<PAGE>
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 DECEMBER 31, 1996
--------------------------
OR
[_] Transition report under section 13 or 15 (d) of the Exchange Act
COMMISSION FILE NUMBER 0-14136
CASMYN CORP.
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(Exact name of registrant as specified in Charter)
COLORADO
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(State or other jurisdiction of incorporation)
84-0987840
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(IRS Employer Identification No.)
1335 GREG STREET, UNIT #104
SPARKS, NEVADA 89431
(702) 331-5524
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(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 February 13, 1997, 12,752,633 shares of the issuer's common stock were
outstanding.
This report contains 14 pages.
<PAGE>
CASMYN CORP.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
No.
----
<S> <C> <C>
PART I. Financial Information:
Condensed Consolidated Balance Sheets - September 30, 1996
and December 31, 1996 3
Condensed Consolidated Statements of Operations - Three Months
ended December 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows - Three Months
ended December 31, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. Other Information:
Item 6 - Exhibits and Reports on Form 8-K 14
Signatures 14
Exhibits 15
</TABLE>
2
<PAGE>
CASMYN CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
------
DECEMBER 31, SEPTEMBER 30,
1996 1996
-------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 799,543 $ 4,046,194
Accounts receivable, net 563,498 210,748
Inventories 677,246 517,837
Prepaid expenses and other assets 208,857 15,295
---------------------------------
Total current assets 2,249,144 4,790,074
INVESTMENT IN AND ADVANCES TO AFFILIATES 3,179,342 2,748,031
PROPERTY AND EQUIPMENT, NET 15,275,941 14,101,782
DUE FROM RELATED PARTIES, NET 189,320 211,708
OTHER ASSETS 446,586 465,544
---------------------------------
TOTAL ASSETS $ 21,340,333 $ 22,317,139
=================================
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 2,092,923 $ 2,024,973
Accrued taxes from acquisition 953,493 993,660
Payable to joint venture - 623,000
Accrued liabilities 100,806 303,864
Current portion of long-term debt 94,015 107,471
---------------------------------
Total current liabilities 3,241,237 4,052,968
LONG-TERM DEBT 54,936 71,230
CONVERTIBLE DEBT 5,000,000 5,000,000
---------------------------------
Total Liabilities 8,296,173 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; 12,752,633 and
12,512,133 shares issued and outstanding 510,105 500,485
Additional paid-in capital 27,635,191 25,735,368
Accumulated deficit (13,995,644) (12,389,109)
Foreign currency translation adjustment (1,105,492) (653,803)
---------------------------------
Total stockholders' equity 13,044,160 13,192,941
---------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 21,340,333 $ 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 ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
REVENUES:
Precious metals $ 622,506 $ -
----------- -----------
COSTS AND EXPENSES:
Mineral operations 816,846 -
General and administrative expenses 567,971 359,867
Compensatory stock option expense 74,042 198,850
Depreciation, depletion and amortization 113,573 11,576
Mineral exploration expense 418,975 206,492
Mergers and acquisitions 113,822 63,332
----------- -----------
2,105,229 840,117
----------- -----------
LOSS FROM OPERATIONS (1,482,723) (840,117)
----------- -----------
OTHER INCOME (EXPENSE):
Equity in net loss of affiliate (277,068) (418,410)
Interest income, net 25,842 49,223
Gain on sale of investment 126,000 -
Other income (expense), net 1,414 (7,393)
----------- -----------
Other income (expense), net (123,812) (376,580)
----------- -----------
NET LOSS $(1,606,535) $(1,216,697)
=========== ===========
NET LOSS PER COMMON SHARE $ (.13) $ (.14)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 12,624,508 8,604,637
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
CASMYN CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS $(1,606,535) $(1,216,697)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation, depletion and
amortization 113,573 11,576
Equity in net loss of affiliate 277,068 418,410
Compensatory stock option expense 74,042 198,850
Amortization of debt issue costs 15,000 15,000
Gain on sale of investment (126,000) -
Other non-cash expense 56,640 -
Increase in accounts receivable (352,750) (50,147)
Increase in inventories (159,409) -
Increase in prepaid expenses and
other assets (23,641) (481,414)
Increase in accounts payable 67,950 16,765
Increase (decrease) in accrued
liabilities (243,225) 161,553
(Increase) decrease in amounts due
from related parties 22,388 (44,864)
----------- -----------
Net cash used in operating
activities (1,884,899) (970,968)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
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 4,958 77,545
Investment in and advances to
affiliates (708,379) (2,095,956)
Purchase of property and equipment (2,685,732) (334,261)
----------- -----------
Net cash used in investing
activities (2,489,153) (2,812,380)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 1,410,500 4,750,002
Issuance of common stock for
exercise of stock options 198,340 -
Repayments of long-term debt (29,750) (98,760)
----------- -----------
Net cash provided by
financing activities 1,579,090 4,651,242
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (451,689) 3,561
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (3,246,651) 871,455
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 4,046,194 4,938,945
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 799,543 $ 5,810,400
=========== ===========
(CONTINUED)
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
CASMYN CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(CONTINUED)
<TABLE>
<CAPTION>
1996 1995
-------------------
<S> <C> <C>
CASH PAID FOR INTEREST $ 22,528 $ 18,764
===================
NONCASH INVESTING AND FINANCING
ACTIVITIES:
Issuance of common stock for services $226,561 $ -
Conversion of common stock to
preferred stock - 270,700
Receipt of investment for sale of asset 1,000 -
Reduction of payable to joint venture
and investment in joint venture 623,000 -
<CAPTION>
- ---------------------------------------------------------------
* IMPACT ON THE COMPANY'S DECEMBER 31, 1995 CONDENSED CONSOLIDATED BALANCE
SHEET RESULTING FROM THE CHANGE FROM CONSOLIDATION TO THE EQUITY METHOD OF
ACCOUNTING FOR THE INVESTMENT IN VETI:
<S> <C> <C>
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. The Form 10-K 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 quarter ended
December 31, 1995 reflects an equity method presentation retroactive to the
beginning of the period.
RECENTLY ISSUED ACCOUNTING STANDARDS - SFAS No. 123, Accounting for Awards of
Stock-Based Compensation, was issued by the 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.
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 December 31, 1996 and
September 30, 1996 include the following:
<TABLE>
<CAPTION>
DECEMBER 31 SEPTEMBER 30
--------------------------
<S> <C> <C>
Investment in VETI $ 757,536 $1,034,604
Advances to VETI 2,414,248 1,712,421
Other 7,558 1,006
-------------------------
Total $3,179,342 $2,748,031
=========================
</TABLE>
Summarized financial information of VETI for the three months ended December 31,
1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------------
<S> <C> <C>
Sales $ 235,555 $ 240,779
Net loss (843,168) (917,073)
</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 are not widely traded at this time.
8
<PAGE>
4. SUMMARY OF STOCKHOLDERS' EQUITY TRANSACTIONS
During the three months ended December 31, 1996, 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 - - 74,042 - - 74,042
Exercise of stock options 60,500 2,420 195,920 - - 198,340
Foreign currency
translation adjustment - - - - (451,689) (451,689)
Net loss - - - (1,606,535) - (1,606,535)
------------------------------------------------------------------------------------------------------
Balances at December 31,
1996 12,752,633 $510,105 $27,635,191 $(13,995,644) $(1,105,492) $13,044,160
======================================================================================================
</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 three months ended December 31, 1996, 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.
The facility is secured by 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>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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
THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THE THREE MONTHS ENDED
DECEMBER 31, 1995
Revenues for the three months ended December 31, 1996 were $622,506 representing
sales of approximately 1,713 ounces of gold produced in Zimbabwe. There were no
gold sales in the three months ended December 31, 1995 as the acquisition of the
Zimbabwe mines did not occur until January 31, 1996. The Company completed the
first phase of a major capital improvement program in the current quarter.
Prior to completion of this phase, the mines operated on a limited basis. As a
result of this commissioning process, gold production was delayed to activate
"state of the art" production circuits so as to provide sustainable production
capacities. Due to these low gold production levels, fixed and variable mineral
operations expenses of $816,846 exceeded revenues from gold sales by $194,340.
Total costs and expenses excluding the $816,846 related to gold production were
$1,288,383 for the three months ended December 31, 1996, compared to $840,117
for the three months ended December 31, 1995, an increase of $448,266.
General and administrative expenses were $567,971 for the three months ended
December 31, 1996 compared to $359,867 for the three months ended December 31,
1995, an increase of $208,104. Compensation and benefits increased $75,067 due
to expanded operations, primarily in Zimbabwe. Travel expenses increased $30,893
in the three months ended December 31, 1996 compared to the three months ended
December 31, 1995 due mainly to increased travel between Zimbabwe, Zambia and
South Africa related to the Company's operations in those countries. In
addition, the Company incurred travel expenses in the three months ended
December 31, 1996 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. Professional services and other
general and administrative expenses increased $102,144 for the three months
ended December 31, 1996 compared to the three months ended December 31, 1995 due
to expansion of the Company's worldwide operations, primarily in Zimbabwe.
Compensatory stock option expense decreased $124,808 for the three months ended
December 31, 1996 compared to the three months ended December 31, 1995 due to
the vesting of fewer compensatory stock options in the three months ended
December 31, 1996.
10
<PAGE>
Mineral exploration expenses were $418,975 for the three months ended December
31, 1996 compared to $206,492 for the three months ended December 31, 1995, an
increase of $212,483. 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 $50,490 in the three months
ended December 31, 1996 to $113,822 due to the Company's interest in developing
new business opportunities around the world.
Total other expense, net was $(123,812) for the three months ended December 31,
1996, compared to $(376,580) for the three months ended December 31, 1995, a
decrease of $252,768. This decrease was due to a reduction in the equity in the
net loss of VETI of $141,342, 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 $8,807, offset by a
decrease in net interest income of $23,381.
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 three months ended December 31, 1996 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.
CAPITAL RESOURCES AND LIQUIDITY
At December 31, 1996, the Company had negative working capital of $992,093,
including $799,543 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 amounts thereof.
As evidence of the Company's ability to secure debt or equity financing, on July
19, 1995 the Company placed a $5,000,000, 2.5%, unsecured Convertible Debenture,
due July 31, 2000, ("Debenture") with Societe Generale, Paris, France ("Holder")
for net proceeds of $4,700,000. Interest is payable semi-annually commencing
January 31, 1996, which, at the election of the Company, may be paid through the
issuance of shares of common stock of the Company. During the fiscal year ended
September 30, 1995, the Company completed private placements of 405,000 Common
Shares and 714,286 units for total net proceeds of $7,002,859. Additionally, 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
11
<PAGE>
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.
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.
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.
Net Cash Used in Operating Activities. Net cash used in operating activities was
$1,884,899 for the three months ended December 31, 1996 due to net loss (before
depreciation and other non-cash items) of $1,196,212 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 $779,025 from
increases in accounts receivable, inventory, prepaid expenses and other assets,
and decreases in accrued liabilities; and net cash provided by operations of
$90,338 due to increases in accounts payable and decreases in amounts due from
related parties. Net cash used in operating activities was $970,968 for the
three months ended December 31, 1995 due to net loss (before depreciation and
other non-cash items) of $572,861; net cash used in operations of $576,425, from
increases in accounts receivable, prepaid expenses and other assets, and
increases in amounts due from related parties; and net cash provided by
operating activities of $178,318 due to increases in accounts payable and
accrued liabilities.
Net Cash Used in Investing Activities. Net cash used in investing activities was
$2,489,153 for the three months ended December 31, 1996 due to the purchase of
property and equipment of $2,685,732, primarily at the Zimbabwe mining
properties, advances to affiliates of $708,379 and net cash
provided by investing activities of $904,958, 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
$2,812,380 for the three months ended December 31, 1995 due to investments in
and advances to affiliates of $2,095,956, purchases of property and equipment of
$334,261, 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 $77,545 due to decreases
in long-term deposits.
Net Cash Provided by Financing Activities. Net cash provided by financing
activities was $1,579,090 for the three months ended December 31, 1996 due to
the Company receiving $1,410,500 from the proceeds, net of costs, from a private
placement of units and $198,340 from the exercise of stock options, offset by
the repayment of long-term debt of $29,750. Net cash provided by financing
activities was $4,651,242 for the three months ended December 31, 1995 due to
the receipt of
12
<PAGE>
$4,750,002 from the collection of subscriptions receivable from the issuance of
common stock, offset by repayment of long-term debt of $98,760.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
10.1 $5,000,000 Short Term finance facility with Barclays Bank of Zimbabwe
Limited
27 Financial Data Schedule
B. Forms 8-K
1. The Company filed an 8-K on October 1, 1996, reporting that on
August 30, 1996, at the direction of the holders, the Company converted
2,707,000 preferred shares of the Company into 2,707,000 common shares of the
Company pursuant to the terms of the preferred stock agreement.
2. The Company filed an 8-K on October 15, 1996, reporting that on
September 30, 1996, the Company reacquired 606,061 shares of its restricted
common stock and returned 5,680,514 shares of WestAmerica Corporation
("WestAmerica") restricted common stock, thereby undoing the transaction entered
into May 24, 1996.
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
February 13, 1997 By _____________________________
Dennis E. Welling, Controller
14
<PAGE>
EXHIBIT 10.1
24 January 1997
The Directors,
Casmyn Mining Zimbabwe (Private) Limited,
PO Box 785,
13 Josiah Chinamano Road,
Bulawayo
BANKING FACILITIES
Dear Sirs,
Following our discussions to provide Casmyn Mining Zimbabwe (Private) Limited
("Casmyn") with its financial requirements, we are please to offer the following
facilities which will be subject to the terms and conditions mentioned herein.
1 Facilities: Short term finance facility (the "Facility") of US$5
million, consisting of short term loans, Drawn for periods up to 180 days, but
subject to condition 4 below.
2 Purpose: Development of Turk and Lonely mines.
3 Drawdown: Available immediately upon acceptance. Drawdowns under the
Facility to be minimum of US$500,000. Casmyn may cancel undrawn amounts of the
Facility from the date six months after acceptance, by giving the Bank at least
7 days' notice. Requests for drawdowns must be supported by evidence for
operating costs or capital expenditures (such as invoices) in the Turk and
Lonely project, and must accord with the expenditure programme to be agreed
between Casmyn and the Bank.
4 Service and repayment: To be serviced initially from the reclamation of
dumps at Turk and Lonely mines This Facility is repayable upon demand, but
subject to this overriding condition, repayment shall be refinance of the
Facility within 12 months of first drawdown. If not refinanced within 12
months, any outstanding amount is to be repaid in full, or refinanced by us, at
our discretion, on the first anniversary of first drawdown (the "Expiry Date").
Drawings of the short term loans under the Facility will not be allowed to
mature after the Expiry Date.
5 Interest: Interest will be charged on the loans under this Facility at
a rate of LIBOR, plus a margin or 2.25% p.a. LIBOR means the percentage rate
per annum quoted to Barclays Bank of Zimbabwe Limited by Barclays Bank plc,
London, relating to period of drawing of the loan. Of the interest charge,
interest amounting to a rate of LIBOR plus 1.25% p.a. is payable in arrears at
the maturity of each drawn short term loan; interest amounting to a rate of 1%
p.a. is debited as drawing/rollover of cash loan
6 Fees and charges: a) An arrangement fee of US$50,000 is payable on
acceptance of this Facility.
<PAGE>
b) A commitment fee is payable quarterly in arrears, at a
rate of 0.15% per quarter of amounts of the Facility undrawn
and uncancelled on the day of calculation. The commitment
fee calculation will commence from date 90 days after the
date of this letter.
c) Refinance fee: we expect to continue our lending
relationship during the life of the Casmyn project by taking
part in a larger term facility To that end, if this
Facility is refinanced so that Barclays Bank of Zimbabwe
Limited has no further part in the term finance, we shall
charge a refinance fee of 0.5% of the loan amount
outstanding on the day prior to the date of refinancing. If
refinancing by Barclays/BZW, and Barclays Bank of Zimbabwe
Limited continues to have a part of the term loan, no
refinance fee will be payable.
d) All fees and charges connected with the completion of
this offer, including the obtaining, valuing and perfection
of security, are for the account of Casmyn.
7 Security It is a condition of the Facility that the following
security be held by the Bank, and that the facility will only be made available
once the proposed security is held by the Bank, unless otherwise agreed by the
Bank in writing.
a) Unlimited guarantee from Turk Mine (Private) Limited
b) General Notarial Covering Bond ("GNCB") FRO Z$60 million
over all assets at Turk Mine (Private) Limited
c) Unlimited guarantee from Greenhorn Mine (Private) Limited
d) Cession of book debts for Z$60 million from Casmyn
e) Cession over all financial investments from Casmyn
f) Cession over all shares of subsidiaries of Casmyn
g) Guarantee from Casmyn Corp for the equivalent of US$5
million
h) Subordination of Casmyn Corp debt to bank debt.
We recognize that Casmyn has granted a GNCB to the Muir family, so that the
security listed at d), e) and f), above will rank behind the Muir GNCB.
However, before drawdown we wish to be appraised in writing of, and satisfied
by, the terms of the Muir GNCB. In addition, by acceptance of this letter,
Casmyn agrees to provide the security detailed above and to allow the Bank
without delay to register its securities. All securities must be in form
satisfactory to the Bank.
8 Proceeds account: All income from the sale of gold by Casmyn in Zimbabwe is
to be received in a Foreign Currency Account ("FCA") domiciled with us. Any sum
of money at any time standing to the credit of Casmyn with the Bank in the FCA
or in any currency upon any other account may be applied by the Bank, once the
Bank has made written demand for the repayment of amounts under this Facility,
in or towards the payment of any indebtedness now or subsequently
2
<PAGE>
owing to the Bank by Casmyn, and the Bank may use any such money to purchase any
currency or currencies required to effect such application.
9 Covenants: a) Casmyn agrees to hedge, or arrange for Casmyn Corp to
hedge, as much of the gold output from its Zimbabwean
operations as the Bank requires. Further, Casmyn agrees to
give Barclays de Zoete Wedd Limited, London, ("BZW")
exclusive right to undertake the required hedging programme,
provided always that BZW remains price competitive with
alternative quotations that Casmyn or Casmyn Corp may seek.
Without prejudice to the Bank's reliance on this clause as
it sees fit, we shall ask Casmyn to hedge at least part of
its production if the price offered by the Reserve Bank of
Zimbabwe for delivered gold falls below US$350 per ounce at
any time.
b) Casmyn agrees not to pay any dividend during the term of
the Facility without prior written agreement from the Bank.
c) Casmyn and subsidiaries of Casmyn shall not create or
permit to subsist (other than in favour of the Bank) any
encumbrance by way of security over any or all of the assets
presently or in the future belonging to Casmyn or its
subsidiaries without prior written consent of the Bank,
except those encumbrances in existence at the date of this
letter and the details of which were disclosed in writing to
us prior to this date, provided that the amount secured by
any such encumbrances is not at any time increased.
d) Casmyn Corp shall not reduce its interest in Casmyn, nor
in its Zimbabwean operations.
10 Monitoring: Casmyn's quarterly management accounts are to be provided to
the Bank within 45 days of the respective quarter end, and audited annual
accounts are to be provided within 3 months of accounting year end. In
addition, monthly production and revenue figures are to be provided within 30
days of month end.
11 General Terms and Conditions
(see annexure)
12 Acceptance: This offer of the Facility remains open for acceptance for
30 days from the date of this letter. Casmyn's acceptance of the Facility shall
be signified by the return of the following documents to us at the address shown
above:
a) a certified true copy of a resolution of Casmyn's board
of directors accepting the Facility on the terms and
conditions set out in this letter and authorising a
specified person or persons to countersign the enclosed copy
of this letter.
b) the copy of this letter signed by the person or persons
specified in clause 12 a) above and returned unamended to
us.
c) the copy of the annexure to this letter initialled by the
person or persons specified in clause 12 a) above and
returned unamended to us.
We look forward to opening a banking relationship with Casmyn.
Yours faithfully,
3
<PAGE>
Robert Schofield
Senior Corporate Manager
We acknowledge receipt of the original of this letter and hereby accept the
Bank's offer of banking facilities subject to the terms and conditions
stipulated in this letter and annexure which terms and conditions are fully
understood and accepted by the company.
For and on behalf of Casmyn Mining Zimbabwe (Private) Limited
_________________________
Authorised signatory
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<PAGE>
ANNEXURE TO FACILITY LETTER FOR COMPANIES
11 GENERAL TERMS AND CONDITIONS
11.1 The Bank reserves the right to alter the interest rate charged from
time to time should the cost of funding the lending increase through
circumstances beyond its control or should changes in Government
monetary policy occur.
11.2 Notwithstanding Condition 4 of the main letter, the facilities offered
shall in accordance with normal banking practice become immediately
payable upon demand being made by the Bank. The Bank is not obliged to
serve notice in making such demand.
11.3 The company undertakes to ensure that all company assets excluding
debtors, are fully insured at all times.
11.4 The company undertakes to advise the Bank of any changes to its
present management operations and accounting system or any other
changes that may have a bearing on the facilities presently offered.
11.5 If the company fails to make payment to the Bank by due date of any
amount due in terms of this or other facilities or become insolvent,
or be provisionally or finally sequestrated, or provisionally or
finally wound up, or be unable to pay its debts to the Bank as they
become due, or be placed under provisional or final judicial
management or enter into a scheme of arrangement with its creditors,
or pass a resolution for the winding up of the company, or should the
company commit any act of insolvency or enter into any compromise with
its creditors or make default in the performance of any undertaking
term or condition of the facility, or if the company acts in any way
which, in the reasonable opinion of the Bank, may have a material
adverse effect on the company's ability to perform its obligations
under this facility, all amounts then outstanding, plus all charges
accrued thereon, together with interest as defined in paragraph 5 (and
any subsequent changes in rates that have occurred) shall immediately
become due and payable.
11.6 In the event of the Bank taking any proceedings to recover any amount
due to it, the amount due shall be determined and proved by a
certificate signed by any Manager or Accountant of this Bank and such
certificate shall be prima facie proof of the amount due by the
company and the onus shall be on the company to disprove the accuracy
of the figures.
11.7 All costs and other charges arising from the need to recover any
liabilities which may include legal charges to a legal practitioner as
well as collection commission, will be for the company's account.
Similarly, all charges relating to registration, recording or
maintaining the security required in terms of the facility, shall be
for the company's account.
11.8 The company undertakes to provide details of outside borrowings when
called upon to do so.
11.9 In the event that the Bank is required to withhold tax or pay any
increased charges in respect of interest/discount on the facilities
granted to the company, the company will be responsible
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<PAGE>
for this cost which will be debited to the company's account as and
when it is incurred.
11.10 All amounts paid to the Bank in repayment of these facilities will be
applied firstly to the payment of interest accrued and any fees or
charges due, and, thereafter, to the reduction of capital.
11.11 In the event that the company breaches or is unable to comply with any
of the terms or conditions without the Bank's prior consent then the
Bank reserves the right to an immediate review of the facilities and,
in need, demand immediate repayment of all amounts outstanding at that
date.
11.12 It is incumbent on the company to ensure the authenticity and
correctness of all entries appearing on the Bank's statement sheets
and to verify the interest charges to the account against the
prevailing rates of interest advised by the Bank, reporting any
inconsistency or discrepancy found to the manager of the branch within
three months after the despatch of the statement.
6
<PAGE>
SUBORDINATION AGREEMENT BY COMPANY
In consideration of Barclays Bank of Zimbabwe Limited (hereinafter called "The
Bank") making or continuing advances or granting other credit or banking
facilities to _____________________________ (hereinafter called "The Company"),
_____________________________ (hereinafter called "the Creditor") agrees and
declares and this memorandum witnesseth that the payment of all sums presently
due or owing to the creditor by the company and of any further sums which may
from time to time hereinafter be owing to the Creditor by the Company shall be
postponed to the payment of all moneys which are now or at any time hereafter
may become due or owing to the Bank by the Company, from any account whether
operated solely, or jointly with any person or persons or body corporate and
whether as principal, surety or otherwise and including all interest
commissions, charges and costs arising therefrom or from any security which the
Bank may hold for the indebtedness of the Company.
The Creditor agrees that all moneys otherwise payable to it as aforesaid shall
be paid in full to the Bank, and that no payment shall be made by the Company to
the Creditor on account of amounts owing by the Company to it, until all amounts
owing by the Company to the Bank are paid in full, and no further payments are,
or will become, owing by the Company to the Bank for any reason whatever.
Should the Company in fact make any payment to the Creditor on account of its
claim against the Company, the Creditor undertakes forthwith to pay the amount
thereof to the Bank, and should the Creditor fail to do so, the Bank may
forthwith and without notice institute proceedings against the Creditor in any
competent court for the recovery of the said amount from the Creditor.
Should the Company be subject to a winding up order, or an order for judicial
management; or go into voluntary liquidation, or in appropriate cases, should
the Company's estate be sequestrated, surrendered or assigned, or should the
Company enter into any arrangement or composition with its creditors; all sums
received by the Creditor from the liquidator, judicial manager, trustee or
assignee, as the case may be, or as a result of such liquidation, composition or
arrangement, shall be paid or assigned by the Creditor to the Bank until all
moneys due to the Bank from the Company shall have been paid in full.
The Creditor hereby agrees to execute such further deeds, documents or
assignments and do all such other acts or things as may be necessary to carry
out the intent of this agreement, and require the Company to record in its books
and records a statement to the effect that payment of sums due to the Creditor
has been postponed in accordance with the terms hereof.
EXECUTED on behalf of _______________________________ the Creditor, by
______________________________ a Director, he being duly authorised hereto, at
____________ on this ______ day of _______________, 19__.
AS WITNESSES:
1 ________________________________ ___________________________________
DIRECTOR
2 ________________________________
7
<PAGE>
To:
BARCLAYS BANK OF ZIMBABWE LIMITED
I/We hereby cede assign deliver and pledge to BARCLAYS BANK OF
ZIMBABWE LIMITED (hereinafter referred to as "the Bank") its successors and
assigns all documents and instruments whether negotiable or not including
specifically and without in any way limiting the generality of the foregoing all
bills for collection promissory notes post dated cheques shares stocks certified
transfer deeds and all other temporary documents of title to stocks and shares
bonds debentures savings account balances and fixed deposit receipts (the said
documents and instruments being hereinafter referred to as "the securities")
which I/we may deposit leave with or deliver to the Bank or which may be
obtained by the Bank together with all dividends interest or other sums of money
or rights which may be or become due or claimable in respect of the securities
and I/we declare that I am/we are the lawful owner(s) or legal holder(s) of the
securities and I/we agree that the said securities shall be held by the Bank in
pledge as a continuing and covering security for any sum or sums of money which
I/we may now or at any time hereafter owe or be indebted to the Bank its
successors and assign from whatever cause arising and whether such indebtedness
be a direct indirect or contingent liability and whether any debt or liability
has incurred or not and whether such indebtedness or liability be incurred by
me/us or any one or more of us individual or jointly with others or by any firm
in which I/we or any one or more of us have or hold or may hereafter have or
hold any interest and whether such indebtedness or liability arise from money
lent and advanced overdrawn accounts drafts promissory notes bills of exchange
or other instruments whether negotiable or otherwise already or hereafter to be
made signed accepted or endorsed by me/us or any one or more of us or others
with whom I/we or any one or more of us may be interested or concerned or any
renewals thereof or through any acts of suretyship or guarantee or other
undertaking already or hereafter to be signed by me/us or any one or more of us
individually or jointly with others or otherwise howsoever arising including
interest commission the costs of realization as hereinafter provided and all
other usual charges and expenses. I/We authorize the Bank at its discretion to
perfect and complete by registration transfer or otherwise to any nominee or
nominees without reference to me/us the securities or any of them and I/we do
hereby expressly waive any claim for loss of market or otherwise which might
arise by reason of any delay in effecting transfer or re-transfer of any
securities and agree that all charges of and incidental to such completion shall
be at my/our joint and several expense and the carrying out of all necessary
formalities in execution therewith entirely at my/our risk. If the Bank by
letter delivered to me/us or addressed to me/us at 13 JOSIAH CHINAMANO ROAD,
BULAWAYO and sent by post calls upon me/us to deposit additional approved
security and/or to pay any amount due to the Bank whether returned or not and if
within twenty-four hours from the delivery of such letter or where the letter is
sent by post within twenty-four hours from the time of the posting of such
letter such additional approved security is not deposited and/or the said amount
is not paid the Bank will have the right to treat as immediately due and payable
the whole of my/our indebtedness or liability to the Bank secured hereby
(whether the due date shall have arrived or not) and I/we hereby irrevocably
authorise and empower the Bank ____ ______ _______ then or at any time
thereafter without any further authority or consent from me/us to sell call up
collect or dispose of the securities or any of them in such manner and on such
terms and conditions as the Bank may deem necessary and to grant valid and
effectual receipts for all sums of money paid to the Bank in respect of any such
sale calling up collection or disposal and to assign code and transfer the
securities with power to the Bank to institute any legal proceedings which the
Bank may this necessary. The Bank will have the right to apply the proceeds of
any such sale calling up collection or realisation after deducting all costs of
and incidental thereto and the costs of any legal proceedings towards
liquidating any indebtedness of me/us to the Bank secured hereunder and if after
all my/our indebtedness to the Bank secured hereunder whether the same shall be
due at the time or not
8
<PAGE>
has been paid and there remains a surplus such surplus shall be paid over to
me/us but should there be any shortfall I/we jointly and severally undertake to
pay such shortfall on demand provided nevertheless that the Bank shall be
entitled either before or during or after the realization or other disposal of
the securities to ______ for the recovery of any moneys owing to the Bank and to
attach any other property belonging to me/us or any one or more of us just as if
this pledge had not been given.
I/We agree that it shall always be in the entire discretion of the
Bank to determine the extent nature and duration of advances to be made and of
facilities allowed or to be allowed to me/us.
I/We further authorise and empower the Bank to receive and grant
receipts in my/our name for all or any dividends interests or other sums of
money which may accrue or become payable in respect of any securities deposited
hereunder such sum so recovered to be applied in reduction of my/our
indebtedness to the Bank. In the event of any securities carrying or being
entitled to rights the Bank shall have the right but shall not be bound at
my/our expense to take up such rights and to debit my/our account with all
amounts paid in respect of such rights. I/We agree that the Bank shall not be
responsible for any loss from or through any brokers or agents employed in the
sale of securities or for any deterioration in _______ securities while in the
possession of the Bank. I/We agree that an account certified by any Manager or
Accountant of the Bank showing the amount of my/our indebtedness from time to
time and of any interest due or accrued and all dividends _______________ of the
sale disposal or realization of the securities or any of them shall be prima
facie proof of the correctness of the matters contained in such account and
shall be sufficient to enable the Bank to obtain provisional sentence in any
competent court of law. Finally, I/we do hereby absolve the Bank from all
liability whatsoever should it fail to collect any interest dividends income and
benefits however named or described without any exception arising from or by
virtue of the securities fail to take up any rights aforesaid fail to register
transfer of any securities within the requisite periods laid down by the Rules
of any Stock Exchange or under any statute relating to the stamping documents or
in any way fail or omit to protect my/our interest relating to the securities.
For the purpose of any sale assignment transfer collection or other
disposal of the securities or any of them and for all purposes of and incidental
thereto or for any other purpose arising hereunder I/we do hereby nominate
constitute and appoint the General Manager of the Bank for the time being or any
recognized Manager of any Branch for the time being of the said Bank as my/our
true and lawful Attorney and Agent irrevocably and in _________ with power of
substitution.
As Witness my/our hand/s at _________________ _______________ this
___________________________ day of _____________, 19__.
AS WITNESSES:
1. ___________________________
2. ___________________________
9
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<PAGE>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 264
<SECURITIES> 536
<RECEIVABLES> 563
<ALLOWANCES> 0
<INVENTORY> 677
<CURRENT-ASSETS> 2,249
<PP&E> 15,741
<DEPRECIATION> (465)
<TOTAL-ASSETS> 21,340
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<BONDS> 5,050
0
0
<COMMON> 510
<OTHER-SE> 12,534
<TOTAL-LIABILITY-AND-EQUITY> 21,340
<SALES> 623
<TOTAL-REVENUES> 623
<CGS> 817
<TOTAL-COSTS> 817
<OTHER-EXPENSES> 1,288
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54
<INCOME-PRETAX> (1,607)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,607)
<DISCONTINUED> 0
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<NET-INCOME> (1,607)
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