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: December 31, 1996
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 No.)
331 South Rio Grande, Suite 201, 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 December 31, 1996: 27,196,102 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 December 31, 1996,
and September 30, 1996, and the results of operations and cash flows for
each of the three months ended December 31, 1996, and 1995, 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
- ------ December September
31, 1996 30, 1996
-------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 94,053 $ 133,556
Accounts receivable 5,000 5,000
Advances to related
parties 4,378 28,842
Prepaid expenses 117,192 76,578
Marketable securities
(Note 3) 150,000 150,000
---------- ----------
Total current assets 370,623 393,976
---------- ----------
MINERAL PROPERTIES 9,121,404 8,849,485
---------- ----------
PROPERTY AND EQUIPMENT:
Leasehold improvements 8,845 8,845
Furniture and equipment 248,217 240,717
Vehicles 125,151 125,151
Field equipment 474,930 441,756
Leased automobiles & equipment 84,620 84,620
Less: Accumulated
depreciation and
amortization (425,940) (385,412)
---------- ----------
Total property and
equipment 515,823 515,677
---------- ----------
OTHER ASSETS
Deposits 4,752 4,752
Other assets 6,438 6,438
---------- ----------
Total other assets 11,190 11,190
---------- ----------
TOTAL ASSETS $10,019,040 $9,770,328
=========== ==========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these condensed consolidated statements.
-3-
<PAGE>
<TABLE>
CENTURION MINES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
As of As of
December September
31, 1996 30, 1996
-------- ---------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 294,162 $ 206,622
Accrued compensation payable 23,346 45,587
Payable to related party 19,793 6,074
Advances from shareholder 6,561 6,561
Leases payable 21,582 31,895
Short-term note payable 30,149 80,542
----------- ----------
Total current
liabilities 395,593 377,281
----------- ----------
LONG TERM DEBTS:
Leases payable 32,445 32,445
Note payable to related party 35,530 35,530
Note payable 38,461 38,461
----------- ----------
Total long term debt 106,436 106,436
----------- ----------
Total liabilites 502,029 483,717
----------- ----------
MINORITY INTERESTS IN
CONSOLIDATED SUBSIDIARIES 29,685 29,685
----------- ----------
SHAREHOLDERS EQUITY:
Common stock - $.01 par
value; 30,000,000 shares
authorized; 27,196,102
and 26,081,077 shares
issued and outstanding,
respectively 271,961 260,811
Additional paid-in capital 20,432,168 19,673,873
Accumulated deficit (11,193,553) (10,654,508)
Receivable related to sale
of common stock (23,250) (23,250)
----------- -----------
Total shareholders'
equity 9,487,326 9,256,926
----------- ----------
TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY $10,019,040 $9,770,328
=========== ==========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these condensed consolidated statements.
-4-
<PAGE>
<TABLE>
CENTURION MINES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended
December 31,
-------------------
1996 1995
---------- ----------
<S> <C> <C>
REVENUES:
Management and
consulting fees $ -- $ 7,500
---------- ----------
Total revenues -- 7,500
---------- ----------
OPERATING EXPENSES:
General and administrative 432,522 406,818
Cost of properties abandoned -- --
Mineral leases 76,531 75,672
Depreciation and amortization 40,528 29,484
---------- ----------
Total operating expenses 549,581 511,974
---------- ----------
OTHER INCOME (EXPENSE):
Other income 2,155 3,196
Interest expense (4,052) (675)
Gain on sale of assets 12,433 64,318
---------- ----------
Total other income 10,536 66,839
---------- ----------
LOSS FROM OPERATIONS (539,045) (437,635)
---------- ----------
LOSS FROM DILUTION OF EQUITY
INVESTMENT IN SUBSIDIARY -- --
---------- ----------
LOSS BEFORE MINORITY INTERESTS (539,045) (437,635)
MINORITY INTERESTS IN LOSS
(INCOME) OF CONSOLIDATED
SUBSIDIARIES -- 336
---------- ----------
NET LOSS $ (539,045) $ (437,299)
========== ==========
NET LOSS PER COMMON SHARE:
(Note 2) $ (.02) $ (.02)
========== ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 26,638,590 23,984,551
========== ==========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these condensed consolidated statements.
-5-
<PAGE>
<TABLE>
CENTURION MINES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash
<CAPTION>
Three Months Ended
December 31,
-------------------
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(539,045) $(437,635)
Adjustments to reconcile
net loss to net cash used in
operating activities:
Compensation and other
expenses paid through
issuance of common stock 246,445 257,974
Depreciation and
amortization 40,528 29,484
Minority interests -- (336)
Change in assets and
liabilities:
Accounts receivable -- --
Receivable from related party 24,464 14,474
Prepaid expenses (40,614) 26,130
Mineral properties (271,919) (82,870)
Deposits -- --
Accounts payable 87,540 (51,732)
Payable to related party 13,719 --
Accrued compensation payable (22,241) 1,279
Advances from shareholders -- 4,915
Leases payable (10,313) --
Notes payable (50,393) --
--------- ---------
Cash used in operating
activities (521,829) (238,317)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and
equipment (40,674) (8,488)
--------- ---------
Net cash used in investing
activities (40,674) (8,488)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock for cash 523,000 270,023
--------- ---------
Net cash provided by
financing activities 523,000 270,023
--------- ---------
NET INCREASE (DECREASE) IN CASH (39,503) 23,218
CASH, BEGINNING OF PERIOD 133,556 17,510
--------- ---------
CASH, END OF PERIOD $ 94,053 $ 40,728
========= =========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these condensed consolidated 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 December 31, 1996, the Company:
- issued 61,750 shares of common stock valued at $60,286 for services of
employees and contractors.
- issued 38,500 shares of common stock valued at $43,784 for promotional
services.
- issued 58,950 shares of common stock valued at $47,375 in lieu of cash
payments for outstanding debt. Centurion also issued 43,400 shares of
common stock for acquisition of mineral properties valued at $40,000.
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these condensed consolidated statements.
-7-
<PAGE>
CENTURION MINES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(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 $1,462,282
FMV is based on the closing or average price of Royal common stock of
$.9375 per share on January 2, 1997, the first trading day following the
quarter ended December 31, 1996.
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these condensed consolidated statements.
-8-
<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 December 31, 1996, there was a deficit working capital of ($24,970) compared
to a positive working capital at September 30, 1996, of $16,695.
At December 31, 1996, the Company owned 1,560,767 shares of Royal Silver Mines,
Inc. common stock, a related company, which was approximately 15 percent of the
total shares outstanding as of December 31, 1996. The current market value of
this stock is about $.93 per share (Note 3).
The Company's assets consist primarily of interests in mineral properties. The
total assets increased from $8,849,485 on September 30, 1996, to $9,121,404 as
of December 31, 1996. The increase in this asset is primarily due to the
exploration or development of mineral properties and the acquisition or
purchase of additional mineral rights.
-9-
<PAGE>
During the three months ended December 31, 1996, the Company's operations used
$521,829 of cash as compared to $238,317 during the three months ended December
31, 1995. This increase is primarily due to the additional development of
mineral properties. During the three months ended December 31, 1996, cash
flows from operations included the issuance of common stock valued at
approximately $246,000 for compensation and services received by various
entities.
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%; Mazama Gold Corporation, Washington, 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 or debt funding, or by selling
properties and retaining royalty interests. In addition, the Company holds
royalty interests on properties sold during fiscal 1992 that are currently
under exploration and development by larger mining companies.
-10-
<PAGE>
Results of Operation
- --------------------
The Company had a loss for the three months ended December 31, 1996, of
$539,045 or $(0.02) per share compared with a loss for the three months ended
December 31, 1995, of $437,299, which was also $(0.02) per share. These losses
are the result of a decrease in the liquidation of Royal Silver Mines stock,
and an increase of depreciation expense due to the acquisition of equipment.
General and administrative costs increased by $25,704 to $432,522 for the
quarter ended December 31, 1996, from that of the same quarter of fiscal 1995.
The increase is the result of additional management personnel and employees.
Management is unable to assess the impact that this increase in cost may have
on the Company's operations. Further, management is unable to assure that such
increases will not result in adverse consequences to the Company's financial
condition.
These changes have 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
has been able to invest additional funds in equipment for exploration and
analysis of exploration data. These equipment acquisitions will allow the
Company to continue its efforts to move toward use of Company personnel instead
of outside contractors. Increases in lease expense for leased property and
increases in depreciation for the additional equipment partly offset the
decreases in operating expenses discussed above.
-11-
<PAGE>
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.
None.
-12-
<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: January 31, 1997 /s/ Spenst Hansen
---------------- -------------------------------
Spenst Hansen, President
Chief Executive Officer
By Its Principal Financial and
Accounting Officer:
Date: January 31, 1997 /s/ Randy Sutherland
---------------- -------------------------------
Randy Sutherland, Treasurer/
Assistant Secretary
Principal Financial and
Accounting Officer
-13-
<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 DECEMBER 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO ITS FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 94,053
<SECURITIES> 0
<RECEIVABLES> 170,568
<ALLOWANCES> 0
<INVENTORY> 117,192
<CURRENT-ASSETS> 381,813
<PP&E> 10,063,167
<DEPRECIATION> (425,940)
<TOTAL-ASSETS> 10,019,040
<CURRENT-LIABILITIES> 395,593
<BONDS> 136,121
<COMMON> 271,961
0
0
<OTHER-SE> 9,215,365
<TOTAL-LIABILITY-AND-EQUITY> 10,019,040
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 549,581
<OTHER-EXPENSES> (14,588)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,052
<INCOME-PRETAX> (539,045)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (539,045)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
