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NORD PACIFIC LIMITED
10-Q, 2000-09-12
METAL MINING

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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 June 30, 2000

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)

 

 

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         NO   X    

 

The number of shares of Common Stock outstanding as of August 15, 2000 was 12,960,803.

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NORD PACIFIC LIMITED

INDEX

 

 

 

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PART I.     FINANCIAL INFORMATION
                  ITEM 1.     Condensed Consolidated Financial Statements

NORD PACIFIC LIMITED
BALANCE SHEETS
ASSETS
(Unaudited)
(In Thousands of U.S. Dollars)

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

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NORD PACIFIC LIMITED
BALANCE SHEETS (Continued)
LIABILITIES AND
STOCKHOLDERS' EQUITY
(Unaudited)
(In Thousands of U.S. Dollars)

 

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

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NORD PACIFIC LIMITED
STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands of U.S. Dollars, except per share amounts)

 SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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NORD PACIFIC LIMITED
STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands of U.S. Dollars, except per share amounts)

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

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NORD PACIFIC LIMITED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands of U.S. Dollars)

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

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NORD PACIFIC LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUARTERS ENDED JUNE 30, 2000 AND 1999

 

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 second quarter of 2000 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, 1999.

Certain reclassifications have been made in the 1999 financial statements to conform to the classification used in 2000. These reclassifications had no effect on results of operations or stockholders' 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:

 

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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:

 

C.    LONG_TERM DEBT

Long-term debt consists of the following:

The Tritton financing agreement provides for ten installment payments of principal and interest as follows: $1,786,000 payable in four equal semi-annual installments beginning December 1, 2000 and $1,790,000 payable in six equal annual installments payable beginning twelve months after commencement of copper production.

 

D.     NORD RESOURCES CORPORATION

Nord Resources Corporation ("Resources") owns approximately 28.5% of the outstanding common stock of the Company. Under the term of a cost sharing agreement, the Company shares office space, administrative personnel and expenses with Resources on a 50/50 basis.

 

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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 Form 10-Q 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 annual report on Form 10-K and the Company's other Securities Exchange Act filings with the SEC.

The Company recorded a net loss of $221,000 and $702,000 for the three and six months ended June 30, 2000 compared to a net loss of $552,000 and $866,000 for the same periods in 1999, as improved copper revenues were offset by higher noncash production costs and by losses related to foreign currency forward exchange contracts. The Company's share of copper sold in the three and six months ended June 30, 2000 totaled 4,090,000 and 8,770,000 pounds, respectively compared to 3,670,000 and 7,670,000 pounds sold in the same period of 1999. Copper revenue, including the effect of copper hedging contracts, increased by $582,000 and $1,528,000 for the three and six months ended June 30, 2000 compared to the same periods in 1999. During the six months ended June 30, 2000, the Company received a net price of $0.82 per pound of copper sold compared to $0.66 received for the same period in 1999. The Company's copper hedging programs reduced copper sales by $20,000 for the six months ended June 30, 2000 compared to an increase of $597,000, for the same period in 1999. Including the effect of the hedging programs, the realized net average sales price was $0.82 per pound of copper sold for the six months ended June 30, 2000 compared to $0.73 per pound for the same period in 1999.

Copper cost of sales decreased to $0.76 per pound for the six months ended June 30, 2000 compared to $0.80 per pound for the same period in 1999. The decrease is primarily due to fixed costs being spread over higher copper production from the Girilambone North ore bodies resulting in lower per pound costs.

General and administrative expenses of $592,000 and $1,217,000 decreased by $50,000 and increased by $14,000 for the three and six months ended June 30, 2000 compared to 1999. The changes were principally due to changes in the costs of temporary contractors and professional services.

Interest income increased by $12,000 and $3,000 for the three and six months ended June 30, 2000 compared to the same periods in 1999 due to increased funds available for investment. Interest expense and amortization of debt issuance expenses decreased by $28,000 and increased by $16,000 for the three and six months ended June 30, 2000 compared to 1999 due to interest on trade payables and interest on a note payable to Resources.

 

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Fluctuations in gains and losses in the foreign currency forward exchange contracts and from foreign currency transactions are primarily a result of fluctuations in the exchange rate between the Australian dollar and the U.S. dollar. The Company recorded a loss of $115,000 and $631,000 on foreign currency forward exchange contracts for the three and six months ended June 30, 2000 compared to gains of $746,000 and $1,168,000 for the same periods in 1999 and gains on foreign currency transactions of $75,000 and $151,000 for the three and six month periods compared to losses of $88,000 and $282,000 for the same periods in 1999.

Liquidity and Capital Resources

Cash provided by operations totaled $838,000 for the six months ended June 30, 2000 compared to cash provided by operations of $2,667,000 for the same period in 1999. Cash provided by operating activities for the six months ended June 30, 2000 includes a $3,163,000 net use of cash for changes in non-cash working capital, while the corresponding period in 1999 included a net source of cash of $662,000 for changes in non-cash working capital. Cash used in investing activities for the six months ended June 30, 2000 included $5,363,000 for the purchase of the remaining 50% interest in the Tritton Copper project, offset by proceeds from the sale of Ramu of $5,257,000.

Cash used by financing activities of $3,200,000 for the six months ended June 30, 2000 includes a $2,400,000 repayment under a long-term bank financing agreement and a $750,000 repayment of advances from Resources. In the six months ended June 30, 2000, cash provided from financing activities of $4,101,000 included $3,576,000 borrowed under a long-term financing agreement to purchase the Tritton property, and a cash advance on future copper cathode sales of $506,000.

At June 30, 2000 the Company had a working capital deficit of $1,929,000 compared to a working capital deficit of $6,343,000 at December 31, 1999. Continuing operations should generate sufficient cash to meet the current working capital requirements during the next year.

In order to develop Tritton as a long-term project, the company will require additional long-term financing.  The debt being considered consists of a number of debt and credit support instruments, including cash advance facilities for up to A$35 million.  The financing is contingent on a number of factors, such as technical review by the banks external independent engineer, syndication with other banks and completion of formal documentation.  The Company's management anticipates the financing would allow the mine to be developed on a 100% debt basis.  The completion of this financing is anticipated to close before the fiscal year end, but there can be no assurance that the financing will be obtained.

PART II.     OTHER INFORMATION

 

     ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

A Form 8-K was filed on July 17, 2000 related to the purchase of the remaining 50% interest in the Tritton Copper Project.

EXHIBIT 27. FINANCIAL DATA SCHEDULE - filed herewith as part of this Report on Form 10-Q.

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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.

 

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