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 June 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
(Exact name of registrant as specified in its charter)
COLORADO 84-0630963
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1515 South Tejon, Suite 201,
Colorado Springs, Colorado 80906
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 471-9013
_____________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
the filing requirements for the past 90 days. YES XX NO
Number of Shares outstanding at June 30, 2000: 1,888,450
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
GOLDEN CYCLE GOLD CORPORATION
BALANCE SHEETS
<CAPTION>
June 30, December 31,
2000 1999
(Unaudited)
_________ _________
<S> <C> <C>
Assets
_________________________________________
Current assets:
Cash and cash equivalents $ 51,267 $ 152,581
Short-term investments 1,366,861 1,164,805
Interest receivable and other
current assets 33,612 38,489
_________ _________
Total current assets 1,451,740 1,355,875
Note receivable 202,257 202,257
Assets held for sale (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 33,194 30,686
_________ _________
43,719 41,211
Less accumulated depreciation (34,398) (33,144)
_________ _________
9,321 8,067
Other assets - -
Investment in mining joint venture (Note 2) - -
_________ _________
Total assets $ 1,795,998 $ 1,698,879
Liabilities and Shareholders' Equity
_________________________________________
Accounts payable and accrued liabilities $ 1,509 $ 14,078
Shareholders' equity:
Common Stock - no par value.
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 deficit (7,221,811) (7,331,499)
Accumulated comprehensive loss (28,040) (28,040)
_________ _________
Total shareholders' equity 1,794,489 1,684,801
_________ _________
$ 1,795,998 $ 1,698,879
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
GOLDEN CYCLE GOLD CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS
AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS ENDED
June 30, 2000 and 1999
(Unaudited)
<CAPTION>
Three Months Ended
June 30,
____________________
2000 1999
_________ _________
<S> <C> <C>
Revenue:
Distribution from mining joint
venture in excess of
carrying value $ - $ -
_________ _________
Total operating revenue - -
Expenses:
General and administrative (110,622) (292,295)
_________ _________
Operating loss (110,622) (292,295)
Other income-
Interest and other income 20,659 19,684
_________ _________
Net loss $ (89,963) $ (272,611)
_________ _________
Loss per share $ (0.05) $ (0.15)
Weighted average common
shares outstanding 1,888,450 1,878,450
ACCUMULATED DEFICIT:
Beginning of period $(7,131,848) $(6,866,002)
_________ _________
End of Period (7,221,811) (7,138,613)
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
GOLDEN CYCLE GOLD CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS
AND ACCUMULATED DEFICIT
FOR THE SIX MONTHS ENDED
June 30, 2000 and 1999
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
____________________
2000 1999
_________ _________
<S> <C> <C>
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 (179,686) (464,167)
_________ _________
Operating income (loss) 70,314 (214,167)
Other income-
Interest and other income 39,374 36,978
_________ _________
Net income (loss) $ 109,688 $ (177,189)
_________ _________
Income (loss) per share $ 0.06 $ (0.09)
Weighted average common
shares outstanding 1,888,450 1,878,450
ACCUMULATED DEFICIT:
Beginning of period $(7,331,499) $(6,961,424)
_________ _________
End of Period (7,221,811) (7,138,613)
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
GOLDEN CYCLE GOLD CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
June 30, 2000 and 1999
(Unaudited)
<CAPTION>
2000 1999
__________ __________
<S> <C> <C>
Cash flows from operating activities:
Net Income (loss) $ 109,688 $ (177,189)
Adjustments to reconcile net income to net
cash provided by (used in)
operating activities:
Depreciation expense 1,254 2,262
Decrease in interest
receivable and other current
assets 4,877 13,336
Decrease in accounts payable
and accrued liabilities (12,569) (12,904)
__________ __________
Net cash provided by
(used in) operating
activities 103,250 (174,495)
__________ __________
Cash flows from investing activities:
Decrease (increase) in short-term
investments, net (202,056) 328,160
Increase in other assets (1,393)
Disposal (purchases) of property and
equipment, net (2,508) 5,182
__________ __________
Net cash provided by (used in)
investing activities (204,564) 331,949
__________ __________
Net increase (decrease) in
cash and cash equivalents (101,314) 157,454
Cash and cash equivalents, beginning of period 152,581 13,734
__________ __________
Cash and cash equivalents, end of period $ 51,267 $ 171,188
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
GOLDEN CYCLE GOLD CORPORATION
NOTES TO FINANCIAL STATEMENTS
GOLDEN CYCLE GOLD CORPORATION
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 June 30, 2000, the Company's share
of accumulated unrecorded losses from the Joint Venture was $11,408,458.
(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
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 $184.1 million were outstanding at
June 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 six months ended June 30, 2000
was approximately $103,000 compared to cash used in operations of
approximately $175,000 during the six months ended June 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 $278,000 primarily due to decreased general and
administrative expenses.
The Company's working capital was approximately $1,450,000 at June 30,
2000 compared to $1,473,000 at June 30, 1999. Working capital decreased by
approximately $23,000 at June 30, 2000 compared to June 30, 1999. The
decrease was primarily due to operating losses incurred during the third
quarter of 1999.
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 six months ended June 30, of
approximately $110,000 in 2000, compared to net loss of approximately
$177,000 in the 1999 period.
The increase in net income for the first six months of 2000 compared
with the corresponding period in 1999 was due to decreased general and
administrative expenses and slightly 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 June 30, 2000, the Company's share of accumulated unrecorded losses from
the Joint Venture was $11,408,458.
The Joint Venture incurred a net loss of approximately $4.1 million for
the three months ended June 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 $6.8 million for the six months ended June 30, 2000
as compared to a net loss of $4.8 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 through 4 are not being reported due to a lack of circumstances
that require a response.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K. None
SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE GOLDEN CYCLE GOLD CORPORATION
(Registrant)
//s// R. Herbert Hampton
R. Herbert Hampton
President, C.E.O. and Treasurer
(as both a duly authorized officer of Registrant and
as principal financial officer of Registrant)
August 10, 2000
