<PAGE> 1
Form 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[ X ]
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the Quarter 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: 0-16484
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FirstMiss Gold Inc.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 64-0748908
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
5190 Neil Road, Suite 310, Reno, Nevada 89502
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including Area Code: 702/827-0211
-----------------------------
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
--- ---
Class Outstanding at April 30, 1995
- - ---------------------------- -----------------------------
Common Stock, $.01 Par Value 18,180,500
<PAGE> 2
Part I. Financial Information
Item 1. Financial Statements
FirstMiss Gold Inc. and Subsidiary
Consolidated Balance Sheets
(Unaudited. In Thousands of Dollars)
<TABLE>
<CAPTION>
Mar. 31 June 30
1995 1994
--------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash $ 1,641 1,979
Trade accounts receivable 1,349 2,190
Inventories:
Ore and in process 4,980 7,488
Materials and supplies 6,286 5,266
-------- --------
Total inventories 11,266 12,754
-------- --------
Prepaid expenses and other current assets 899 181
Deferred income taxes, current 3,726 2,581
-------- --------
Total current assets 18,881 19,685
-------- --------
Property, plant and equipment, at cost 150,963 135,820
Less accumulated depreciation and depletion 76,062 69,022
-------- --------
Net property, plant and equipment 74,901 66,798
-------- --------
Deferred income taxes 2,394 2,264
-------- --------
$ 96,176 88,747
======== =======
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 4,876 5,165
Payable to First Mississippi 770 910
Income taxes payable 1,199 74
Other accrued expenses 576 555
-------- --------
Total current liabilities 7,421 6,704
-------- --------
Notes payable to First Mississippi 36,100 29,339
Other long-term liabilities 3,076 2,985
Stockholders' equity:
Common stock 181 181
Contributed and paid-in capital 34,007 33,862
Retained earnings 15,391 15,676
-------- --------
Total stockholders' equity 49,579 49,719
-------- --------
$ 96,176 88,747
======== ========
</TABLE>
The accompanying notes are an integral part of these financials statements.
<PAGE> 3
FirstMiss Gold Inc. and Subsidiary
Consolidated Statement of Operations
(Unaudited. In Thousands of Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31 March 31
--------------------- ----------------------
1995 1994 1995 1994
--------------------- ----------------------
<S> <C> <C> <C> <C>
Net sales $ 18,456 24,658 58,228 69,989
Cost of Sales 15,594 20,638 52,835 59,830
-------- ------- ------- ---------
Gross profit 2,862 4,020 5,393 10,159
Selling, general and administrative expenses 494 403 1,676 1,331
Exploration expenses 797 634 3,095 2,491
-------- ------- ------- ---------
Earnings from operations 1,571 2,983 622 6,337
Interest and other income (loss) (1) 3 86 93
Interest expense 384 479 1,143 1,466
-------- ------- ------- ---------
Earnings (loss) before income taxes 1,186 2,507 (435) 4,964
Income tax expense (benefit) 415 384 (150) 1,200
-------- ------- ------- ---------
Net earnings (loss) before cumulative effect
of change in accounting principle 771 2,123 (285) 3,764
Cumulative effect of change in accounting
principal - - - 1,350
-------- ------- ------- ---------
Net earnings (loss) $ 771 2,123 (285) 5,114
======== ======= ======= =========
Earnings (loss) per common share:
Before cumulative effect of accounting change $ 0.04 0.12 (0.02) 0.21
Cumulative effect of accounting change 0.00 0.00 0.00 0.07
-------- ------- ------- ---------
Total earnings (loss) per common share $ 0.04 0.12 (0.02) 0.28
======== ======= ======= =========
Average shares and equivalents outstanding 18,190 18,156 18,156 18,141
======== ======= ======= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
FirstMiss Gold Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited. In Thousands of Dollars)
<TABLE>
<CAPTION>
Nine months ended
Mar. 31
--------------------------
1995 1994
--------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (285) 5,114
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation, depletion and amortization 11,663 13,401
Deferred compensation - 2
Loss on sale of property, plant and equipment 32 13
Net change in assets and liabilities:
Trade accounts receivable 841 (1,182)
Inventories 1,487 (324)
Deferred income taxes (1,275) (3,208)
Prepaid expenses and other current assets (719) (420)
Accounts payable (288) (3,717)
Payable to First Mississippi 2,140 1,442
Other accrued expenses 22 (226)
Income taxes payable 1,125 3,058
Deferred use taxes - (6)
Other long-term liabilities 90 408
--------- --------
Net cash provided by operating activities 14,833 14,355
--------- --------
Cash flows from investing activities:
Capital expenditures (19,680) (6,621)
Deferred stripping costs (319) (4,473)
Proceeds from sale of property, plant and equipment 203 15
--------- --------
Net cash used by investing activities (19,796) (11,079)
--------- --------
Cash flows from financing activities:
Purchase of gold for repayment of gold loan - (7,127)
Proceeds from issuance of common stock 144 -
Proceeds from notes payable to First Mississippi 5,950 1,000
Repayment of notes payable to First Mississippi (1,469) -
--------- --------
Net cash provided by (used in) financing activities 4,625 (6,127)
--------- --------
Net decrease in cash and cash equivalents (338) (2,851)
Cash and cash equivalents at beginning of period 1,979 3,690
--------- --------
Cash and cash equivalents at end of period $ 1,641 839
========= ========
Supplemental disclosures:
For the nine months ended March 31, 1995 and 1994, $2,280 and $1,310, respectively, in interest expense
included in payables to First Mississippi was added to long-term notes payable as an addition to
the notes.
Cash paid during the period for:
Interest, net of amounts capitalized $ 51 231
========= ========
Income tax $ - -
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
FirstMiss Gold Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - GENERAL
The financial statements included herein are unaudited and have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting and Securities and Exchange Commission regulations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In the
opinion of management, the financial statements reflect all adjustments (of a
normal and recurring nature) which are necessary to present fairly the
financial position, results of operations and cash flows for the interim
periods. These financial statements should be read in conjunction with the
Annual Report of the Company on Form 10-K for the year ended June 30, 1994.
NOTE 2 - FORWARD SALES AGREEMENTS
At March 31, 1995, the Company had hedge commitments under the spot
deferred sales contracts for the delivery of gold as follows:
<TABLE>
<CAPTION>
Average Price
Delivery Date Per Ounce Ounces
------------- ----------- ------
<S> <C> <C>
4/1/95-6/30/95 $393 60,400
7/1/95-6/30/96 $395 131,000
</TABLE>
Based on the market price of gold on March 31, 1995, the unrealized loss
on these contracts is $921.
<PAGE> 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Three months and nine months ended March 31, 1995, compared with the three
months and nine months ended March 31, 1994.
Results for the third quarter ended March 31, 1995, were earnings of $0.8
million, or $0.04 per share, compared to earnings of $2.1 million, or $0.12 per
share, for the same period last year. Results for the nine months ended March
31, 1995, were a loss of $0.3 million, or $0.02 per share compared to earnings
of $5.1 million, or $0.28 per share, for the same period last year when a
required change in income tax accounting added $1.4 million, or $0.07 per
share. Lower mill feed grades and lower heap leach tonnage were responsible for
the decreased income in both the quarter and nine months.
The following table highlights sales and production information:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
03/31/95 03/31/94 03/31/95 03/31/94
-----------------------------------------------
<S> <C> <C> <C> <C>
Ounces sold 47,465 62,518 150,771 179,781
Average Realized Price/oz $389 $394 $386 $389
Average Market Price/oz. $380 $385 $383 $378
Ounces Produced:
Mill 43,172 56,238 136,579 158,229
Heap Leach 4,293 6,329 14,192 21,652
Cash Cost/oz.:
Mill $283 $287 $305 $289
Heap Leach $349 $172 $278 $177
Combined $289 $276 $302 $276
Total Cost/oz.:
Mill $326 $346 $357 $352
Heap Leach $357 $186 $290 $188
Combined $329 $330 $350 $333
</TABLE>
Sales for the quarter and year to date were off 25% and 17%,
respectively, from a year earlier, the result of lower production from both
the mill and heap leach. Increased dependence on lower grade stockpile ores
during the current transition from open pit mining to underground mining led to
an average grade of 0.174 ounces per ton and 0.166 ounces per ton for the year
to date and quarter, respectively. Mill feed averaged 0.204 ounces per ton and
0.240 ounces per ton for the prior year to date and third quarter,
respectively, when high grade North Pit ore was milled. Heap leach tons
declined 35% and 17% for the quarter and year to date, respectively, as
currently identified oxide reserves near depletion.
Cost of sales for the quarter and year-to-date were down 24% and 12%,
respectively, versus last year, despite higher mill throughput, primarily due
to lower costs of stockpiled ore.
<PAGE> 7
Total cost per ounce for the quarter was the same versus prior year but was up
5% for the nine months due to lower output from the mill and heap leach. Mill
throughput for the quarter averaged 3,407 tons per day, up from 2,889 tons per
day last year while mill throughput for the nine months averaged 3,296 tons per
day compared to the prior year's 3,191 tons per day.
Exploration expenditures totaled $2.1 million for the quarter and $5.5
million year to date, an increase of 47 % and 40%, respectively, over the same
periods last year. The majority of the exploration spending was related to the
Turquoise Ridge project, the Hansen Creek area south of the Main Pit and to the
oxide project in Section 13.
Interest expense for the quarter and the nine months was lower than last
year reflecting the capitalization of $437 and $919 in interest, respectively,
on the Main Underground development and payoff of the gold loan on June 30,
1994. Long term borrowing from First Mississippi increased to $36.1 million at
03/31/95 from $25.9 million a year ago primarily to cover development funding
of the Main Underground mine.
LIQUIDITY AND CAPITAL RESOURCES
Operating cash flow for the nine months was $14.8 million, up slightly
from a year ago. Investing activities for the nine months were up 79%,
reflecting capital expenditures of $15.8 million for underground development.
Cash from operations was insufficient to cover capital expenditures during the
nine months and a net $4.5 million in cash was borrowed from First Mississippi
Corporation. On February 1, 1995, a new revolving promissory note was executed
with First Mississippi which extended the maturity date of borrowings to August
1, 1997.
Additional outside funding may be needed to complete the Getchell Main
Underground mine and to continue to develop Turquoise Ridge. First Mississippi
has been the primary source of outside funding in recent years but is not
obligated to make future advances. Prior to June 30, 1994, the Company's
ability to access debt financing was restricted due to liens and covenants in
its original gold loan agreement. With the gold loan paid, the Company may
access traditional sources of debt financing. Financing may also be obtained by
selling equity.
First Mississippi has now received a favorable response from the IRS
that would permit the tax-free distribution of First Mississippi's shares of
FirstMiss Gold to First Mississippi shareholders. First Mississippi says it
expects to proceed with the spin-off assuming favorable results for the
Turquoise Ridge pre-feasibility study, continued mine and mill operations as
expected, a viable financial outlook and approval of the First Mississippi and
FirstMiss Gold boards of directors. First Mississippi shareholders would
receive approximately 0.7 shares of FirstMiss Gold for each share of First
Mississippi stock owned.
<PAGE> 8
OUTLOOK
Underground production is currently averaging approximately 500 tons per
day grading in excess of 0.340 ounces per ton, with production of 1,000 tons
per day expected to be reached in the fourth quarter. Costs associated with the
start-up of the Main Underground may adversely impact fourth quarter earnings.
Mill throughput is planned to continue at or above the 3,000 ton-per-day
design capacity using a blend of underground, open pit and stockpiled lower
grade ores with final open Main Pit ore milled by the end of the first quarter
of fiscal 1996. There is sufficient lower grade stockpiled material to feed the
mill for approximately three years at current rates, as efforts continue to
develop new ore sources. If current oxide exploration programs are
unsuccessful, mining of oxide ores will cease by the end of fiscal 1995.
Drilling to date at Turquoise Ridge has identified mineralization over a
strike and dip of approximately 2,000 feet by 1,000 feet, respectively, and the
deposit remains open down dip and along strike in both directions. Twelve core
drills are now working on a portion of the mineralization 700 feet by 1,000
feet, to complete a 35 hole in-fill program designed to provide data to support
a mine pre-feasibility study scheduled for completion in July of this year. The
study is being conducted by an engineering team consisting of internal staff
complemented by independent consultants. An oxide drilling program initiated
earlier in the year has identified a new oxide zone in Section 13 directly
south of the Section 13 oxide ore body. Deeper drilling indicates there is also
sulfide gold mineralization below the oxide. Drilling continues to encounter
sulfide mineralization in and adjacent to the Getchell fault zone directly
south of the Main Pit at Hansen Creek. Mineralization resembles that now being
mined in the Main Underground. Additional drilling is planned for both of
these projects.
As of March 31, 1995, 191,400 ounces of gold have been sold for delivery
over the next one and one-half years using spot deferred contracts at prices
ranging between $387 and $419 per ounce.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
Registrant filed a current report on Form 8-K dated February 8,
1995, including under "Other Event" information about the election
of Robert L. Zerger to it's board of directors.
<PAGE> 9
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.
FIRSTMISS GOLD INC.
5/11/95 /s/ G. W. Thompson
- - ------------------------ ------------------------------------------
Date G. W. Thompson
President and Chief Executive Officer
5/11/95 /s/ Donald S. Robson
- - ------------------------ ------------------------------------------
Date Donald S. Robson
Vice President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 1,641
<SECURITIES> 0
<RECEIVABLES> 1,349
<ALLOWANCES> 0
<INVENTORY> 11,266
<CURRENT-ASSETS> 18,881
<PP&E> 150,963
<DEPRECIATION> 76,062
<TOTAL-ASSETS> 96,176
<CURRENT-LIABILITIES> 7,421
<BONDS> 39,176
<COMMON> 181
0
0
<OTHER-SE> 49,398
<TOTAL-LIABILITY-AND-EQUITY> 96,176
<SALES> 58,228
<TOTAL-REVENUES> 58,228
<CGS> 52,835
<TOTAL-COSTS> 52,835
<OTHER-EXPENSES> 4,685
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,143
<INCOME-PRETAX> (435)
<INCOME-TAX> (150)
<INCOME-CONTINUING> (285)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (285)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
