<PAGE> 1
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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 September 30, 1998
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 1-11887
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: 46,137,074
shares of the Company's Common Stock were outstanding as of November 1,
1998.
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<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.
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, 1997.
<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 7-17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS .........................................Page 18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK .................................................................Page 24
</TABLE>
2
<PAGE> 3
CANYON RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 324,600 $ 3,111,000
Restricted cash 2,660,100 2,316,300
Accounts receivable 1,045,200 746,700
Inventories 6,120,400 6,051,800
Prepaid and other assets 943,700 1,288,500
------------ ------------
Total current assets 11,094,000 13,514,300
------------ ------------
Property and equipment, at cost
Mining claims and leases 24,522,400 26,463,800
Producing properties 62,179,100 60,616,800
Other 1,076,400 1,144,500
------------ ------------
87,777,900 88,225,100
Accumulated depreciation and depletion (12,512,500) (7,269,100)
------------ ------------
Net property and equipment 75,265,400 80,956,000
------------ ------------
Other Assets 3,216,800 2,811,800
------------ ------------
Total Assets $ 89,576,200 $ 97,282,100
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 4,390,600 $ 3,829,600
Notes payable - current 2,539,500 4,554,300
Deferred income 4,340,700 --
Accrued taxes, other than payroll and income 63,300 151,400
Accrued reclamation costs 502,100 1,441,200
Other accrued liabilities 551,200 956,600
------------ ------------
Total current liabilities 12,387,400 10,933,100
Notes payable - long term 17,183,300 28,055,000
Deferred income 5,477,500 --
Accrued reclamation costs 3,323,300 2,857,500
Other noncurrent liabilities 1,443,200 398,000
------------ ------------
Total Liabilities 39,814,700 42,243,600
------------ ------------
Common stock ($.01 par value) 100,000,000 shares authorized;
issued and outstanding: 46,107,100 at September 30, 1998, and
43,617,100 at December 31, 1997 461,100 436,200
Capital in excess of par value 95,278,800 92,999,400
Deficit (45,978,400) (38,397,100)
------------ ------------
Total Stockholders' Equity 49,761,500 55,038,500
------------ ------------
Total Liabilities and Stockholders' Equity $ 89,576,200 $ 97,282,100
============ ============
</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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUE
Sales $ 7,525,800 $ 8,337,300 $ 25,064,000 $ 21,445,700
-------------- -------------- -------------- --------------
EXPENSES
Cost of sales 5,879,000 6,621,600 18,675,500 15,017,200
Depreciation, depletion, and amortization 1,570,200 1,489,600 5,230,400 3,881,400
Selling, general and administrative 781,100 712,900 2,466,300 2,383,500
Exploration costs 146,300 27,200 452,500 145,700
Abandoned mineral properties -- 297,100 -- 297,100
-------------- -------------- -------------- --------------
8,376,600 9,148,400 26,824,700 21,724,900
-------------- -------------- -------------- --------------
OTHER INCOME (EXPENSE)
Interest income 51,800 156,100 164,300 324,500
Interest expense (263,500) (400,200) (1,200,100) (940,200)
Gain on partial prepayment of gold loan 919,700 -- 919,700 --
Gain (loss) on asset disposals 22,200 89,100 39,900 238,500
Other 13,800 4,600 (8,300) (10,200)
-------------- -------------- -------------- --------------
744,000 (150,400) (84,500) (387,400)
-------------- -------------- -------------- --------------
Loss before extraordinary item and
cumulative effect of change in accounting
principle ($ 106,800) ($ 961,500) ($ 1,845,200) ($ 666,600)
Extraordinary loss on debt prepayments -- -- (281,500) --
Cumulative effect of change in accounting
principle -- -- (5,454,600) --
-------------- -------------- -------------- --------------
Net loss ($ 106,800) ($ 961,500) ($ 7,581,300) ($ 666,600)
============== ============== ============== ==============
Basic and diluted loss per share:
Loss before extraordinary item and cumulative
effect of change in accounting principle -- ($ 0.02) ($ 0.04) ($ 0.02)
Extraordinary loss on debt prepayments -- -- -- --
Cumulative effect of change in accounting
principle -- -- ($ 0.12) --
-------------- -------------- -------------- --------------
Net loss -- ($ 0.02) ($ 0.16) ($ 0.02)
============== ============== ============== ==============
Weighted average shares outstanding 46,107,100 41,048,700 46,107,100 39,114,600
============== ============== ============== ==============
Pro forma amounts assuming the change in
accounting principle is applied retroactively
Net loss ($ 106,800) ($ 1,446,000) ($ 2,126,700) ($ 1,813,200)
Basic and diluted per share amounts -- ($ 0.04) ($ 0.16) ($ 0.05)
</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>
Nine months ended September 30,
1998 1997
--------------- ---------------
Cash flows from operating activities:
Net loss $ (7,581,300) $ (666,600)
--------------- ---------------
<S> <C> <C>
Adjustments to reconcile net loss to net cash provided by
operating activities:
Extraordinary loss on debt prepayments 281,500 --
Cumulative effect of change in accounting principle 5,454,600 --
Depreciation, depletion, and amortization 5,230,400 3,881,400
Amortization of financing costs 165,400 141,400
Abandoned mineral properties -- 297,100
(Gain) on asset disposals (39,800) (238,500)
Other 34,800 1,200
Changes in assets and liabilities;
Increase in receivables (303,100) (299,100)
Increase in inventories (68,600) (1,402,000)
Increase in prepaid and other assets (862,100) (892,300)
(Decrease) increase in accounts payable and accrued
liabilities (738,100) 2,443,400
Increase in deferred income 9,818,200 --
(Decrease) increase in other liabilities 465,800 (570,700)
Increase in restricted cash (233,000) (1,575,100)
--------------- ---------------
Total adjustments 19,206,000 1,786,800
--------------- ---------------
Net cash provided by operating activities 11,624,700 1,120,200
--------------- ---------------
Cash flows from investing activities:
Purchases of property and equipment (3,580,600) (17,543,200)
Proceeds on asset dispositions 143,500 239,600
Proceeds from gold sales and restricted cash -- 3,894,100
--------------- ---------------
Net cash used in investing activities (3,437,100) (13,409,500)
--------------- ---------------
Cash flows from financing activities:
Issuance of stock, net 2,192,500 9,308,100
Proceeds from loans and restricted cash, net 1,004,000 3,066,900
Receipts from escrow account 200 --
Payments on debt (13,866,700) (1,626,400)
Payment to collateralize letter of credit (165,000) --
Payments on capital lease obligations (139,000) (110,300)
--------------- ---------------
Net cash provided by (used in) financing activities (10,974,000) 10,638,300
--------------- ---------------
Net decrease in cash and cash equivalents (2,786,400) (1,651,000)
Cash and cash equivalents, beginning of year 3,111,000 4,181,100
--------------- ---------------
Cash and cash equivalents, end of period $ 324,600 $ 2,530,100
=============== ===============
</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
(Unaudited)
Supplemental disclosures of cash flow information:
1. The Company paid $1,119,200 of interest during the first nine months of
1998, and $1,167,700 during the corresponding period of 1997. Of the total
payments, capitalized interest during the first nine months of 1998 and
1997 was $0 and $461,500, respectively.
2. The Company paid no income taxes during the first nine months of 1998 and
no income taxes during the corresponding period of 1997.
Supplemental schedule of noncash investing and financing activities:
1. The Company acquired $1,258,900 in equipment through capital leases during
the first nine months of 1998, and $85,200 in equipment through capital
leases during the corresponding period of 1997.
2. The Company issued 50,000 shares of common stock which was valued at
$106,200 in connection with the termination of a previous agreement to
acquire an exploration property during the first nine months of 1997.
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.
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 (SFAS 130), Reporting Comprehensive
Income. SFAS 130 is designed to report a measure of all changes in
equity of an enterprise that result from recognized transactions and
other economic events of the period other than transactions with owners
in their capacity as owners. Besides net income, other comprehensive
income includes foreign currency items, minimum pension liability
adjustments, and unrealized gains and losses on certain investments in
debt and equity securities. The Company has no items of other
comprehensive income in any period presented in the accompanying
interim financial statements.
The provisions of Statement of Financial Accounting Standards No. 131
(SFAS 131), Disclosures about Segments of an Enterprise and Related
Information, will be effective for the Company's 1998 fiscal year. SFAS
131 establishes standards for the way that public business enterprises
determine operating segments and report information about those
segments in annual financial statements. SFAS 131 also requires those
enterprises to report selected information about operating segments in
interim financial reports issued to shareholders. SFAS 131 further
establishes standards for related disclosures about products and
services, geographic areas, and major customers. As the provisions need
not be applied to interim financial statements in the initial year of
application, the accompanying interim financial statements do not
include the disclosures required by SFAS 131. Upon adoption, the
Company anticipates a material impact on its reported disclosures.
In April 1998, the Financial Accounting Standards Board approved the
issuance of Statement of Position No. 98-5, Reporting on the Costs of
Start-Up Activities (SOP 98-5). SOP 98-5 is effective for financial
statements for fiscal years beginning after December 15, 1998 and
provides guidance on the financial reporting of start-up costs and
organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred. Initial adoption will be
reported as a cumulative effect of a change in accounting principle. At
this time, the Company cannot determine the effects of adopting SOP
98-5 on its financial condition or results of operations.
7
<PAGE> 8
CANYON RESOURCES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
1. BASIS OF PRESENTATION: (Continued)
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities (SFAS 133). SFAS 133 is effective
for all fiscal quarters of fiscal years beginning after June 15, 1999
and establishes accounting and reporting standards for derivative
instruments and hedging activities. It requires that the Company
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. At this time, the Company cannot determine the effects, if any,
that adopting SFAS 133 will have on its financial condition, liquidity
or results of operations.
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 cash flows of Canyon
Resources and its consolidated subsidiaries for interim periods.
2. CHANGE IN ACCOUNTING PRINCIPLE:
In the second quarter of 1998, the Company changed its method of
accounting for exploration costs on unproven properties from
capitalizing all expenditures to expensing all costs, other than
acquisition costs, prior to the establishment of proven and probable
reserves. This will bring the Company's accounting method in accordance
with the predominant practice in the US mining industry and will better
reflect operating income and cash flow. The $5,454,600 cumulative
effect of the change on prior years is included in the loss for the
nine months ended September 30, 1998. The effect of the change on the
three months ended September 30, 1998 was to increase the net loss by
$108,700, which had no effect on per share amounts. The effect of the
change on the nine months ended September 30, 1998 was to increase the
loss before extraordinary item and cumulative effect of a change in
accounting principle by $364,700, or $0.01 per share and the net loss
by $5,819,300 or $0.13 per share.
3. INTERIM RESULTS:
The foregoing interim results are not necessarily indicative of the
results of operations for the full year ending December 31, 1998.
8
<PAGE> 9
CANYON RESOURCES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
4. 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.
5. RESTRICTED CASH:
Restricted cash consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Collateral for Letter of Credit (a) $ 2,118,000 $ 1,953,000(1)
Unexpended proceeds from gold sales (b) 542,100 309,100
Unexpended proceeds from loan drawing (c) -- 54,000
Contingency account (d) -- 200
------------ ------------
$ 2,660,100 $ 2,316,300
============ ============
</TABLE>
(a) In connection with the issuance of certain bonds for the
performance of reclamation obligations at the Kendall Mine,
Briggs Mine and McDonald Gold Project, a bank Letter of Credit
has been provided in favor of the Surety as partial collateral
for such bond obligations. The Letter of Credit is fully
collateralized with cash and will expire no earlier than December
31, 1998. At the bank's option, the Letter of Credit may be
renewed for successive one-year periods.
1 Kendall and Briggs Mines only
(b) The Briggs Mine loan facility requires all proceeds from gold
sales to be held in trust and disbursed from the collected credit
balance in certain orders of priority.
(c) Loan proceeds restricted solely for use at 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. Substantially all of these funds were utilized in 1996 due
to higher than anticipated construction costs and working capital
needs.
9
<PAGE> 10
CANYON RESOURCES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
6. INVENTORIES:
Inventories consisted of the following at:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Gold-in-process (a) $ 5,103,400 $ 4,997,900
Industrial minerals - in process (a) 339,900 413,200
Materials and supplies 677,100 640,700
------------ ------------
$ 6,120,400 $ 6,051,800
============ ============
</TABLE>
(a) Includes all direct and indirect costs of mining, crushing,
processing, and site overhead expenses.
7. NOTES PAYABLE:
Notes payable consisted of the following at:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Briggs Facility (a)
o Gold Loan $ 18,308,300 $ 23,125,000
o Cash Loans -- 8,700,000
o Credit Line 450,000 --
Norwest Revolver (b) 500,000 350,000
Western Mobile Note (c) 464,500 434,300
------------ ------------
$ 19,722,800 $ 32,609,300
Current portion 2,539,500 4,554,300
------------ ------------
Notes Payable - Long Term $ 17,183,300 $ 28,055,000
============ ============
</TABLE>
(a) On December 6, 1995, the Company's wholly owned subsidiary, CR
Briggs Corporation, obtained a $34.0 million loan facility to
finance the capital requirements of mine construction and working
capital for its Briggs Mine in California. Drawings on the
facility included $25.0 million principal in the form of a gold
loan and $9.0 million principal as dollar loans. The gold loan
portion was monetized at $388.05 per ounce, or 64,425 ounces.
10
<PAGE> 11
CANYON RESOURCES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
7. NOTES PAYABLE: (Continued)
In May, 1998, the loan facility was restructured and included (i)
the modification of certain coverage ratios (as defined), (ii) a
revision to the amortization schedule for the gold loan, and
(iii) the liquidation of the Company's hedge position for all
forward contracts with settlement dates beyond June 30, 1998. The
liquidation resulted in proceeds of $11.1 million which were used
to prepay in full the cash loans outstanding of $8.6 million. As
a result of the prepayment, unamortized deferred financing costs
of $281,500 allocated to the cash loans were expensed in the
second quarter of 1998. This amount is shown as an extraordinary
item on the Statement of Operations for the nine months ended
September 30, 1998.
In August, 1998, the loan facility was further amended as
follows: (i) a six month, $1 million credit line at LIBOR plus 2
3/8% was established for working capital needs ($450,000 drawn at
September 30, 1998); (ii) the Company pledged the stock of its
subsidiary, CR Minerals, as additional collateral for the loan;
(iii) certain proceeds from any asset sales the Company may
undertake will be used to reduce the principal balance on the
gold loan; and (iv) the $2.5 million remaining from the May, 1998
hedge liquidation was utilized for scheduled debt service for the
period ending September 30, 1998 (644 ounces of principal and 312
ounces of interest) and to further reduce the principal on the
gold loan by 8,225 ounces. As a result of the partial prepayment
of the gold loan, the Company recognized a gain of $919,700
(8,869 ounces of principal repaid by open market purchase at
$284.35 per ounce; corresponding reduction in debt at $388.05 per
ounce). This amount is shown as an other income item on the
Statement of Operations for the three and nine months ended
September 30, 1998.
Weighted average interest rates on the amounts outstanding during
the three months ended September 30, 1998 were (i) 3.0% on the
gold loan, and (ii) 8.1% on the credit line. For the comparable
period in 1997, weighted average interest rates on the gold loan
and dollar loans were 3.5% and 10.3%, respectively. For the nine
months ended September 30, 1998, weighted average interest rates
were (i) 3.3% on the gold loan, (ii) 10.5% on the cash loans, and
(iii) 8.1% on the credit line. For the comparable period in 1997,
weighted average interest rates were 3.4% on the gold loan and
10.1% on the cash loans. Interest payments of $154,700 and
$348,700 were made during the three months ended September 30,
1998 and 1997, respectively. For the nine month period, interest
payments of $966,200 and $1,116,000 were made during 1998 and
1997, respectively.
11
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CANYON RESOURCES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
7. NOTES PAYABLE: (Continued)
The current amortization schedule for the gold loan follows:
<TABLE>
<CAPTION>
PAYMENT PERIOD OUNCES $ MONETIZED AMOUNT
- -------------- ------------ ------------------
<S> <C> <C>
Balance of 1998 644 $ 250,000
1999 3,060 1,187,400
2000 2,738 1,062,500
2001 14,174 5,500,200
2002 26,564 10,308,200
------------ ------------
47,180 $ 18,308,300
</TABLE>
The Company was not in compliance with a certain coverage ratio
(as defined) of the loan agreement as of September 30, 1998, and
has obtained a waiver of compliance for this matter. The Company
anticipates to be in compliance with this covenant in future
periods.
(b) In October, 1997, the Company's wholly owned subsidiary, CR
Minerals Corporation (CR Minerals), obtained a one-year revolving
credit line (Revolver) with Norwest Bank Colorado, N.A. in an
amount not to exceed the lesser of a borrowing base or $600,000.
The borrowing base is calculated on 70% of CR Minerals' domestic
accounts receivables not more than 90 days in age from date of
invoice. The average interest rate for the current periods was
9.0% and interest payments for the three and nine months ended
September 30, 1998, were $9,600 and $18,100, respectively. At
September 30, 1998, the amount available under the Revolver was
$100,000.
(c) On December 31, 1997, CR Minerals purchased the pumice mine which
supplies the raw ore for its New Mexico processing facility from
Western Mobile Santa Fe, Inc. Total purchase price was $950,000,
of which $475,000 was paid at closing with the balance of
$475,000 due one year later. As the promissory note issued for
the remaining consideration did not contain a stated interest
rate, an imputed rate of 9% was used to establish the note's
present value, resulting in a discount of $40,700. The amounts
amortized to interest expense during the three and nine months
ended September 30, 1998, were $10,300 and $30,200, respectively.
12
<PAGE> 13
CANYON RESOURCES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
8. SITE RESTORATION COSTS:
Reclamation spending at the Kendall Mine for the three months ended
September 30, 1998 was $235,700. For the comparable period of 1997,
spending totaled $378,800. For the nine months ended September 30,
1998, spending totaled $764,900 as compared to $1,303,600 for the prior
period.
9. CONTINGENT LIABILITY:
On September 25, 1997, the Company, together with its wholly owned
subsidiary, CR Montana Corporation (CR Montana), purchased a 72.25%
participating interest and underlying assets in the Seven-Up Pete
Venture (Venture) from CR Montana's partner in the Venture, Phelps
Dodge Corporation (Phelps Dodge). The Company and its wholly owned
subsidiary now own 100% of the Venture. The Venture includes the
McDonald Gold Project near Lincoln, Montana, which is currently in the
permitting stage.
The initial agreement required the Company to make a payment of $5
million as part of a total purchase price which would be no less than
$100 million and no more than $150 million, assuming all applicable
permits for the McDonald Gold Project are obtained. The largest part of
the purchase price, $20 to $30 per mineable reserve ounce attributable
to the Phelps Dodge ownership as determined by a final feasibility
study, would be paid after all permits for mine development are
obtained.
In June, 1998, the Company and Phelps Dodge amended the purchase terms,
subject to the Company entering into a joint venture or other business
arrangement, including a merger, by December 31, 1998, that would
provide adequate financing to carry the McDonald Gold Project through
completion of permitting and engineering (Restructuring Event). Upon
completion of a Restructuring Event, the original purchase terms would
be modified to include an immediate $5.0 million payment and a further
payment of $20.0 million upon completion of the permitting process. In
addition, production payments would be modified to commence when the
gold price is above $325 per ounce and would no longer be capped. If a
Restructuring Event does not occur on or prior to December 31, 1998,
the amendment will terminate and the original purchase terms will then
remain in force. Due to the contingent nature of the transaction, the
Company has recorded only the initial payment of $5.0 million as
additions to mining claims and leases.
10. OTHER CONTINGENT MATTERS:
In September, 1998, the Montana Department of Environmental Quality
(DEQ) filed a complaint in District Court alleging violations of the
Montana Water Quality Act for
13
<PAGE> 14
CANYON RESOURCES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
10. OTHER CONTINGENT MATTERS: (Continued)
unpermitted discharges at the Kendall Mine. The DEQ has proposed a
civil penalty in the amount of $330,000 in connection with the
complaint. The Company is currently preparing a response to the
complaint and believes the penalty as currently assessed is onerous and
without substantial merit.
11. YEAR 2000 ISSUE:
Many computer programs utilize a two digit format to identify the
applicable year. Without modification, any date sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing, among
other things, disruptions to operations and inability to process
financial transactions.
The Company is presently inventorying systems which utilize information
technology. Software that is not year 2000 compliant will be upgraded
or replaced as appropriate. The associated costs are not expected to be
material. The Company expects its information technology systems to be
fully compliant by June 30, 1999.
The Company is currently in the data gathering phase with regard to
equipment used in its operations which may have embedded chip
technology. Equipment that is not year 2000 ready could fail causing a
disruption to the Company's operations. The Company expects to
determine year 2000 compliance for such equipment by March 31, 1999 and
to complete remediation efforts by September 30, 1999. At this time,
the Company does not have sufficient data to estimate the cost of year
2000 compliance nor does it have a contingency plan in place for its
non-information technology systems.
The Company relies on third parties to supply certain materials,
utilities, transportation, and other services necessary for its
business operations. During the fourth quarter of 1998, the Company
will initiate a process to ascertain their stage of year 2000 readiness
through questionnaires, interviews and other means with the objective
of determining such third parties' readiness by March 31, 1999. As part
of the Company's contingency planning, alternate suppliers, where
practical, will be identified to reduce the risks of interruption due
to third party failures.
Although the Company believes it has adequate resources and personnel
to complete its remediation efforts prior to December 31, 1999, the
Company remains at risk with respect to its ability to complete its own
program and/or to a failure by one or more of its third party suppliers
to achieve year 2000 compliance within the required time frame.
14
<PAGE> 15
CANYON RESOURCES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
12. DEFERRED INCOME:
In May, 1998, the Company liquidated its gold hedge position for all
forward contracts with settlement dates beyond June 30, 1998, resulting
in a gain of $11.1 million. For the three and nine months ended
September 30, 1998, $1.3 million of the gain has been recognized in
operations based on the original terms of the forward contracts. The
balance of the gain will be recognized as follows:
<TABLE>
<CAPTION>
$MM
-----
<S> <C>
Balance of 1998 $ 1.2
1999 4.1
2000 4.5
-----
TOTAL $ 9.8
</TABLE>
13. TERMINATION OF AGREEMENT TO SELL MOUNTAIN VIEW PROPERTY:
The Company executed an agreement during the second quarter of 1997 to
sell the Mountain View property in Nevada for $3.0 million, payable
over a twenty-four month period and, until the purchase price was paid
in full, an aggregate work commitment of $1,250,000. At any time, the
buyer, upon proper notice could terminate the agreement and its then
remaining obligations, and relinquish its interest in the property.
During the third quarter of 1998, the buyer relinquished its interest
in the property. The Company subsequently returned the property to the
underlying lessors. No gain or loss occurred as a result of the
property relinquishment.
14. 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.
15
<PAGE> 16
CANYON RESOURCES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
15. EARNINGS PER SHARE (EPS):
The Company computes EPS by applying the provisions of Statement of
Financial Accounting Standards No. 128, Earnings per Share. The
following table provides a reconciliation of the amounts used in the
calculation of the Company's basic and diluted EPS before extraordinary
item and cumulative effect of a change in accounting principle.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
BASIC EPS
Income (loss) before extraordinary
item and accounting change $ (106,800) $ (961,500) $ (1,845,200) $ (666,600)
================= ================= ================= =================
Weighted average shares
outstanding 46,107,100 41,048,700 46,107,100 39,114,600
================= ================= ================= =================
Per share amount -- $ (0.02) $ (0.04) $ (0.02)
================= ================= ================= =================
DILUTED EPS
Income (loss) before extraordinary
item and accounting change $ (106,800) $ (961,500) $ (1,845,200) $ (666,600)
================= ================= ================= =================
Weighted average shares
outstanding 46,107,100 41,048,700 46,107,100 39,114,600
Add: effect of dilutive options (A) (A) (A) (A)
Weighted average shares
outstanding, as adjusted 46,107,100 41,048,700 46,107,100 39,114,600
================= ================= ================= =================
Per share amount -- $ (0.02) $ (0.04) $ (0.02)
================= ================= ================= =================
</TABLE>
(A) Effect would be antidilutive due to a loss before extraordinary item
and accounting change.
Options and warrants to purchase 4,694,500 shares of common stock were
outstanding at September 30, 1998 that were not included in the current
period calculations of diluted EPS as the effect would be antidilutive.
At September 30, 1997, options and warrants to purchase 4,855,500
shares of common stock were outstanding that were not included in the
prior period calculations of EPS as the effect would be antidilutive.
16
<PAGE> 17
CANYON RESOURCES CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
16. SUBSEQUENT EVENTS:
In October, 1998, the Company entered into an agreement in principle to
sell all the assets of its industrial minerals business to an
investment group for $6 million. The investment group has initially
advanced the Company $2 million which will be applied to the purchase
price upon satisfactory completion of a 60-day due diligence period.
The advance is collateralized by a first mortgage and deed of trust
lien on the Company's diatomaceous earth and pumice reserves. If the
investment group does not complete the purchase, the Company must repay
the $2.0 million on the earlier to occur of (i) October 29, 1999, or
(ii) the date upon which the stock or assets of either the Company or
its wholly owned subsidiary, CR Minerals Corporation, are sold or
otherwise transferred to another party. While outstanding, the advance
will bear interest at the rate of 15% per annum, payable quarterly on
each three-month anniversary of the advance.
In November, 1998, the Montana electorate passed an anti-cyanide mining
initiative (I-137) by a vote of 54% to 46%. I-137 bans development of
new gold and silver mines and expansions to existing mines which use
cyanide in the treatment and recovery process. For most of the campaign
period, mining companies were prevented from campaigning due to a
previously passed initiative (I-125) which prohibited
campaign-expenditures by "for-profit" entities. Ten days prior to the
election, a federal judge declared the prohibition "unconstitutional".
The mining community has filed lawsuits against I-137, based on (i)
having been denied the opportunity to campaign due to the effectiveness
of I-125 until the last few days, and (ii) due process considerations,
in that I-137 results in a taking of property without any compelling
public policy interest, since environmental safety concerns are well
protected and monitored with existing laws and regulations. The
Company's legal counsel believes that it is likely that I-137 will be
declared unconstitutional, or at a minimum, be overturned.
17
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
The matters discussed in this report on Form 10-Q, when not historical
matters, are forward-looking statements that involve a number of risks and
uncertainties that could cause actual results to differ materially from
projected results. Such factors include, among others, the speculative nature of
mineral exploration, commodity prices, production and reserve estimates,
environmental and government regulations, availability of financing, force
majeure events, and other risk factors as described from time to time in the
Company's filings with the Securities and Exchange Commission. Many of these
factors are beyond the Company's ability to control or predict. The Company
disclaims any intent or obligation to update its forward-looking statements,
whether as a result of receiving new information, the occurrence of future
events, or otherwise.
RESULTS OF OPERATIONS
The Company recorded a net loss of $106,800, or $0.00 per share, on
revenues of $7,525,800 for the third quarter of 1998. This compares to a net
loss of $961,500, or $0.02 per share, on revenues of $8,337,300 during the third
quarter of 1997. For the nine months ended September 30, 1998, the Company
reported a loss before extraordinary item and cumulative effect of a change in
accounting principle of $1,845,200 or $0.04 per share and a net loss of
$7,581,300, or $0.16 per share on revenues of $25,064,000. This compares to a
net loss of $666,600, or $0.02 per share on revenues of $21,445,700 during the
first nine months of 1997.
In the second quarter of 1998, the Company changed its method of
accounting for exploration costs on unproven properties from capitalizing all
expenditures to expensing all costs, other than acquisition costs, prior to the
establishment of proven and probable reserves. This will bring the Company's
accounting policy in accordance with the predominant practice in the US mining
industry and will better reflect operating income and cash flow. The $5,454,600
cumulative effect of the change on prior years is included in the net loss for
the nine months ended September 30, 1998.
For the three months ended September 30, 1998, the Company sold 16,097
ounces of gold and 3,500 ounces of silver at an average price of $383 per
equivalent gold ounce. For the comparable period of 1997, the Company sold
18,811 ounces of gold and 6,000 ounces of silver at an average realized price of
$382 per equivalent gold ounce. For the first nine months of 1998, 54,155 ounces
of gold and 13,500 ounces of silver were sold at an average realized price of
$384 per equivalent gold ounce. For the comparable period in 1997, 52,823 ounces
of gold and 12,500 ounces of silver were sold at an average realized price of
$398 per equivalent gold ounce. This total includes the sale of 8,150 ounces of
gold during the first two months of 1997 which was credited against capitalized
development costs. The New York Commodity Exchange (COMEX) gold price averaged
$289 per ounce for the three and nine months ended September 30, 1998. For the
comparable periods of 1997, the COMEX gold price averaged $323 and $340 per
ounce, respectively. Revenue from the sales of industrial minerals products
increased 13% and 11%,
18
<PAGE> 19
respectively, for the three and nine months ended September 30, 1998 as compared
to the prior year. Sales of industrial minerals products accounted for 17% and
16% of the Company's revenues for the three and nine months ended September 30,
1998, respectively. Sales of industrial mineral products accounted for 14% and
17% of the Company's revenues, respectively, for the three and nine months ended
September 30, 1997.
Cost of sales was $5.9 million for the three months ended September 30,
1998, as compared to $6.6 million in the prior period. For the nine months ended
September 30, 1998, cost of sales was $18.7 million as compared to $15.0 million
in the prior period. The prior period includes only seven months of commercial
production from the Briggs Mine.
Per ounce cost of gold sold at the Briggs Mine, as computed under the
Gold Institute's Production Cost Standard, was as follows:
CR BRIGGS MINE
COST PER OUNCE OF GOLD SOLD
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1998 1997 1998 1997(1)
------------------ -----------------
<S> <C> <C> <C> <C>
Cash operating (2) $306 $302 $286 $272
Total cash costs (3) $311 $308 $292 $278
Total production costs (4) $407 $388 $387 $365
</TABLE>
(1) March, 1997 - September, 1997, only.
(2) All direct and indirect costs of the operation, excluding
royalties and accruals for site restoration. Includes inventory
changes and adjustments for deferred stripping.
(3) Cash operating costs plus royalties.
(4) Total cash costs plus depreciation, depletion, amortization and
accruals for site restoration.
Cost per ounce amounts were higher for the three months ended September
30, 1998 due to lower production levels. For the nine month period, although the
ounces of gold produced and sold were higher and the operating costs were
somewhat lower in 1998 than in 1997, per ounce costs were higher due to lower
grades of ore mined. For the nine months ended September 30, 1998, the average
ore grade was 0.029 ounce per ton as compared to 0.033 ounce per ton for the
prior period.
Depreciation, depletion and amortization was not materially different
for the three months ended September 30, 1998 and was higher for the nine month
period due to higher gold sales. In addition, the prior nine month period
included only seven months of commercial gold production from the Briggs Mine.
19
<PAGE> 20
Interest expense was lower for the three months ended September 30,
1998 as compared to the prior period, due to the early paydown of the Briggs
cash loans in the second quarter. For the nine months ended September 30, 1998,
interest expense was higher than the prior period as interest on the Briggs loan
facility was capitalized for the first two months of 1997. Interest income was
lower in the current periods due to lower cash balances.
In May, 1998, the Company prepaid in full the cash loans outstanding of
$8.6 million on the Briggs Mine loan facility. As a result of the prepayment,
unamortized deferred financing costs of $285,100 allocated to the cash loans
were expensed and recorded as an extraordinary loss for the three and six months
ended June 30, 1998.
During the third quarter of 1998, the Company recognized a gain of
$919,700 relating to a partial prepayment of the gold loan. Utilizing proceeds
of approximately $2.5 million remaining from an earlier hedge liquidation, the
Company repaid 8,869 ounces of principal by open market purchase at $284.35 per
ounce with a corresponding reduction in debt at $388.05 per ounce.
LIQUIDITY & CAPITAL RESOURCES
CASH FLOW
Net cash provided by operating activities during the nine months ended
September 30, 1998, was $11.6 million as compared to $1.1 million for the same
period in 1997. The substantial improvement was a result of the Company
liquidating most of its gold hedge position in May, 1998, resulting in proceeds
of $11.1 million. (See separate caption "Briggs Mine Loan Facility".)
Cash and cash equivalents at September 30, 1998 was $0.3 million.
The Company spent $3.6 million on capital programs for the nine months
ended September 30, 1998, principally on advancing the permitting effort at the
McDonald Gold Project and improvements to the industrial minerals business.
During the first nine months of 1998, the Company raised $2.5 million
($2.2 million net of expenses) through the sale of 2,490,000 shares of common
stock, repaid $13.5 million of principal on the Briggs loan facility (See
separate caption "Briggs Mine Loan Facility") and borrowed an additional $0.15
million on the CR Minerals Revolver.
BRIGGS MINE LOAN FACILITY
In May, 1998, the loan facility was restructured and included (i) the
modification of certain coverage ratios (as defined), (ii) a revision to the
amortization schedule for the gold loan, and (iii) the liquidation of the
Company's hedge position for all forward contracts with settlement dates beyond
June 30, 1998. The liquidation resulted in proceeds of $11.1 million which were
used to prepay in full the cash loans outstanding of $8.6 million.
In August, 1998, the loan facility was further amended as follows: (i)
a six month, $1 million credit line at LIBOR plus 2 3/8% was established for
working capital needs ($450,000 drawn at September 30, 1998); (ii) the Company
pledged the stock of its subsidiary, CR Minerals, as additional collateral for
the loan; (iii) certain proceeds from any asset sales the Company may undertake
will be used to reduce the principal balance on the gold loan; and (iv)
20
<PAGE> 21
the $2.5 million remaining from the May, 1998 hedge liquidation was utilized for
scheduled debt service for the period ending September 30, 1998 (644 ounces of
principal and 312 ounces of interest) and to further reduce the principal on the
gold loan by 8,225 ounces.
The current amortization schedule for the gold loan follows:
<TABLE>
<CAPTION>
PAYMENT PERIOD OUNCES $ MONETIZED AMOUNT
-------------- ------ ------------------
<S> <C> <C>
Balance of 1998 644 $ 250,000
1999 3,060 1,187,400
2000 2,738 1,062,500
2001 14,174 5,500,200
2002 26,564 10,308,200
------ ------------
47,180 $18,308,300
</TABLE>
The Company was not in compliance with a certain coverage ratio (as
defined) of the loan agreement as of September 30, 1998, and has obtained a
waiver of compliance for this matter. The Company anticipates to be in
compliance with this covenant in future periods.
MCDONALD GOLD PROJECT
In June, 1998, the Company and Phelps Dodge amended the deferred
payment terms resulting from the Company's purchase in September 1997 of Phelps
Dodge's interest in the Seven-Up Pete Joint Venture and the McDonald Gold
Project. Subject to the Company completing a joint venture or other business
arrangement, including a merger, by December 31, 1998 that would provide
adequate financing to carry the McDonald Gold Project through completion of
permitting and engineering (Restructuring Event), the original purchase terms
would be modified to include an immediate $5.0 million payment and a further
payment of $20.0 million upon completion of the permitting process. In addition,
production payments would be modified to commence when the gold price is above
$325 per ounce and would no longer be capped. If a Restructuring Event does not
occur on or prior to December 31, 1998, the amendment will terminate and the
original purchase terms will then remain in force. Due to the contingent nature
of the transaction, the Company has recorded only the initial payment of $5.0
million as additions to mining claims and leases.
In November, 1998, the Montana electorate passed an anti-cyanide mining
initiative (I-137) by a vote of 54% to 46%. I-137 bans development of new gold
and silver mines and expansions to existing mines which use cyanide in the
treatment and recovery process. For most of the campaign period, mining
companies were prevented from campaigning due to a previously passed initiative
(I-125) which prohibited campaign-expenditures by "for-profit" entities. Ten
days prior to the election, a federal judge declared the prohibition
"unconstitutional". The mining community has filed lawsuits against I-137, based
on (i) having been denied the opportunity to campaign due to the effectiveness
of I-125 until the last few days, and (ii) due process
21
<PAGE> 22
considerations, in that I-137 results in a taking of property without any
compelling public policy interest, since environmental safety concerns are well
protected and monitored with existing laws and regulations. The Company's legal
counsel believes that it is likely that I-137 will be declared unconstitutional,
or at a minimum, be overturned. In the interim, expenditures will be directed at
maintaining the property's mineral and legal rights.
OVERALL LIQUIDITY
At September 30, 1998, the ratio of the Company's liquid assets (cash
and cash equivalents, restricted cash available to fund Briggs operations and
accounts receivable) to its current liabilities (excluding deferred income) was
0.24 to 1.
In October, 1998, the Company entered into an agreement in principle to
sell all the assets of its industrial minerals business to an investment group
for $6 million. The investment group has initially advanced the Company $2
million which will be applied to the purchase price upon satisfactory completion
of a 60-day due diligence period. The advance is collateralized by a first
mortgage and deed of trust lien on the Company's diatomaceous earth and pumice
reserves. If the investment group does not complete the purchase, the Company
must repay the $2.0 million on the earlier to occur of (i) October 29, 1999, or
(ii) the date upon which the stock or assets of either the Company or its wholly
owned subsidiary, CR Minerals Corporation, are sold or otherwise transferred to
another party. While outstanding, the advance will bear interest at the rate of
15% per annum, payable quarterly on each three-month anniversary of the advance.
The Company continues to pursue a strategy of (i) divestiture or joint
venture of one or more of its assets, and (ii) seeking a merger or amalgamation
of companies with the objective of increasing liquidity and overall financial
strength.
ENVIRONMENTAL MATTERS
In September, 1998, the Montana Department of Environmental Quality
(DEQ) filed a complaint in District Court alleging violations of the Montana
Water Quality Act for unpermitted discharges at the Kendall Mine. The DEQ has
proposed a civil penalty in the amount of $330,000 in connection with the
complaint. The Company is currently preparing a response to the complaint and
believes the penalty as currently assessed is onerous and without substantial
merit.
YEAR 2000 ISSUE
Many computer programs utilize a two digit format to identify the
applicable year. Without modification, any date sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing, among other things, disruptions
to operations and inability to process financial transactions.
The Company is presently inventorying systems which utilize information
technology. Software that is not year 2000 compliant will be upgraded or
replaced as appropriate. The associated costs are not expected to be material.
The Company expects its information technology systems to be fully compliant by
June 30, 1999.
22
<PAGE> 23
The Company is currently in the data gathering phase with regard to
equipment used in its operations which may have embedded chip technology.
Equipment that is not year 2000 ready could fail causing a disruption to the
Company's operations. The Company expects to determine year 2000 compliance for
such equipment by March 31, 1999 and to complete remediation efforts by
September 30, 1999. At this time, the Company does not have sufficient data to
estimate the cost of year 2000 compliance nor does it have a contingency plan in
place for its non-information technology systems.
The Company relies on third parties to supply certain materials,
utilities, transportation, and other services necessary for its business
operations. During the fourth quarter of 1998, the Company will initiate a
process to ascertain their stage of year 2000 readiness through questionnaires,
interviews and other means with the objective of determining such third parties'
readiness by March 31, 1999. As part of the Company's contingency planning,
alternate suppliers, where practical, will be identified to reduce the risks of
interruption due to third party failures.
Although the Company believes it has adequate resources and personnel
to complete its remediation efforts prior to December 31, 1999, the Company
remains at risk with respect to its ability to complete its own program and/or
to a failure by one or more of its third party suppliers to achieve year 2000
compliance within the required time frame.
RECENTLY ISSUED ACCOUNTING STANDARDS
In April 1998, the Financial Accounting Standards Board approved the
issuance of Statement of Position No. 98-5, Reporting on the Costs of Start-Up
Activities (SOP 98-5). SOP 98-5 is effective for financial statements for fiscal
years beginning after December 15, 1998 and provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs of
start-up activities and organization costs to be expensed as incurred. Initial
adoption will be reported as a cumulative effect of a change in accounting
principle. At this time, the Company cannot determine the effects of adopting
SOP 98-5 on its financial condition or results of operations.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (SFAS 133). SFAS 133 is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999 and establishes accounting and
reporting standards for derivative instruments and hedging activities. It
requires that the Company recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. At this time, the Company cannot determine the effects, if any,
that adopting SFAS 133 will have on its financial condition, liquidity or
results of operations.
23
<PAGE> 24
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not meet the minimum market capitalization requirement
for these disclosures for interim periods in 1998.
24
<PAGE> 25
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
In September, 1998, the Montana Department of Environmental Quality
(DEQ) filed a complaint in District Court alleging violations of the
Montana Water Quality Act for unpermitted discharges at the Kendall
Mine. The DEQ has proposed a civil penalty in the amount of $330,000
in connection with the complaint.
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. 27 - Financial Data Schedule
ITEM 6(b) REPORTS ON FORM 8-K:........................................ None
25
<PAGE> 26
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.
CANYON RESOURCES CORPORATION
Date: November 19, 1998 /s/ Richard H. De Voto
----------------------
Richard H. De Voto
President
Date: November 19, 1998 /s/ Gary C. Huber
-----------------
Gary C. Huber
Chief Financial Officer
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- -------------------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,984,700
<SECURITIES> 0
<RECEIVABLES> 1,045,200
<ALLOWANCES> 0
<INVENTORY> 6,120,400
<CURRENT-ASSETS> 11,094,000
<PP&E> 87,777,900
<DEPRECIATION> 12,512,500
<TOTAL-ASSETS> 89,576,200
<CURRENT-LIABILITIES> 12,387,400
<BONDS> 17,183,300
0
0
<COMMON> 461,100
<OTHER-SE> 95,278,800
<TOTAL-LIABILITY-AND-EQUITY> 89,576,200
<SALES> 25,064,000
<TOTAL-REVENUES> 25,064,000
<CGS> 18,675,500
<TOTAL-COSTS> 18,675,500
<OTHER-EXPENSES> 5,682,900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,200,100
<INCOME-PRETAX> (1,845,200)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,845,200)
<DISCONTINUED> 0
<EXTRAORDINARY> (281,500)
<CHANGES> (5,454,600)
<NET-INCOME> (7,581,300)
<EPS-PRIMARY> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>