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, 1997
Commission File Number: 0-17048
CENTURION MINES CORPORATION
(Exact name of registrant as specified in its charter)
UTAH 87-0429204
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
860 South 500 West Street, First Floor, Salt Lake City, Utah 84101
(Address of Principal Executive Offices) (Zip Code)
801-534-1120
Registrant's telephone number, including area code
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 [ ]
The number of shares outstanding at March 31, 1997: 28,144,665 shares
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF CENTURION MINES CORPORATION
(Hereinafter referred to as Registrant or Company)
The condensed, consolidated financial statements of the Registrant
included herein have been prepared by the Registrant from its own books and
records. In the opinion of management, the financial statements included
in this quarterly report present fairly in all material respects, the
financial position of Registrant and subsidiaries as of March 31, 1997, and
September 30, 1996, the results of operations for the three months and six
months ended March 31, 1997 and 1996, and the cash flows for the six months
ended March 31, 1997 and 1996, in conformance with generally accepted
accounting principles.
As discussed in Item 2, a substantial portion of Registrant's assets
consist of investments in mineral properties for which additional
exploration is required to determine if they contain ore reserves that are
economically recoverable. The realization of these investments is dependent
upon the success of future property sales, the existence of economically
recoverable reserves, the ability of the Company to obtain financing or make
other arrangements for development, and upon future profitable production.
Accordingly, no provision for any asset impairment that may result, in the
event the Company is not successful in developing or selling these properties,
has been made in the accompanying consolidated financial statements.
-2-
<PAGE>
<TABLE>
CENTURION MINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
ASSETS As of As of
- ------ March September
31, 1997 30, 1996
-------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 55,623 $ 133,556
Accounts receivable -- 5,000
Advances to related parties 7,528 28,842
Prepaid expenses 92,812 76,578
Marketable securities (Note 3) 150,000 150,000
--------- ---------
Total current assets 305,963 393,976
--------- ---------
MINERAL PROPERTIES 9,430,367 8,849,485
--------- ---------
PROPERTY AND EQUIPMENT:
Leasehold improvements 8,845 8,845
Furniture and equipment 270,120 240,717
Vehicles 125,151 125,151
Field equipment 486,228 441,756
Leased automobiles & equipment 84,620 84,620
Less: Accumulated depreciation and
amortization (467,805) (385,412)
--------- ---------
Total property and equipment 507,159 515,677
--------- ---------
OTHER ASSETS:
Deposits 4,752 4,752
Other assets 1,438 6,438
--------- ---------
Total other assets 6,190 11,190
--------- ---------
TOTAL ASSETS $10,249,679 $9,770,328
========== ==========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these condensed consolidted statements.
-3-
<PAGE>
<TABLE>
CENTURION MINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
As of As of
March September
31, 1997 30, 1996
-------- ---------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 299,811 $ 206,622
Accrued compensation payable 23,946 45,587
Payable to related party 24,266 6,074
Advances from shareholder 28,862 6,561
Leases payable 12,246 31,895
Short-term notes payable 32,543 80,542
---------- ----------
Total current
liabilities 421,674 377,281
---------- ----------
LONG TERM DEBTS:
Leases payable 32,445 32,445
Note payable - related party 35,530 35,530
Note payable 38,461 38,461
---------- ----------
Total long term debt 106,436 106,436
---------- ----------
TOTAL LIABILITIES 528,110 483,717
---------- ----------
MINORITY INTERESTS IN
CONSOLIDATED SUBSIDIARIES 29,685 29,685
---------- ----------
SHAREHOLDERS' EQUITY:
Common stock - $.01 par value;
30,000,000 shares authorized;
28,144,665 and 26,081,077
shares issued and outstanding,
respectively 281,447 260,811
Additional paid-in capital 20,957,499 19,673,873
Accumulated deficit (11,526,162) (10,654,508)
Receivable related to sale
of common stock (20,900) (23,250)
---------- ----------
Total shareholders'
equity 9,691,884 9,256,926
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $10,249,679 $ 9,770,328
=========== ===========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these condensed consolidted statements.
-4-
<PAGE>
<TABLE>
CENTURION MINES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Management and consulting
fees $ -- $ 7,500 $ -- $ 15,000
---------- ---------- ---------- ----------
Total revenues -- 7,500 -- 15,000
$---------- $---------- $---------- $----------
OPERATING EXPENSES:
General and administrative 412,564 388,246 845,086 795,064
Cost of properties
abandoned 5,859 -- 5,859 --
Mineral leases 65,296 72,247 141,827 147,919
Depreciation and
amortization 41,865 29,022 82,393 58,506
---------- ---------- ---------- ----------
Total operating
expenses 525,584 489,515 1,075,165 1,001,489
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Other income 7,268 8,142 9,423 11,338
Interest expense (4,173) (470) (8,225) (1,145)
Gain on sale of assets 189,880 14,722 202,313 79,040
---------- ---------- ---------- ----------
Total other income 192,975 22,394 203,511 89,233
---------- ---------- ---------- ----------
LOSS FROM OPERATIONS (332,609) (459,621) (871,654) (897,256)
---------- ---------- ---------- ----------
LOSS FROM DILUTION OF EQUITY
INVESTMENT IN SUBSIDIARY -- -- -- --
---------- ---------- ---------- ----------
LOSS BEFORE MINORITY INTERESTS (332,609) (459,621) (871,654) (897,256)
MINORITY INTERESTS IN LOSS (INCOME)
OF CONSOLIDATED SUBSIDIARIES -- 328 -- 664
---------- ---------- ---------- ----------
NET LOSS $ (332,609) $ (459,293) $ (871,654) $ (896,592)
========== ========== ========== ==========
NET LOSS PER COMMON SHARE:(Note 2) $ (.01) $ (.02) $ (.03) $ (.04)
========== ========== ========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 27,670,380 24,187,142 27,154,485 24,085,847
========== ========== ========== ==========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these condensed consolidted statements.
-5-
<PAGE>
<TABLE>
CENTURION MINES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash
<CAPTION>
Six Months Ended March 31,
-------------------------
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (871,654) $ (897,256)
Adjustments to reconcile net loss to
net cash used in operating activities:
Compensation and other expenses paid
through issuance of common stock 540,562 517,671
Depreciation and amortization 82,393 57,498
Minority interests -- (664)
Change in assets and liabilities:
Accounts receivable 5,000 (166)
Receivable from related party 21,314 178,290
Prepaid expenses (16,234) (22,578)
Mineral properties (580,882) (235,594)
Other assets 5,000 (5,600)
Accounts payable 93,189 16,988
Payable to related party 18,192 --
Accrued compensation payable (21,641) 3,369
Advances from shareholders 22,301 --
Leases payable (19,649) --
Notes payable (47,999) --
--------- ---------
Net cash used in operating activities (770,108) (388,042)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (73,875) (85,178)
Net cash used in investing activities (73,875) (85,178)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock for cash 763,700 510,023
Receivable related to sale of common
stock 2,350 --
--------- ---------
Net cash provided by financing
activities 766,050 510,023
--------- ---------
NET INCREASE (DECREASE) IN CASH (77,933) 36,803
CASH, BEGINNING OF PERIOD 133,556 17,510
CASH, END OF PERIOD $ 55,623 $ 54,313
========== ==========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these condensed consolidted statements.
-6-
<PAGE>
CENTURION MINES CORPORATION
Condensed Consolidated Statements of Cash Flows - Continued
Supplemental disclosure of noncash investing and financing activities:
During the three months ended March 31, 1997, the Company:
- issued 83,450 shares of common stock valued at $58,450 for services of
employees and contractors.
- issued 35,000 shares of common stock valued at $28,438 for Directors'
fees.
- issued 308,683 shares of common stock valued at $201,370 in lieu of
cash payments for outstanding debt.
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these condensed consolidted statements.
-7-
<PAGE>
CENTURION MINES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
(1) The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, in accordance with generally
accepted accounting principles for interim financial information and
pursuant to the rules, regulations and instructions of the Securities and
Exchange Commission pertaining to Form 10-Q and Article 10 of Regulation
S-X. These condensed consolidated financial statements reflect all
adjustments which, in the opinion of management, are necessary to present
fairly the results of operations for the interim period presented. All
adjustments are of a normal recurring nature. Certain information,
footnotes and disclosures normally included in complete financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the following disclosures
are adequate. It is suggested that these condensed consolidated financial
statements be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company's annual report
on Form 10-K for the year ended September 30, 1996.
(2) Net loss per common share is based on the weighted average number of common
shares outstanding during the period.
(3) The Company carries its marketable securities at the lower of cost or
market value (FMV):
Royal Silver Mines, Inc. COST FMV
---- ---
$150,000 $1,552,619
FMV is based on the closing or average price of Royal common stock of
$1.12 per share on April 1, 1997, the first trading day following the
quarter ended March 31, 1997.
-8-
These Notes to Condensed Consolidated Financial Statements are an integral
part of the financial statements.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Financial Condition, Liquidity and Capital Resources.
- -----------------------------------------------------
Since inception on June 21, 1984, the Company has been engaged in exploration,
acquisition, and development of mineral properties primarily through joint
ventures. The Company's principal capital resources have been acquired
through issuance of common stock, through joint venture operations, and through
sales of various properties. The Company has primarily relied upon joint
venture partners to finance the on-going costs of holding and developing
properties.
At March 31, 1997, the Company had a deficit working capital of ($115,711)
compared to working capital at September 30, 1996, of $16,695. This decline
in available working capital was primarily the result of a decrease in the
value of common stock that was issued for cash.
At March 31, 1997, the Company owned 1,380,267 shares of Royal Silver Mines,
Inc. common stock, a related company, which is approximately 10 percent of the
total shares of Royal common stock outstanding as of March 31, 1997. The
market value of Royal common stock on the first trading day after March 31,
1997, was $1.12 per share (Note 3).
The Company's assets consist primarily of interests in mineral properties. The
total assets increased from $8,849,485 at September 30, 1996, to $9,430,367
at March 31, 1997. The increase in total assets is primarily due to the
exploration and development of mineral properties along with the acquisition of
additional mineral rights.
These condensed consolidated financial statements include the following
companies, with the state of incorporation and percentage of ownership as
shown: Centurion Mines Corporation, Utah, 100%; Centurion Exploration,
Incorporated, Utah, 100%; Dotson Exploration Company, Nevada, 100%; Mammoth
Mining Company, Nevada, 81.8%; The Gold Chain Mining Company, Utah, 61.1%;
and Tintic Coalition Mines, Utah, 80%.
The Company does not have sufficient capital to fully explore and develop its
mineral properties, nor does the Company currently have continuing revenues.
The Company plans to continue financing its exploration activities through
joint ventures, production activities, equity funding, or by selling
properties and retaining royalty interests.
Results of Operations
- ---------------------
During the six months ended March 31, 1997, the Company's operations used
$770,108 of cash as compared to $388,042 during the six months ended March 31,
1996. This increase in cash flow is the result of a change in management's
objectives from that of actively acquiring additional mineral properties to
increasing the exploration and development of current properties. During the
three months ended March 31, 1997, cash flows from operations included the
issuance of common stock to various entities for compensation and services,
valued at $294,117.
The Company had a loss for the three months ended March 31, 1997, of $332,609
or $0.01 per share compared with a loss for the three months ended March 31,
1996, of $459,293 or $0.02 share. This improvement is generally the result of
partial liquidation of Royal Silver Mines stock owned by the company.
-9-
<PAGE>
General and administrative costs increased by $24,318 to $412,564 in the
quarter ended March 31, 1997 compared to the quarter ended March 31, 1996.
Management believes there is no known certainty nor uncertainty that such
reductions may result in adverse consequences to the Company's financial
condition.
These improvements allowed the Company to concentrate use of its funds in the
areas of land acquisition and exploration, and in the rehabilitation of tunnels
and water systems in certain previously-producing mines. Also, the Company
continued to invest additional funds in equipment for exploration and analysis
of exploration data. These equipment acquisitions will allow the Company to
increase its use of Company personnel, rather than outside contractors.
Increases in lease expense for leased property partly offset the decreases in
operating expenses discussed above.
PART II. OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS.
None.
ITEM 2.CHANGES IN SECURITIES.
None.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5.OTHER INFORMATION.
None.
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K.
Exhibit Sec. No. Document
---------------------------------------------------------------------------
4.03 4 Amendment No. 3 to 1991 Stock Option
and Stock Award Plan
27.01 27 Financial Data Schedule for Quarter Ending
March 31, 1997
No Reports on Form 8-K were filed during the quarter.
-10-
<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.
CENTURION MINES CORPORATION
By Its Chief Executive Officer:
Date: May 12, 1997 /s/ Spenst Hansen
-------------- -------------------------------
Spenst Hansen, President
Chief Executive Officer
By Its Principal Financial and
Accounting Officer:
Date: May 12, 1997 /s/ Randy W. Sutherland
-------------- -------------------------------
Randy W. Sutherland, Treasurer/
Assistant Secretary
Principal Financial and
Accounting Officer
-11-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN REGISTRANT'S FORM 10-Q FOR THE
QUARTER ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO ITS FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 55,623
<SECURITIES> 150,000
<RECEIVABLES> 13,718
<ALLOWANCES> 0
<INVENTORY> 92,812
<CURRENT-ASSETS> 312,153
<PP&E> 10,405,331
<DEPRECIATION> (467,805)
<TOTAL-ASSETS> 10,249,679
<CURRENT-LIABILITIES> 421,674
<BONDS> 136,121
<COMMON> 281,447
0
0
<OTHER-SE> 9,410,437
<TOTAL-LIABILITY-AND-EQUITY> 10,249,679
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 525,584
<OTHER-EXPENSES> (197,148)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,173
<INCOME-PRETAX> (332,609)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (332,609)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.02)
</TABLE>
EXHIBIT 4.03
AMENDMENT NO. 3
TO THE 1991 STOCK OPTION AND
STOCK AWARD PLAN OF
CENTURION MINES CORPORATION
WHEREAS, Centurion Mines Corporation (the "Company") adopted the 1991 Stock
Option and Stock Award Plan of Centurion Mines Corporation (the "Plan") on
April 19, 1991; and
WHEREAS, an amendment to the Plan was approved by the Board of Directors of
the Company on May 27, 1993, and approved by the shareholders of the Company
on May 27, 1993; and
WHEREAS, an amendment to the Plan was approved by the Board of Directors of
the Company on April 18, 1995, and approved by the shareholders of the Company
on April 19, 1995.
WHEREAS, an amendment to the Plan was approved by the Board of Directors of
the Company on December 19, 1996, and approved by the shareholders of the
Company on April 29, 1997.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 4 of the Plan shall be amended to increase the number of common
shares of the Company that may be subject to or issued under awards
granted pursuant to the terms of the Plan from 2,500,000 to 5,000,000.
2. Except as amended hereby, the Plan remains unmodified in full force and
effect.
