-------- --------
Cash and cash equivalents at end of period $ 6,039 $12,208
======== ========
</TABLE>
<TABLE>
Supplemental Disclosures of Cash Flow Information
<CAPTION>
Nine Months Ended
September 30,
----------------------
1995 1994
---------- --------
<S> <C> <C>
Cash paid during the period for:
Interest $ - $ -
Income taxes $ - $ (978)
<FN>
The accompanying notes are part of the condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
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 nine month periods ended September 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
Due to adverse weather conditions at the Company's
Goldstrike Mine in Utah, no cyanide was added to the
process solutions between November of 1994 and June of
1995. After adding cyanide in June, gold recovery
increased in July, but declined sharply in August and
September. This unexpected decline in gold recovery
triggered a reevaluation of the estimated remaining
recoverable gold ounces in the heaps and the remaining
estimated life of mine costs through the anticipated
closure of the property in 1997. As a result, the
Company recorded an impairment loss of $1,620,000 during
the quarter ended September 30, 1995.
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:
<TABLE>
<CAPTION>
Ounces of Gold at
------------------------------
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Gold bullion and dore' 4,931 1,200
Gold in process - 9,100
------------- ------------
Total estimated ounces in process 4,931 10,300
============= ============
</TABLE>
<PAGE>
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.
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. In October 1995, the
Company was advised that, as a result of the reclamation
work accomplished by the Company at the Goldstrike Mine,
the required surety had been reduced by approximately
$404,000. Management is in the process of effecting
reductions in the certificate of deposit and the letter
of credit outstanding to reflect the reduced requirement.
<PAGE>
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 September 30, 1995 of $7,369,000.
Cash and cash equivalents decreased during the first nine
months of 1995 by $5,975,000 primarily as a result of
cash invested in property, plant and equipment
(principally the development of mineral properties) of
$3,972,000 and cash used in operating activities of
$2,186,000, partially offset by proceeds from the sale of
property, plant and equipment of $456,000. 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 September
30, 1995 the Company had on hand 4,931 ounces of gold
bullion and dore' with a market value at that date of
approximately $1,894,000.
Management believes that the Company's cash and cash
equivalents on hand, refined gold available for sale and
the unused portion of its bank line of credit should be
adequate to fund internally exploration and development
activities planned by the Company for the next 12 months.
The Company is engaged in feasibility studies with
respect to two of its mining properties. The feasibility
study for one of these properties, Illinois Creek,
Alaska, is expected to be completed by the end of 1995.
If the decision is made by the Company to proceed with
plans to mine this property, substantial capital
expenditures will be necessary, and the Company will need
to utilize outside sources of capital. While the Company
has made preliminary inquiries regarding outside sources
of financing for this project, it does not intend to seek
commitments for such financing unless and until a
positive feasibility report is finalized. In addition,
the Company engages in on going active evaluations of
various opportunities in the mining business which may
require significant amounts of capital. The Company may
need additional sources of capital to exploit these
opportunities.
Capital Investment
- - ------------------
During the first nine months of 1995 the Company
invested $1,034,000 in exploration activities primarily
on its Mexico properties. In addition the Company
invested approximately $2,923,000 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.
<PAGE>
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 assets
abandoned or impaired during any given period and (4)
asset dispositions.
Three months ended September 30
- - -------------------------------
The Company recorded a net loss for the third
quarter of 1995 of $2,195,000, compared with net income
of $389,000 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 September 30, 1995
and 1994:
<TABLE>
<CAPTION>
Revenue Variance Analysis
Quarter Ended September 30, 1995 1994
--------------------------------------- ------------ ------------
<S> <C> <C>
Ounces of gold sold 0 9,500
Average price realized per ounce N/A $389
Variances
Lower volume ($3,697,000) ($3,246,000)
Higher prices 0 181,000
--------------------------------------- ------------ ------------
Decrease in gold sales revenue over the
comparable period of the preceding year ($3,697,000) ($3,065,000)
======================================= ============ ============
</TABLE>
The decrease in ounces sold is the result of reduced
production from the Company's Goldstrike Mine and
management's decision not to sell any of the available
gold production. At September 30, 1995 the Company had
on hand 4,931 ounces of gold bullion and dore' valued at
approximately $1,894,000.
Change in Costs Applicable to Sales
- - -----------------------------------
Costs applicable to sales were $128,000 for the
third quarter of 1995 and represented minimum royalties
paid, compared to $3,164,000 or $334 per ounce for the
same period of 1994 as set forth in the following table.
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended September 30, 1995 1994
- - ------------------------------------------ ---------------
Goldstrike Mine
---------------
<S> <C> <C>
Ounces of gold produced 2,037 8,690
Ounces of gold sold - 9,500
Per ounce statistics:
Cash production costs incurred $ 198 $ 261
Depreciation, depletion, amortization and
reclamation accruals $ 1 $ 63
------ ------
Production cost per ounce produced $ 199 $ 324
====== ======
Gold sales revenue $ - $ 389
------ ------
Production cost per ounce sold - 296
Change in inventories - 20
------ ------
Cost of gold sold - 316
Mining Taxes - 3
Production royalties - 15
------ ------
Costs applicable to sales - 334
------ ------
Gross profit $ - $ 55
====== ======
</TABLE>
Production royalties amounted to $59 per ounce of
gold produced during the third quarter of 1995, compared
to $17 per ounce of gold produced for the same period of
1994. The increase is the result of required monthly
minimum royalty payments and reduced gold production
during the third quarter of 1995.
Asset Abandonments and Impairments
- - ----------------------------------
Asset abandonments and impairments charged to
operations amounted to $1,641,000 for the quarter ended
September 30, 1995, compared to $40,000 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 $21,000
were written off during the third quarter of 1995,
compared to $40,000 for the same period in 1994. The
Oscar property in Nevada was the only property abandoned
during the third quarter of 1995.
The Company recorded an impairment loss of
$1,620,000 related to deferred mining and processing
costs during the third quarter of 1995, compared to none
for the same period of 1994. See Note 2 to the condensed
consolidated financial statements for details.
Asset Dispositions
- - ------------------
During the third quarter of 1995 and 1994 no gains
or losses were recorded as the result of asset disposals.
<PAGE>
Nine months ended September 30
- - ------------------------------
The Company recorded a net loss for the nine month
period ended September 30, 1995, of $4,619,000, compared
to net income of $326,000 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 nine month period ended September
30, 1995 and 1994:
<TABLE>
<CAPTION>
Revenue Variance Analysis
Nine Months Ended September 30, 1995 1994
---------------------------------------- ------------ ------------
<S> <C> <C>
Ounces of gold sold 2,000 26,575
Average price realized per ounce $389 $384
Variances
Lower volume ($9,428,000) ($4,966,000)
Higher prices 10,000 718,000
---------------------------------------- ------------ ------------
Decrease in gold sales revenue over the
comparable period of the preceding year ($9,418,000) ($4,248,000)
======================================== ============ ============
</TABLE>
The 1995 increase in the average price realized per
ounce is attributable to the generally favorable gold
price during the first nine 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 September 30, 1995, the
Company had on hand 4,931 ounces of gold bullion and dore'
valued at approximately $1,894,000
Change in Costs Applicable to Sales
- - -----------------------------------
Costs applicable to sales totaled $1,041,000 or
approximately $521 per ounce, net of silver credits, for
the nine month period ended September 30, 1995, compared
to $8,834,000 or $333 per ounce for the same period of
1994 as set forth in the following table.
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1995 1994
- - --------------------------------------- ------------------
Goldstrike Mine
------------------
<S> <C> <C>
Ounces of gold produced 5,714 27,822
Ounces of gold sold 2,000 26,575
Per ounce statistics:
Cash production costs incurred $ 202 $ 259
Depreciation, depletion, amortization
and reclamation (0) 57
-------- ------
Production cost per ounce produced $ 202 $ 316
======== ======
Gold sales revenue $ 389 $ 384
-------- ------
Production cost per ounce sold 577 330
Change in inventories (252) (18)
-------- ------
Cost of Goods sold 325 312
Mining Taxes 6 3
Production royalties 189 18
-------- ------
Costs applicable to sales 521 333
-------- ------
Gross profit $ (131) $ 51
======== ======
</TABLE>
Production royalties amounted to $189 per ounce of
gold sold during the first nine months of 1995, compared
to $18 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 nine months of 1995.
Asset Abandonments and Impairments
- - ----------------------------------
Asset abandonments and impairments charged to
operations amounted to $3,112,000 for the nine month
period ended September 30, 1995, compared to $40,000 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 $452,000
were written off during the first nine months of 1995,
compared to none for the same period in 1994. The
properties abandoned during the first nine months of 1995
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), Ancho Canyon,
New Mexico ($13,000) and Oscar, Nevada ($21,000).
The Company recorded an impairment loss relating to
the Cala Abajo, Puerto Rico, property of $1,040,000
during the first nine months of 1995 compared to none for
the same period in 1994. See Note 3 to the condensed
consolidated financial statements for details.
<PAGE>
The Company recorded an impairment loss related to
deferred mining and processing costs of $1,620,000 during
the first nine months of 1995 compared to none for the
same period in 1994. See Note 2 to the condensed
consolidated financial statements for details.
Asset Dispositions
- - ------------------
During the first nine 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.
<PAGE>
PART II -- OTHER INFORMATION
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
September 30, 1995.
<PAGE>
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 14, 1995 By: /s/ Donald E. Nilson
Donald E. Nilson, Vice President - Finance,
Secretary, Chief Financial Officer
Date: November 14, 1995 By: /s/ Daniel J. Stewart
Daniel J. Stewart, Controller, (Principal
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-START> Jan-01-1995
<PERIOD-END> Sep-30-1995
<PERIOD-TYPE> 9-MOS
<CASH> 6039
<SECURITIES> 0
<RECEIVABLES> 662
<ALLOWANCES> 0
<INVENTORY> 1894
<CURRENT-ASSETS> 8805
<PP&E> 13008
<DEPRECIATION> 3446
<TOTAL-ASSETS> 20140
<CURRENT-LIABILITIES> 1436
<BONDS> 0
0
0
<COMMON> 15
<OTHER-SE> 18116
<TOTAL-LIABILITY-AND-EQUITY> 20140
<SALES> 778
<TOTAL-REVENUES> 1767
<CGS> 1041
<TOTAL-COSTS> 6650
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4883)
<INCOME-TAX> (264)
<INCOME-CONTINUING> (4619)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4619)
<EPS-PRIMARY> (0.31)
<EPS-DILUTED> (0.31)
</TABLE>
