<PAGE> 1
==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------------
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the 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 0-14329
CANYON RESOURCES CORPORATION
(a Delaware Corporation)
I.R.S. Employer Identification Number 84-0800747
14142 Denver West Parkway, Suite 250
Golden, CO 80401
(303) 278-8464
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 issuers
classes of common stock, as of the latest practicable date:
30,856,348 shares of the Company's Common Stock were outstanding as
of May 3, 1996.
==============================================================================
<PAGE> 2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following consolidated financial statements have been prepared by
Canyon Resources Corporation ("the Company") pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such SEC rules and regulations. In the
opinion of the Company's management, the consolidated financial statements
include all adjustments, consisting only of adjustments of a normal, recurring
nature, necessary to present fairly the financial information set forth
therein.
These consolidated financial statements should be read in conjunction
with the financial statements and accompanying notes included in the Company's
Form 10-K for the year ended December 31, 1995.
<TABLE>
<S> <C>
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . Page 3
Consolidated Statements of Operations . . . . . . . . . . . . Page 4
Consolidated Statements of Cash Flows . . . . . . . . . . . . . Page 5-6
Notes to Interim Consolidated Financial Statements . . . . . . Page 7-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . Page 10-11
</TABLE>
<PAGE> 3
CANYON RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $11,241,200 $ 1,893,800
Restricted cash 19,995,400 25,212,600
Accounts receivable 674,700 586,300
Inventories 663,900 664,200
Prepaid and other assets 298,900 297,900
----------- -----------
Total current assets 32,874,100 28,654,800
----------- -----------
Property and equipment, at cost
Mining claims and leases 35,087,800 34,321,800
Producing properties 2,942,900 2,869,100
Other 10,890,000 2,692,600
----------- -----------
48,920,700 39,883,500
Accumulated depreciation and depletion (1,483,900) (1,359,100)
----------- -----------
Net property and equipment 47,436,800 38,524,400
----------- -----------
Deferred financing costs, net of amortization of $813,100 at
March 31, 1996, and $741,100 at December 31, 1995 1,920,200 1,981,800
Other assets 2,782,300 3,263,200
----------- -----------
Total Assets $85,013,400 $72,424,200
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $1,423,100 $806,900
Notes payable - current 829,100 216,600
Accrued taxes, other than payroll and income 324,800 413,200
Accrued reclamation costs 669,000 686,000
Deferred income taxes 267,900 267,900
Other accrued liabilities 846,300 476,800
----------- -----------
Total current liabilities 4,360,200 2,867,400
Notes payable - long term 47,689,400 47,371,800
Accrued reclamation costs 2,026,000 2,026,000
Other noncurrent liabilities 219,100 88,500
----------- -----------
Total Liabilities 54,294,700 52,353,700
----------- -----------
Commitments
Common stock ($.01 par value) 100,000,000 shares authorized; issued and out-
standing: 29,992,800 at March 31, 1996, and 25,793,300 at December 31, 1995 299,800 257,900
Capital in excess of par value 57,507,000 46,072,500
Deficit (27,088,100) (26,259,900)
----------- -----------
Total Stockholders' Equity 30,718,700 20,070,500
----------- -----------
Total Liabilities and Stockholders' Equity $85,013,400 $72,424,200
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
CANYON RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
1996 1995
---------- ----------
<S> <C> <C>
REVENUE
Sales $1,144,100 $3,689,900
---------- ----------
EXPENSES
Cost of sales 911,800 2,654,500
Depreciation, depletion, and amortization 60,300 297,400
Selling, general and administrative 811,500 1,052,400
Exploration costs 129,500 247,400
Abandonments - 14,300
---------- ----------
1,913,100 4,266,000
---------- ----------
OTHER INCOME (EXPENSE)
Interest income 332,400 189,600
Interest expense (402,700) (422,400)
Gain on sale of equipment - 160,600
Other 11,100 400
---------- ----------
(59,200) (71,800)
---------- ----------
Net (loss) $(828,200) $(647,900)
========== ==========
Net (loss) per share $(0.03) $(0.03)
========== ==========
Weighted average shares outstanding 27,272,000 25,558,700
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
CANYON RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $ (828,200) $ (647,900)
----------- -----------
Adjustments to reconcile net (loss) to net cash:
Depreciation and depletion 60,300 297,400
Amortization of financing costs 72,000 72,500
Abandoned mineral properties - 14,300
Equity in loss of Minera Hispaniola - 2,700
(Gain) on asset sales - (160,600)
Other - (6,600)
Changes in assets and liabilities,
(Increase) in receivables (88,400) (90,000)
Decrease in inventories 300 773,800
(Increase) decrease in prepaid and other assets (1,000) 50,400
(Decrease) in accounts payable and accrued liabilities (25,600) (163,600)
Increase in other liabilities 3,800 428,000
----------- -----------
Total adjustments 21,400 1,218,300
----------- -----------
Net cash provided by (used in) operating activities (806,800) 570,400
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (7,883,300) (1,429,400)
Proceeds from asset sales 5,300 310,000
----------- -----------
Net cash used in investing activities (7,878,000) (1,119,400)
----------- -----------
Cash flows from financing activities:
Issuance of stock, net 11,476,300 -
Proceeds from loans 6,717,200 -
Payments on debt (69,900) (216,400)
Payments for debt issuance costs (61,200) -
Payments on capital lease obligations (11,100) (7,100)
Payments to escrow account (19,100) -
----------- -----------
Net cash provided by (used in) financing activities 18,032,200 (223,500)
----------- -----------
Net increase (decrease) in cash and cash equivalents 9,347,400 (772,500)
Cash and cash equivalents, beginning of year 1,893,800 13,280,100
----------- -----------
Cash and cash equivalents, end of period $11,241,200 $12,507,600
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
CANYON RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
(Unaudited)
Supplemental disclosures of cash flow information:
1. The Company paid $12,900 of interest, net of $388,200 capitalized , during
the first three months of 1996, and $23,300 (none capitalized) during the
corresponding period of 1995.
2. The Company paid no income taxes during the first three months of 1996 and
the corresponding period of 1995.
Supplemental schedule of noncash investing and financing activities:
1. The Company acquired $156,000 in equipment through capital leases during the
first three months of 1996, and $25,800 in equipment during the
corresponding period of 1995.
2. The Company issued 61,500 shares of common stock which was valued at
$100,000 in exchange for an interest in a joint venture during the first
three months of 1995.
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 7
CANYON RESOURCES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION:
During interim periods, Canyon Resources follows the accounting
policies set forth in its Annual Report to Stockholders and its Report
on Form 10-K filed with the Securities and Exchange Commission. Users
of financial information produced for interim periods are encouraged
to refer to the footnotes contained in the Annual Report to
Stockholders when reviewing interim financial results.
In the opinion of management, the accompanying interim financial
statements contain all material adjustments, consisting only of normal
recurring adjustments necessary to present fairly the financial
position, the results of operations, and the changes in financial
position of Canyon Resources and its consolidated subsidiaries for
interim periods. Certain amounts in the prior period financial
statements have been reclassified to conform to the current period
presentation.
2. INTERIM RESULTS:
The foregoing interim results are not necessarily indicative of the
results of operations for the full year ending December 31, 1996, as
the Briggs Mine is scheduled to commence production in the third
quarter of 1996.
3. USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
4. RESTRICTED CASH:
Restricted cash consisted of the following:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Collateral for Letter of Credit (a) $ 1,953,000 $ 1,953,000
Collateral for Letter of Credit (b) 500,000 500,000
Unexpended proceeds from loan drawing (c) 17,542,400 23,259,600
Contingency account (d) 2,019,400 2,000,300
----------- -----------
$22,014,800 $27,712,900
Current portion 19,995,400 25,212,600
----------- -----------
Noncurrent portion $ 2,019,400 $ 2,500,300
=========== ===========
</TABLE>
7
<PAGE> 8
4. RESTRICTED CASH: (Continued)
(a) In connection with the issue of certain bonds in 1995 for the
performance of reclamation obligations at the Kendall and
Briggs Mines, a bank Letter of Credit has been provided in
favor of the Surety as partial collateral for such bond
obligations. The Letter of Credit, in the amount of
$1,953,000, will expire no earlier than December 31, 1996, and
at the bank's option, may be renewed for successive one- year
periods. The Company has fully collateralized the Letter of
Credit by depositing cash in the amount of $1,953,000 with the
bank.
(b) In connection with a first year work commitment on an
exploration property in Ethiopia, a bank Letter of Credit has
been provided in favor of the Ministry of Mines and Energy,
Federal Democratic Republic of Ethiopia. The Letter of
Credit, in the amount of $500,000, will expire on January 6,
1997. The Company has fully collateralized the Letter of
Credit by depositing cash in the amount of $500,000 with the
bank.
(c) Restricted solely for the development of the Briggs Mine.
(d) As a condition precedent to securing the Briggs loan facility,
the Company transferred $2.0 million to an escrow account to
be held in reserve against construction cost overruns at the
Briggs Mine. These funds, including interest earned and net
of any cost overruns, will be returned to the Company upon
final completion of an expansion phase of development,
currently scheduled in 1997.
5. INVENTORIES:
Inventories consisted of the following:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Gold-in-process (a) $380,300 $389,200
Diatomite (a) 125,600 120,000
Materials and supplies 158,000 155,000
-------- --------
$663,900 $664,200
======== ========
</TABLE>
(a) Includes all direct and indirect costs of mining, crushing,
processing, and site overhead expenses.
6. NOTES PAYABLE:
Notes payable consisted of the following at:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Briggs Loan (a) $27,000,000 $26,000,000
6% Debentures (b) 21,175,000 21,175,000
Caterpillar Finance Note (c) 343,500 413,400
----------- -----------
$48,518,500 $47,588,400
Current portion 829,100 216,600
----------- -----------
Notes Payable - Long Term $47,689,400 $47,371,800
=========== ===========
</TABLE>
8
<PAGE> 9
6. NOTES PAYABLE: (Continued)
(a) On December 6, 1995, the Company's wholly owned subsidiary, CR
Briggs Corporation, secured a $34.0 million loan facility to
finance the capital requirements of mine construction and
working capital for its Briggs Mine in California. On
December 27, 1995, drawing commenced on the facility and $25.0
million principal in the form of a gold loan and $1.0 million
principal as a dollar loan were drawn. The gold loan portion
was monetized at $388.05 per ounce, or 64,425 ounces. On
March 4, 1996, an additional $1.0 million principal as a
dollar loan was drawn. Current interest rates on the drawings
are (i) 3.76% on the $25.0 million gold loan and (ii) 9.56% on
the $2.0 million cash loans, all scheduled to be reset on June
2, 1996. During the first three months of 1996, interest
payments of $385,900 were made utilizing proceeds from the
drawings.
(b) On June 2, 1993, the Company sold $22.0 million of
Subordinated Convertible Debentures ($21.2 million currently
outstanding) which are due June 1, 1998. Interest is payable
semi-annually on June 1 and December 1 at a rate of 6% per
annum. The debentures are convertible at the option of the
holder any time into common shares at the rate of $3.45 per
share. After three years, the Company may redeem the
debentures by issuing common stock at a rate equal to 94% of
the then trading common stock price at the time of redemption,
or by payment in cash at par. Upon the occurrence of certain
events, principally relating to changes in control of the
Company, each note holder has the right, at the holder's
option, to require the Company to repurchase the notes for
cash at par plus accrued interest to the repurchase date.
(c) In August 1994, the Company exercised purchase options on its
leased mining equipment at the Kendall Mine for $899,900.
Caterpillar Financial Services Corporation subsequently agreed
to finance the purchase price over a three-year period at a
fixed rate of 9.5%. During the first three months of 1996,
the Company paid $12,300 of interest and reduced the principal
balance by $69,900.
7. INCOME TAXES:
The Company has not recorded a tax benefit for the current period as
the benefit is not expected to be realized during the year. The
benefit is also not expected to be realizable as a deferred tax asset
at year end as the Company anticipates recording a full valuation
allowance for all deferred tax assets, except to the extent of
offsetting reversals of expected deferred tax liabilities.
8. SUBSEQUENT EVENT:
The Company received proceeds of approximately $2.8 million in
connection with the exercise of 814,167 warrants to purchase common
shares in April 1996.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company recorded a net loss of $828,200 on revenues of $1,144,100
for the three months ended March 31, 1996, compared to a net loss of $647,900
on revenues of $3,689,900 for the comparable period in 1995. The current
period was principally impacted by lower production at the Kendall Mine.
For the three months ended March 31, 1996, the Company sold 1,000
ounces of gold and 600 ounces of silver at an average price of $405 per
equivalent gold ounce. For the three months ended March 31, 1995, 7,900 ounces
of gold and 4,500 ounces of silver were sold at an average price of $384 per
equivalent gold ounce. The New York Commodity Exchange (COMEX) gold price
averaged $400 and $380 per ounce for the three months ended March 31, 1996 and
1995, respectively.
Cost of sales at Kendall were $508 per ounce during the current period
as compared to $289 per ounce in the prior period, due principally to lower
than expected production caused by very cold temperatures. Depreciation
depletion and amortization was lower in the current period, reflecting a fourth
quarter 1995 write-off of Kendall's remaining asset carrying values.
Interest income was higher in the current period due to higher cash
balances.
The Company recorded a $160,600 gain on the sale of a portion of the
Kendall mining equipment during the three months ended March 31, 1995, with no
comparable activity for the current period.
LIQUIDITY & CAPITAL RESOURCES
Net cash used by operating activities during the three months ended
March 31, 1996 was $806,800, as compared to $570,400 provided by operating
activities for the same period in 1995. Cash and cash equivalents at March 31,
1996 was $11,241,200.
The Company spent $7,883,300 on capital programs for the three months
ended March 31, 1996, principally on mine development and construction at
Briggs.
On March 26, 1996, the Company completed a private placement in the
amount of $12.1 million ($11.3 million net of expenses). The offering was
completed at a price of $3.00 per unit which included one share of common stock
(4,034,300 total shares) and one-half warrant (2,017,200 total warrants). Each
whole warrant entitles the holder to purchase one share of common stock at an
exercise price equal to $3.75 per share. The warrants expire on March 25,
1999. The Company has filed a Registration Statement under the Securities and
Exchange Act of 1933 in respect of the common shares, the warrants, and the
common shares underlying the warrants. In the event that the Registration
Statement does not become effective on or before the 90th day following the
completion of the private placement, each purchaser will be issued
10
<PAGE> 11
an additional 1/10 of one common share and 1/20 of one warrant for each unit
purchased. The Company's planned use of proceeds are for exploring properties
within and in proximity to the Briggs claim block, continuing to fund its share
of expenditures on the McDonald Project, exploration work on select foreign
properties, particularly in Brazil, and for general corporate purposes.
OUTLOOK
Mine development and construction of facilities at Briggs is expected
to take approximately seven months. Financed expenditures for the period will
total approximately $26 million. Gold production will commence in the second
half of 1996, after sufficient ore staking and leaching to facilitate gold
recovery has occurred with production of approximately 19,000 ounces
anticipated. Direct cash operating costs, after achieving design capacity, are
expected in the range of $215-$225 per ounce during the fourth quarter of 1996.
The Company anticipates gold production from residual leaching at
Kendall in 1996 of approximately 7,000 ounces at direct cash operating costs of
approximately $330-340 per ounce. The Company expects to spend approximately
$0.7 million on reclamation during 1996.
During 1996, the Company expects to contribute approximately $1.8
million to fund its share of expenditures for the McDonald Project, principally
relating to ongoing permitting and support activities. The Company's overall
exploration objectives in 1996 will be to seek quality joint venture partners
for several of its foreign properties and focus internally on exploring and
drilling within and adjacent to the Briggs claim block and select foreign
properties, particularly in Brazil. These expenditures are expected to total
$3.0 million.
11
<PAGE> 12
PART II OTHER INFORMATION
<TABLE>
<S> <C>
ITEM 1. LEGAL PROCEEDINGS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
ITEM 2. CHANGES IN SECURITIES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS: . . . . . . . . . . . . . . . . . . . . None
ITEM 5. OTHER INFORMATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
ITEM 6(A) EXHIBITS:
No. 11 - Calculation of primary and fully diluted income (loss) per share
No. 27 - Financial Data Schedule
ITEM 6(B) REPORTS ON FORm 8-K: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
</TABLE>
12
<PAGE> 13
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.
<TABLE>
<S> <C> <C>
CANYON RESOURCES CORPORATION
Date: May 10, 1996 /s/ Richard T. Phillips
------------------------------------------------
Richard T. Phillips
Treasurer
Date: May 10, 1996 /s/ Gary C. Huber
-----------------------------------------------
Gary C. Huber
Chief Financial Officer
</TABLE>
13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION PAGE
- ----------- ------------------- ----
<S> <C>
11 Calculation of primary and fully
diluted income (loss) per share
27 Financial Data Schedule
</TABLE>
14
<PAGE> 1
EXHIBIT NO. 11
CANYON RESOURCES CORPORATION
CALCULATION OF PRIMARY and FULLY-DILUTED
EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
----------- ----------
<S> <C> <C>
Computation for Statement of Income (A)
- ---------------------------------------------------------------------------
Adjustment to net (loss) per statements
of income to amount used in earnings
per share computation:
(Loss) before extraordinary items $ (828,200) $ (647,900)
Add-interest on convertible debentures,
net of tax effect (B) (B)
---------- ----------
Net (loss), as adjusted $ (828,200) $ (647,900)
========== ==========
Adjustment to weighted average shares outstanding
to amount used in primary earnings per share
computation:
Weighted average shares outstanding 27,272,000 25,558,700
Add-Shares issuable from assumed exercise of
convertible debentures (B) (B)
Add-Shares issuable from assumed exercise
of options and warrants (B) (B)
---------- ----------
Weighted average shares outstanding, as adjusted 27,272,000 25,558,700
========== ==========
Net (loss) per common share $(0.03) $(0.03)
========== ==========
</TABLE>
(A) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
(B) Effect is antidilutive, so amounts are not included in the earnings (loss)
per share calculation.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 31,236,600
<SECURITIES> 0
<RECEIVABLES> 674,700
<ALLOWANCES> 0
<INVENTORY> 663,900
<CURRENT-ASSETS> 32,874,100
<PP&E> 48,920,700
<DEPRECIATION> 1,483,900
<TOTAL-ASSETS> 85,013,400
<CURRENT-LIABILITIES> 4,360,200
<BONDS> 47,689,400
<COMMON> 299,800
0
0
<OTHER-SE> 57,507,000
<TOTAL-LIABILITY-AND-EQUITY> 85,013,400
<SALES> 1,144,100
<TOTAL-REVENUES> 1,144,100
<CGS> 911,800
<TOTAL-COSTS> 911,800
<OTHER-EXPENSES> 189,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 402,700
<INCOME-PRETAX> (828,200)
<INCOME-TAX> 0
<INCOME-CONTINUING> (828,200)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (828,200)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
