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 March 31, 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 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 May 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>
March 31, December 31,
1996 1995
--------------- ----------------
<S> <C> <C>
ASSETS
Cash and equivalents $ 2,922 $ 5,226
Federal income taxes receivable 393 381
Other current assets 228 227
--------------- ----------------
Total current assets 3,543 5,834
--------------- ----------------
Property, plant & equipment 14,728 13,291
Accumulated depreciation, depletion and amortization (3,507) (3,475)
--------------- ----------------
Net property, plant and equipment 11,221 9,816
Other assets 1,641 1,819
--------------- ----------------
Total assets $ 16,405 $ 17,469
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 119 $ 312
Accrued salaries 30 73
Accrued reclamation 339 304
Other accrued liabilities 16 51
--------------- ----------------
Total current liabilities 504 740
Estimated reclamation liability 535 885
Stockholders' equity
Common stock 15 15
Additional paid-in capital 15,583 15,583
Retained earnings (232) 246
--------------- ----------------
Total liabilities and stockholders' equity $ 16,405 $ 17,469
=============== ================
<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
March 31,
-------------------------------
1996 1995
-------------- -------------
<S> <C> <C>
Sales $ - $ 386
Cost applicable to sales - 453
-------------- -------------
Gross (Loss) - (67)
General and administrative expenses 564 560
Prospecting costs 194 246
Mineral property abandonments - 28
-------------- -------------
Loss from operations (758) (901)
Royalty income 180 180
Other income, net 77 187
-------------- -------------
Loss before income tax provision (501) (534)
Income tax provision (23) (61)
-------------- -------------
Net loss $ (478) $ (473)
-------------- -------------
Loss per common share $ (0.03) $ (0.03)
-------------- -------------
Weighted average common and common equivalent
shares outstanding 14,739 14,820
============== =============
<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>
Three Months Ended
March 31,
---------------------------
1996 1995
------------- ----------
<S> <C> <C>
Net cash used in operations $ (867) $ (856)
------------- ----------
Net cash provided by (used in) investing activities:
Capital additions and property acquisitions (1,437) (724)
Proceeds from sale of property plant and equipment - (17)
------------- ----------
(1,437) (741)
------------- ----------
Net cash provided by (used in) financing activities:
Repurchase of common stock - (52)
------------- ----------
- (52)
------------- ----------
Increase (decrease) in cash and equivalents (2,304) (1,649)
Cash and cash equivalents at beginning of year 5,226 12,014
------------- ----------
Cash and cash equivalents at end of period $ 2,922 $ 10,365
============= ==========
Three Months Ended
Supplemental Disclosures of Cash Flow Information March 31,
---------------------------
1996 1995
------------- ----------
Cash paid during the period for:
Interest $ - $ -
Income taxes $ - $ 123
<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 month period ended March 31, 1996 are not
necessarily indicative of the results which may be
expected for the year ending December 31, 1996. These
interim condensed 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 - 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 3 - 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 $1,851,000. The required surety is in
the form of a certificate of deposit in the amount of
$800,000 and a letter of credit in the amount of
$1,051,000. The certificate of deposit is reflected in
Other assets in the accompanying condensed consolidated
statements of financial position.
Note 4 - Subsequent Events
On May 10, 1996 the Company received a $2.5 million,
8.75% fixed rate loan from Pegasus Gold Corporation
(Pegasus). The loan is repayable over a 50 month
period beginning June 1, 1996. The loan is
collateralized by the Company's 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.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Financial Condition
Liquidity
Cash and cash equivalents decreased during the first
three months of 1996 by $2,304,000 primarily as a result
of cash invested in property, plant and equipment
(principally development of the Illinois Creek, Alaska
property ) of $1,437,000 and net cash used in operating
activities of $867,000. No gold sales were made during
the first three months of 1996 resulting in a net use of
cash in operations for the period.
It is the Company's goal to commence mining on the
Illinois Creek Mine in the summer of 1996. The Company
estimates that the cost necessary to develop the Illinois
Creek Mine and place it into production will be
approximately $26.6 million, including approximately $4.7
million in working capital and $4 million in property
acquisition costs which may be paid by the issuance of
Company Common Stock.
The Company intends to use its internal cash
resources and the proceeds from borrowings to finance the
development and construction costs. The Company has
obtained a commitment for a $22 million facility to
finance the development and construction costs of the
Illinois Creek Project. The Company will need to
promptly finalize, and commence use of funds from this
facility, in order for the Company to commence mining in
the summer of 1996. Closing is subject to several
conditions, including completion of a satisfactory due
diligence report from an independent engineering firm,
the Company's receipt of necessary permit approvals,
completion of documentation satisfactory to the Lender,
and transfer of title to the property. Transfer of the
property is contingent upon the payment of the $4 million
purchase price. The Company has agreed with North
Pacific Mining Company (NPMC) that, concurrent with the
transfer of title to the Company, NPMC will receive a
first perfected priority security interest in the
property (subject to subordination to a lender providing
financing for the project upon terms reasonably
acceptable to NPMC). If commercial production has not
been achieved on the property by December 16, 1999, the
Agreement with NPMC will terminate, and the property will
revert to NPMC.
Failure of the Company to complete this financing
may jeopardize severely the Company's ability to complete
development of the Illinois Creek Project. Moreover,
since December 31, 1995, the Company has utilized the
substantial portion of its working capital for further
development of the Illinois Creek Project. Any delay in
construction, and future operation, of the Illinois Creek
Project could create significant liquidity problems for
the Company.
It is expected that the Company will be a guarantor
of the $22 million facility until it has been
demonstrated that the Illinois Creek Mine is operating in
a manner satisfactory to the lender. 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, it is expected
that the final loan documentation will include covenants
restricting the Company's future business activities
without the lender's consent, including other project
financing and the payment of any dividends. Such
restrictions could affect the Company's operations and
future plans.
<PAGE>
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. If the Thunder Mountain
Project is sufficiently attractive to warrant continued
development and the necessary permits and financing are
obtained, it is possible that construction could commence
in 1997. Management estimates that substantial capital
would be required for construction of facilities and
other development activities at Thunder Mountain. The
Company has neither sought or obtained commitments for
outside financing for the Thunder Mountain Project.
The Company's ability to obtain outside financing
for the Thunder Mountain Project or other future projects
will depend, among other things, upon the price of gold
and perceptions of future prices. Therefore,
availability of funding is dependent largely upon factors
outside the Company's control, and cannot be predicted.
The Company does not know from what specific sources it
will be able to derive any required funding. Any such
financing, if available, could increase the indebtedness
of the Company or dilute current stockholders' positions.
If the Company acquires such funding through debt, a
substantial portion of the Company's cash flow may need
to be devoted to the payment of principal and interest on
such debt, which could render the Company more vulnerable
to competitive pressure or economic downturns. If the
Company is not able to raise additional funds (and there
can be no assurance that it can, or that if it can, such
funds will be on terms acceptable to the Company) it will
not be able to fund certain exploration and development
activities on its own.
Capital Investment
During the first three months of 1996 the Company
invested $1,096,000 to develop the Illinois Creek, Alaska
property. In addition the Company invested approximately
$341,000 to further explore its Mexico properties and
develop the Thunder Mountain, Idaho property.
Over the next 12 months, the Company plans to invest
approximately $21.5 million in development, including
approximately $21,000,000 at Illinois Creek, Alaska, and
$500,000 at Thunder Mountain, Idaho. In addition, the
Company plans on investing approximately $500,000 on
exploration activities in Mexico.
Results of Operations
The Company sustained a net loss for the first
quarter of 1996 of $478,000, compared with a net loss of
$473,000 for the same period of 1995.
Fluctuations in the Company's results of operations
typically arise 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 mineral
properties abandoned during any given period and (4)
asset dispositions.
<PAGE>
Change in the Volume of Gold Sold and Selling Price of Gold
The following table analyzes the variance in gold
sales revenue for the quarter ended March 31, 1996 and
1995:
<TABLE>
<CAPTION>
Revenue Variance Analysis
Quarter Ended March 31, 1996 1995
---------- ------------
<S> <C> <C>
Ounces of gold sold - 1,000
Average price realized per ounce $ $ 386
-
Variances
Lower volume ($386,000) ($1,498,000)
Higher prices - 12,000
---------- ------------
Decrease in gold sales revenue
over the comparable period of the
preceding year ($386,000) ($1,486,000)
---------- ------------
</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 Cost Applicable to Sales
There were no costs applicable to sales for the
first quarter of 1996, compared to $453,000 or $453 per
ounce for the same period of 1995. The fluctuation in
the cost of gold sold is a result of the change from
period to period in the mix of production from the
Company's mines and the change in production throughout
the life of each mine as illustrated in the following
table.
<TABLE>
<CAPTION>
Quarter Ended March 31, 1996 1995
-------------------
Goldstrike Mine
-------------------
<S> <C> <C>
Ounces of gold produced - 2,168
Ounces of gold sold - 1,000
Per ounce statistics:
Cash production costs incurred $ - $ 186
Depreciation, depletion, amortization and reclamation accruals - 1
------ ------
Production cost per ounce produced $ - $ 187
====== ======
Gold sales revenue $ - $ 386
------ ------
Production cost per ounce sold - 405
Change in inventories - (79)
Mining Taxes - 3
Production royalties - 124
------ ------
Costs applicable to sales - 453
------ ------
Gross (Loss) $ - $ (67)
====== ======
</TABLE>
<PAGE>
Mineral Property Abandonments
No property abandonments were charged to operations
for the first three months of 1996 compared to $28,000
for the same period of 1995.
Asset Dispositions
For the first three months of 1996, no gains or
losses were recorded. During the same period of 1995, a
$3,000 gain was recorded as the result of asset
disposals.
Other Factors
Other operating expense, including general and
administrative expense and prospecting costs, was $758,000
for the first three months of 1996 compared to $834,000
for the same period of 1995. Other income, primarily
interest, was $77,000 for the first three months of 1996
compared to $187,000 for the same period of 1995.
<PAGE>
PART II -- OTHER INFORMATION
Item 5. Other Information
On May 10, 1996 the Company received a $2.5 million,
8.75% fixed rate loan from Pegasus Gold Corporation (Pegasus).
The loan is repayable over a 50 month period beginning
June 1, 1996. The loan is collateralized by the Company's
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.
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
March 31, 1996.
<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: May 15, 1996 By: /s/ James A. Knox
James A. Knox, President
Date: May 15, 1996 By: /s/ Daniel J. Stewart
Daniel J. Stewart, Controller,
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,922
<SECURITIES> 0
<RECEIVABLES> 393
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,543
<PP&E> 14,728
<DEPRECIATION> 3,507
<TOTAL-ASSETS> 16,405
<CURRENT-LIABILITIES> 504
<BONDS> 0
<COMMON> 15
0
0
<OTHER-SE> 15,351
<TOTAL-LIABILITY-AND-EQUITY> 16,405
<SALES> 0
<TOTAL-REVENUES> 257
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 758
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (501)
<INCOME-TAX> (23)
<INCOME-CONTINUING> (478)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (478)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> 0
</TABLE>
