UNITED STATES
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, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-19182
Nord Pacific Limited
(Exact name of registrant as specified in its charter)
New Brunswick Not Applicable
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
40 Wellington Row, Suite 2100, Scotia Plaza
Saint John, New Brunswick E2L 4S3
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code (506) 633-3800
Indicated 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 twelve 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 of Common Stock outstanding as of May 15, 1999
was 12,925,203.
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NORD PACIFIC LIMITED
INDEX
Page
Number
PART I. FINANCIAL INFORMATION:
ITEM 1. Condensed Consolidated Financial Statements:
Balance Sheets - March 31, 1999
and December 31, 1998 (Unaudited) 3-4
Statements of Operations - Three
Months ended March 31, 1999
and 1998 (Unaudited) 5
Statements of Cash Flows -Three
Months ended March 31, 1999 and
1998 (Unaudited) 6
Notes to Condensed Consolidated Financial
Statements (Unaudited) 7-8
ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9-11
PART II. OTHER INFORMATION:
ITEM 1-5. Not Applicable
ITEM 6. Exhibits and Reports on Form 8-K 12
2
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<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements
NORD PACIFIC LIMITED
BALANCE SHEETS
ASSETS
(Unaudited)
(In Thousands of U.S. Dollars)
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,137 $ 1,416
Accounts receivable:
Trade 955 1,384
Other including joint venture partner 224 402
Inventories:
Copper 103 191
Supplies 161 166
Prepaid expenses 74 87
--------- ------------
TOTAL CURRENT ASSETS 2,654 3,646
DEFERRED COSTS ASSOCIATED WITH ORE UNDER
LEACH, net of accumulated amortization
of $17,378 in 1999 and $16,192 in 1998 9,997 9,413
PROPERTY, PLANT AND EQUIPMENT - at cost
less accumulated depreciation of $7,260 in 1999
and $6,904 in 1998 3,251 3,605
DEFERRED EXPLORATION AND DEVELOPMENT COSTS
Girilambone, net of accumulated amortization of $3,266
in 1999 and $2,917 in 1998 3,210 3,527
Exploration and development prospects 19,659 19,141
OTHER ASSETS 63 71
--------- ------------
$38,834 $39,403
========= ============
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
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<TABLE>
NORD PACIFIC LIMITED
BALANCE SHEETS (Continued)
LIABILITIES AND
SHAREHOLDERS' EQUITY
(Unaudited)
(In Thousands of U.S. Dollars)
<CAPTION>
March 31, December 31,
1999 1998
---------- -------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable:
Trade $ 1,904 $ 1,715
Affiliates 484 594
Accrued expenses 282 484
Current maturities of long-term debt 600 600
Payable on foreign currency contracts 1,484 1,556
---------- ---------
TOTAL CURRENT LIABILITIES 4,754 4,949
LONG-TERM LIABILITIES:
Long-term debt 2,800 2,400
Payable on foreign currency contracts 669 1,144
Deferred income tax liability 5,300 5,300
Retirement benefits 286 271
---------- ---------
TOTAL LONG-TERM LIABILITIES 9,055 9,115
SHAREHOLDERS' EQUITY:
Common shares 47,375 47,375
Accumulated deficit (23,148) (22,834)
Foreign currency translation adjustment 798 798
---------- ---------
TOTAL SHAREHOLDERS' EQUITY 25,025 25,339
---------- ---------
$ 38,834 $ 39,403
========== =========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
</TABLE>
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<TABLE>
NORD PACIFIC LIMITED
STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands of U.S. Dollars, except per share amounts)
<CAPTION>
Three Months Ended
March 31,
1999 1998
-------- --------
<S> <C> <C>
SALES $ 2,919 $ 3,252
COSTS AND EXPENSES:
Cost of sales 2,862 2,528
General and administrative 561 684
---------- --------
TOTAL COSTS AND EXPENSES 3,423 3,212
---------- --------
OPERATING EARNINGS (LOSS) (504) 40
OTHER INCOME (EXPENSE):
Interest and other income 29 82
Interest and debt issuance costs (67) (61)
Foreign currency forward exchange contract gains 643 155
Foreign currency transaction losses (415) (329)
---------- --------
TOTAL OTHER INCOME (EXPENSE) 190 (153)
---------- --------
NET LOSS $ (314) $ (113)
========== ==========
BASIC LOSS PER SHARE $ (.02) $ --*
========== ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 12,925 12,852
========== ==========
* less then $.01 per share
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5
</TABLE>
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<TABLE>
NORD PACIFIC LIMITED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands of U.S. Dollars)
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ (314) $ (113)
Depreciation and amortization 1,899 1,822
Gain on Foreign Currency Contacts (643) (155)
Changes in non-cash working capital 605 2,043
---------- ----------
Net cash provided by operating activities 1,547 3,597
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Deferred exploration and development costs (2,320) (2,093)
Capital expenditures (2) (1)
---------- ----------
Net cash used in investing activities (2,322) (2,094)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Addition to long-term debt 400 --
Payments of long-term debt -- (614)
Proceeds from settlement of contracts 96 --
Costs associated with issuance of common shares -- (4)
---------- ----------
Net cash provided by (used in) financing activities 496 (618)
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS -- (97)
---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (279) 788
CASH AND CASH EQUIVALENTS - beginning of period 1,416 3,351
---------- ----------
CASH AND CASH EQUIVALENTS - end of period $ 1,137 $ 4,139
========== ==========
CASH PAID FOR INTEREST $ -- $ 61
========== ==========
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
</TABLE>
<PAGE>
NORD PACIFIC LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUARTERS ENDED MARCH 31, 1999 AND 1998
A. FINANCIAL STATEMENTS OF NORD PACIFIC LIMITED (the "Company")
These interim consolidated financial statements are unaudited. In the
opinion of management, all adjustments, which consist of normal
recurring accruals, necessary to present fairly the financial position
and results of operations for the interim periods presented have been
made. The results shown for the first quarter of 1999 are not
necessarily indicative of the results that may be expected for the
entire year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1998.
Certain reclassifications have been made in the 1998 financial
statements to conform to the classification used in 1999. These
reclassifications had no effect on results of operations or
shareholders' equity as previously reported.
B. GIRILAMBONE
The Company is a 40% joint venturer in the Girilambone Copper Property
and a 50% joint venturer in the Girilambone North Copper Property
(collectively "Girilambone") in Australia. All costs incurred during
mine development have been capitalized and are being amortized using
the units of production method over the estimated reserves. Following
is summarized combined balance sheet information for Girilambone:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ----------
(In Thousands of U.S.
Dollars)
<S> <C> <C>
Current assets $ 3,957 $ 3,132
Deferred costs associated with ore under leach, net 20,291 19,290
Property, plant and equipment, net 6,573 7,356
Deferred exploration and development costs, net 18,879 19,685
--------- ---------
Total assets 49,700 49,463
Current liabilities (3,507) (4,071)
--------- ---------
Partners' equity $ 46,193 $ 45,392
========= =========
Company's share of equity $ 17,408 $ 16,916
Less: Eliminations (1,415) (1,454)
--------- ---------
Net assets recorded by Company $ 15,993 $ 15,462
========= =========
</TABLE>
7
<PAGE>
Debt incurred related to Girilambone is the separate responsibility of
each venturer and is not included in the joint ventures' financial
statements. Copper production is distributed to each venturer based
on its respective ownership interest. Sale of copper is the
responsibility of each venturer. Cost and expense information related
to the operations of the mine is as follows:
Three Months Ended
March 31,
-------------------------------
1999 1998
------------- ---------------
(In Thousands of U.S. Dollars)
Cost of copper sales $ 6,206 $ 6,110
General and administrative expense $ 103 $ 98
C. NORD RESOURCES CORPORATION
Nord Resources Corporation ("Resources") owns approximately 28.5% of
the outstanding common stock of the Company. In January 1998, under
the term of a cost sharing agreement, the Company began sharing office
space, administrative personnel and expenses with Resources on a 50/50
basis.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Safe Harbor Statement under the Private Securities Litigation Act of
1995: The statements contained in this release which are not
historical fact are "forward looking statements" that involve various
important risks, uncertainties and other factors which could cause the
Company's actual results to differ materially from those expressed in
such forward looking statements. These factors include, without
limitation the risk factors disclosed in the Company's securities
filings.
Due primarily to lower copper prices, the Company recorded a net loss
of $314,000 for the three months ended March 31, 1999 compared to a
net loss of $113,000 for the same period in 1998. The Company
recorded an operating loss of $504,000 for the three months ended
March 31, 1999 compared to operating earnings of $40,000 for the three
months ended March 31, 1998. The Company's share of copper sold in
the first quarter of 1999 totaled 4,013,000 pounds compared to
3,851,000 pounds sold in the same period in 1998. Due to the drop in
copper prices, copper revenue, including settlement of copper hedging
contracts, decreased $333,000. During the first quarter of 1999, the
Company received a net price of $.64 per pound of copper sold compared
to $.79 received in 1998. The copper hedging programs established by
the Company resulted in an increase in sales of $339,000 during the
first quarter of 1999 compared to $199,000 in 1998. Including the
impact of these hedging programs, the Company realized a net average
sales price per pound of $.73 in 1999 compared to $.84 per pound in
1998.
Cost of sales per pound of copper increased to $.71 per pound for the
first three months ended March 31, 1999 compared to $.66 per pound in
1998 due primarily to increased depreciation, depletion and
amortization ("DD&A") of deferred leach costs. Cost of sales as a
percentage of sales increased to 98% during the first quarter of 1999
compared to 78% in 1998 due primarily to lower sales revenues due to
the drop in the price of copper and to increased DD&A.
General and administrative costs decreased $123,000 for the three
months ended March 31, 1999 compared to the same period in 1998 due
primarily to reductions in public relations costs, professional fees,
office expenses and increases in Australian administrative overhead
reimbursement from its Australian joint venture partners.
Interest income decreased for the three months ended March 31, 1999
compared to 1998 due to less funds available for investment.
Fluctuations in gains and losses in the foreign currency exchange
contracts and in foreign currency transactions are primarily a result
of changes in the relative strength of the Australian dollar compared
to the U.S. dollar. The Company recorded a gain of $643,000 on
forward currency exchange contracts for the three months ended March
31, 1999 compared to $155,000 in 1998 and a loss on foreign currency
transactions of $415,000 in 1999 compared to $329,000 in 1998.
Liquidity and Capital Resources
Cash provided by operations totaled $1,547,000 for the three months
ended March 31, 1999, compared to $3,597,000 for the same period in
1998. Cash used in investing activities included capital expenditures
for property and equipment and exploration and development costs.
Cash expenditures of $2,322 for the three months ended March 31,
1999 relate primarily to costs incurred at Girilambone. Cash
expenditures of $2,093,000 for the three months ended March 31, 1998
relate to Girilambone and to the Company's Ramu Project.
9
<PAGE>
Cash provided by financing activities of $400,000 for the three months
ended March 31, 1999 consists of borrowings under long-term bank
financing agreements. Reductions in other long-term liabilities
primarily relates to reductions in amounts payable under foreign
currency contracts.
10
<PAGE>
Other
On May 3, 1999 the Company received notification from the National
Association of Securities Dealers that the Company's common shares had
been delisted from the National Association of Securities Dealers
Automated Quotation System. The shares were delisted effective as of
the close of business on May 3, 1999 for failure to maintain a closing
bid price of at least $1.00 in accordance with Marketplace Rule
4450(a)(5) under Maintenance Standard 1. The Company's shares
continue to be traded on the Toronto Stock Exchange and are eligible
to be traded on the OTC Bulletin Board.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No Reports on Form 8-K were filed during the three
months ended March 31, 1999.
EXHIBIT 27. FINANCIAL DATA SCHEDULE - filed
herewith as part of this Report on Form 10-Q.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NORD PACIFIC LIMITED
May 17, 1999 By: /s/ Ray W. Jenner
Ray W. Jenner
Vice President Finance
and Authorized Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Nord Pacific Limited for the three month period ended March 31, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,137
<SECURITIES> 0
<RECEIVABLES> 1,179
<ALLOWANCES> 0
<INVENTORY> 264
<CURRENT-ASSETS> 0
<PP&E> 10,511
<DEPRECIATION> 7,260
<TOTAL-ASSETS> 38,834
<CURRENT-LIABILITIES> 4,754
<BONDS> 0
0
0
<COMMON> 47,375
<OTHER-SE> (22,350)
<TOTAL-LIABILITY-AND-EQUITY> 38,834
<SALES> 2,919
<TOTAL-REVENUES> 2,919
<CGS> 2,862
<TOTAL-COSTS> 2,862
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67
<INCOME-PRETAX> (314)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (314)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
