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, 1996
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 (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
141 Union Boulevard,
Suite 100
Lakewood, Colorado 80228
(Address of (Zip Code)
principal executive
offices)
(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 Outstanding at
Common Stock November 14, 1996
$.001 par value 16,184,182
<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 December
30, 31,
1996 1995
--------- ---------
<S> <C> <C>
ASSETS
Cash and equivalents $ 1,752 $ 5,226
Restricted cash 7,484 -
Federal income taxes receivable 507 381
Other current assets 667 227
--------- ---------
Total current assets 10,410 5,834
Property, plant & equipment 38,421 13,291
Accumulated depreciation, depletion and
amortization (3,521) (3,475)
--------- ---------
Net property, plant and equipment 34,900 9,816
Other assets 2,854 1,819
--------- ---------
Total assets $ 48,164 $ 17,469
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 2,601 $ 312
Accrued salaries 50 73
Accrued reclamation 427 304
Other accrued liabilities 27 51
Notes payable, current 8,220 -
--------- ---------
Total current liabilities 11,325 740
Note payable - affiliate 3,733 -
Note Payable 14,500 -
Estimated reclamation liability 535 885
Stockholders' equity
Common stock 16 15
Additional paid-in capital 19,582 15,583
Retained earnings (accumulated deficit) (1,527) 246
--------- ---------
Total liabilities and stockholders'equity $ 48,164 $ 7,469
========= =========
<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,
1996 1995 1996 1995
-----------------------------------------
<S> <C> <C> <C> <C>
Sales $ - $ - $ - $ 778
Costs applicable to sales - 128 - 1,041
------- ------- ------- -------
Gross (loss) - (128) - (263)
General and administrative expenses 1,284 642 2,590 1,892
Prospecting costs 116 129 521 605
Asset write downs, abandonments & impairments - 1,641 242 3,112
------- ------- ------- -------
(Loss) from operations (1,400) (2,540) (3,353) (5,872)
Royalty income - 180 360 540
Other income, net 557 120 1,082 449
------- ------- ------- -------
(Loss) before income tax benefit (843) (2,240) (1,911) (4,883)
Income tax benefit (71) (45) (138) (264)
------- ------- ------- -------
Net (loss) $ (772) $(2,195) $(1,773) $(4,619)
======= ======= ======= =======
Loss per common share $ (0.05) $ (0.15) $ (0.12) $ (0.31)
======= ======= ======= =======
Weighted average common shares outstanding 15,781 14,720 15,097 14,787
======= ======= ======= =======
<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,
1996 1995
-------------------------------
<S> <C> <C>
Net cash provided by (used in) operations $ (1,087) $ (2,186)
---------- ----------
Net cash provided by (used in) investing activities:
Capital additions and property acquisitions (21,313) (3,972)
Proceeds from sale of property, plant and equipment 9 456
Investment in restricted cash account (8,864) -
Proceeds from sale of stock held for investment 1,281 -
Other - (52)
---------- ----------
(28,887) (3,568)
Net cash provided by (used in) financing activities:
Proceeds from note payable to affiliate 4,500 -
Proceeds from note payable 22,000 -
Repurchase of common stock - (227)
Proceeds from issuance of common stock - 6
---------- ----------
26,500 (221)
---------- ----------
Decrease in cash and equivalents (3,474) (5,975)
Cash and cash equivalents at beginning of year 5,226 12,014
---------- ----------
Cash and cash equivalents at end of period $ 1,752 $ 6,039
========== ==========
</TABLE>
<TABLE>
Supplemental Disclosures of Cash Flow Information
<CAPTION>
Nine Months Ended September 30,
1996 1995
-------------------------------
<S> <C> <C>
Cash paid during the period for:
Interest $ - $ -
Income taxes $ - $ -
<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, 1996 are
not necessarily indicative of the results which may be
expected for the year ending December 31, 1996. 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, 1995.
Note 2 - Restricted Cash
Amounts drawn pursuant to the Illinois Creek
financing facility (see note 4) are deposited in the
project proceeds account and may be used only for the
benefit of the project. Such amounts are reflected in
the accompanying condensed consolidated statements of
financial position as restricted cash. In the balance of
restricted cash at September 30, 1996, $4.5 million is
required to be returned to the lender and made available
for future advances (see note 4).
Note 3 - Property, Plant and Equipment
Effective July 11, 1996, the Company acquired
leasehold and other property interests in the Illinois
Creek Project in north central Alaska from North Pacific
Mining Corporation ("NPMC"). The $4.0 million purchase
price was paid by the issuance, to NPMC, of 1,540,663
shares of the Company's common stock. The calculation of
the number of shares was based on the average market
price of the common stock on The Nasdaq Stock Market as
provided in the agreement. As a result of this
transaction, NPMC owns approximately 9.5% of the
Company's issued and outstanding common stock.
Note 4 - Long Term Debt
Note Payable - Affiliate
During the second quarter of 1996 the Company
arranged for a $4.5 million, 8.75% fixed rate loan from
Pegasus Gold Corporation ("Pegasus"), which owns
approximately 30.8% of the Company's common stock. The
loan is repayable over a 50 month period beginning June
1, 1996. The loan is collateralized by the Company's
royalty interest in Montana Tunnels. In lieu of loan
payments by the Company, Pegasus will retain the $60,000
per month Montana Tunnels royalty payments that it would
otherwise make to the Company.
During the second quarter of 1996 the Company agreed
with Pegasus to sell its net profits royalty interest in
the Montana Tunnels Mine to Pegasus for $4,500,000.
Pegasus is the owner and operator of the Montana Tunnels
Mine. The net profits royalty interest entitles the
Company to the greater of a 5% net profits royalty
interest or minimum advance royalties of $60,000 per
month until certain construction, land acquisition,
associated financing and other costs have been recovered
by Pegasus ("Payback"), and a 50% net profits royalty
interest thereafter. Based on information provided by
Pegasus, the Company estimates that, as of December 31,
1995, the remaining recoverable costs to attain Payback
were approximately $26,539,000. It is unclear whether
Payback will ever be achieved. Payback is dependent upon
<PAGE>
several factors, including future metal prices,
production rates, and the life of the Montana Tunnels
Mine. Based on Pegasus' published reserves, the expected
mine life is in the range of 3.5 to 4 years. Since
inception of the contract, the Company has received the
monthly minimum advance royalties.
Loan proceeds received by the Company from Pegasus
will be credited against the sales price at closing and
the loan will be extinguished. Closing of the
transaction is subject to completion of definitive
documentation and approval of the Company's stockholders.
Because use of working capital will not be required to
extinguish the loan, the long-term portion of the loan
has not been classified as a current liability in the
accompanying condensed consolidated statements of
financial position as of September 30, 1996.
Financing Facility
On July 11, 1996 the Company closed a $22 million
financing facility with N M Rothschild & Sons Limited
("Rothschild"). The facility comprises a $19.5 million
project loan and a $2.5 million convertible loan.
Proceeds of the facility will be used to partially fund
the development of the Company's Illinois Creek Mine in
Alaska. Total capital costs of the Illinois Creek
Project are estimated to be $36.9 million.
The $19.5 million project loan will bear interest,
payable quarterly, at 2.25% above the LIBOR until certain
tests related to project operations have been completed
to the satisfaction of the lender and 1.875% thereafter
for the remainder of the approximate four-year term of
the loan. Principal payments will be made in 7 amortized
installments on September 30 and December 31 of each
year, commencing September 30, 1997. The Company will be
a guarantor of the $19.5 million loan (which will remain
secured by the Illinois Creek Project assets) until it
has been demonstrated that the Illinois Creek Project is
operating in a manner satisfactory to Rothschild and that
no defaults are outstanding. There can be no assurance
when, or if, this will occur, and the Company could have
a substantial debt burden without other resources to make
repayment. In addition, the Company will be a continuing
guarantor of the covenant to comply with environmental
laws.
The $2.5 million convertible loan will bear interest
at 2% above LIBOR and will be payable no less frequently
than semi-annually. The note may be converted into
Common Stock at the conversion price of $3.40 per share
at the option of the lender at any time during the
approximate four-year term of the note. The Company may
also require conversion if the note is not in default and
the daily closing price of the Common Stock exceeds $4.75
for 30 consecutive trading days. A total of 735,294
shares of Common Stock (subject to adjustment for certain
events) will be reserved for issuance by the Company upon
conversion of the $2.5 million loan. The convertible
loan is due September 30, 2000.
The loan agreements include several financial and
other covenants, including the maintenance of certain
operating and financial ratios, limitations on or
prohibitions of dividends, indebtedness, liens,
investments, mergers, changes in capital structure and
<PAGE>
certain other items. Such restrictions could affect the
Company's operations and future plans.
Per the terms of the $22.0 million Rothschild financing
facility, the Company agreed to deposit $1.5 million in an
escrow account by September 30, 1996. The Company was
unable to comply with this requirement and in a letter
agreement dated October 29, 1996, Rothschild agreed to waive
this and certain financial ratio requirements until December
31, 1996, conditional upon the Company's agreements to,
among other things, (A) file a prospectus with the
appropriate Canadian securities regulatory authorities by
November 1, 1996, and complete a public offering by December
31, 1996, (B) adjust the price at which Rothschild may elect
to convert the $2.5 million loan into the Company common
shares to the price at which the shares offered by the
prospectus (or an earlier private placement) are sold, (C)
to pay Rothschild a fee of US$100,000 which fee is payable
upon the first to occur of (i) a date upon which such
payment can be made without materially reducing the working
capital reasonably required by the Company for continued
operations or (ii) April 15, 1997, and (D) return to
Rothschild $4.5 million in previously drawn but unused funds
which will be made available for future draws as needed.
This amount is reflected as a current liability in the
accompanying condensed consolidated statements of financial
position. It is provided in the letter agreement that
the definitive amendments to the agreements be made.
Note 5 - Income Taxes
The income tax benefits 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 $1,736,600. The required surety is in
the form of a certificate of deposit in the amount of
$800,000 and letters of credit, secured by cash, in the
amount of $936,600. The certificate of deposit and cash
security is reflected in Other assets in the accompanying
condensed consolidated statements of financial position.
Pursuant to the mining reclamation and bonding
regulations of the State of Alaska, Department of Natural
Resources, the Company provided reclamation surety for
the Illinois Creek Mine in the amount of $1,575,000 in
1996. The required surety is in the form of certificates
of deposit totaling $1,575,000 and is reflected in Other
assets in the accompanying Consolidated Statements of
Financial Position.
Hedging
As part of its gold hedging program the Company has
entered into agreements with a major financial
institution to deliver gold and silver. Realization
under these agreements is dependent upon the ability of
the counterparties to perform in accordance with the
terms of the agreement. As of September 30, 1996, the
Company had entered into forward sales contracts for
140,900 ounces of gold for delivery at various dates
<PAGE>
through December 31, 1999 at an average selling price of
$409 per ounce. Delivery under these spot deferred
contracts can be deferred at the Company's option up to
forty months depending on the individual contract.
Further, the Company had written silver call options
expiring at various dates over the next forty months,
which if exercised, would become spot deferred contracts
with delivery deferred as previously described. At
September 30, 1996, the Company had sold 891,100 ounces
of silver call option contracts all at a strike price of
$5.50 per ounce expiring on dates ranging from October
29, 1996 through December 29, 1999. The aggregate
unrealized excess of the net market value of the
Company's forward sales contracts over the spot gold
price of $379 per ounce as of September 30, 1996, is
approximately $624,000.
Note 7 - Subsequent Event
In October the Company entered into a letter
agreement with Newcrest Capital Inc. ("Newcrest") of
Toronto, Ontario Canada, whereby Newcrest will act as a
financial advisor and proposes to act as a lead
underwriter in connection with a prospectus qualified
public offering of approximately 5,000,000 shares of the
Company's common stock. On November 1, 1996, the Company
filed a prospectus with the Canadian securities
regulatory authorities requesting qualification of the
public offering. The Company also filed a registration
statement with the U.S. Securities and Exchange
Commission in connection with this proposed offering.
The offering will be made only by means of a prospectus.
No assurance can be given that this offering will be
successful.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Financial Condition
Liquidity and Capital Resources
Cash and cash equivalents amounted to $1.8 million
at September 30, 1996. Cash and cash equivalents decreased
during the nine months ended September 30, 1996, by $3.5
million primarily as a result of investment in property,
plant and equipment of approximately $21.3 million,
including deferred exploration costs of $0.3 million and
development costs of $21.0 million ($20.1 million at
Illinois Creek, Alaska and $0.9 million at Thunder
Mountain, Idaho), investment in restricted cash accounts
of $8.9 million and cash used in operations of $1.1
million. These costs were partially offset by $1.3
million in proceeds from the sale of the Company's
holdings in Alta Gold Co. common stock.
In addition, the Company obtained $4.5 million in
loans from Pegasus Gold Inc. secured by the Company's
interest in the Montana Tunnels property and $22.0
million in financing for the construction of the Illinois
Creek Mine and related facilities, including working
capital. (See note 3 to condensed consolidated financial
statements for a detailed discussion of this financing)
The Company completed its feasibility study of the
Illinois Creek Project in February 1996. After approval
of the project by the Company's Board of Directors,
clearing and grubbing activities began in March 1996.
Upon receipt of a commitment for a $22 million financing
facility and required permits and regulatory approvals in
May, construction of the mine and related facilities was
begun.
The original Illinois Creek development budget was
$22.6 million, including $4.7 million in estimated
working capital. As a result of weather induced delays and
other problems arising from the complexities of developing
a mine using only air transport, the Company is now
forecasting a total development cost at Illinois Creek of
approximately $28.6 million. The mine and related
facilities were substantially completed in October 1996;
however due to the high cost that would be incurred in
order to complete the hydraulic test of the leach pad
liner and to commence the leaching operation during the
winter months, the Company has elected to defer
commencement of gold production until the spring of 1997.
The resulting delay in revenues from the sale of gold
produced will require certain working capital
requirements to be funded from other sources. The
Company has used internal cash to fund $3.4 million of
the approximately $6 million in forecast cost overruns.
The Company intends to use the proceeds of a proposed
public offering to fund the remaining working capital
requirements and the balance of any cost overruns at
Illinois Creek. (See note 6 to the condensed consolidated
financial statements for a detailed discussion of the
proposed public offering)
<PAGE>
In addition to construction and working capital
requirements at Illinois Creek, the Company is required
by the terms of the credit agreements with the Lender to
maintain a fund sufficient to maintain certain financial
ratios of the project. Based on the development plan
mutually agreed to by the Company and the Lender, the
Company estimates that a contribution to this fund will
be required at December 31, 1996 of approximately $5.1
million. The Company intends to use the proceeds of the
proposed public offering of shares of its common stock to
provide the required contribution to the project fund.
The Company's lending arrangements for the Illinois
Creek Project require it to maintain minimum balances in a
Proceeds Account for use only in connection with the Project
and to maintain certain financial ratios related to the
Project and to the Company. The Company was required to
deposit $1.5 million to the Proceeds Account by September
30, 1996, which requirement was not satisfied. The Lender
has agreed with the Company to waive this default and any
defaults related to the failure by the Company to comply
with the financial ratios until December 31, 1996, provided
the Company completes the proposed public offering by that
date and meets certain other conditions (See note 3 to the
condensed consolidated financial statements for a detailed
discussion of this financing). If the Company is unable to
meet these conditions or to maintain compliance thereafter
with its credit obligations to Rothschild, it risks a
possible foreclosure of Rothschild's security interest in
the Project and/or 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 proposed public offering
were 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.
The Company has filed a Notice of Intent to Operate
with the Idaho Department of Lands describing the
Company's proposed gold and silver mining activities in
the Thunder Mountain Project. Management estimates that
the project would require substantial capital to place it
into production, including working capital. If the
project is sufficiently attractive to warrant continued
development and the necessary permits are obtained,
construction could begin in 1998. Production could begin
in 1998 or 1999 depending on the construction schedule.
Management believes that the Company will need to obtain
additional capital to put Thunder Mountain into
production.
The Company's balance sheet at September 30, 1996,
reflects a total of $1.0 million in accrued reclamation
liabilities associated with its acquisition and operation
of the Goldstrike Mine. Reclamation activities in 1996
have focused primarily on recontouring, topsoiling and
planting heap number one and completion of rinsing of
heap number two. Commencement of recontouring and
topsoiling of heap number two as well as the dismantling
of the process plant and reclamation of the plant site
will begin once the Company has obtained acceptance by
the State of Utah of the Company's final closure plan,
which could occur by the end of 1996. The goal is to
achieve closure by the end of 1997. This reclamation is
expected to be financed with internally available cash
balances, cash generated from the sale of gold produced
as a by product of heap rinsing and approximately $1.6
million cash previously provided to the State of Utah as
reclamation surety.
Results of Operations
Fluctuations in the Company's results of operations
arise primarily from four factors: (1) changes in the
<PAGE>
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 September 30
The Company recorded a net loss for the third
quarter of 1996 of $772,000, compared with a net loss of
$2,195,000 for the same period of 1995.
Change in the Volume of Gold Sold and Selling Price of Gold
The following table analyzes the change in gold
sales revenue for the quarters ended September 30, 1996
and 1995:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Revenue Variance Analysis
Quarter Ended September 30, 1996 1995
- ----------------------------------------------------------------------
<S> <C> <C>
Ounces of gold sold - -
Average price realized per ounce n/a n/a
Variances
Lower volume - ($3,697,000)
Higher prices - -
- ----------------------------------------------------------------------
Decrease in gold sales revenue over the
comparable period of the preceding year - ($3,697,000)
======================================================================
</TABLE>
The decrease in the ounces sold is the result of the
termination of production and the commencement of rinsing
at the Company's Goldstrike Mine on October 1, 1995. The
small amount of gold recovered during the rinsing process
is recorded as a reduction to the rinsing costs.
Change in Costs Applicable to Sales
There were no costs applicable to sales for the
third quarter of 1996, compared to a $128,000 prior period
adjustment for the same period of 1995 as illustrated in
the following table.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Quarter Ended September 30, 1996 1995
- ---------------------------------------------------------------------
Goldstrike Mine
---------------
<S> <C> <C>
Ounces of gold produced - 2,037
Ounces of gold sold - -
Per ounce statistics:
Cash production costs incurred $ - $ 198
Depreciation, depletion, amortization and
reclamation accruals - 1
- ---------------------------------------------------------------------
Production cost per ounce produced $ - $ 199
- ---------------------------------------------------------------------
Gold sales revenue $ - $ -
- ---------------------------------------------------------------------
Production cost per ounce sold - -
Change in inventories - -
- ---------------------------------------------------------------------
Cost of gold sold - -
Mining Taxes - -
Production royalties - -
- ---------------------------------------------------------------------
Costs applicable to sales - -
- ---------------------------------------------------------------------
Gross loss $ - $ -
=====================================================================
<PAGE>
Asset Write Downs, Abandonments and Impairments
No mineral property abandonments or impairments were
charged to operations for the quarter ended September 30,
1996, compared to $1,641,000 for the same period of 1995.
No mineral properties were written off during the
first nine months of 1996, compared to $21,000 for the
same period in 1995.
No impairment loss was recorded during the quarter
ended September 30, 1996, compared to $1,620,000 for the
same period in 1995.
Asset Dispositions
During the third quarter of 1996 the Company
recorded a $497,000 gain on the sale of common stock held
for investment and a $9,000 gain from the sale of fixed
assets. During the same period of 1995 no gains or
losses were recorded as the result of asset disposals.
Nine months ended September 30
The Company recorded a net loss for the nine month
period ended September 30, 1996, of $1,773,000, compared
with a net loss of $4,619,000 for the same period of
1995.
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 periods ended September
30, 1996 and 1995:
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Revenue Variance Analysis
Six Months Ended September 30, 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C>
Ounces of gold sold - 2,000
Average price realized per ounce n/a $ 389
Variances
Lower volume ($778,000) ($9,428,000)
Higher prices - 10,000
- -----------------------------------------------------------------------------
Decrease in gold sales revenue over the
comparable period of the preceding year ($778,000) ($9,428,000)
=============================================================================
</TABLE>
The decrease in the ounces sold is the result of the
termination of production and the commencement of rinsing
at the Company's Goldstrike Mine on October 1, 1995. The
small amount of gold recovered during the rinsing process
is recorded as a reduction to the rinsing costs.
Change in Costs Applicable to Sales
There were no costs applicable to sales for the nine
month period ended September 30, 1996, compared to
$1,041,000 or $520 per ounce for the same period of 1995
as set forth in the following table.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Nine Months Ended September 30, 1996 1995
- ------------------------------------------------------------------------
Goldstrike Mine
---------------
<S> <C> <C>
Ounces of gold produced - 5,714
Ounces of gold sold - 2,000
Per ounce statistics:
Cash production costs incurred $ - $ 202
Depreciation, depletion, amortization and
reclamation accruals - -
- ------------------------------------------------------------------------
Production cost per ounce produced $ - $ 202
- ------------------------------------------------------------------------
Gold sales revenue $ - $ 389
- ------------------------------------------------------------------------
Production cost per ounce sold - 577
Change in inventories - (252)
- ------------------------------------------------------------------------
Cost of gold sold - 325
Mining Taxes - 6
Production royalties - 189
- ------------------------------------------------------------------------
Costs applicable to sales - 520
- ------------------------------------------------------------------------
Gross loss $ - $ (131)
========================================================================
</TABLE>
Asset Write Downs, Abandonments and Impairments
Mineral property abandonments and impairments
charged to operations amounted to $242,000 for the nine
month period ended September 30, 1996 compared to
$3,112,000 for the same period of 1995.
Mineral properties which had historical costs
totaling $242,000 were written off during the first nine
months of 1996, compared to $452,000 for the same period
in 1995. The properties abandoned during the first nine
months of 1996 were the Elk Creek, Montana ($93,000), La
Reserva, Mexico ($81,000), Las Cruces, Mexico ($48,000),
Tecolate, Mexico ($15,000) and other Mexico properties
($5,000).
No mineral property impairment loss was recorded
during the first nine months of 1996 compared to
$1,040,000 for the same period in 1995.
No impairment loss related to deferred mining and
processing costs was recorded during the first nine
months of 1996 compared to $1,620,000 for the same period
in 1995.
Asset Dispositions
During the first nine months of 1996 the Company
recorded a $936,000 gain on the sale of common stock held
for investment and a $9,000 gain from the sale of fixed
assets. During the same period of 1995 the Company
recorded a $1,000 loss related to the sale of a mineral
property.
<PAGE>
PART II -- OTHER INFORMATION
Item 5. Other Information
In October the Company entered into a letter
agreement with Newcrest Capital Inc. ("Newcrest") of
Toronto, Ontario Canada, whereby Newcrest will act as a
financial advisor and proposes to act as a lead
underwriter in connection with a prospectus qualified
public offering of approximately 5,000,000 shares of the
Company's common stock. On November 1, 1996, the Company
filed a prospectus with the Canadian securities
regulatory authorities requesting qualification of the
public offering. The Company also filed a registration
statement with the U.S. Securities and Exchange
Commission in connection with this proposed offering.
The offering will be made only by means of a prospectus.
No assurance can be given that this offering will be
successful.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.18 Letter agreement dated October 29,
1996, between the Company and NM Rothschild &
sons Limited filed as an exhibit to the
Company's registration statement on Form S-2
(file number 333-15431) which exhibit is
incorporated herein by reference.
(b) Reports on Form 8-K
During the Quarter ended September 30, 1996,
the Company filed a Form 8-K reporting under
Item 2. the acquisition of leasehold and other
property interests in the Illinois Creek
Project in north central Alaska from North
Pacific Mining Corporation. The Company also
reported that the Company entered into credit
agreements with N M Rothschild & Sons Limited
for a $22,000,000 facility to partially finance
the development and construction costs of the
Illinois Creek Project. The credit agreements
and other pertinent documents were filed as
exhibits to the Form 8-K.
<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, 1996 By: /s/ Donald E. Nilson
Donald E. Nilson, Vice President -
Finance, Secretary, Chief
Financial Officer
Date: November 14, 1996 By: /s/ Daniel J. Stewart
Daniel J. Stewart, Controller,
(Principal Accounting Officer)
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