(NOTIFY) 72731,347
(CONTACT-NAME) David A. Kain
(CONTACT-PHONE) (312) 861-6050
PAGE 0
DOCUMENT HEADER
DOCUMENT DESCRIPTION 10-K
DOCUMENT TYPE 1
COUNT 7
PAGE 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
______________
Commission File number 1-9569
FMC GOLD COMPANY
(Exact name of registrant as specified in its charter)
Delaware 88-0226676
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5011 Meadowood Way, Suite 200, Reno, NV 89502
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (702) 827-3777
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which
registered
Common Stock, $0.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO __
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates
of the Registrant as of March 1, 1994, was $87,406,458. The
number of shares of Registrant's Common Stock, $0.01 par value,
outstanding as of that date was 73,484,395.
Documents Incorporated By Reference
Document Form 10-K Reference
Portions of Annual Report to Parts I and II, Part
III, Item
Stockholders for 1993 10 and Part IV,
Item (a)(1) and (2)
Portions of Proxy Statement for Part III
1994 Annual Meeting of Stockholders
PAGE 2
Cross-Reference Table of Contents
The 1993 Annual Report to Stockholders and the 1994 Proxy
Statement include all information required in Parts I, II and III
of Form 10-K except for the list of executive officers of
Registrant which appears at the end of Part I. The Cross-
Reference Table of Contents set forth below identifies the source
of incorporated material for each of the 10-K items included in
Parts I, II, III and IV (Items (a)(1) and (2)). Only those
sections of the Annual Report to Stockholders and the Proxy
Statement cited in the Cross-Reference Table are part of the 10-K
and filed with the Securities and Exchange Commission.
10-K Item No. Incorporated by Reference
From
PART 1
Item 1. Business
(a) General Development Annual Report to
Stockholders,
of Business Exhibit 13 pages 1-11, 17, 20-
21,
23-29
(b) Financial Information (Not Applicable)
About Industry
Segments
(c) Narrative Description Annual Report to
Stockholders,
of Business Exhibit 13, pages 1-15, 20-
21,
25-29
(d) Financial Information Annual Report to
Stockholders,
About Foreign and Exhibit 13, pages 25-26
Domestic Operations
and Export Sales
Item 2. Properties Annual Report to
Stockholders,
Exhibit 13, pages 7-11
Item 3. Legal Proceedings Annual Report to
Stockholders,
Exhibit 13, page 27
Item 4. Submission of Matters (Not Applicable)
to a Vote of Security
Holders
PAGE 3
Executive Officers of the Registrant
The executive officers of FMC Gold Company, together with the
offices in FMC Gold Company presently held by them, their
business experience since January 1, 1989, and their ages, are as
follows:
Age Office; year of election;
Name 3/1/94 and other information for past 5 years
Larry D. Brady 51 Chairman of the Board and Chief Executive
Officer of the Company since November,
1991; President of FMC (93); Executive
Vice President of FMC (89-93); Vice
President-Corporate Development of FMC
(88); Vice President and General Manager
- Agricultural Chemical Group (83-88)
Brian J. Kennedy 50 President and Chief Operating
Officer of FMC Gold Company (87);
Manager, Minerals Division of FMC (84);
Director of FMC's Natural Resources
Operations (80-84)
Donald L. Beckwith 47 Vice President-Operations
(92); Vice President-Development (87-
92); Manager of Planning and Development
for FMC's Natural Resources Operations
(79-87)
Nha D. Hoang 51 Vice President-International
(93); Director,
International for FMC (87-93)
Robert A. Horn 51 Vice President-Exploration (94);
previously
with AMCL International Mining
Consultants
(92-94); Vice President, BP Canada (88-
92)
Steven E. Baginski 35 Vice President-Finance,
Treasurer and Chief
Financial Officer (93); Manager of
Business
Planning, Pepsi Co. Foods International
(92-
93); Chief Financial Officer, Frito-Lay
of
Hawaii (89-92)
Robert L. Day 59 Secretary and General Counsel
(87); Secretary
and Assistant General Counsel of FMC
(87);
Associate General Counsel of FMC (78)
Each of the Company's executive officers has been employed by the
Company and/or by FMC Corporation in a managerial capacity for
the past five years except for Messrs. Baginski and Horn. No
family relationship exists between any of the above-listed
officers and there are no arrangements or understandings between
any of them and any other persons pursuant to which they were
selected as an officer. All officers are elected to hold office
for one year and until their successors are elected and qualify.
PAGE 4
10-K Item No. Incorporated by
Reference From
PART II
Item 5. Market for Registrant's Annual Report to
Stockholders,
Common Equity and Related Exhibit 13, pages 12-
15, 31
Stockholder Matters
Item 6. Selected Financial Data Annual Report to
Stockholders,
Exhibit 13, pages 2-5, 11-15,
21, 25-26, 31
Item 7. Management's Discussion Annual Report to
Stockholders,
and Analysis of Financial Exhibit 13, pages 2-
15, 17-18,
Condition and Results of 20-21, 26-29, 31
Operations
Item 8. Financial Statements and Annual Report to
Stockholders,
Supplementary Data Exhibit 13, pages 15-30
(including all Schedules
required under Item 14
of Part IV)
Item 9. Changes in and disagreements (Not Applicable)
with Accountants on
Accounting and Financial
Disclosure
PART III
Item 10. Directors and Executive Part I; Proxy
Statement for
Officers of the Registrant 1994 Annual Meeting
of Stockholders, pages 2-3,
11; Annual Report to
Stockholders, Exhibit 13,
pages 32-33
Item 11. Executive Compensation Proxy Statement for
1994 Annual
Meeting of Stockholders,
pages 6-10
Item 12. Security Ownership of Proxy Statement for
1994
Certain Beneficial Annual Meeting of
Stockholders,
Owners and Management pages 3-4
PAGE 5
Item 13. Certain Relationships Proxy Statement for
1994
and Related Transactions Annual Meeting of
Stockholders,
pages 2-5
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
(a) Documents filed with this Report
1. Consolidated financial statements of FMC Gold
Company and its subsidiaries are incorporated
under Item 8 of this Form 10-K.
2. All required financial statement schedules are
included in the consolidated financial statements
or notes thereto as incorporated under item 8 of
this Form 10-K.
3. Exhibits: See attached exhibit index, page 7.
(b) Reports on Form 8-K
1. Report filed on December 10, 1993, regarding
charges resulting primarily from writedown of
carrying value of investment in Beartrack project.
(c) Exhibits
See Index of Exhibits.
PAGE 6
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FMC GOLD COMPANY
(Registrant)
Brian J. Kennedy
President
By Robert L. Day______
Date: March 28, 1994 Robert L. Day
(Attorney-in-Fact)
PAGE 7
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date
indicated.
LARRY D. BRADY* Chairman of the Board, Chief
Executive
Larry D. Brady Officer and Director
STEVEN E. BAGINSKI* Vice President-
Finance, Principal Steven E. Baginski Financial Officer
and Principal
Accounting Officer
ROBERT N. BURT* Director
Robert N. Burt
PAUL L. DAVIES, JR.* Director
Paul L. Davies, Jr.
NHA D. HOANG.* Director
Nha D. Hoang
BRIAN J. KENNEDY* Director
Brian J. Kennedy
EDMUND W. LITTLEFIELD* Director
Edmund W. Littlefield
ARTHUR D. LYONS* Director
Arthur D. Lyons
*By Robert L. Day_____________ March 28, 1994
Robert L. Day
Attorney-in-Fact
PAGE 0
DOCUMENT HEADER
DOCUMENT DESCRIPTION EXHIBIT INDEX
DOCUMENT TYPE 2
COUNT 3
PAGE 1
INDEX TO EXHIBITS FILED
WITH OR INCORPORATED BY
REFERENCE INTO FORM 10-K
OF FMC GOLD COMPANY
FOR YEAR ENDED DECEMBER 31, 1993
Exhibit No. Sequential
This 10-K Exhibit Description Page No.
3.1 Certificate of Incorporation of the
Company, as amended (incorporated by
reference to Exhibit 3.1 of the
Company's Registration Statement
on Form S-1 (No. 33-14429)) ..................N/A
3.2 By-Laws of the Company (incorporated
by reference to Exhibit 3.2 to the
Company's Registration Statement on Form
S-1 (No. 33-14429)) ..........................N/A
4.1 Form of certificate representing Shares
of Common Stock of the Company
(incorporated by reference to Exhibit
4.1 to the Company's Registration
Statement on Form S-1 (No. 33-14429)) ........N/A
10.1 Management Services Agreement between
the Company and FMC (incorporated by
reference to Exhibit 10.1 to the
Company's Registration Statement on
Form S-1 (No. 33-14429)) .....................N/A
10.2 Amendment No. 1 to Management Services
Agreement between the Company and
FMC (incorporated by reference to Exhibit
10 to the Company's Quarterly Report
on Form 10-Q for the quarter ended
September 30, 1987) ..........................N/A
10.3 Amendment No. 2 to Management Services
Agreement between the Company and FMC
(incorporated by reference to Exhibit
10.3 to the Company's Form 10-K for 1990) ......
N/A
10.4 Tax Sharing Agreement between the
Company and FMC (incorporated by reference
to Exhibit 10.2 to the Company's
Registration Statement on Form S-1 (No.
33-14429)) ...................................N/A
PAGE 2
10.5 Bill of Sale, Purchase and Assumption
Agreement between the Company and FMC
(incorporated by reference to Exhibit
10.3 to the Company's Registration
Statement on Form S-1 (No. 33-14429)) ....
N/A
10.6 Joint Venture Agreement between
Freeport Exploration Company and FMC
Corporation (incorporated by reference
to Exhibit 10.4 to the Company's
Registration Statement on Form S-1
(No. 33-14429)) ...................... N/A
10.7 FMC 1981 Incentive Share Plan, as
amended effective April 24, 1987
(incorporated by reference to
Exhibit 10.5 to the Company's
Registration Statement on Form S-1
(No. 33-14429)) ..............................N/A
10.8 FMC Corporation Salaried Employees'
Retirement Plan, as revised on
January 1, 1985 (incorporated by
reference from Exhibit 10.2 to the
Form SE filed by FMC on March 27,
1992) ....... N/A
10.9 FMC Corporation Employees' Thrift and
Stock Purchase Plan, as revised and
restated as of April 1, 1991 (incor-
porated by reference from Exhibit
10.3 to the Form SE filed by FMC on
March 27, 1992) . N/A
10.10 FMC Salaried Employees' Equivalent
Retirement Plan (incorporated by
reference from Exhibit 10.4 to the
Form SE filed by FMC on March 27, 1992) N/A
10.11 FMC Deferred Compensation Equivalent
Retirement and Thrift Plan (incorporated
by reference from Exhibit 10.5 to the
Form SE filed by FMC on March 27, 1992) ..N/A
10.12 FMC Management Bonus Plan (incorporated
by reference from Exhibit 10.6 to the
Form SE filed by FMC on March 27, 1992) N/A
PAGE 3
10.13 FMC Employees' Thrift and Stock Purchase
Trust dated April 1, 1982 (incorporated by
reference from Exhibit 10.7 to the Form SE
filed by FMC on March 27, 1992) N/A
10.14 Amendment to FMC Employees' Thrift and
Stock Purchase Trust dated April 1, 1988
(incorporated by reference from Exhibit
10.8 to the Form SE filed by FMC on
March 27, 1992) . N/A
10.15 FMC Master Trust Agreement between FMC and
Bankers Trust Company (incorporated by
reference from Exhibit 10.9 to the
Form SE filed by FMC on March 27, 1992) N/A
10.16 FMC Gold Company 1988 Long-Term Incentive
Compensation Plan (incorporated by
reference from Exhibit 10.19 to the
Company's Form 10-K for 1989) N/A
10.17 Agreement and Plan of Merger among
Meridian Minerals Company, Meridian Gold
Company, FMC Gold Company, FMC Corporation
and Burlington Resources, Inc. dated
April 19, 1990 (Incorporated by reference
from Exhibit 1 to the Company's Current
Report on Form 8 dated April 19, 1990) N/A
13 Annual Report of FMC Gold Company
for the year ended December 31, 1993 1
22 List of Significant Subsidiaries of
the Registrant . 34
24 Consent of Auditors . 35
25 Powers of Attorney 36-37
PAGE 0
DOCUMENT HEADER
DOCUMENT DESCRIPTION EXHIBITS
DOCUMENT TYPE 2
COUNT 37
PAGE 1
FMC GOLD COMPANY
Annual Report on
Form 10-K for 1993
Exhibit 13 Annual Report of FMC Gold Company
CONTENTS
Message to Stockholders 2
Exploration 4
Development 7
Operations 8
Financial Review 11
Financial Results 14
Directors and Officers 28
STOCKHOLDER DATA
ANNUAL MEETING OF STOCKHOLDERS
FMC Gold's annual meeting of stockholders will be held at 11 a.m.
on Wednesday, May 4, 1994, in the Gold Room of the Stanford Court
Hotel at 905 California Street, San Francisco, California.
Notice of the meeting, together with proxy material, will be
mailed approximately 40 days prior to the meeting to stockholders
of record as of March 16, 1994.
TRANSFER AGENT AND REGISTRAR OF STOCK
Harris Trust and Savings Bank
P.O. Box 755
Chicago, Illinois 60690
Questions concerning FMC Gold common stock should be sent to the
above address.
EXCHANGE LISTINGS
Common stock: New York Stock Exchange
FMC Corporation subordinated debentures exchangeable into FMC
Gold common stock:
Luxembourg Exchange
COMMON STOCK SYMBOL
FGL
FORM 10-K
A copy of the company's annual report to the Securities and
Exchange Commission on Form 10-K for 1993 is available upon
written request to:
FMC Gold Company
Communications Department
200 East Randolph Drive
Chicago, Illinois 60601
However, most information required under Parts I, II and III of
Form 10-K has been incorporated by reference to the annual report
to stockholders or the proxy statement.
PAGE 2
FMC Gold was incorporated in 1987 under Delaware law.
CORPORATE PROFILE
FMC Gold is a precious metals producer, with 1993 production of
321,000 ounces of gold and 863,000 ounces of silver. FMC Gold has
reserves of 1.8 million ounces of gold.
FMC Gold was formed in 1987 through a combination of FMC
Corporation's North American Precious Metals interests. In June
1987, FMC Gold sold 11.4 percent of its shares to the public. In
May 1990, FMC Gold issued eight million new shares of stock to
acquire Meridian Gold Company. FMC Corporation holds the
remaining 79 percent of shares. FMC Gold today has two producing
properties: Jerritt Canyon (30 percent ownership), located in
Nevada, and Royal Mountain King (100 percent ownership) in
California. FMC Gold also holds the majority interest in the
Beartrack project (86 percent ownership) in Idaho. In addition,
FMC Gold carries an active exploration property inventory within
the western United States and Latin America.
HIGHLIGHTS
Gold production of 321,000 ounces.
Cash costs of $194 per ounce.
FMC Gold generated $12.5 million of cash flow, raising year-end
cash and cash equivalents to $167 million.
In April 1993, the company purchased the remaining 50 percent of
the Humboldt Gold Venture, which brings the company's ownership
of the Rossi exploration property to 100 percent
SILVER PRICES HIGH/LOW
$8
7 6.93
6
5.42 5.36
5 4.55
4.34 5.05
4
3.96
3 3.56 3.66 3.53
2
93 92 91 90 89
Average
PAGE 3
GOLD PRICES High/Low
$500
450
406 420
416
400 403
359
350
344 348
330 356
300 326
250 93 92 91 90 89
Average
PRODUCTION Gold Equivalent Ounces (In thousands)
500 441
402 403
400 383
331
300
200
100
0
93 92 91 90 89
Paradise Peak
Jerritt Canyon Austin
Royal Mountain King
PRODUCTION COSTS (1) $ Per Gold Equivalent Ounce
350 326
310
300 290
250 240
220
201
200
194
180
150 161
129
100
50
0
93 92 91 90 89
Cash Cost Full Cost
PAGE 4
EARNINGS PER SHARE
$1.00
0.80 0.75
0.60 0.56
0.40
0.20
0.20 0.12
0.10
0.00
(0.70)
93 92 91 90 89
Before asset write-downs and other charges
Net Income
OPERATING SUMMARY
1993 1992
1991
Production (thousands of ounces):
Gold 321 418
357
Silver 863 1,926
2,337
Total (gold equivalent) 331 441
383
Average realized price (ounce):
Gold $357.00 $343.00
$361.00
Silver $ 3.94 $ 4.01 $
4.05
Cash cost of production
per gold equivalent ounce(1) $194.00 $180.00
$220.00
Year-end reserves (thousands
of ounces):
Gold 1,752 2,279
2,620
Silver - 4,321
7,576
FINANCIAL SUMMARY
(In millions, except per share data) 1993 1992
1991
Sales $118.9 $150.0 $139.4
Income before write-downs and
other charges(2) $ 9.3 $ 14.4 $7.0
Write-downs and other charges $(60.6) $ - $-
Net income (loss) $(51.3) $ 14.4 $7.0
Earnings (loss) per common share:
Income before write-downs and
other charges(2) $ 0.12 $ 0.20 $0.10
Net income (loss) $(0.70) $ 0.20 $0.10
Exploration costs $ 14.4 $ 12.2 $12.6
Capital expenditures $ 18.5 $ 19.0 $19.4
Cash flow $ 12.5 $ 28.9 $24.0
Common shares outstanding 73.5 73.5 73.5
Common stock prices
High 7-3/8 6-1/4 10-3/8
Low 4 4 4
(1)Cash cost of production includes all mine-site cash operating
and administrative expenses, including royalties and net proceeds
taxes. Selling expenses and pre-production stripping costs are
excluded. Full cost includes all cash costs plus non-cash costs
and corporate overhead.
PAGE 5
(2)Supplemental financial information. Income before write-downs
and other charges, and related earnings per share, should not be
considered in isolation nor as alternatives for net income (loss)
or as the sole measures of the company's profitability.
MESSAGE TO STOCKHOLDERS
With the shutdown of Paradise Peak in 1993 and the anticipated
shutdown of Royal Mountain King in 1994, we are increasingly
dependent on our exploration skills as the source of providing
shareholder value. The situation is now more difficult as a
result of the declining attractiveness of U.S. exploration. We
continue efforts in selected high-potential areas in the United
States; however, we are increasingly moving our exploration
investment offshore.
In 1993, our Paradise Peak operation completed production at mid-
year, and we completed heap leaching of the lower-grade ore by
year-end. We also drew down reserves at our Royal Mountain King
mine, which will cease production by mid-year 1994.
In 1993, as expected, production declined to 331,000 gold
equivalent ounces due to the exhaustion of millable reserves at
Paradise Peak. With lower production, sales declined to $119
million.
FMC Gold incurred a net loss of $51.3 million as a result of
special charges of $60.6 million associated with asset write-
downs at the Beartrack property in Salmon, Idaho, and costs
associated with the closing of the Paradise Peak and Royal
Mountain King mines.
Our revenues were helped somewhat by our unhedged position, which
allowed the company to benefit from higher precious metals prices
during 1993. Average realized gold prices of $357 per ounce were
$14 higher than the prior year.
In 1993, we generated $12.5 million in cash flow, with year-end
cash equivalents totaling $166.8 million. Our strong cash
position with no debt ensures our ability to respond to
successful exploration or business development programs.
Meanwhile, we focused on renewing our business. During the past
year, we funded a $14.4 million exploration program. While our
recent exploration efforts have not produced minable reserves, we
are encouraged by progress at the Rossi property in Nevada, where
we became sole owner in April, as well as drilling projects in
Chile.
In 1993, we redirected much of our exploration efforts overseas.
Last year, approximately one-third of our exploration spending
was related to prospects outside the United States, and we see
the trend increasing toward offshore investing. While the
regulatory environment has become increasingly stringent in the
United States, particularly with the proposed changes to federal
mining legislation, other countries are inviting production.
FMC Gold staffed an international business development group to
pursue acquisition and development of advanced-stage
opportunities in selected countries, including the Newly
Independent States (the former Soviet Union) and China, where in
early 1994, we signed memoranda to participate in investigating
known deposits.
OPERATIONS
As anticipated, gold production totaled 321,000 ounces in 1993,
down 23 percent from the prior year. The reduced production
reflected the
PAGE 6
depletion of economic ore at Paradise Peak. In May, the mill was
shut down, and reclamation of the minesite began. Heap leaching
continued throughout the year and accounted for 61 percent of the
158,000 ounces produced. Cash costs of production improved 13
percent from the prior
year to $117 per ounce, reflecting the lower cost of heap-leach
operation and the completion of mining.
At Jerritt Canyon, production was up 13 percent to 108,000
ounces, reflecting higher throughput and improved grades. Cash
costs of production increased slightly to $240 per ounce due to
increased mining costs.
At Royal Mountain King, production declined 23 percent to 55,000
ounces due to a severe winter and the failure of the hydraulic
shovel. Decreased production caused cash costs to increase 18
percent to $336 per ounce.
RESERVES
The company's gold reserves totaled 1.8 million ounces at year-
end, down 0.5 million ounces from the prior year.
Exploration efforts at Jerritt Canyon focused on expanding proven
reserves and identifying new resources. At the end of 1993, FMC
Gold's 30 percent interest in the proven and probable reserves at
Jerritt Canyon was 880,000 ounces.
At Beartrack, further delineation of the known reserves was
deferred until gold prices improved. As a result, at the end of
1993, FMC Gold's 86 percent interest in the proven and probable
reserves at Beartrack remains at 839,000 ounces.
Increased international exploration activity will continue in
1994 as we pursue interests in Mexico and Chile. International
exploration spending is expected to be approximately half of
total exploration spending in 1994. In the western United States,
we will continue to assess the overall claim block at Jerritt
Canyon and continue our deep drilling program at the Rossi
property on the Carlin Trend.
DEVELOPMENT
Permits remain in place for our Beartrack property. However, the
National Marine Fisheries Service has placed a restraining order
on all development activity within the Salmon National Forest
until a biological opinion is completed. The agency's report will
determine whether construction activity would threaten the
Chinook salmon, an endangered species. Beartrack construction
will continue to be deferred until this issue is resolved, and
gold prices improve.
MANAGEMENT CHANGES
In 1993 we welcomed several people to our management team. Nha D.
Hoang was appointed vice president-international and was elected
a director of FMC Gold. Nha's knowledge of the global marketplace
and expertise in international development projects and
operations will boost our chances for success as we increase
offshore exploration investments. Steven E. Baginski was elected
vice president- finance. Steve brings us highly desirable skills
in strategic planning and acquisitions, as well as experience in
global startups. Robert A. Horn was elected vice president-
exploration. Bob has 25 years of experience in exploration and
mining in South America, Africa, Australia, Europe, Canada and
the
PAGE 7
United States and will play an important role in charting our
future course.
OUTLOOK
As Jerritt Canyon becomes our primary source of production in
1994, gold production is expected to decline to 174,000 ounces,
and silver production will decline to 77,000 ounces. Production
costs are expected to increase in the range of the North American
industry average.
Our future depends on the success of our exploration efforts as
we expand our focus outside the United States and as our new
international development group pursues advanced-stage
opportunities within selected countries. Our strong balance
sheet, technical expertise and solid organization have us well-
positioned to bring new projects into development and to expand
reserves.
Larry D. Brady
Chairman of the Board
and Chief Executive Officer
Brian J. Kennedy
President and Chief
Operating Officer
February 12, 1994
EXPLORATION
In 1993, exploration spending totaled $14.4 million, including
$2.4 million for targets in the vicinity of the Paradise Peak and
Jerritt Canyon deposits. We spent $4.5 million to evaluate
prospects, primarily in Mexico and Chile, and the remaining $7.5
million funded grassroots exploration, submittal evaluations and
project work throughout the western United States. At year-end we
retain 15 active exploration projects.
We continue to be optimistic about our Rossi property in Nevada.
In April, we purchased the remaining 50 percent of the Humboldt
Gold Venture from TRE Management Company for $5.5 million, and
brought our ownership of Rossi to 100 percent. Our deep-drilling
program at Rossi, located on the Carlin Trend in Elko County,
Nevada, has shown progressively encouraging results over the past
four years. In 1993, exploration spending on Rossi totaled $3.4
million, and spending is expected to be near this level in 1994.
Meanwhile, small geologic resources have been developed at the
Miller Mountain and Ramshorn projects in Montana. These projects
might be farmed out during 1994 due to the size of the discovered
resources.
Our international programs in Mexico and Chile expanded in 1993
to include seven projects that currently are being evaluated.
Results of our drilling projects in Chile were especially
encouraging, and we're planning a larger-scale program there in
1994.
In the fall, we formed an international business development
group to identify advanced opportunities within the Newly
Independent States (the former Soviet Union), China and several
other countries. We expect spending on international targets and
reconnaissance to be about half of the approximately $15 million
targeted for our 1994 exploration program.
PAGE 8
FMC GOLD ORE RESERVES (PROVEN AND PROBABLE)(1)
December 31, 1993 December
31, 1992
(In thousands, except Tons(2) Grade Ounces(3) Tons(2) Grade
Ounces(3)
grades) (OPT) (Cont) (OPT)
(Cont)
Gold
Paradise Peak
Millable - - - 570 0.075 43
Heap leach - - - 5,775 0.027 154
Jerritt Canyon (30%)
Millable(4) 5,530 0.158 876 6,400 0.166 1,063
Heap leach 150 0.026 4 906 0.039 35
Royal Mountain King
Millable 628 0.053 33 2,740 0.053 145
Beartrack (86%)
Heap leach(5) 23,712 0.035 839 23,712 0.035 839
Total 30,020 N/A 1,752 40,103 N/A 2,279
Silver
(Paradise Peak only)
Millable - - - 570 1.415 808
Heap leach - - - 5,775 0.608 3,513
Total - - - 6,345 N/A 4,321
(1)Reserve estimates for 1993 and 1992 are based on assumed
prices
of $350 per ounce for gold and $4.00 per ounce for silver.
(2)Based on optimized mine plans, which incorporate as necessary
the impacts of dilution and access for FMC Gold operations.
(3)Contained ounces exceed recoverable ounces due to metal losses
experienced during the extraction process. Precious metal
recoveries are dependent on process used, grade of ore and
metallurgy. Estimated recoveries are as follows: Paradise Peak
mill ore 90% gold; 60% silver. Paradise Peak heap-leach ore
65-85% gold; 5-20% silver. Jerritt Canyon mill ore 90%.
Jerritt
Canyon heap-leach ore 60%. Royal Mountain King mill ore 75-80%.
Beartrack heap-leach ore 66%.
(4)Jerritt Canyon millable reserves reflect a change in the
anticipated method of mining the New Deep orebody. 1993
millable reserves are based on underground mining of New Deep,
while the 1992 millable reserves were based on open pit mining
of New Deep. 1993 millable reserves would be 5,948 tons at a
0.160 grade yielding 951 contained ounces if New Deep were to
be mined using the open pit method. 1992 millable reserves
would have been 5,105 tons at a 0.176 grade yielding 896
contained ounces if New Deep were mined underground.
(5)Beartrack's proven and probable reserves were determined based
upon a $350 per ounce gold price. Although our proven and
probable reserves can be economically mined, the development
of
the Beartrack property in the current gold price environment
does not meet the company's return criteria and has
therefore been put on standby. The property, however, has
potential to add shareholder value assuming certain gold
prices
and other positive conditions. The company continues to assess
the possibility for the future development of the property.
DEVELOPMENT
Development at Beartrack continues to be deferred until gold
prices improve. Seventy-one percent of this property, located 11
miles northwest of Salmon,Idaho, was acquired as part of the 1990
Meridian Gold acquisition. In December 1991, Canyon Resources
Corporation transferred its 15 percent interest in this property
to
PAGE 9
FMC Gold. As a result, FMC Gold ownsan 86 percent interest in
this property, with the remaining 14 percent held by Minex.
The Beartrack property covers 53 square miles and contains
approximately one million ounces of proven and probable gold
reserves. Eighty-five percent of the mineable ore reserves are
on patented land. Current studies indicate that the project could
be developed at a cost of approximately $50 million, with annual
heap-leach production averaging 100,000 ounces of gold per year,
at a cash production cost of $205 per ounce.
Beartrack's permits remain in effect. However, late last year,
the Salmon National Forest received orders from the National
Marine Fisheries Service in Portland, Oregon, to "avoid further
developments or impacts to riparian reserves" until NMFS had
completed its biological opinion, as required by the U.S.
Endangered Species Act. This opinion is not expected until
sometime in the first quarter of 1994. Construction of Beartrack
cannot begin until this process is completed.
Deferral of the project is the most prudent course given current
gold prices and the regulatory environment.
OPERATIONS
PARADISE PEAK
The wholly owned Paradise Peak mine, located 140 miles southeast
of Reno, Nevada, had a good year in 1993, despite mill-grade ore
being exhausted in May.
We operated three mines at the Paradise Peak property: the
original Paradise Peak mine, Ketchup Flat mine and County Line
mine. Ore from the original Paradise Peak discovery was processed
primarily through the mill, while ores from Ketchup Flat and
County Line deposits were heap leached.
As anticipated, due to the depletion of the orebody, 1993 gold
production decreased 37 percent to 158,000 ounces; similarly,
silver production decreased 58 percent to 800,000 ounces.
Production from low-grade, heap-leach operations contributed to
61 percent of total gold production. The mill was shut down in
May, and mining activity ended in August.
In 1993, cash costs of production improved 13 percent to $117 per
ounce due to lower process costs of heap leaching. We began
reclamation of the mine site, and this work will continue well in
to 1995. As we detoxify heap-leach pads in 1994, FMC Gold will
recover approximately 30,000 ounces of gold.
JERRITT CANYON
The Jerritt Canyon mine, located 57 miles northwest of Elko,
Nevada, is 30 percent owned by FMC Gold. Our joint-venture
partner, Independence Mining Company, Inc., a wholly owned
subsidiary of Minorco (U.S.A.) Inc., operates the mine.
Development and mining activities take place at Jerritt Canyon on
various orebodies scattered over a 120-mile claim block. Ore is
processed through one of two milling circuits-a wet mill circuit
for less refractory ores, and a dry milling and ore-roasting
PAGE 10
circuit for more refractory ores that contain higher carbon
content.
In 1993, FMC Gold's 30 percent share of gold production was
108,000 ounces, up 13 percent from the previous year, reflecting
higher mill throughput and improved ore grades. The mine moved a
record 41 million tons of material due to an expanded and
upgraded mine fleet, and the use of an outside mining contractor.
Mill throughput increased during 1993, rising to 8,552 tons per
day 5 percent above 1992. The average grade of ore milled
improved 10 percent to 0.129 ounces per ton; average recovery
remained at 89 percent.
The average cash costs of gold production increased 4 percent to
$240 per ounce, reflecting higher mining costs associated with
increased haul distances.
At year-end 1993, the company's share of reserves declined 20
percent to 0.9 million ounces. Approximately half of current
reserves are contained within the New Deep orebody that was
discovered in 1990. New Deep contains approximately 1.3 million
ounces of gold with an average grade of 0.2 ounces per ton.
Significant efforts focused on identifying new resources at
Jerritt Canyon. FMC Gold's share of exploration costs on the
claim block totaled $2.2 million. Results are encouraging as
several prospective areas demonstrated significant
mineralization.
ROYAL MOUNTAIN KING
During 1993, the wholly owned Royal Mountain King mine located in
Calaveras County, 40 miles east of Stockton, California,
struggled to offset adverse climatic conditions and the failure
of the hydraulic shovel.
In 1993, gold production at Royal Mountain King declined 23
percent to 55,000 ounces. The lower production was a result of
three factors: a 5 percent decline in mill throughput to 3,645
tons per day associated with the extraordinarily wet winter, a 12
percent reduction in the average grade of gold ore to 0.053
ounces per ton, and a 6 percent decline in recoveries to 77
percent.
1993 cash costs of production increased 18 percent to $336 per
ounce primarily due to lower gold production. Efforts to reduce
costs and increase efficiency have been considerable. However, it
has been difficult to offset unfavorable physical conditions.
These conditions have forced us to accelerate the shut down of
the mine to mid-year 1994.
PAGE 11
STATISTICAL SUMMARY
1993 1992 1991 1990 1989
Tons of ore processed (thousands)
Paradise Peak
Mill 587 1,727 1,558 1,409 1,339
Heap leach 3,918 4,715 3,217 803 465
Total 4,505 6,442 4,775 2,212 1,804
Jerritt Canyon (FMC Gold share)
Mill 936 897 865 754 545
Heap leach - - - - 107
Total 936 897 865 754 652
Austin (FMC Gold share) N/A N/A N/A N/A 80
Royal Mountain King 1,334 1,405 1,368 659 N/A
Ore grade (ounces per ton)
Paradise Peak (Mill)
Gold 0.115 0.097 0.079 0.136 0.168
Silver 1.900 1.511 2.166 5.599 5.385
Paradise Peak (Heap leach)
Gold 0.026 0.028 0.029 0.028 0.036
Silver 0.331 0.278 0.316 0.540 0.574
Jerritt Canyon (Mill) 0.129 0.117 0.145 0.147 0.179
Austin (Mill) N/A N/A N/A N/A 0.201
Royal Mountain King (Mill) 0.053 0.060 0.057 0.068 N/A
Recoveries
Paradise Peak (Mill)
Gold 89% 93% 92% 94% 95%
Silver 57% 63% 63% 68% 71%
Paradise Peak (Heap leach)
Gold 82% 74% 72% 74% 73%
Silver 8% 17% 16% 20% 28%
Jerritt Canyon (Mill) 89% 89% 88% 88% 90%
Austin (Mill) N/A N/A N/A N/A 84%
Royal Mountain King (Mill) 77% 82% 78% 81% N/A
Production (thousands of ounces)
Gold
Paradise Peak
Mill 61 157 114 183 216
Heap leach 97 94 68 16 12
Jerritt Canyon (FMC Gold share) 108 96 113 98 87
Austin (FMC Gold share) N/A N/A N/A N/A 14
Royal Mountain King 55 71 62 35 N/A
Total 321 418 357 332 329
Silver
Mill 698 1,709 2,176 5,395 5,084
Heap Heach 165 217 161 86 76
Total 863 1,926 2,337 5,481 5,160
Total gold equivalent(1) 331 441 383 402 403
(1)Silver/gold conversion ratio: 90.6:1 in 1993, 85.5:1 in 1992,89.1:1
in 1991, 77.8:1 in 1990, 70.0:1 in 1989
Cash cost of production
($ per gold equivalent ounce)
Paradise Peak $117 $134 $180 $106 $95
Jerritt Canyon $240 $230 $219 $237 $247
Austin N/A N/A N/A N/A $142
Royal Mountain King $336 $285 $353 $365 N/A
Average $194 $180 $220 $161 $129
Full cost of production $310 $290 $326 $240 $201
PAGE 12
FINANCIAL REVIEW
SALES AND EARNINGS
Sales decreased to $118.9 million from $150.0 million in 1992
primarily due to a 23 percent decrease in gold production and 55
percent lower silver production, offset by slightly higher
precious metals prices. At Paradise Peak, gold production
decreased to 158,000 ounces in 1993, due to the shutdown of the
mill in May 1993. Heap-leach operations will continue to generate
residual gold during detoxification through 1994. At Jerritt
Canyon, the company's 30 percent share of gold production rose to
108,000 ounces due to 10 percent higher ore grades in both the
ore-roasting process and the wet mill. The Royal Mountain King
mine produced 55,000 ounces in 1993, a 23 percent decrease from
1992, due to 12 percent lower ore grades as well as lower
recoveries. As expected, silver production declined to 863,000
ounces from 1,926,000 ounces in 1992 due to the exhaustion of
mill ore reserves at Paradise Peak.
The average realized price of gold increased to $357 per ounce
from $343 per ounce in 1992. Average realized silver prices
declined slightly to $3.94 per ounce from $4.01 per ounce in
1992. The company's average precious metal prices were
essentially equal to commodity market averages.
Cost of sales decreased to $96.8 million in 1993 due to the mill
shutdown at Paradise Peak, partially offset by higher operating
costs at Jerritt Canyon as a result of increased production.
Average cash costs of production increased to $194 per gold
equivalent ounce from $180 in 1992 reflecting the exhaustion of
low-cost mill ore grades at Paradise Peak mine as well as higher
costs at Jerritt Canyon and Royal Mountain King. Cash costs at
Paradise Peak decreased to $117 per gold equivalent ounce in
1993, reflecting lower costs associated with heap-leach
production and the absence of mining costs beginning in July
1993. Royal Mountain King cash costs per ounce increased 18
percent due to lower production volumes as a result of lower ore
grades. Jerritt Canyon cash costs increased to $240 per ounce
from $230 in 1992 due to higher mining costs.
Exploration spending increased to $14.4 million in 1993,
reflecting increased spending related to Jerritt Canyon as well
as an increased focus on international exploration. Selling,
general and administrative expenses decreased slightly to $7.0
million in 1993, due to lower allocated costs from FMC
Corporation (FMC), as well as continued cost reduction efforts.
Interest income increased to $8.3 million in 1993 due to an
increase in cash and cash equivalents of $12.5 million as well as
achieving higher interest rates on loans to FMC.
In mid-December, the company recorded a $60.6 million charge
primarily for write-down of assets. The charge included an asset
write-down of $51.0 million for the Beartrack development
property and related investments. Recent gold prices have not
increased as projected, resulting in a write-down of the book
value of the assets. The company is continuing to assess the
future development of the Beartrack property. At Royal Mountain
King, a charge of $4.6 million was recorded to fully depreciate
the fixed assets due to the planned closure of the mine in mid-
1994. A charge of $5.0 million was taken at Paradise Peak for
additional mine closure costs in 1994 and beyond.
PAGE 13
Net income was $9.3 million before the impact of write-downs and
other charges. After the $60.6 million in write-downs and other
charges, the company reported a net loss of $51.3 million. Net
income was $14.4 million in 1992. Earnings per share decreased to
$(0.70) per share from $0.20 in 1992.
TAXES
The company recorded a 1 percent tax benefit on losses in 1993
compared with an 11 percent tax on earnings in 1992. The decrease
in rate is due to lower earnings partially offset by the
Beartrack property write-down which was not tax effected.
LIQUIDITY AND CAPITAL RESOURCES
Cash to meet the company's operating needs, finance capital
expenditures and fund exploration activities was generated from
operations. At December 31, 1993, cash and cash equivalents
totaled $166.8 million, primarily in the form of loans to FMC
which have varying maturities and are payable on demand. As of
December 31, 1993, FMC's cash on hand and available credit lines
were more than adequate to allow repayment of these loans.
Capital expenditures of $18.5 million were slightly less in 1993
than in 1992. Major capital outlays for the year included mine
development and equipment additions at Jerritt Canyon, and the
purchase of the remaining 50 percent interest in the Humboldt
Gold Venture.
On December 31, 1993, the company paid a dividend on common stock
of $0.05 per share to stockholders of record on December 9, 1993.
Expected cash requirements for 1994 include approximately $15 to
$20 million for planned capital expenditures, primarily
associated with Jerritt Canyon orebody development and equipment
additions, approximately $15 million for exploration activities
and $3.7 million for dividends, based on the current dividend
rate. The company expects to fund these requirements from
existing cash and cash equivalents and cash flow from operations.
As a matter of course, the company periodically evaluates the
possible acquisition of other mining assets or companies. Should
such an acquisition occur, or should mine development at any of
the company's existing properties prove beneficial, significant
cash requirements may be necessary. The company believes that any
unexpected cash requirements could be funded by current cash
balances or through borrowing from third parties.
1993 FOURTH QUARTER COMPARED WITH 1992
Sales in the fourth quarter fell 25 percent to $26.3 million from
$35.1 million in the fourth quarter of 1992, as a result of the
shutdown of the mill at Paradise Peak.
In the fourth quarter, the average realized price of gold
increased 11 percent to $373 per ounce. The average realized
price of silver increased 25 percent to $4.72 per ounce. Gold
production decreased to 64,000 ounces from 101,000 ounces in the
fourth quarter of 1992. At Paradise Peak, gold production
declined to 22,000 ounces from 62,000 ounces in the fourth
quarter of 1992. The decrease in gold production reflected the
exhaustion of mill-grade ore in May of
PAGE 14
1993, with fourth quarter production coming entirely from the
heap-leach operation. At Jerritt Canyon, gold production
increased 41 percent to 31,000 ounces in the fourth quarter due
to significantly higher mill ore grades and improved recoveries.
Silver production for the fourth quarter declined to 47,000
ounces from 386,000 ounces in 1992 as a result of the expected
decline in grades associated with the mill shutdown at Paradise
Peak.
Cost of sales decreased $11.0 million to $19.8 million due mainly
to the cessation of mill operations at Paradise Peak. Average
cash production costs for the quarter increased to $209 per gold
equivalent ounce compared with $193 per gold equivalent ounce in
1992, reflecting the declines in production at Paradise Peak and
Royal Mountain King.
Exploration spending rose $1.2 million to $4.9 million due mainly
to increased spending for the Jerritt Canyon property and the
foreign program. Selling, general and administrative expenses
increased $0.5 million, reflecting timing of expenses. Interest
income increased $0.6 million to $2.2 million as the loan
balances increased and better interest rates were achieved.
Net income for the quarter increased $2.0 million to $3.1 million
(before $60.6 million in write-downs and special charges) from
$1.1 million due to higher gold prices and lower overall costs
resulting from the shutdown of Paradise Peak. In December of 1993
the company recorded an after-tax special charge of $60.6
million, or $0.82 per share, primarily to cover the write-down of
the Beartrack development property. After special charges, losses
per share were $0.78 for the quarter compared with earnings of
$0.01 last year.
1992 COMPARED WITH 1991
Sales increased to $150.0 million from $139.4 million in 1991,
primarily due to a 17 percent increase in gold production, offset
by lower precious metals prices and reduced silver production. At
Paradise Peak, gold production increased to 251,000 ounces from
182,000 ounces in 1991, due to higher mill throughput, mill
grades and increased heap-leach activity. At Jerritt Canyon, the
company's 30 percent share of gold production declined to 96,000
ounces from 113,000 ounces in 1991 due to reduced ore grades for
both the ore-roasting process and the wet mill. Production at the
Royal Mountain King mine increased to 71,000 ounces from 62,000
ounces in 1991 as a result of higher ore grades. Silver
production declined to 1.9 million ounces from 2.3 million ounces
in 1991, reflecting the continued expected decline in silver
grades at Paradise Peak.
The average realized price of gold declined to $343 per ounce
from $361 per ounce in 1991. The average realized price of silver
declined slightly to $4.01 per ounce from $4.05 per ounce in
1991.
Average cash costs of production decreased to $180 per gold
equivalent ounce from $220 in 1991, reflecting increased gold
production at Paradise Peak and Royal Mountain King, in addition
to lower operating costs.
Exploration spending decreased slightly to $12.2 million in 1992,
primarily due to the reduced exploration of developed properties,
with a shift to international exploration. Selling, general and
administrative expenses increased slightly to $7.7 million in
1992. Interest income declined to $6.0 million in 1992, as the
effect of a $29 million
PAGE 15
increase in cash and cash equivalents was more than offset by
lower interest rates. Net income increased to $14.4 million
compared with net income of $7.0 million in 1991, due to higher
sales, offset in part by higher costs as noted above. Earnings
per share increased to $0.20 per share from $0.10 per share in
1991.
QUARTERLY FINANCIAL INFORMATION (unaudited)
(In millions, except per share data) 1993 1992
1st 2nd 3rd 4th 1st 2nd 3rd 4th
Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.
Sales $35.5 $31.2 $25.9 $ 26.3 $39.5 $36.9 $38.5 $35.1
Gross profit $ 5.4 $ 5.4 $ 4.8 $ 6.5 $ 9.7 $ 5.4 $10.6 $ 4.3
Earnings (loss) before
interest and taxes $ 1.4 $(0.4) $0.2 $(61.1) $ 5.8 $ 0.5 $4.8 $(1.0)
Net income (loss) $ 2.8 $ 1.0 $2.4 $(57.5) $ 6.9 $ 1.1 $5.3 $ 1.1
Earnings (loss) per
common share(1) $0.04 $0.01 $0.03 $(0.78) $0.09 $0.02 $0.07 $0.01
Dividends per
common share $ 0.05 $0.05
Common stock prices:
High $5-1/8 $6-7/8 $7-3/8 $5-3/4 $5-1/4 $5-5/8 $6-1/4 5-5/8
Low $4 $4-3/8 $4-7/8 $4-7/8 $4 $4 $4-5/8 $4-1/8
(1) Quarterly earnings per common share may differ from the full-
year
amounts due to rounding.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data) Year ended December
31
1993 1992 1991
Sales $118,927 $150,030 $139,389
Costs and expenses
Cost of sales 96,822 119,987 117,875
Exploration costs 14,414 12,174 12,575
Selling, general and
administrative expenses 7,003 7,664 7,511
Write-downs and other charges (Note 3) 60,600 - -
Total costs and expenses 178,839 139,825 137,961
Earnings (loss) before interest
and taxes (59,912) 10,205 1,428
Interest income 8,336 5,965 7,758
Income (loss) before income taxes (51,576) 16,170 9,186
Provision (benefit) for income
taxes (Note 8) (313) 1,725 2,200
Net income (loss) $(51,263) $14,445 $6,986
Earnings (loss) per common
share (Note 1) $(0.70) $ 0.20 $0.10
See notes to consolidated financial statements.
PAGE 16
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data) December 31
1993 1992
CURRENT ASSETS
Loans due from FMC Corporation
(Notes 1 and 12) $167,326 $154,826
Trade receivables 2,527 3,773
Inventories (Note 4) 3,776 6,292
Other current assets 1,236 420
Total current assets 174,865 165,311
Property, plant and equipment,
net (Note 5) 60,605 120,957
Deferred income taxes (Note 8) 2,527 1,192
Other assets 638 4,443
TOTAL ASSETS $238,635 $291,903
CURRENT LIABILITIES
Outstanding checks in excess
of bank balances (Note 1) $ 542 $ 510
Accounts payable, trade and other 8,206 7,816
Accrued and other liabilities (Note 6) 11,935 10,312
Amounts due to FMC Corporation (Note 12) 1,069 1,382
Income taxes payable (Notes 1 and 8) 4,922 7,100
Total current liabilities 26,674 27,120
Other long-term liabilities (Note 7) 12,316 10,201
Commitments and contingent liabilities
(Note 11)
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value,
authorized 100,000 shares; none issued
or outstanding - -
Common stock, $0.01 par value, authorized
150,000,000 shares; issued and outstanding
73,484,395 shares 735 735
Capital in excess of par value 68,609 68,609
Retained earnings 130,301 185,238
Total stockholders' equity 199,645 254,582
Total liabilities and stockholders' equity $238,635 $291,903
See notes to consolidated financial statements.
PAGE 17
CONSOLIDATED STATEMENTS OF CASH FLOWS
Reconciliation of Net Income (Loss) to Net Cash Provided by
Operating Activities
(In thousands) Year ended December31
1993 1992 1991
Net income (loss) $(51,263) $14,445 $6,986
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Provision for depreciation
and amortization 25,804 30,653 31,507
Deferred tax provision (benefit) (1,335) (3,022) 285
Write-downs and other charges (Note 3) 60,600 - -
(Increase) decrease in assets:
Trade receivables 1,246 34 3,522
Inventories 2,516 85 1,286
Other current assets (816) 169 2,319
(Decrease) increase in liabilities:
Accounts payable, trade and other 390 (3,775) 1,998
Accrued and other liabilities 1,623 5,518 (62)
Amounts due to FMC Corporation (313) (110) 1,475
Income taxes payable (2,178) 4,047 (2,337)
Other long-term liabilities (2,885) 3,153 1,929
Net cash provided by operating
activities $33,389 $51,197 $48,908
Supplemental disclosure of non-cash investing and financing
activities:
In December 1991, Canyon Resources Corporation (Canyon), a joint-
venture partner in the Beartrack development project, elected to
transfer its 15 percent interest in the project to the company to
satisfy certain obligations. As part of this transaction, the
company reclassified $4.7 million of amounts due from Canyon to
property, plant and equipment (Note 2).
Supplemental disclosure of cash flow information:
Cash paid for income taxes during 1993, 1992 and 1991 was $3,180,
$700 and $4,260, respectively.
See notes to consolidated financial statements.
PAGE 18
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(In thousands) Year ended December 31
1993 1992 1991
NET CASH PROVIDED BY
OPERATING ACTIVITIES $33,389 $51,197 $48,908
Cash flows from investing
activities:
Capital spending (18,455) (19,037) (19,357)
Disposal of property, plant
and equipment, net 1,431 465 200
Increase in other assets (223) (20) (2,028)
Net cash used in investing
activities (17,247) (18,592) (21,185)
Cash flows from financing
activities:
Dividends paid (3,674) (3,674) (3,674)
Increase in cash and cash
equivalents 12,468 28,931 24,049
Cash and cash equivalents,
beginning of year 154,316 125,385 101,336
Cash and cash equivalents,
end of year $166,784 $154,316 $125,385
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Number Capital
of Common in excess
Retained
(In thousands) shares stock of par value
earnings
Balance December 31, 1990 73,484 $735 $68,609 $171,155
Net income 6,986
Cash dividend
($0.05 per share) (3,674)
Balance December 31, 1991 73,484 735 68,609 174,467
Net income 14,445
Cash dividend
($0.05 per share)
(3,674)
Balance December 31, 1992 73,484 735 68,609 185,238
Net loss (51,263)
Cash dividend
($0.05 per share) (3,674)
Balance December 31, 1993 73,484 $735 $68,609 $130,301
See notes to consolidated financial statements.
PAGE 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 PRINCIPAL ACCOUNTING POLICIES
CONSOLIDATION.
The consolidated financial statements include the accounts of the
company and all majority-owned subsidiaries. The accounts of
joint ventures in which the company holds an interest are
consolidated on a pro rata basis. All significant intercompany
accounts are eliminated in consolidation.
CASH AND CASH EQUIVALENTS.
Cash and cash equivalents consists of:
Year ended December 31
(In thousands) 1993 1992 1991
Loans due from FMC Corporation $167,326 $154,826 $127,000
Outstanding checks in excess of
bank balances (542) (510) (1,615)
Total cash and cash equivalents $166,784 $154,316 $125,385
Loans due from FMC consist of five notes, with varying
maturities, due upon demand. Terms and conditions of these loans
are covered by the management services agreement between the
company and FMC (Note 12).
As a result of the company's participation in FMC's centralized
cash management system, the company reported a liability for
outstanding checks in excess of bank balances due to the timing
of cash transfers from FMC.
INVENTORIES.
Finished goods inventories are stated at the lower of the average
cost or market, and include labor, materials, other production
costs and depreciation. No inventory value is assigned to
stockpiled ore or in-process material, except for certain
stockpiled leach-pad ore where cost includes labor, materials and
other production costs.
PROPERTY, PLANT AND EQUIPMENT.
Property, plant and equipment, including development costs and
capitalized interest associated with the construction of certain
capital assets, is recorded at cost. Depreciation and
amortization for financial reporting purposes is provided
principally on the straight- line basis over the shorter of the
estimated lives of the assets or the estimated proven and
probable recoverable reserves. Royal Mountain King assets are
depreciated over units of production. Gains and losses are
reflected in income upon sale or retirement of assets.
Maintenance and repairs are charged to expense in the year
incurred ($12.6 million, $13.5 million and $14.9 million in 1993,
1992 and 1991, respectively). Expenditures that extend the useful
life of property, plant and equipment or increase its
productivity are capitalized.
MINERAL EXPLORATION AND DEVELOPMENT COSTS.
Mineral exploration and preliminary development costs are
expensed as incurred. Development costs applicable to mineralized
properties deemed capable of commercial production are
capitalized and then amortized over units of production.
RECLAMATION. Reclamation and shutdown costs to be incurred when
mining operations are closed are estimated and accrued over the
life of the mine.
PAGE 20
INCOME TAXES.
Income tax provisions are based on income reported for financial
statement purposes, adjusted for transactions (permanent
differences) that do not enter into the computation of income
taxes payable. Prior to January 1, 1993, the company deferred the
tax effects of timing differences between financial reporting and
tax income. Effective
January 1, 1993, the company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes." SFAS No. 109 requires an asset and liability approach,
whereby deferred tax liabilities and assets are recognized for
expected future tax consequences of temporary differences between
the carrying amounts and tax bases of assets and liabilities.
OTHER TAXES.
Sales and property taxes were $2.6 million, $3.0 million and $3.2
million, and net proceeds taxes paid (refunded) were $(0.3)
million, $2.1 million and $1.2 million in 1993, 1992 and 1991,
respectively.
EARNINGS PER COMMON SHARE.
Earnings per common share are computed by dividing net income
(loss) by the weighted average number of shares of common stock
and common stock equivalents (incentive plan shares and founders'
Award shares) outstanding during the year (73,484,395 in 1993 and
1992, and 73,489,720 in 1991).
FINANCIAL INSTRUMENTS.
The fair value of financial instruments approximated their
carrying values at December 31, 1993, 1992 and 1991. Fair values
have been determined through information obtained from both
market sources and management estimates.
ACCOUNTING STANDARDS NOT ADOPTED.
In November 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 112, "Employers"
Accounting for Postemployment Benefits." Statement No. 112,
effective for fiscal year 1994, establishes accounting standards
for benefits provided to former or inactive employees after
employment but before retirement. The company is continuing to
evaluate the new statement's provisions, although it does not
expect that implementation will have a material impact on the
company's results of operations and financial position.
RECLASSIFICATIONS.
Certain prior-year amounts have been reclassified to conform with
the current year's presentation.
NOTE 2 ACQUISITIONS AND DIVESTITURES
In April 1993, the company purchased the remaining 50 percent
interest in the Humboldt Gold Venture from TRE Management Company
for $5.5 million, bringing the company's ownership interest in
all gold and precious metal-bearing ores in the related property
to 100 percent. The former Humboldt Gold Venture is targeting
deep gold mineralization at the "Rossi Property" on the Carlin
Gold Trend in Nevada.
In December 1991, Canyon Resources Corporation (Canyon), a joint-
venture partner in the Beartrack project, elected to transfer its
15 percent interest in the project to the company to satisfy
certain obligations. As part of this transaction, completed in
1992, the company cancelled a $1.75 million loan due from Canyon
and $4.7
PAGE 21
million of other amounts relating to Canyon's share of
development expenditures incurred by the joint venture.
NOTE 3 WRITE-DOWNS AND OTHER CHARGES
In December 1993, the company recorded a special charge of $60.6
million or $0.82 per share. This charge included a write-down of
$51.0 million for the Beartrack development property and related
investments. The Beartrack property was acquired for stock in
1990. Gold prices have not increased as projected; and therefore,
the book value of the property was written down to reflect these
lower prices. The property, however, has potential to add
shareholder value assuming certain gold prices and other positive
conditions. The company continues to assess the possibilities for
the future development of the property.
Also included was a charge of $4.6 million associated with the
write-down of fixed assets at the Royal Mountain King mine, which
is projected to complete production in mid-1994. Because the mine
is forecasted to operate near breakeven before depreciation
during 1994, an earlier shutdown could result from either lower
than anticipated gold prices or higher than anticipated cash
costs or both. The fixed asset write-down is consistent with the
uncertainty surrounding 1994 results. A charge of $5.0 million
was also recorded at Paradise Peak for additional mine closure
costs in 1994 and beyond.
NOTE 4 INVENTORIES
Inventories included at cost in current assets at December 31
were:
(In thousands) 1993 1992
Gold and silver $482 $1,544
Leach-pad ore - 769
Materials and supplies 3,294 3,979
Total $3,776 $6,292
Gold and silver inventories are in the form of dore', which is
suitable for delivery to precious metal treatment facilities.
These inventories are generally sold to and further processed by
these facilities into forms suitable for end uses.
PAGE 22
NOTE 5 PROPERTY, PLANT AND EQUIPMENT
A summary of changes in property, plant and equipment and related
accumulated depreciation accounts is as follows:
<TABLE>
<CAPTION>
Land Machinery
and and Construction
improve- equip- in Development Capitalized
(In thousands) ments Buildings ment progress costs interest Total
<S> <C> <C> <C> <C> <C> <C> <C>
COST
Balance
December 31, 1990 $10,425 $3,735 $128,884 $2,503 $86,591 $10,586 $242,724
Additions - 5 7,540 5,315 6,497 - 19,357
Disposals,
retirements and
reclassifications (2,689) (1) 1,638 43,580 (38,891) - 3,637
Balance
December 31, 1991 7,736 3,739 138,062 51,398 54,197 10,586 265,718
Additions 287 14 5,393 3,360 9,983 - 19,037
Disposals,
retirements and
reclassifications 37,964 (57) (2,186) (37,964) 24 - (2,219)
Balance
December 31, 1992 45,987 3,696 141,269 16,794 64,204 10,586 282,536
Additions - 351 3,184 1,743 13,177 - 18,455
Disposals,
retirements and
reclassifications (37,287) 1,130 8,190 (14,348) (12,559) - (54,874)
BALANCE
DECEMBER 31, 1993 $ 8,700 $5,177 $152,643 $ 4,189 $64,822 $10,586 $246,117
ACCUMULATED DEPRECIATION
Balance
December 31, 1990 $ 6,226 $2,164 $ 71,606 $ 13,952 $ 8,316 $102,264
Depreciation and
amortization 1,303 565 19,728 8,369 1,542 31,507
Disposals,
retirements
and reclassifications (2,103) - 90 922 - (1,091)
Balance
December 31, 1991 5,426 2,729 91,424 23,243 9,858 132,680
Depreciation and
amortization 1,160 597 18,683 9,512 701 30,653
Disposals, retirements
and reclassifications - (25) (1,729) - - (1,754)
Balance
December 31, 1992 6,586 3,301 108,378 32,755 10,559 161,579
Depreciation and
amortization 577 659 15,929 8,612 27 25,804
Disposals, retirements
and reclassifications 153 752 4,361 (7,137) - (1,871)
Balance
December 31, 1993 $7,316 $4,712 $128,668 $34,230 $10,586 $185,512
Property, plant and
equipment, net,
December 31, 1993:
Paradise Peak $ 8 $ - $ 2,593 $ - $ - $ - $ 2,601
Jerritt Canyon 619 357 20,466 4,158 19,752 - 45,352
Royal Mountain King 449 - - 6 - - 455
Beartrack - - - - 5,340 - 5,340
Other 308 108 916 25 5,500 - 6,857
Total Company $1,384 $ 465 $23,975 $4,189 $30,592 $ - $ 60,605
PAGE 23
NOTE 6 ACCRUED AND OTHER LIABILITIES
Accrued and other liabilities at December 31 were:
(In thousands) 1993 1992
Shutdown and reclamation accrual (Note 1) $ 9,036 $ 5,538
Accrued bonus and payroll 1,588 2,516
Other 1,311 2,258
Total $11,935 $10,312
NOTE 7 OTHER LONG-TERM LIABILITIES
Other long-term liabilities at December 31 were:
(In thousands) 1993 1992
Shutdown and reclamation accrual (Note 1) $12,209 $10,019
Other 107 182
Total $12,316 $10,201
The shutdown and reclamation accrual represents estimated costs
of earthwork such as recontouring, revegetation and
stabilization. Also included are heap-leach detoxification costs,
facility decomissioning costs and human resource costs. The
estimated costs of shutdown and reclamation for Paradise Peak and
Royal Mountain King are substantially accrued. Costs for Jerritt
Canyon are accrued monthly.
NOTE 8 INCOME TAXES
Effective January 1, 1993, the company adopted Statement of
Financial Accounting Standards (SFAS) No. 109 "Accounting for
Income Taxes." The adoption of SFAS 109 changes the company's
method of accounting for income taxes from the deferred method
(APB 11) to an asset and liability approach. Previously, the
company deferred the tax effects of timing differences between
financial reporting and taxable income. The asset and liability
approach requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of
other assets and liabilities.
The company has elected not to restate the financial statements
of any prior years. There was no cumulative effect on pretax
income and net income for the change in accounting method.
Through May 15, 1990, the company's taxable income was included
in the consolidated federal income tax return filed by FMC. Under
an agreement between the company and FMC, the company paid to FMC
amounts generally equal to the tax the company would have been
required to pay had it filed a separate return. The company was
also liable for a percentage of FMC's consolidated alternative
minimum tax liability where the amount allocated to the company
exceeded the company's alternative minimum tax calculated on a
separate return basis. For periods subsequent to May 15, 1990,
the company deconsolidated from FMC for federal income tax
purposes and has filed separate consolidated returns.
For state tax purposes, the company will generally continue to be
included in FMC's combined returns. Under a separate agreement
between the company and FMC covering state taxes for periods
after May 15, 1990, the company will be liable for the
incremental impact the company has on FMC's state tax liability
in states where FMC files combined returns. In states where the
company does business, the company's liability will not be less
than it would be had the company filed a separate return in those
states.
PAGE 24
The prior agreement remains in effect for all federal and state
tax matters for periods through May 15, 1990. The company's
management believes that all determinations under the prior
agreement and the state tax agreement have been made in a manner
which is fair and reasonable in the circumstances.
The provision (benefit) for income taxes consists of:
Year ended December 31
(In thousands) 1993 1992 1991
Current:
Federal $ 782 $ 4,418 $1,408
State 240 329 507
Total current 1,022 4,747 1,915
Deferred (1,335) (3,022) 285
Total provision (benefit) $ (313) $ 1,725 $2,200
Significant components of the company's deferred tax assets
and liabilities as of December 31, 1993 are as follows
(in thousands):
Alternative minimum tax carryforwards $ 12,183
Reclamation reserves 6,429
Property, plant and equipment 5,203
Capitalized exploration costs 3,446
General reserves 2,122
Accrued pension and other postretirement benefits 661
Other 865
Deferred tax assets 30,909
Valuation
allowance (27,230)
Deferred tax assets, net of allowance $ 3,679
Capitalized development costs $ (896)
Other (256)
Deferred tax liabilities $ (1,152)
Net deferred tax assets $ 2,527
The valuation allowance for deferred tax assets as of January 1,
1993 was $4,598. The net change in the total and beginning-of-the-
year valuation allowance was an increase of $22,632 as a result
of the write-down of the Beartrack property.
The company has an alternative minimum tax credit carryover of
$12.2 million for income tax purposes. This credit is available
to offset future regular taxes to the extent those taxes exceed
the alternative minimum tax computed for the respective carryover
year. For amounts generated through May 15, 1990, the company
will be reimbursed by FMC in the event that tax regulations are
promulgated which prevent the company from utilizing allocated
alternative minimum tax credits.
Management of the company believes that it is likely that the
results of future operations will generate sufficient taxable
income to realize the stated $2.5 million of net deferred tax
assets.
The effective income tax provision (benefit) differs from that
computed by applying the applicable federal statutory rate of 34
percent to income before taxes for the following reasons:
PAGE 25
Year ended December 31
(In thousands) 1993 1992 1991
Expected tax provision (benefit) $(17,536) $5,498 $3,123
Foreign sales corporation
income not subject to U.S. tax (2,714) (1,650) (782)
Percentage depletion (3,674) (4,862) (5,250)
Imputed interest expense 9 279 558
Alternative minimum tax - 491 792
Net operating loss carryover - 3,079 4,996
Change in valuation reserve 22,632 - -
Loss on foreign subsidiaries 787 - -
Purchase accounting differences - (1,334) (1,433)
State income taxes, less federal
income tax benefit 158 79 22
Other 25 145 174
Actual tax provision (benefit) $(313) $1,725 $2,200
The source and tax effect of the deferred income tax provision
(benefit) are as follows:
Year ended December 31
(In thousands) 1992 1991
Alternative minimum tax $(2,370) $ (27)
Tax depreciation greater (less)
than book (4,304) (5,131)
Exploration and development costs 968 5,315
Shutdown and reclamation costs (2,454) (606)
Net operating loss carryover 5,535 1,478
Other timing differences (397) (744)
Total deferred income tax
provision (benefit) $(3,022) $ 285
The provision for income taxes has been determined in accordance
with the tax-sharing agreements between the company and FMC.
Differences between the recorded provision and that calculated on
a separate return basis are as follows:
(Unaudited) Year ended December 31
(In thousands) 1993 1992 1991
Tax provision (benefit)
as recorded $(313) $1,725 $2,200
State income taxes - 31 -
Tax provision (benefit) on
separate return basis $(313) $1,756 $2,200
State income tax differences result from allocations made to the
company by FMC for the incremental impact on FMC's tax liability
caused by the inclusion of the company in tax returns filed in
states requiring combined reporting covering all unitary
affiliates of FMC. The incremental impact is based on both the
income and apportionment elements of the various state tax
equations. Apportionment elements include the company's sales,
property and payroll.
NOTE 9 EXPORT SALES AND SALES TO MAJOR CUSTOMERS
U.S. export sales to unaffiliated customers by destination of
sale are as follows:
Year ended December 31
(In thousands) 1993 1992 1991
Canada $ 20,063 $ 21,563 -
Western Europe 98,404 125,367 $116,011
Total $118,467 $146,930 $116,011
PAGE 26
The company's products may be purchased and refined by several
Canadian, European, Asian and domestic refiners. Sales to four
refiners in 1993, and three refiners in 1992 and 1991 each
represented 10 percent or more of consolidated sales.
Specifically, sales to these companies amounted to $118.5 million
in 1993, $146.9 million in 1992, and $116.0 million in 1991. The
company believes that because there are several alternative
refiners, each capable of refining the company's products, no
adverse effect will result should any of the current refiners
discontinue buying the company's products.
NOTE 10 EMPLOYEE PLANS All company employees are covered by
FMC's postretirement health care and life insurance benefit
program. Retroactive to January 1, 1992, the company elected
early adoption of Statement of Financial Accounting Standards
(SFAS) No. 106, "Employers" Accounting for Postretirement
Benefits Other Than Pensions," which requires accrual of the
expected cost of providing postretirement benefits, other than
pensions, during the years of employee service. Previously, such
costs were generally expensed as paid. The impact of adopting
SFAS No. 106 was immaterial to the company's financial position.
Employees, other than hourly employees at the Royal Mountain King
operating mine, are included in FMC's employee thrift plan and
funded retirement plan. Charges for these benefits were $1.1
million, $1.3 million and $1.1 million in 1993, 1992 and 1991,
respectively, and are included in the costs paid under the
management services agreement as discussed in Note 12. Hourly
employees at Royal Mountain King participate in a separate thrift
and stock purchase plan which is qualified under Section 401(k)
of the Internal Revenue Code. Under this plan, employee
contributions, up to 5 percent of compensation, are matched up to
60 percent by the company. The company also contributes a fixed
amount per hour worked per employee. All matching contributions
by the company are invested in FMC common stock. Charges against
income for contributions made to this plan were $0.1 million in
1993, 1992 and 1991 and are included in the costs paid under the
management services agreement discussed in Note 12. The company
has no pension obligations other than the payment of charges from
FMC under the management services agreement.
Following the closing of a public stock offering on June 25,
1987, the company granted to each of the approximately 270
employees of the company the right to receive 71 shares of common
stock (Founders' Award shares) which had a value of approximately
$1,000 determined on the basis of the public offering price of
$14.00 per share. During 1991, the company paid $0.1 million to
eligible employees in settlement of these rights.
In 1989, the stockholders approved the FMC Gold Company 1988 Long-
Term Incentive Compensation Plan which authorized the Board of
Directors of the company (the Board) to grant awards, payable in
the form of cash and non-qualified stock options, to key
employees of the company if certain specified performance
objectives were met over a four-year period ended December 31,
1991. The Board established as a base performance objective the
discovery of a certain quantity of profitable gold reserves.
During the first quarter of 1992, a cash payment of $0.8 million
was made to plan participants related to awards granted in 1988.
The stock options granted in 1988 bear an exercise price ranging
from $9.625 to $11.25, the fair market value at the date of
grant, and expire May 6, 1998. During 1992, additional options
for 223,000 shares of common stock were granted at an exercise
price of $4.25 and with an expiration date of April 2007.
PAGE 27
NOTE 11 COMMITMENTS AND CONTINGENT LIABILITIES
The company leases office space and various types of equipment.
Total rent expense under all leases amounted to $0.6 million,
$0.8 million and $0.8 million for 1993, 1992 and 1991,
respectively. Minimum future rentals under noncancellable leases
aggregated approximately $1.4 million as of December 31, 1993,
and are estimated to be payable $0.4 million in 1994 and $0.4
million in 1995, $0.3 million in 1996 and $0.3 million in 1997.
The company's mining operations and exploration activities are
subject to various federal, state and local laws, and regulations
governing protection of the environment. These laws are
continually changing and, as a general matter, are becoming more
restrictive. The company's policy is to conduct its business in a
manner that safeguards public health and the environment. The
company believes that its operations are in compliance with all
applicable laws and regulations, and has no reason to believe
that compliance problems exist at operations in which it holds a
joint-venture interest. To comply with these federal, state and
local laws, the company has made and in the future will be
required to make capital and operating expenditures on
environmental projects. However, the company currently has no
environmental projects under development that will require
substantial and extraordinary expenditures. Expenditures for
environmental projects were not substantial in 1993, nor are they
expected to be substantial in 1994.
The company has certain contingent liabilities resulting from
litigation, claims and commitments incident to the ordinary
course of business. Management believes that the probable
resolution of such contingencies will not materially affect the
financial position or results of operations of the company.
NOTE 12 RELATED PARTY TRANSACTIONS
At December 31, 1993, 78.9 percent of the outstanding common
stock of the company was held by FMC. In 1994, FMC intends to
increase its ownership interest in the company to 80 percent.
Certain agreements exist between the company and FMC concerning
income taxes and management services. Due to the issuance of 8
million new shares to acquire Meridian in 1990, FMC's ownership
of the company dropped below the 80 percent threshold required
for inclusion in FMC's federal tax return. Therefore, the company
has filed separate consolidated returns for tax periods beginning
May 16, 1990. For state tax purposes, the company will generally
continue to be included in FMC's combined returns.
Under the management services agreement, the company will be
charged at FMC's direct and indirect cost, including allocated
overhead, for certain general, administrative and other services
provided by FMC. Overhead allocations of $2.6 million, $3.1
million and $2.8 million in 1993, 1992 and 1991, respectively,
are based generally on the level of company sales to aggregate
FMC sales. The company's management believes that all
determinations with respect to direct and indirect costs,
including allocated overhead, have been made in a manner which is
fair and reasonable under the circumstances.
In addition, the agreement states that either the company or FMC
may borrow up to $50 million from the other on a short-term
demand basis. Borrowings exceeding $50 million are made upon the
review and approval of the lending company. All such borrowings
are payable on a demand basis and bear interest at a floating
rate equal to FMC's current weighted average rate on its
borrowings under its credit facilities, or its investing rate,
for the relevant period. The company's management believes that
any demand for repayment of borrowings by FMC under the
management services agreement
PAGE 28
is legally enforceable. During 1993, FMC increased total
borrowings owed was $174.0 million. The company believes it has
received an equal or better yield on its loans to FMC than it
could have received from comparable investments and plans to
continue this cash management arrangement in the future. The
company is an unsecured creditor of FMC, and as such it receives
the same treatment as any other FMC unsecured creditor. At year-
end, FMC's cash on hand and available credit lines were more than
adequate to allow repayment of these loans.
On January 16, 1990, FMC completed a $75 million issue of
exchangeable senior subordinated debentures in Europe. The
debentures bear interest at 6-3/4 percent and are exchangeable at
$15-1/8 per share, subject to change as defined in the offering
circular, into common stock of the company currently held by FMC.
If exchanged at $15-1/8, non-FMC ownership of the company would
increase to 28 percent.
The following schedule recaps the activity of indebtedness to and
from FMC in 1993, 1992 and 1991.
Loan due Amounts due
(In thousands) from FMC from (to) FMC
Balance December 31, 1990 $102,077 $ (17)
Increase in amounts loaned 107,000
Interest charges 7,565
Payments made by FMC for FMC Gold (5,738)
Charges from FMC for services
and materials (4,899)
Payments made 9,289
Payments received (82,077) (7,692)
Balance December 31, 1991 127,000 (1,492)
Increase in amounts loaned 95,500
Interest charges 5,962
Payments made by FMC for FMC Gold (6,282)
Charges from FMC for services
and materials (5,739)
Payments made 12,143
Payments received (67,674) (5,974)
Balance December 31, 1992 154,826 (1,382)
Increase in amounts loaned 94,500
Interest charges 8,297
Payments made by FMC for FMC Gold (11,543)
Charges from FMC for services
and materials (5,492)
Payments made 16,816
Payments received (82,000) (7,765)
Balance December 31, 1993 $167,326 $(1,069)
The company purchases liquid sodium cyanide from the Alkali
Chemicals Division of FMC. Such purchases amounted to $2.0
million in 1993, and $1.0 million in 1992 and 1991. Contracts are
in effect to purchase sodium cyanide through 1994. The purchases
from FMC were transacted on terms no less favorable to the
company than those which the company believes could have been
obtained from an unaffiliated third party. The Jerritt Canyon
gold mining joint venture, in which the company holds a 30
percent ownership interest, purchases soda ash from the Alkali
Chemicals Division of FMC, on terms negotiated by the operator of
the joint venture. Such purchases amounted to $0.2 million, $0.5
million and $0.3 million for 1993, 1992 and 1991, respectively.
PAGE 29
FMC, as controlling stockholder, will be able to control all
decisions with respect to the use of cash generated by the
company, including dividend policy. Any determination as to the
use of cash generated by the company may be affected by factors
related to FMC's cash requirements which may differ from those of
other stockholders of the company and may conflict with the use
which the company would otherwise make of its cash, such as for
new exploration or the funding of development activity. No such
conflict is presently anticipated.
The company does not generally engage in hedging transactions
with respect to its production of precious metals, but may
determine to do so in the future. Historically, FMC has engaged
in such transactions, and it may engage in such transactions in
the future for its own account as a means of offsetting the
decline in the company's income that could result if gold or
silver prices should decrease.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders,
FMC Gold Company:
We have audited the consolidated balance sheets of FMC Gold
Company and consolidated subsidiaries as of December 31, 1993 and
1992, and the related consolidated statements of income, cash
flows and changes in stockholders' equity for each of the years
in the three-year period ended December 31, 1993. These
consolidated financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of FMC Gold Company and consolidated subsidiaries at
December 31, 1993 and 1992, and the results of their operations
and their cash flows for each of the years in the three-year
period ended December 31, 1993 in conformity with generally
accepted accounting principles.
KPMG Peat Marwick
Salt Lake City, Utah
January 24, 1994
PAGE 30
MANAGEMENT REPORT ON FINANCIAL STATEMENTS
The consolidated financial statements and related information
were prepared by management, which is responsible for the
integrity and objectivity of that information. The statements
were prepared to conform with generally accepted accounting
principles and where appropriate, reflect estimates based on
management judgments.
The company's system of internal accounting controls provides
reasonable assurance as to the reliability of financial records
and protection of assets. Accounting control is maintained by
selecting and training qualified personnel, by establishing and
communicating sound accounting and business policies, and by FMC
Corporation's internal auditing program which constantly
evaluates the adequacy and effectiveness of such accounting
controls, policies and procedures.
The Audit Committee of the Board of Directors, composed of
outside directors of the company, inquires into the company's
financial and accounting organization, accounting controls and
the quality of financial reporting. The independent auditors,
KPMG Peat Marwick, and internal auditors have free access to the
Audit Committee to discuss their audits.
Steven E. Baginski
Vice President-Finance
Reno, Nevada
January 24, 1994
PAGE 31
FIVE-YEAR FINANCIAL SUMMARY
(In millions, except per share,
employee and stockholder data) 1993 1992 1991 1990 1989
SUMMARY OF EARNINGS
Sales $118.9 150.0 139.4 53.0 151.5
Cost of sales 96.8 120.0 117.9 88.8 71.7
Exploration costs 14.4 12.2 12.6 14.7 14.3
Selling, general and
administrative expenses 7.0 7.6 7.5 8.5 8.7
Write-downs and other charges 60.6 - - -
- - - - - -
Total costs and expenses 178.8 139.8 138.0 112.0 94.7
Earnings (loss) before interest
and taxes (59.9) 10.2 1.4 41.0 56.8
Interest income 8.3 6.0 7.8 8.0 3.9
Income (loss) before
income taxes (51.6) 16.2 9.2 49.0 60.7
Provision (benefit) for
income taxes (0.3) 1.8 2.2 9.6 11.8
Net income (loss) $ (51.3) 14.4 7.0 39.4 48.9
SHARE DATA
Average number of common
shares used in earnings per
share computations 73.5 73.5 73.5 70.5 65.5
Earnings (loss) per common share $ (0.70) 0.20 0.10 0.56 0.75
FINANCIAL POSITION AT DECEMBER 31
Property, plant and equipment,
at cost $ 246.1 282.5 265.7 242.7 177.2
Accumulated depreciation
and amortization $ 185.5 161.6 132.7 102.3 79.6
Total assets $ 238.6 291.9 275.2 267.8 169.5
Stockholders' equity $ 199.6 254.6 243.8 240.5 148.6
OTHER DATA
Capital expenditures $ 18.5 19.0 19.4 18.8 22.0
Provision for depreciation
and amortization $ 25.8 30.7 31.5 23.0 18.8
Total dividends $ 3.7 3.7 3.7 3.7 3.3
Employees at year-end 238 442 473 500 279
Stockholders of record at
year-end 940 960 990 825 867
PAGE 32
DIRECTORS AND OFFICERS
BOARD OF DIRECTORS
Larry D. Brady
Chairman of the Board and
Chief Executive Officer; also President
FMC Corporation
Robert N. Burt
Chairman of the Board and
Chief Executive Officer
FMC Corporation
Paul L. Davies, Jr. (1)
President
Lakeside Corporation
Nha D. Hoang
Vice President-International
Brian J. Kennedy
President and Chief Operating Officer
Edmund W. Littlefield (1)
Retired Chairman of
Utah International, Inc.
Arthur D. Lyons
Vice President-Finance
FMC Corporation
(1) Audit and Compensation Committees
OFFICERS
Larry D. Brady
Chairman of the Board and
Chief Executive Officer.
Elected Chairman of the Board and Chief Executive Officer in
November 1991; also serves FMC Corporation as President since
1993. Elected FMC Vice President in 1984; became Vice President-
Corporate Development in 1988 and Executive Vice President in
1989; served as General Manager-Agricultural Chemical Group from
1983 to 1988. Age 51
Brian J. Kennedy
President and Chief Operating Officer.
Elected President and Chief Operating Officer in May 1987; served
as Division Manager of FMC Corporation's Minerals Division since
1984 and as FMC's Director of Natural Resources Operations from
1980 to 1984. Age 50
Steven E. Baginski
Vice President-Finance,
Treasurer and Assistant Secretary.
Named to present position in July 1993. Previously was with Frito-
Lay since 1988 in several financial and management positions,
including Manager, Strategic Planning for PepsiCo Foods
International. Served with AMR Corporation in various financial
positions since 1984. Age 35
PAGE 33
Donald L. Beckwith
Vice President-Operations.
Named Vice President in July 1987; named to present position in
February 1992. Served as Manager of Planning and Development,
FMC's Natural Resources Operations, later the Minerals Division,
since 1979. Age 47
Robert L. Day
Secretary and General Counsel.
Named to present position in May 1987; also serves FMC
Corporation as Secretary since May 1987 and Assistant General
Counsel since July 1987; served in FMC's Law Department since
1972. Age 59
Nha D. Hoang
Vice President-International.
Elected to present position in September 1993. Served as Director-
International of FMC Corporation since April 1987; also served as
Director-International Trade since 1985. Previously held various
sales and international management positions with General
Electric Company since 1977. Age 51
Robert A. Horn
Vice President-Exploration.
Named to present position in January 1994. Previously with AMCL
international mining consultants since 1992. Was Vice President
for BP Canada from 1988. Managed various exploration programs for
BP Minerals International, British Nuclear Fuel global uranium
procurement program and for Companhia Vale do Rio Doce's non-
ferrous metal exploration program. Age 51
PAGE 34
FMC GOLD COMPANY
Annual Report on
Form 10-K for 1993
Exhibit 22. List of Significant
Subsidiaries of Registrant
Percent of
Organized under Voting
Laws of the Securities
Company State of
Owned
FMC Gold Company................. Delaware
Registrant
FMC Jerritt Canyon Corporation... Delaware100
FMC Minerals Corporation......... Delaware100
FMC Paradise Peak Corporation.... Nevada 100
Meridian Gold Company............ Montana 100
Minera FMC S.A. de C.V............ Mexico 100
Minera FMC Limitada................ Chile 100
PAGE 35
FMC GOLD COMPANY
Annual Report on
Form 10-K for 1993
Exhibit 24 Consent of Auditors
The Board of Directors
FMC Corporation:
We consent to incorporation by reference in Registration
Statement No. 33-35804 and Registration Statement No. 33-35805 on
Forms S-3 of FMC Gold Company and consolidated subsidiaries of
our report dated January 24, 1994, relating to the consolidated
balance sheets of FMC Gold Company and consolidated subsidiaries
as of December 31,1993 and 1992, and the related consolidated
statements of income, cash flows and changes in stockholder's
equity for each of the years in the three-year period ended
December 31, 1993, which report is incorporated by refinance in
the December 31,1993 annual report on Form 10-K of FMC Gold
Company and consolidated subsidiaries.
Chicago, Illinois
March 28, 1994
PAGE 36
FMC GOLD COMPANY
Annual Report on
Form 10-K for 1993
EXHIBIT 25 POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, FMC GOLD COMPANY, a Delaware corporation (hereinafter
referred to as the "Company"), is a corporation with securities
registered pursuant to Section 12(b) of the Securities and
Exchange Act of 1934, as Amended, (the "Act"), and is subject to
the reporting requirements of the Act including the obligation to
file an annual report on Form 10-K; and
WHEREAS, the undersigned holds and may hereafter from time to
time hold one or more positions in the Corporation whether as an
Officer, a Director, or both, such that the undersigned may be
required or permitted in such capacity or capacities, or on
behalf of the Corporation, to sign one or more of such documents;
NOW, THEREFORE, the undersigned hereby constitutes and appoints
B.J. Kennedy, S.E. Baginski or R.L. Day, or any of them, his
attorney for him and in his name, place and stead, and in his
office and capacity in the Company, to sign and file the
Company's Annual Report on Form 10-K for the year ended December
31, 1993, including all schedules, exhibits and amendments
thereto, hereby giving and granting to said attorneys full power
and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or
could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
this 10th day of February, 1994.
PAGE 37
LARRY D. BRADY* Chairman of the Board, Chief
Executive
Larry D. Brady Officer and Director
STEVEN E. BAGINSKI* Vice President-
Finance, Principal Steven E. Baginski Financial Officer
and Principal
Accounting Officer
ROBERT N. BURT* Director
Robert N. Burt
PAUL L. DAVIES, JR.* Director
Paul L. Davies, Jr.
NHA D. HOANG.* Director
Nha D. Hoang
BRIAN J. KENNEDY* Director
Brian J. Kennedy
EDMUND W. LITTLEFIELD* Director
Edmund W. Littlefield
ARTHUR D. LYONS* Director
Arthur D. Lyons
*By Robert L. Day_____________ March 28, 1994
Robert L. Day
Attorney-in-Fact
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