SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10-Q
[X] Quarterly report under Section 13 or 15 (d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
-----------------
OR
[ ] Transition report under section 13 or 15 (d) of the Exchange Act
COMMISSION FILE NUMBER 0-14136
CASMYN CORP.
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in Charter)
COLORADO
- ---------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
84-0987840
- ---------------------------------------------------------------------------
(IRS Employer Identification No.)
1335 GREG STREET, UNIT #104
SPARKS, NEVADA 89431
(702)331-5524
- ---------------------------------------------------------------------------
(Address and Telephone Number of Principal Executive Offices)
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15 (d) of the Exchange Act during the past 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 [ ].
As of May 1, 1997, 12,839,674 shares of the issuer's common stock were
outstanding.
This report contains 16 pages.
<PAGE>
CASMYN CORP.
FORM 10-QSB
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
- --------- -------------------------------------------------------- --------
<S> <C> <C>
Condensed Consolidated Balance Sheet - March 31, 1997
and September 30, 1996 3
Condensed Consolidated Statements of Operations - Three Months
and Six Months ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows - Three
Months Ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
PART II. OTHER INFORMATION
- --------- --------------------------------------------------------
Item 6 - Exhibits and Reports on Form 8-K 16
Signatures 16
</TABLE>
2
<PAGE>
CASMYN CORP.
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
------
CURRENT ASSETS:
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, 1997 September 30, 1996
-----------------------------------
Current Assets:
Cash and cash equivalents $1,055,744 $4,046,194
Accounts receivable, net 946,625 210,748
Inventories 889,694 517,837
Prepaid expenses and other assets 19,629 15,295
---------- ----------
Total current assets 2,911,692 4,790,074
Investment in and Advances to Affliates 3,434,890 2,748,031
Property and Equipment, net 17,061,268 14,101,782
Due From Related Parties, net 54,805 211,708
Other Assets 374,814 465,544
---------- ----------
Total Assets $23,837,469 $22,317,139
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable $ 2,118,462 $2,024,973
Accrued taxes from acquisition 915,795 993,660
Payable to joint venture - 623,000
Accrued liabilities 73,837 303,864
Line of Credit 3,976,305 -
Current portion of long-term debt 223,783 107,471
---------- ---------
Total current liabilties 7,308,182 4,052,968
Long-Term Debt 6,724 71,230
Convertible Debt 5,000,000 5,000,000
---------- ---------
Total Liabilities 12,314,906 9,124,198
---------- ---------
Stockholders' Equity:
Preferred stock, $.10 par value; 20,000,000
shares authorized;none outstanding - -
Common stock, $.04 par value; 300,000,000
shares authorized; 12,839,674 and
12,512,133 shares issued and
outstanding 513,587 500,485
Additional paid-in capital 27,702,171 25,735,368
Accumulated deficit (14,985,216) (12,389,109)
Foreign currency translation adjustment( 1,707,979) ( 653,803)
---------- ----------
Total Stockholders' Equity 11,522,563 13,192,941
---------- ----------
Total Liabilities and Stockholders'
Equity $23,837,469 $22,317,139
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
CASMYN CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
For the Six Months For the Three Months
Ended March 31, Ended March 31,
<S> <C> <C> <C> <C>
1997 1996 1997 1996
------------- ------------ ------------- -----------
REVENUES:
Precious metals $ 1,497,151 $ 105,378 $ 874,645 $ 105,378
----------- ----------- ---------- -----------
COSTS AND EXPENSES:
Mineral operations 1,423,430 24,141 609,584 24,141
General and administrative
expenses 1,080,323 688,221 512,352 385,584
Compensatory stock option
expense 83,085 298,276 9,043 99,426
Professional Services 173,411 195,388 111,254 99,948
Depreciation, depletion and
amortization 224,863 23,029 111,290 11,453
Mineral exploration expense482,735 319,783 63,760 113,291
Mergers and acquisitions 193,340 30,515 79,518 -
------------ ------------ ---------- ----------
3,661,187 1,579,353 1,496,801 731,843
------------- ------------ ---------- ----------
LOSS FROM OPERATIONS (2,164,036) (1,473,975) ( 622,156) (626,465)
------------- ----------- ---------- ----------
OTHER INCOME (EXPENSE):
Equity in net loss of
affiliate ( 557,710) (1,030,225) (280,642) (611,815)
Interest (expense)
income, net (14,618) 82,118 (40,460) 40,838
Gain on sale of investment 126,000 - - -
Other income (expense), net 14,257 38 12,843 (7,905)
------------- ----------- ---------- ----------
Other (expense),
net (432,071) (948,069) (308,259) (578,882)
------------- ----------- ---------- ----------
Net Income (Loss) $(2,596,107) $(2,422,044) $( 930,415) $(1,205,347)
============= =========== ========== ==========
Net Loss Per Common Share $ (.20) $ (.28) $ (.07) $ (.14)
============= =========== ========== ==========
Weighted Average Common
Shares Outstanding 12,701,362 8,619,666 12,786,279 8,634,861
============= =========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
CASMYN CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(2,596,107) $(2,422,044)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation, depletion and amortization 224,863 23,029
Equity in net loss of affiliate 557,710 1,030,225
Write down of assets - 100,000
Compensatory stock option expense 83,085 298,276
Amortization of debt issue costs 30,000 30,000
Gain on sale of investment (126,000) -
Other non-cash expense 171,499 58,562
Increase in accounts receivable (735,877) (162,485)
(Increase) decrease in inventories (371,857) 423,249
Decrease (increase) in prepaid expenses and
other assets 108,947 (154,343)
Increase in accounts payable 155,339 1,604,283
Decrease in accrued liabilities (307,892) (979,789)
Increase (decrease) in amounts due from related
parties 156,903 (89,696)
------------- ------------
Net cash used in operating activities (2,649,387) (240,733)
------------- ------------
Cash flows from investing activities:
Purchase of business, net of cash acquired* - (4,526,415)
Decrease in cash due to change in accounting
for investment in VETI** - (459,708)
Proceeds from sale of assets 900,000 -
Decrease in long-term deposits 60,731 124,219
Investment in and advances to affilitates (1,244,570) (1,804,915)
Purchase of property and equipment (4,581,349) (1,266,841)
------------- ------------
Net cash used in investing activities (4,865,188) (7,933,600)
------------- ------------
Cash flows from financing activities:
Issuance of common stock 1,410,500 13,495,685
Issuance of common stock for exercise of
stock options 201,540 189,637
Proceeds from line credit 3,976,605 -
Repayments of long-term debt (10,344) (330,726)
------------- ------------
Net cash provided by financing activities 5,578,301 13,354,596
------------- ------------
Effect of exchange rate changes on cash and
cash equivalents (1,054,176) (89,995)
------------- ------------
Net (decrease) increase in cash and cash
equivalents (2,990,450) 5,090,208
Cash and cash equivalents, beginning of period 4,046,194 4,938,945
------------- ------------
Cash and cash equivalents, end of period $1,055,744 $10,029,153
============= ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
CASMYN CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
----------------------------
1997 1996
----------------------------
<S> <C> <C>
Cash paid for interest $ 83,658 $ 29,520
============================
Non-cash investing and financing activities:
Issuance of common stock for services $ 226,561 $ -
Common stock for payment of interest 58,219 58,562
Conversion of common stock to preferred stock - 270,700
Reduction of payable to joint venture and
investment in joint venture 623,000 -
- -----------------------------------------------------------------------------
* Purcashe of business, net of cash acquired:
Working capital, other than cash $ (111,594)
Mineral properties (4,728,373)
Property and equipment (892,074)
Accrued taxes from acquisition 993,660
Capital lease obligations 231,966
------------
Net cash used to acquire business $(4,526,415)
============
** Impact on the Company's March 31, 1996 condensed consolidated balance
sheet resulting from the change from consolidation to the equity method
of accounting for the investment in VETI:
Current assets $ 439,673
Investment in and advances to affiliates (654,853)
Property and equipment, net 141,688
Other assets 3,024
Current liabilities (389,240)
------------
Decrease in cash due to change in accounting
for investment in VETI $ (459,708)
============
</TABLE>
6
<PAGE>
CASMYN CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements are unaudited;
however, in the opinion of management, such statements include all
adjustments (which are of a normal, recurring nature) necessary for a fair
statement of the results for the interim periods. The financial statements
included herein have been prepared by Casmyn Corp. (the "Company") pursuant
to the rules and regulations of the Securities and Exchange Commission.
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 rules and
regulations, although the Company believes that the disclosures included
herein are adequate to make the information not misleading.
The organization and business of the Company, accounting policies followed by
the Company and other information are contained in the notes to the Company's
consolidated financial statements filed as part of the Company's September
30, 1996 Form 10-K/A. The Form 10-K/A should be read in conjunction with this
quarterly report.
Consolidated financial statements for the fiscal years ended prior to
September 30, 1996 included the financial statements of Vector Environmental
Technologies, Inc. ("VETI") on a consolidated basis due to the Company having
a voting controlling interest in VETI and accounting for the acquisition of
its investment in VETI as a combination of entities under common control.
This voting controlling interest arose through the provisions of the
Preferred Shares held by the Company, whereby each Preferred Share was
entitled to the equivalent of four (4) common share votes. Effective
September 30, 1996, the Company converted these Preferred Shares into common
shares and thereby relinquished its voting control of VETI. Therefore, as of
September 30, 1996, the investment in VETI has been recorded in the
consolidated balance sheet using the equity method of accounting and this
method of accounting has been applied prospectively from that date. The
consolidated statement of operations for the six months and quarter ended
March 31, 1996 reflect an equity method presentation retroactive to the
beginning of the respective period.
Recently Issued Accounting Standards - Statement of Financial Accounting
Standards ("SFAS") No. 123, Accounting for Awards of Stock-Based Compensation,
was issued by the Financing Accounting Standards Board ("FASB") in October
1995, and established financial accounting and reporting standards for stock-
based employee compensation plans and for transactions where equity securities
are issued for goods and services. The Company adopted the provisions of SFAS
No. 123 during the first quarter of the year ending September 30, 1997. This
statement requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require)
compensation cost to be measured based on the fair value of the equity
instrument awarded. Companies are permitted, however, to continue to apply
APB No. 25, Accounting for Stock Issued to Employees, which recognizes
compensation cost based upon the intrinsic value of the equity instrument
awarded. The Company will continue to apply APB Opinion No. 25 to its
stock-based compensation awards to employees and will disclose the required
pro forma effect on net income and earnings per share.
In February 1997, the FASB issued SFAS No. 128, Earnings Per Share. The
statement is effective for financial statements of the Company for periods
ending after December 15, 1997, including interim periods. SFAS No. 128
establishes standards for computing and presenting earnings per share (EPS)
and applies to entities with publicly held common stock or potential common
stock. This statement simplifies the standards for computing earnings per
share previously found in APB Opinion No. 15, Earnings per Share, and makes
them comparable to international EPS standards. It replaces the presentation
of primary EPS with a presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS on the face of the income statement for
all entities with complex capital structures and requires a reconciliation of
the numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. The Company will adopt the new
statement for its fiscal year ending September 30, 1998, and does not
anticipate earnings per share calculations will be significantly different from
those previously calculated.
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 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.
7
<PAGE>
2. INVESTMENT IN AND ADVANCES TO AFFILIATES
The Company's investment in and advances to affiliates
at March 31, 1997 and September 30, 1996 include the following:
<TABLE>
<CAPTION>
March 31 September 30
--------------------------------
<S> <C> <C>
Investment in VETI $ 476,894 $1,034,604
Advances to VETI 2,957,996 1,712,421
Other - 1,006
--------------------------------
Total $3,434,890 $2,748,031
================================
</TABLE>
Summarized financial information of VETI for the six months ended March 31,
1997 and 1996 is as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------------
<S> <C> <C>
Sales $ 359,627 $ 554,279
Net Loss (1,697,788) (1,528,888)
</TABLE>
3. INVESTMENT IN NEWGOLD INCORPORATED
On May 7, 1996, the Company entered into a 50:50 joint venture with Newgold
Incorporated ("Newgold"), a public company based in Reno, Nevada, for the
development of the Relief Canyon Mine located in Pershing County, Nevada
("Relief Canyon"). The Company committed to contribute $1,398,000
for its 50% interest in the venture. As of September 30, 1996, the
Company had contributed approximately $775,000 toward its 50% interest
in this venture and had recorded the remaining $623,000 commitment as
a payable to joint venture. On October 7, 1996, the Company sold its
interest back to Newgold for $900,000 cash, 1,000,000 restricted shares
of Newgold common stock and a release from the remaining $623,000 of
its commitment. The Company recorded a gain of $126,000 on this
transaction. The Company has recorded its investment in the 1,000,000
restricted common shares of Newgold received in the sale described
above at a nominal value of $1,000. These shares were assigned this
nominal value based upon the fact that Newgold shares were not widely
traded at that time.
8
<PAGE>
4. SUMMARY OF STOCKHOLDERS' EQUITY TRANSACTIONS
During the six months ended March 31, 1997, the Company has recorded
the following activity in its stockholders' equity accounts:
<TABLE>
<CAPTION>
Foreign
Number of Additional Currency Total
Common Common Paid-in Accumulated Translation Stockholders'
Description Shares Stock Capital Deficit Adjustment Equity
<S> <C> <C> <C> <C> <C> <C>
Balances September 30,
1996 12,512,133$500,485$25,735,368$(12,389,109)$ (653,803) $13,192,941
Private
placement
of units 155,000 6,200 1,404,300 - - 1,410,500
Issuance of
shares for
consulting
services 25,000 1,000 225,561 - - 226,561
Deferred
compensation - - 83,085 - - 83,085
Exercise of
stock options 140,500 5,620 195,920 - - 198,340
Shares issued
in lieu of
interest 7,041 282 57,937 - - 58,219
Foreign currency
translation
adjustment - - - - (1,054,176) (1,054,176)
Net loss - - - (2,596,107) - (2,596,107)
- -----------------------------------------------------------------------------
Balances at March 31,
1997 12,839,674 $513,587$27,702,171$(14,985,216)$(1,707,979) $11,522,563
==============================================================================
</TABLE>
On November 8, 1996, the Company completed a private placement of 155,000
units for net proceeds of $1,410,500. Each unit consists of one share
of the Company's restricted common stock plus one warrant; two warrants
plus $10.00 will entitle the holder to purchase one share of the
Company's common stock. The warrants are exercisable for a period of
two years.
During the six months ended March 31, 1997, the Company issued 25,000
restricted common shares to an investment banking company for services
to be rendered during the current fiscal year.
5. ZIMBABWE CREDIT FACILITY
On January 24, 1997, Casmyn Mining Zimbabwe (Private) Limited ("CMZ"),
a wholly owned subsidiary of the Company, obtained a $5,000,000 short
term credit facility which provides the Company with the ability to
draw down short term loans to fund operating and capital expenditures.
Loans under this facility can be drawn down in minimum increments
of $500,000 for up to 180 days but not past the maturity date of the
facility. All borrowings under the facility must be repaid on or
before one year from the date of the first funding. Interest on
borrowings under this facility is at LIBOR plus 2.25% per annum
("pa"); 1% pa paid as a funding fee at the time of borrowings and
LIBOR plus 1.25% pa paid at maturity. In addition the Company paid
a $50,000 arrangement fee and is required to pay a quarterly commitment
fee of 0.15% on the unused portion of the facility. The facility also
provides a refinancing fee of 0.5% of the outstanding loan on the day prior
to any refinancing if the lender is not a party to the refinancing. At March
31, 1997, $3,976,605 in short term loans were outstanding under the credit
facility. The facility is secured by a pledge of substantially all of the
assets of CMZ plus the guarantee of the Company. In addition, CMZ is required
to hedge a portion of forward gold production through the lender if at any time
the gold price offered by the Reserve Bank of Zimbabwe falls below $350 per
ounce.
9
<PAGE>
6. PREFERRED STOCK PLACEMENT
On April 14, 1997, the Company completed the placement of 751,200 shares of
restricted convertible preferred stock for cash proceeds of approximately
$16.7 million (after cash fees to the placement agent and the Company's
financial advisor and estimated transaction expenses); an additional 83,467
restricted preferred shares were issued to Societe Generale for $2,086,675
of pre-existing convertible debentures. Societe Generale also converted the
remaining $2,913,325 balance of its convertible debt in exchange for 594,856
common shares. The subscription price for the placement was $25 per share. The
preferred shares carry an 8% t be paid in additional shares of preferred stock
and convert into common stock over a five year period at an increasing discount
to the market price of the common stock at the time of conversion subject to
certain adjustments. The Company has the ability to force mandatory
conversion if the common stock exceeds certain trading price and volume
targets. The number of shares that can be converted by a holder over a ten
month period beginning in July, 1997 is limited to 10% per month, cumulative.
The underlying common stock is also restricted for sale subject to daily
volume limitations. The placement agent received warrants exercisable for a
period of five years to purchase 110,000 shares of the convertible preferred
stock at $25 per share.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements and information contained in this Report constitute "forward
looking statements" within the meaning of the United States Federal securities
laws. Such statements involve risks and uncertainties which may cause actual
results, performance, or achievements of the Company to be materially different
from results, performance, or achievements implied by such forward looking
statements. Factors which could affect the Company's financial results are
described below and in the Company's latest Annual Report on Form 10-K/A filed
with the Securities and Exchange Commission for the year ended September 30,
1996. Readers are cautioned not to place undue reliance on these forward
looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to releasse the result of any revisions to these
forward looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrences of unanticipated events.
OVERVIEW
The business activities of the Company center around mineral resource
development. The primary focus to date has been the acquisition and
exploration of precious mineral resource properties in Zimbabwe, Zambia and
South Africa. The Company has acquired certain mineral properties in South
Africa, a prospecting license in Zambia and is presently conducting mining
operations at the Zimbabwe mining properties. In addition, the Company has
positioned itself in the environmental industry through an equity investment
in VETI which is focused primarily on the development, manufacture, sales and
management of water treatment equipment and facilities.
RESULTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1997, COMPARED TO THE SIX MONTHS ENDED
MARCH 31, 1996
Revenues for the six months ended March 31, 1997 were $1,497,151 representing
sales of approximately 4,300 ounces of gold produced in Zimbabwe compared to
$105,378 for the six month period ended March 31, 1996 representing the sale
of approximately 300 ounces of gold during the period between January 31,
1996 (date of acquisition of the Zimbabwe mines) and March 31, 1996. The
Company has spent in excess of $11,000,000 in the first phase of a major
capital improvement program which was completed in December 1996. Prior
to completion of this phase, the mines had operated on a limited basis. The
commissioning of this first phase resulted in the Comapny having "state of
the art" production circuits which are capable of providing sustainable
production capacities. During the six months ended March 31, 1997, the
Company incurred $1,423,430 in fixed and variable costs related to revenues
of $1,497,151 from the sale of gold. These levels of revenues and expenses
are not necessarily indicative of future results.
Total costs and expenses excluding the $1,423,430 related to gold production
were $2,237,757 for the six months ended March 31, 1997, compared to $1,555,212
for the six months ended March 31, 1996, an increase of $682,545.
General and administrative expenses were $1,080,323 for the six months ended
March 31, 1997 compared to $688,221 for the six months ended March 31, 1996,
an increase of $392,102. Travel expenses increased $106,792 in the six months
ended March 31, 1997 compared to the six months ended March 31, 1996 due mainly
11
<PAGE>
to increased travel between Zimbabwe, Zambia and South Africa related to the
Company's operations and exploration activities in those countries.
Additionally, the Company incurred travel expenses in the six months ended
March 31, 1997 related to conducting a tour of the Zimbabwe mining operations
for a group of twelve mining analysts to conduct due diligence for the
preparation of independent research reports. Expenses related to public and
stockholder relations increased $89,130 in the six months
ended March 31, 1997 compared to the six months ended March 31, 1996.
Insurance costs were $66,997 higher for the six months ended March 31, 1997
compared to the six months ended March 31, 1996 due to the Company obtaining
increased liability insurance coverages. Realized losses on foreign exchange
increased $44,543 in the six months ended March 31, 1997 compared to the six
months ended March 31, 1996 due to the Company's operations in Canada and
Africa. Other general and administrative expenses increased $83,994 for the
six months ended March 31, 1997 compared to the six months ended March 31, 1996
due to expansion of the Company's worldwide operations, primarily in Zimbabwe.
Compensatory stock option expense decreased $215,191 for the six months ended
March 31, 1997 compared to the six months ended March 31, 1996 due to the
vesting of fewer compensatory stock options in the six months ended March 31,
1997.
Professional services expenses, consisting of accounting, audit and tax and
legal expenses decreased $21,977 in the six months ended March 31, 1997
compared to the six months ended March 31, 1996 due to higher costs related to
the Company's initial audit examination which included years that were not
previously audited.
Mineral exploration expenses were $482,735 for the six months ended March 31,
1997 compared to $319,783 for the six months ended March 31, 1996, an increase
of $162,952. This increase is due to the Company's mineral exploration program
that is presently under way at the Luswishi Property located in the Zambian
Copperbelt.
Merger and acquisition related expenses increased $162,825 in the six months
ended March 31, 1997 to $193,340 due to the Company's interest in developing
new business opportunities around the world.
Total other expense, net was $432,071 for the six months ended March
31, 1997, compared to $948,069 for the six months ended March 31, 1996, a
decrease of $515,998. This decrease was due to a reduction in the equity in
the net loss of VETI of $472,515, a gain on the sale of the Company's interest
in a mining joint venture of $126,000 (see Note 3 to the Condensed Consolidated
Financial Statements) and an increase in other income of $14,219, offset by a
decrease in net interest income of $96,736
The Company anticipates that, in the short term, expenditures related to
upgrading the mining properties in Zimbabwe will exceed revenues derived from
the sale of gold from the mines. Additionally, the Company anticipates that
expense levels experienced in the six months ended March 31, 1997 relating to
active exploration programs in various countries will continue for the
foreseeable future. The Company charges to expense all mineral resource
exploration and development costs until the mineral property to which they
relate is determined to have resources for which recovery is economically
feasible. Costs are then capitalized until the mineral property to which they
relate is placed into production, sold, abandoned or written down where there
is an impairment in value. Capitalized costs are to be charged to future
operations on a unit-of-production basis.
12
<PAGE>
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1996
Revenues for the three months ended March 31, 1997 were $874,645 representing
the sale of approximately 2,500 ounces of gold produced in Zimbabwe compared
to $105,378 for the three month period ended March 31, 1996. As discussed
above, the acquisition of the Zimbabwe mines did not occur until January 31,
1996, and as such gold sales in the period ended March 31, 1996 only amounted
to approximately 300 ounces of gold. Gold sales exceeded fixed and variable
mineral operating expenses by $265,061 for the three months ended March 31,
1997, the operations for the three months ended March 31, 1996 reflect mine
operations on a limited basis.
Total costs and expenses excluding the $609,584 related to gold production were
$887,217 for the three months ended March 31, 1997, compared to $707,702 for
the three months ended March 31, 1996, an increase of $179,515.
General and administrative expenses were $512,352 for the three months ended
March 31, 1997 compared to $383,584 for the three months ended March 31, 1996,
an increase of $128,768. Travel expenses increased $55,029 in the three months
ended March 31, 1997 compared to the three months ended March 31, 1996 due
mainly to increased travel between Zimbabwe, Zambia and South Africa related
to the Company's operations in those countries. Expenses related to public
and stockholder relations increased $37,822 in the three months ended March
31, 1997 compared to the three months ended March 31, 1996. Insurance costs
were $56,517 higher for the three months ended March 31, 1997 compared to the
three months ended March 31, 1996 due to the Company obtaining increased
liability insurance coverages. Other general and administrative expenses
decreased $20,600 for the three months ended March 31, 1997 compared to the
three months ended March 31, 1996 due to various cost cutting programs
implemented by the Company.
Compensatory stock option expense decreased $90,383 for the three months ended
March 31, 1997 compared to the three months ended March 31, 1996 due to the
vesting of fewer compensatory stock options in the three months ended March
31, 1997.
Professional services expenses, consisting of accounting, audit and tax and
legal expenses increased $11,306 in the three months ended March 31, 1997
compared to the three months ended March 31, 1996 due to higher audit and tax
services costs.
Mineral exploration expenses were $63,760 for the three months ended March 31,
1997 compared to $113,291 for the three months ended March 31, 1996, a decrease
of $49,531. This decrease is due to limited exploration activities at the
Luswishi Property located in the Zambian Copperbelt during the three months
ended March 31, 1997. Additionally, the Company had an active exploration
program in South Africa during the three months ended March 31, 1996 which the
Company did not have in the three month period ended March 31, 1997.
Merger and acquisition related expenses increased $79,518 in the three months
ended March 31, 1997 due to the Company's interest in developing new business
opportunities around the world, there were no comparable expenses in the three
month period ended March 31, 1996.
Total other expense, net was $308,259 for the three months ended
March 31, 1997, compared to $578,882 for the three months ended March 31,
1996, a decrease of $270,623. This decrease was due to a reduction in the
equity in the net loss of VETI of $331,173 and an increase in other income of
$20,748, offset by a decrease in net interest income of $81,298.
13
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
At March 31, 1997, the Company had negative working capital of $4,396,490,
including $1,055,744 in cash and cash equivalents. Management anticipates
that the net use of cash by operations will increase during the foreseeable
future due to expenditures on mineral resource development projects in South
Africa, mineral exploration and facility upgrades at the Zimbabwe mining
properties and a mineral exploration program currently underway in Zambia.
The Company will use current cash and cash equivalents to fund the on-going
projects in the short term and anticipates that it will be able to secure
additional debt and/or equity financing to fund longer term projects although
there can be no assurance that any such financing will be secured or the
amonnts thereof.
As evidence of the Company's ability to secure debt or equity financing, in the
year ended September 30, 1996, the Company received $12,975,683 net of
commissions and other expenses related to the transactions, through issuance of
1,159,091 units, consisting of warrants and shares of restricted common stock
in exempt private transactions. On November 8, 1996, the Company completed a
private placement of 155,000 units for net proceeds of $1,410,500. Each unit
consists of one share of the Company's restricted common stock plus one
warrant; two warrant plus $10.00 will entitle the holder to purchase one share
of the Company's common stock. The warrants are exercisable for a period of
two years.
On January 24, 1997, Casmyn Mining Zimbabwe (Private) Limited ("CMZ"), a wholly
owned subsidiary of the Company, obtained a $5,000,000 short term credit
facility which provides the Company with the ability to draw down short term
loans to fund operating and capital expenditures. Loans under this facility
can be drawn down in minimum increments of $500,000 for up to 180 days but not
past the maturity date of the facility. All borrowings under the facility must
be repaid on or before one year from the date of the first funding. Interest
on borrowings under this facility is at LIBOR plus 2.25% per annum ("pa"); 1%
pa paid as a funding fee at the time of borrowings and LIBOR plus 1.25% pa paid
at maturity. In addition the Company paid a $50,000 arrangement fee and is
required to pay a quarterly commitment fee of 0.15% on the unused portion of
the facility. The facility also provides a refinancing fee of 0.5% of the
outstanding loan on the day prior to any refinancing if the lender is not a
party to the refinancing. At March 31, 1997, $3,976,605 in short term loans
were outstanding under the credit facility. The facility is secured by a
pledge of substantially all of the assets of CMZ plus the guarantee of the
Company. In addition, CMZ is required to hedge a portion of forward gold
production through the lender if at any time the gold price offered by the
Reserve Bank of Zimbabwe falls below $350 per ounce.
On April 14, 1997, the Company completed the placement of 751,200 shares of
restricted convertible preferred stock for cash proceeds of approximately
$16.7 million (after cash fees to the placement agent, the Company's financial
advisor and estimated transaction expenses); an additional 83,467 restricted
preferred shares were issued to Societe Generale in exchange for $2,086,675 of
pre-existing convertible debentures. Societe Generale also converted the
remaining $2,913,325 balance of its convertible debt in exchange for 594,856
common shares. The subscription price for the placement was $25 per share.
The preferred shares carry an 8% dividend to be paid in additional shares of
preferred stock and convert into common stock over a five year period at an
increasing discount to the market price of the commons stock at the time of
conversion subject to certain adjustments. The Company has the ability to
force mandatory conversion if the common stock exceeds certain trading price
and volume targets. The number of shares that can be converted by a holder
over a ten month period beginning in July, 1997 is limited to 10% per month,
cumulative. The underlying common stock is also restricted for sale subject to
daily volume limitations. The placement agent received warrants exercisable
for a period of five years to purchase 110,000 shares of the convertible
preferred stock at $25 per share.
Net Cash Used in Operating Activities. Net cash used in operating activities
was $3,590,544 (before depreciation and other non-cash items) for the six
months ended March 31, 1997 due to net loss of $2,596,107 which was due
primarily to the increased expenses related to the Zimbabwe mining operations
and increased compensation and benefits; net cash used in operations of
$1,415,626 from increases in accounts receivable, inventory, and decreases in
accrued liabilities; and net cash provided by operations of $421,189 due to
increases in accounts payable and decreases in amounts due from related parties
and prepaid expenses and other assets. Net cash used in operating activities
was 41,780,825 (before depreciation and other non-cash items) for the six
months ended March 31, 1996 due to net loss of $2,422,044; net cash used in
operations of $1,386,313 from increases in accounts receivable, prepaid
expenses and other assets, and increases in accrued liabilities and amounts due
from related parties; and net cash provided by operating activities of
$2,027,532 due to a decrease in inventory and an increase in accounts payable.
Net Cash Used in Investing Activities. Net cash used in investing activities
was $4,865,188 for the six months ended March 31, 1997 due to the purchase of
property and equipment of $4,581,349 primarily at the Zimbabwe mining
properties, advances to affiliates of $1,244,570 and net cash provided by
investing activities of $960,731, primarily from the sale of the Company's
investment in a mining joint venture (see Note 3 to the Condensed Consolidated
Financial Statements). Net cash used in investing activities was $7,933,600
for the six months ended March 31, 1996 due to the purchase of certain
businesses in Zimbabwe of $4,526,415, investments in and advances to affiliates
of $1,804,915, purchases of property and equipment of $1,266,841, a decrease in
cash of $459,708 due to a change in accounting for the Company's investment in
VETI, and net cash provided of $124,219 due to decreases in long-term deposits.
Net Cash Provided by Financing Activities. Net cash provided by financing
activities was $5,578,301 for the six months ended March 31, 1997 due to the
Company receiving $1,410,500 from the proceeds, net of costs, from a private
placement of units and $201,540 from the exercise of stock options, offset by
the repayment of long-term debt (under capital leases) of $10,344. Net cash
provided by financing activities was $13,354,596 for the six months ended
March 31, 1996 due to the collection of subscriptions receivable, proceeds from
the exercise of stock options and from the issuance of common stock in a
private placement. This was offset by repayment of long-term debt of $330,726.
15
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
None
B. Form 8-K
None
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 hereunto duly authorized.
Casmyn Corp.
/s/ Dennis E. Welling
May 15, 1997 By _____________________________
Dennis E. Welling, Controller
(Duly authorized and Principal
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000772320
<NAME> CASMYN CORP.
<PAGE>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 1,056
<SECURITIES> 25
<RECEIVABLES> 1,742
<ALLOWANCES> (795)
<INVENTORY> 890
<CURRENT-ASSETS> 2,912
<PP&E> 17,594
<DEPRECIATION> (533)
<TOTAL-ASSETS> 23,837
<CURRENT-LIABILITIES> 7,308
<BONDS> 0
0
0
<COMMON> 514
<OTHER-SE> 11,009
<TOTAL-LIABILITY-AND-EQUITY> 23,837
<SALES> 1,487
<TOTAL-REVENUES> 1,497
<CGS> 1,423
<TOTAL-COSTS> 3,661
<OTHER-EXPENSES> 432
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15
<INCOME-PRETAX> (2,596)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,596)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,596)
<EPS-PRIMARY> (0.20)
<EPS-DILUTED> 0
</TABLE>
