<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________to ___________
Commission file number 1-9620
AMAX GOLD INC.
(Exact name of registrant as specified in its charter)
DELAWARE 06-1199974
- --------------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employers Identification No.)
incorporation or organization)
9100 EAST MINERAL CIRCLE, ENGLEWOOD,COLORADO 80155
- --------------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,including area code (303) 643-5500
--------------------
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 ___
---
Common Stock Outstanding, $0.01 par value, as of May 5, 1995 - 81,295,607 shares
Total Pages - 13
Exhibit Index Located on Page 11
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMAX GOLD INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
- --------------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Revenues $ 22,700 $ 23,800
- --------------------------------------------------------------------------------
Costs and operating expenses:
Cost of sales 19,700 20,600
Depreciation and depletion 5,400 5,900
General and administrative 1,700 1,700
- --------------------------------------------------------------------------------
Total costs and operating expenses 26,800 28,200
- --------------------------------------------------------------------------------
Gross operating loss (4,100) (4,400)
Exploration expense (700) (300)
- --------------------------------------------------------------------------------
Loss from operations (4,800) (4,700)
Interest expense (1,900) (2,400)
Interest income and other 700 400
- --------------------------------------------------------------------------------
Loss before income taxes and cumulative
effect of accounting change (6,000) (6,700)
Income tax benefit - 1,500
- --------------------------------------------------------------------------------
Loss before cumulative effect of accounting change (6,000) (5,200)
Cumulative effect of accounting change, net
of income tax provision of $2,000 - 7,500
- --------------------------------------------------------------------------------
Net earnings (loss) (6,000) 2,300
Preferred stock dividends (1,700) -
- --------------------------------------------------------------------------------
Earnings (loss) attributable to common shares $ (7,700) $ 2,300
================================================================================
Per common share:
Loss before cumulative effect of accounting change $ (.09) $ (.07)
Cumulative effect of accounting change - .09
- --------------------------------------------------------------------------------
Net earnings (loss) $ (.09) $ .02
================================================================================
Weighted average common shares outstanding 81,295 78,189
================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
AMAX GOLD INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands except par value of stock)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
- --------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and equivalents $ 49,900 $ 36,700
Inventories 29,400 28,600
Other 10,900 7,400
- --------------------------------------------------------------------------------------------
Current assets 90,200 72,700
Property, plant and equipment, net 328,100 313,300
Other 28,200 17,200
- --------------------------------------------------------------------------------------------
Total assets $ 446,500 $ 403,200
============================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, trade $ 7,300 $ 4,000
Accounts payable, affiliates 200 600
Accrued and other current liabilities 18,300 15,100
Reclamation reserve, current portion 2,000 2,000
Current maturities of gold and currency financings 22,300 23,900
- --------------------------------------------------------------------------------------------
Current liabilities 50,100 45,600
Long-term portion of gold and currency financings 129,000 83,200
Reclamation reserve, noncurrent portion 11,600 11,100
Deferred income taxes 10,000 10,000
Other 7,800 7,800
- --------------------------------------------------------------------------------------------
Total liabilities 208,500 157,700
Commitments and contingencies - -
Shareholders' equity:
Preferred stock, par value $1.00 per share, authorized
10,000,000 shares, of which 2,000,000 shares have been
designated as Series A Convertible Preferred Stock, no
shares issued and outstanding and 1,840,000 shares have
been designated as Series B Convertible Preferred Stock,
issued and outstanding 1,840,00 shares 1,800 1,800
Common stock, par value $.01 per share, authorized
200,000,000 shares, issued and outstanding 81,295,607
shares in 1995 and 81,267,708 shares in 1994 800 800
Paid-in capital 258,600 258,400
Accumulated deficit (23,200) (15,500)
Common stock in treasury, at cost (1,991 shares) - -
- --------------------------------------------------------------------------------------------
Total shareholders' equity 238,000 245,500
- --------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 446,500 $ 403,200
============================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
AMAX GOLD INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
- --------------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings (loss) $ (6,000) $ 2,300
Adjustments to reconcile net earnings (loss) to
cash provided by operating activities:
Depreciation and depletion 5,400 5,900
Increase in reclamation reserves 500 600
Cumulative effect of accounting change - (7,500)
Decrease in deferred taxes - (1,500)
Other - (300)
Decrease in working capital items 1,800 3,000
- --------------------------------------------------------------------------------
Net cash provided by operating activities 1,700 2,500
- --------------------------------------------------------------------------------
Investing Activities
Capital expenditures (19,800) (4,100)
Loan to joint venture partner (10,000) -
Proceeds from repayment of loans 1,200 -
Other (100) (700)
- --------------------------------------------------------------------------------
Net cash used in investing activities (28,700) (4,800)
- --------------------------------------------------------------------------------
Financing Activities
Proceeds from financings 47,500 50,100
Repayments of financings (3,300) (48,700)
Deferred financing costs (2,300) (1,600)
Cash dividends paid (1,700) -
Other - (100)
- --------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 40,200 (300)
- --------------------------------------------------------------------------------
Net increase (decrease) in cash and equivalents 13,200 (2,600)
Cash and equivalents at January 1 36,700 7,500
- --------------------------------------------------------------------------------
Cash and equivalents at March 31 $ 49,900 $ 4,900
================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
AMAX GOLD INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. FINANCIAL STATEMENT ADJUSTMENTS AND FOOTNOTE DISCLOSURES
The accompanying financial statements are unaudited; however, in the opinion of
management, all adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation have been made. These financial statements
should be read in conjunction with the financial statements and related notes
included in the annual report on Form 10-K for Amax Gold Inc. (the "Company")
for the year ended December 31, 1994 on file with the Securities and Exchange
Commission.
As discussed in Notes 1 and 5 to the Company's 1994 financial statements, the
Company changed its method of accounting for the costs of ore loaded on heap
leach pads, to record such costs as work-in-process inventory. Previously the
Company had expensed these costs as incurred. Accordingly, all of the 1994
periods were restated to reflect the adoption of this policy as of January 1,
1994 and, for the first quarter of 1994, the Company recognized a $7.5 million
benefit (net of an income tax provision of $2.0 million) relating to the
cumulative effect of the accounting change for periods prior to 1994.
2. RESTRICTED CASH AND EQUIVALENTS
The proceeds received from the gold loan described in Note 4 and an equity
contribution made by the Company to Compania Minera Maricunga, the joint venture
company developing the Refugio project, are restricted for development of the
Refugio project. At March 31, 1995, the Company's cash and equivalents included
$44.7 million restricted for use at this project.
3. INVENTORIES
Inventories consist of the following (in millions):
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Precious metals refined and in-process $ 22.8 $ 21.8
Materials and supplies 6.6 6.8
- --------------------------------------------------------------------------------
$ 29.4 $ 28.6
================================================================================
</TABLE>
4. GOLD AND CURRENCY FINANCINGS
The following table summarizes the Company's outstanding debt at March 31, 1995
(in millions):
<TABLE>
<CAPTION>
Current Noncurrent Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Gold loans $ - $ 42.5 $ 42.5
Gold leases - 23.3 23.3
Currency borrowings 22.3 58.2 80.5
Borrowings from Cyprus Amax - 5.0 5.0
- --------------------------------------------------------------------------------
$ 22.3 $ 129.0 $ 151.3
================================================================================
</TABLE>
In February 1995, Compania Minera Maricunga, the joint venture company
developing the Refugio project in Chile, borrowed $85 million denominated in
gold under a project financing
5
<PAGE>
arrangement with a group of banks. The Company's 50 percent share is 111,842
ounces at $380 per ounce. The Company has entered into various hedging
transactions to generate additional revenues associated with these borrowed
ounces. Additional revenues, $4 per ounce at March 31, 1995, will be recognized
as earnings as loan repayments are made.
In February 1995, the Company entered into an agreement with Cyprus Amax subject
to approval by the stockholders of the Company, under which Cyprus Amax will
provide the Company with an $80 million line of credit available until December
31, 2001, with certain equity features. During March 1995, the Company arranged
to borrow up to $40 million of this $80 million line of credit during the period
prior to receipt of stockholder approval, primarily to fund capital expenditures
at Fort Knox. Under this temporary arrangement, the equity features of the
credit line are suspended and the loan is secured by a 20 percent interest in
the Company's Fort Knox project. If stockholder approval is not received, the
Company will have until October 15, 1995 to repay the loan. As of March 31,
1995, the Company has borrowed $5 million under this temporary arrangement.
During March 1995, the Company repaid the outstanding balance of 4,000 ounces of
gold under a gold bullion loan agreement. Collateral for this financing
consisted of Nevada Gold's Sleeper mine assets and capital stock.
5. HEDGE CONTRACTS
As of March 31, 1995, the Company's outstanding hedge contracts are as follows:
<TABLE>
<CAPTION>
Average
Gold Price
Ounces Per Ounce Period
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Forward sales contracts/(1)/ 156,700 $ 450 April 1995 - July 1995
Option contracts:
Purchased put options 346,000 $ 401 April 1995 - December 2000
Sold put options 84,200 $ 374 April 1995 - November 1995
Purchased call options 40,000 $ 420 April 1995 - December 1995
Sold call options 258,750 $ 431 April 1995 - December 1995
</TABLE>
/(1)/ Represents the net forward sales position which was made primarily on a
spot deferred forward basis which allows the Company to defer the
delivery of gold ounces to a later date at a renegotiated gold price.
The Company also has outstanding compound put options for 370,000 ounces at $433
per ounce and compound call options for 25,000 ounces at $384 per ounce. If
exercised, these options expire through December 2000.
The market value of the Company's forward contracts, put and call options and
compound options at March 31, 1995 was approximately $14.5 million. Future
market valuations for these contracts are dependent on gold market prices,
option volatility and interest rates, which can vary significantly. These
contracts will be utilized in the future to hedge against declines in gold
market prices for the Company's future gold production while maintaining
benefits in the event of higher gold market prices.
6
<PAGE>
6. COMMITMENTS AND CONTINGENCIES
Reclamation, site restoration and closure costs are accrued on a units-of-
production basis using estimates based upon current federal, state and Chilean
laws and regulations governing the protection of the environment. These laws
and regulations are continually changing and generally becoming more
restrictive. Any changes in these laws and regulations could impact future
estimated reclamation costs.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the Company's ounces of gold production and
production costs and ounces of gold sold and average realized prices for the
three months ended March 31, 1995 and 1994.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
- --------------------------------------------------------------------------------
1995 1994/(3)/
================================================================================
<S> <C> <C>
GUANACO MINE:
Ounces of gold produced 20,104 15,592
Average cost per ounce produced:
Cash production cost/(1)/ $ 318 $ 345
Depreciation and depletion 147 145
- --------------------------------------------------------------------------------
Total production cost $ 465 $ 490
- --------------------------------------------------------------------------------
HAYDEN HILL MINE:
Ounces of gold produced 17,842 11,807
Average cost per ounce produced:
Cash production cost/(1)/ $ 319 $ 487
Depreciation and depletion 87 105
- --------------------------------------------------------------------------------
Total production cost $ 406 $ 592
- --------------------------------------------------------------------------------
SLEEPER MINE:
Ounces of gold produced 17,296 25,930
Average cost per ounce produced:
Cash production cost/(1)/ $ 407 $ 304
Depreciation and depletion 50 92
- -------------------------------------------------------------------------------
Total production cost $ 457 $ 396
- -------------------------------------------------------------------------------
WIND MOUNTAIN MINE:
Ounces of gold produced 1,252 3,274
Average cost per ounce produced:
Cash production cost/(1)/ $ 294 $ 189
Depreciation and depletion - -
- -------------------------------------------------------------------------------
Total production cost $ 294 $ 189
- -------------------------------------------------------------------------------
TOTAL:
Ounces of gold produced 56,494 56,603
Average cost per ounce produced:/(2)/
Cash production cost/(1)/ $ 345 $ 347
Depreciation and depletion 96 104
- -------------------------------------------------------------------------------
Total production cost $ 441 $ 451
===============================================================================
Ounces of gold sold 55,992 59,408
Average price per ounce sold $ 406 $ 401
===============================================================================
</TABLE>
/(1)/ Cash production costs include all operating costs at the mine sites,
including overhead, and, where applicable, Nevada net proceed tax,
royalties and credit for silver by-products.
/(2)/ Average costs weighted by ounces of gold produced at each mine
/(3)/ Restated for a fourth quarter 1994 change in the method of accounting for
heap leach inventory, retroactive to January 1, 1994.
8
<PAGE>
RESULTS OF OPERATIONS
The Company recognized a net loss of $6.0 million before dividends of $1.7
million on preferred stock for the first quarter of 1995 compared to net income
of $2.3 million during the first quarter of 1994. The 1994 results include
after tax income of $7.5 million relating to the cumulative effect of a change
in accounting for leach pad inventory. The 1994 results also include an income
tax benefit of $1.5 million. Results in 1995 do not include any tax benefit
because the Company is not assured of utilizing tax loss carryforwards in future
periods.
Revenues decreased to $22.7 million for the first quarter of 1995 compared to
$23.8 million for the first quarter of 1994. The decrease in 1995 is the result
of lower sales volumes somewhat offset by higher realized gold prices. The
lower sales volumes occurred even though gold production was approximately the
same during 1995. Total production and sales volumes for the remainder of 1995
are expected to increase slightly over 1994 levels as the Hayden Hill and
Guanaco heap leach operations are scheduled to process ore at design capacity,
more than offsetting declines at Sleeper which is nearing the end of its mine
life and Wind Mountain where residual leaching is expected to end during the
second quarter of 1995.
The Company realized an average selling price of $406 per ounce of gold during
the first quarter of 1995 compared to $401 per ounce of gold during the first
quarter of 1994. The average realized price for both periods included hedging
benefits from closing forward sales contracts and gold options at prices above
market. The average COMEX gold price for the first quarter was $379 and $384
for 1995 and 1994, respectively.
Cost of sales declined slightly to $19.7 million during the first quarter of
1995 compared to $20.6 million during the first quarter of 1994, primarily
attributable to the lower sales volume discussed above. On a per ounce basis,
cash production costs were $345 during the first quarter of 1995 compared to
$347 for the first quarter of 1994. Cash production costs per ounce were lower
at Guanaco and Hayden Hill due to higher gold production which is primarily
attributable to the processing of higher grade ore during the first quarter of
1995 compared to the first quarter of 1994, as well as higher gold recovery
rates at Hayden Hill. Higher production levels at Guanaco and Hayden Hill are
expected to be maintained throughout the remainder of 1995. First quarter 1995
decreases in costs at Guanaco and Hayden Hill were offset by higher per ounce
costs at Sleeper resulting from lower production levels due to the processing of
significantly lower grade mill ore and lower mill recovery rates as well as a
reduction in the availability of leach ore as the property approaches the end of
its mine life.
Depreciation and depletion decreased by $0.5 million during the first quarter of
1995 compared to the first quarter of 1994. This decrease is primarily the
result of lower depletion rates at the Sleeper property as well as the Hayden
Hill property in addition to lower production at Sleeper. The rate at the
Sleeper property is lower during 1995 since the number of ounces expected to be
produced over the remaining life of the property has increased over estimates
used in 1994. The Hayden Hill rate declined during 1995 because estimates of
capital expenditures required to produce the remaining ounces have decreased
from amounts estimated in 1994. These reductions have been somewhat offset by
increased production from the Guanaco property which has a higher depreciation
rate as well as higher production from the Hayden Hill property. On a unit
basis, weighted average depreciation and depletion decreased to $96 during the
first quarter of 1995 from $104 for the first quarter of 1994.
Exploration expense was $0.7 million during the first quarter of 1995 compared
to $0.3 million during the first quarter of 1994. The primary reason for the
increase is
9
<PAGE>
increased exploration activity at the Cerro Quema property in Panama, an
advanced stage exploration project which the Company has the option to purchase
from Cyprus Amax upon completion of a feasibility study.
Interest expense for the 1995 quarter was $0.5 million lower than the
corresponding quarter in 1994. This decrease was primarily the result of $0.3
million of interest capitalized on the Fort Knox and Refugio projects which are
presently under construction. In addition, the weighted average interest rate
was slightly lower during the first quarter of 1995 compared to the first
quarter in 1994, which is primarily the result of a lower interest rate
associated with the gold loan entered into during the first quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital was $40.1 million at March 31, 1995 compared to
$27.1 million at December 31, 1994. During the first quarter of 1995, the
Company generated $1.7 million of cash from operations while using $28.7 million
for investing activities. Capital expenditures at development properties
included $2.6 million at Fort Knox and $16.1 million at Refugio. Cash spent for
property, plant and equipment at operating properties included $0.8 million at
Guanaco, $0.1 million at Hayden Hill and $0.2 million at Sleeper. Pursuant to
terms of the acquisition of the Company's interest in the Refugio project, the
Company loaned $10 million to its joint venture partner to be held in escrow to
support the partner's loan guarantee.
Net financing activities generated cash of $40.2 million during the first
quarter of 1995. During the first quarter, the joint venture company developing
the Refugio project borrowed $85 million drawn in gold under a project financing
arrangement with a group of banks. The Company is severally liable until
completion of the project for its 50 percent share. In addition, the Company
borrowed $5 million from Cyprus Amax under an arrangement whereby the Company
can borrow up to $40 million under a line of credit. See Note 3 in Item 1 for
further discussion. As of May 5, 1995, the Company has borrowed $15 million
under this arrangement.
Capital expenditures for 1995 are expected to be approximately $187 million
including $127 million at Fort Knox, $54 million for the Company's share at
Refugio and $6 million at operating properties. As discussed above, funding for
Refugio has been finalized while various financing alternatives for Fort Knox
are under consideration.
Cash flows from operations for 1995 are expected to be sufficient to fund
operating and administrative expenses, exploration expenditures and interest
payments on outstanding debt. In order to meet all scheduled debt payments and
to fund capital development requirements, the Company will be required to obtain
external debt or equity financing and to borrow money from Cyprus Amax. Cyprus
Amax has made available to the Company lines of credit for $100 million and for
$80 million. A substantial portion of the $100 million credit line is
designated as support for existing indebtedness while the $80 million credit
line is subject to approval by the stockholders of the Company.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit Number Exhibit
-------------- -------
(27) Financial Data Schedule
(B) REPORTS ON FORM 8-K - NONE
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMAX GOLD INC.
By /s/ David L. Mueller
---------------------------------------
David L. Mueller
Vice President and Controller
(principal accounting officer)
Dated: May 9, 1995
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 49,900
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 29,400
<CURRENT-ASSETS> 90,200
<PP&E> 579,400
<DEPRECIATION> (251,300)
<TOTAL-ASSETS> 446,500
<CURRENT-LIABILITIES> 50,100
<BONDS> 0
<COMMON> 800
0
1,800
<OTHER-SE> 235,400
<TOTAL-LIABILITY-AND-EQUITY> 446,500
<SALES> 22,700
<TOTAL-REVENUES> 22,700
<CGS> 19,700
<TOTAL-COSTS> 26,800
<OTHER-EXPENSES> 700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,200 <F1>
<INCOME-PRETAX> (6,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,000)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> 0
<FN>
<F1>Net of interest income of $700
</FN>
</TABLE>
