FORM 10-Q
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 Quarterly Period Ended September 30, 1996
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 2-2274
ALTA GOLD CO.
-------------
(Exact Name of Registrant as specified in its charter)
Nevada 87-0259249
------ ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification Number)
601 WHITNEY RANCH DRIVE, SUITE 10
HENDERSON, NEVADA 89014
- --------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA
CODE: (702) 433-8525
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 of the
Registrant's Common Stock as of September 30, 1996
was 28,949,587.
-1-
<PAGE>
ALTA GOLD CO.
INDEX
Page
Number
PART I Financial Information
Item 1 Financial Statements
Condensed Balance Sheets as of
September 30, 1996 and December 31, 1995 . . 3
Condensed Statements of Operations
for the Three Months Ended
September 30, 1996 and 1995 . . . . . . . . 5
Nine Months Ended September 30, 1996
and 1995 . . . . . . . . . . . . . . . . . 6
Condensed Statements of Cash Flows
for the Nine Months Ended
September 30, 1996 and 1995 . . . . . . . . 7
Notes to Condensed Financial Statements . . 9
Item 2 Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . 13
PART II Other Information
Item 6 Exhibits and Reports on Form 8-K . . . . . . 17
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . 18
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<PAGE>
ALTA GOLD CO.
-------------
CONDENSED BALANCE SHEETS
------------------------
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
------
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash
equivalents $ 429,000 $ 369,000
Receivables 124,000 110,000
Inventories 4,181,000 4,251,000
Prepaid expenses and other 189,000 91,000
----------- -----------
Total current assets 4,923,000 4,821,000
PROPERTY, BUILDINGS AND
EQUIPMENT, net
Mining properties and claims 17,300,000 18,550,000
Buildings and equipment 16,818,000 15,063,000
----------- -----------
34,118,000 33,613,000
Less - accumulated depreciation (9,612,000) (8,049,000)
----------- -----------
Total property and
equipment, net 24,506,000 25,564,000
DEFERRED MINE DEVELOPMENT
COSTS, net 13,184,000 9,178,000
OTHER ASSETS 1,082,000 836,000
----------- -----------
Total Assets $43,695,000 $40,399,000
=========== ===========
</TABLE>
The accompanying notes to condensed financial statements are an
integral part of these statements.
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<PAGE>
ALTA GOLD CO.
-------------
CONDENSED BALANCE SHEETS (continued)
------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 751,000 $ 1,064,000
Accrued liabilities 854,000 1,149,000
Current portion of
long-term debt 4,001,000 2,920,000
----------- -----------
Total current liabilities 5,606,000 5,133,000
LONG-TERM DEBT, net of current
portion 2,084,000 3,297,000
DEFERRED INCOME TAXES 662,000 755,000
OTHER LONG-TERM LIABILITIES 761,000 826,000
Total liabilities 9,113,000 10,011,000
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value;
authorized 60,000,000
shares, issued 28,949,587
and 28,452,780 shares,
respectively 29,000 28,000
Additional capital 43,958,000 42,360,000
Accumulated deficit (9,405,000) (12,000,000)
----------- -----------
Total stockholders' equity 34,582,000 30,388,000
----------- -----------
Total liabilities and
stockholders' equity $43,695,000 $40,399,000
=========== ===========
</TABLE>
The accompanying notes to condensed financial statements are an
integral part of these statements.
-4-
<PAGE>
ALTA GOLD CO.
-------------
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1996 1995
----- -----
<S> <C> <C>
REVENUE $4,629,000 $6,607,000
---------- ----------
OPERATING COSTS AND EXPENSES:
Direct mining, production
and holding costs 2,529,000 3,730,000
General and administrative 344,000 277,000
Exploration 39,000 11,000
Depreciation, depletion and
amortization 780,000 1,010,000
---------- ----------
3,692,000 5,028,000
---------- ----------
Income from operations 937,000 1,579,000
OTHER INCOME (EXPENSE), net:
Interest income and other 8,000 12,000
Interest expense and other (58,000) (209,000)
---------- ----------
(50,000) (197,000)
---------- ----------
INCOME BEFORE PROVISION FOR
INCOME TAXES 887,000 1,382,000
PROVISION FOR INCOME TAXES -- --
----------- ----------
NET INCOME $ 887,000 $1,382,000
=========== ==========
NET INCOME PER SHARE $ 0.03 $ 0.05
=========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 30,513,469 28,452,780
========== ==========
</TABLE>
The accompanying notes to condensed financial statements are an
integral part of these statements.
-5-
<PAGE>
ALTA GOLD CO.
-------------
CONDENSED STATEMENTS OF OPERATIONS
----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
REVENUE $15,000,000 $12,899,000
----------- ----------
OPERATING COSTS AND EXPENSES:
Direct mining, production
and holding costs 8,810,000 7,603,000
General and administrative 1,094,000 975,000
Exploration 55,000 28,000
Depreciation, depletion
and amortization 2,326,000 1,957,000
----------- -----------
12,285,000 10,563,000
----------- -----------
Income from operations 2,715,000 2,336,000
----------- -----------
OTHER INCOME (EXPENSE), net:
Gain on sale of assets -- 2,425,000
Interest income and other 66,000 109,000
Interest expense and other (186,000) (482,000)
----------- -----------
(120,000) 2,052,000
----------- -----------
INCOME BEFORE PROVISION
FOR INCOME TAXES 2,595,000 4,388,000
PROVISION FOR INCOME TAXES -- --
---------- -----------
NET INCOME $ 2,595,000 $ 4,388,000
=========== ===========
NET INCOME PER SHARE $ 0.09 $ 0.16
=========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING 30,306,777 28,299,097
========== ==========
</TABLE>
The accompanying notes to condensed financial statements are an
integral part of these statements.
-6-
<PAGE>
ALTA GOLD CO.
------------
CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $2,595,000 $4,388,000
Adjustments to reconcile net
income to net cash provided
by (used in) operating
activities:
Depreciation, depletion
and amortization 2,326,000 1,957,000
Net gain on sale of
assets -- (2,425,000)
Stock compensation 80,000 47,000
Decrease (increase) in:
Short-term investments -- 262,000
Receivables (14,000) 325,000
Inventories 70,000 (1,423,000)
Prepaid expenses and
other (344,000) (127,000)
Increase (decrease) in:
Accounts payable (313,000) (1,033,000)
Accrued and other
liabilities (542,000) (377,000)
----------- ----------
Net cash provided by
operating activities 3,858,000 1,594,000
----------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to property,
buildings and equipment (2,271,000) (2,108,000)
Additions to deferred mine
development costs (4,223,000) (2,018,000)
Proceeds from sale of
property, buildings and
equipment -- 2,425,000
----------- -----------
Net cash used in
investing activities (6,494,000) (1,701,000)
----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance
of debt 4,207,000 5,317,000
Payment on debt (1,430,000) (5,526,000)
Proceeds from stock option
exercise 29,000 --
Other (110,000) 15,000
----------- ----------
Net cash provided by (used in)
financing activities 2,696,000 (194,000)
----------- ----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 60,000 (301,000)
CASH AND CASH EQUIVALENTS,
beginning of period 369,000 471,000
----------- ----------
CASH AND CASH EQUIVALENTS,
end of period $ 429,000 $ 170,000
============ ==========
</TABLE>
The accompanying notes to condensed financial statements are an
integral part of these statements.
-7-
<PAGE>
ALTA GOLD CO.
-------------
CONDENSED STATEMENTS OF CASH FLOWS (continued)
---------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period
for interest, net of amount
capitalized $184,000 $269,000
Cash paid during the period
for income taxes $28,000 $65,000
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
During the nine months ended September 30,
1996, the Company retired $3,000,000 in
convertible debentures - $1,600,000 through the
issuance of 400,000 shares of common stock and
400,000 warrants and $1,400,000 through the
exercise of offset provisions as provided for
in the Purchase Agreement underlying the
convertible debentures. Concurrently with the
exercise of the offset provisions, the cost and
book value of the assets acquired under the
Purchase Agreement was also reduced by $1,400,000.
During the nine months ended September 30,
1995, the Company retired $500,000 in outstanding
debt through the issuance of common stock valued
at $500,000.
During the nine months ended September 30,
1996 and 1995, the Company capitalized interest of
$91,000 and $83,000, respectively, on zero coupon
debentures to deferred mine development costs.
</TABLE>
The accompanying notes to condensed financial
statements are an integral part of these
statements.
-8-
<PAGE>
ALTA GOLD CO.
-------------
NOTES TO CONDENSED FINANCIAL STATEMENTS
---------------------------------------
(Unaudited)
Note 1. Interim Financial Statement Policies and
- -------------------------------------------------
Disclosures
- -----------
The interim, unaudited, condensed financial
statements of Alta Gold Co. (the "Company")
included herein have been prepared pursuant to the
rules and regulations of the Securities and
Exchange Commission. Certain information and
footnote disclosures normally required in
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 disclosures are adequate to make the
information presented not misleading.
These interim, unaudited, condensed financial
statements should be read in conjunction with the
Company's Annual Report on Form 10-K for the year
ended December 31, 1995, as filed with the
Securities and Exchange Commission. In the
opinion of Management, all adjustments (consisting
of normal recurring accruals) considered necessary
for a fair presentation have been included.
Operating results for the three and nine months
ended September 30, 1996 are not necessarily
indicative of the results that may be expected for
the year ending December 31, 1996.
Cash and Cash Equivalents
- -------------------------
For purposes of the balance sheets and
statements of cash flows, the Company considers
all investments with an original maturity of
three months or less to be cash equivalents.
Reclamation Costs
- -----------------
Minimum standards for mine reclamation have
been established by various governmental agencies
which affect certain operations of the Company.
The Company's general policy is to accrue
estimated reclamation costs during each property's
productive life based on estimated reserves using
the units of production method. As of September
30, 1996 and December 31, 1995, the Company had
reserved approximately $1,050,000 and $1,596,000,
respectively, for reclamation activities of which
approximately $150,000 is expected to be expended
during the last three months of 1996.
Income Taxes
- ------------
No provision for income taxes was recognized
in either 1996 or 1995 because of the utilization
of net operating loss carryforwards. As of
September 30, 1996, the Company estimates that it
has approximately $17,360,000 in remaining net
operating loss carryforwards. These net operating
loss carryforwards are scheduled to expire during
the period 2005 to 2009.
Net Income Per Share
- --------------------
Net income per share is computed based on the
weighted-average number of shares and common stock
equivalents, if dilutive, actually outstanding
during the period.
On a primary basis, net income per share is
based on common stock equivalents adjusted to
reflect additional shares that would be
outstanding using the treasury stock method
assuming exercise of dilutive stock warrants and
stock options having exercise prices less than the
average market price.
On a fully diluted basis, net income per
share is based on common stock equivalents
adjusted to reflect additional shares that would
be outstanding using the treasury stock method
assuming exercise of dilutive stock warrants and
stock options having exercise prices less than the
period end market price (when greater than the
average market price).
Note 2. Inventories
- --------------------
<TABLE>
<CAPTION>
Inventories consist of the following:
September 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Precious metals:
Refined products $ 203,000 $ 238,000
In process 3,835,000 3,765,000
Consumable supplies 143,000 248,000
---------- ----------
$4,181,000 $4,251,000
========== ==========
Inventories of in-process metals and
consumable supplies are valued at the lower of
cost (using the first-in, first-out method) or
market. Inventories of refined products are
valued at market.
</TABLE>
-10-
<PAGE>
Note 3 - Long-Term Debt
- -------------------------
<TABLE>
<CAPTION>
Long-term debt is summarized as follows:
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Amount due under a line of
credit; interest at LIBOR +
2%; due in installments
beginning December 1996;
secured by property and
equipment $3,000,000 $ -
Notes payable; interest at
16.1%; due in monthly
installments through June
1998; secured by equipment 493,000 673,000
Note payable; interest at
11.8%; due in monthly
installments through
April 1999; secured by
equipment 397,000 -
Note payable; interest at
8.5%; due in monthly
installments through June
1999; secured by equipment 235,000 -
Note payable; interest at
10%; due September 1996;
unsecured - 50,000
Note payable to a bank;
interest at 12%; due December
31, 1996; secured by property
and equipment 500,000 -
Amount due under a bank credit
facility; interest at prime
plus 2%; due September 1996;
secured by equipment - 1,125,000
6% Subordinated convertible
debenture; due June 1996 - 1,500,000
6% Subordinated convertible
debenture; due June 1998 - 1,500,000
Zero coupon $4,000,000
subordinated debenture;
discounted at an imputed
rate of 9%; due June 2008 1,460,000 1,369,000
---------- ----------
6,085,000 6,217,000
Less - current portion (4,001,000) (2,920,000)
---------- ----------
Total long-term debt $2,084,000 $3,297,000
========== ==========
</TABLE>
On May 31, 1996, the Company obtained a line
of credit with Gerald Metals, Inc. pursuant to
which the Company is entitled to borrow up to
$5,000,000 through December 30, 1996 at an
interest rate based on the overnight London
Interbank Offered Rate ("LIBOR") plus 2%. Any
balances outstanding as of December 30, 1996, are
required to be paid down in installments of
$100,000 each on December 31, 1996, January
31, 1997 and February 28, 1997 and continuing on
the last business day of each month thereafter,
nine installments each in an amount equal to
one-ninth of the balance, if any, outstanding as
of February 28, 1997. As of September 30, 1996,
the Company has borrowed $3,000,000 under
this $5,000,000 line of credit.
Effective June 28, 1996, $1,600,000 of the
$3,000,000 due under the two $1,500,000
subordinated convertible debentures due June 1996
and June 1998 were converted into 400,000 shares
of the Company's common stock and warrants to buy
400,000 shares of the Company's common stock. The
warrants are exercisable at a price of $4.00 per
share up through and including July 31, 2001. The
remaining $1,400,000 was credited against certain
Mining Properties and Claims which were subject to
a right of offset as provided for in the Purchase
Agreement in regard to which the subordinated
convertible debentures were originally issued.
-12-
<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- --------------------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ---------------------------------------------
The Private Securities Litigation Reform Act
of 1995 provides a "safe harbor" for forward-
looking statements. Certain information
included herein contains statements that are
forward-looking, such as statements relating to
plans for future production and development
activities as well as other capital spending,
financing sources and the effects of regulation.
Such forward-looking information involves
important risks and uncertainties that could
significantly affect anticipated results in the
future and, accordingly, such results may differ
from those expressed in any forward-looking
statements made herein. These risks and
uncertainties include, but are not limited
to, those relating to the market price of metals,
production rates, production costs, the
availability of financing, the ability to obtain
and maintain all of the permits necessary to put
and keep properties in production, development and
construction activities and dependence on existing
management. The Company cautions readers not to
place undue reliance on any such forward-looking
statements, and such statements speak only as of
the date made.
RESULTS OF OPERATIONS
- ---------------------
COMPARISON OF THREE-MONTH PERIODS ENDED SEPTEMBER
30, 1996 AND SEPTEMBER 30, 1995.
In the third quarter of 1996, the Company had
$4,629,000 in revenue from the sale of 12,000
ounces of gold at an average price of $386/oz, as
compared to $6,607,000 in revenue in the third
quarter of 1995 from the sale of 16,780 ounces of
gold at an average price of $394/oz. In the third
quarter of 1996, the Company produced 11,902
ounces of gold, 10,697 ounces from Kinsley at an
average cash cost of $199/oz and 1,205 ounces from
pad-rinsing at Easy Junior. In the third quarter
of 1995, the Company produced 15,201 ounces of
gold, 12,411 ounces from Kinsley at an average
cash cost of $168/oz and 2,790 ounces from Easy
Junior at an average cash cost of $285/oz. The
increase in cash production costs at Kinsley from
$168/oz to $199/oz between comparable periods is
principally due to a decrease in the grade of ore
mined and longer hauls. In the third quarter of
1996, the Company mined 598,000 tons of ore at
Kinsley with an average grade of .0298 oz/ton
gold, principally from the Ridge deposit. In
the third quarter of 1995, the Company mined
390,000 tons of ore at Kinsley with an average
grade of .0588 oz/ton of gold, principally
from the Main deposit, which was depleted
during the fourth quarter of 1995.
Gold production at Kinsley began in late
January 1995. Mining at Easy Junior was completed
in the third quarter of 1994; however, gold
production is expected to continue through
December 1996, as the leach pad is rinsed. The
decrease in revenue from $6,607,000 to $4,629,000
between comparable periods is due to the decrease
in the grade of ore mined at Kinsley and the
winding down of gold production at Easy Junior.
The decrease in direct mining, production and
holding costs from $3,730,000 to $2,529,000
between comparable periods is directly related to
the decrease in production.
General and administrative expenses increased
from $277,000 in the third quarter of 1995 to
$344,000 in the third quarter of 1996. The
increase is principally due to costs incurred in
the third quarter of 1996 associated with the
Company's efforts to raise additional equity and
debt capital.
As the result of the Company's focus on
developing Olinghouse, Copper Flat and Griffon,
exploration expense was de minimis in the third
quarters of both 1996 and 1995.
The decrease in depreciation, depletion and
amortization from $1,010,000 in the third quarter
of 1995 to $780,000 in the third quarter of 1996
is principally due to lower gold production in the
third quarter of 1996 and its affect on depletion,
which is calculated on a unit-of-production basis.
Interest income and other decreased from
$12,000 in the third quarter of 1995 to $8,000 in
the third quarter of 1996 primarily as the result
of lower average balances available for investment
in 1996. Interest expense and other decreased
from $209,000 in the third quarter of 1995 to
$58,000 in the third quarter of 1996 principally
due to financing fees incurred in the third
quarter of 1995.
No provision for income taxes was recognized
in either the third quarter of 1996 or the third
quarter of 1995 because of the utilization of net
operating loss carryforwards. As of September 30,
1996, the Company estimates that it has
approximately $17,360,000 in remaining net
operating loss carryforwards. These net operating
loss carryforwards are scheduled to expire during
the period 2005 to 2009.
COMPARISON OF NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995.
During the first nine months of 1996, the
Company had $15,000,000 in revenue from the sale
of 37,900 ounces of gold at an average price
of $396/oz, as compared to $12,899,000 in revenue
during the first nine months of 1996 from the sale
of 32,780 ounces of gold at an average price of
$393/oz. During the first nine months of 1996,
the Company produced 37,693 ounces of gold, 33,364
ounces from Kinsley at an average cash cost of
$223/oz and 4,329 ounces from pad-rinsing at
Easy Junior. During the first nine months of
1995, the Company produced 32,844 ounces of gold,
22,818 ounces from Kinsley at an average cash cost
of $186/oz and 10,026 ounces from Easy Junior at
an average cash cost of $277/oz. The increase in
cash production costs at Kinsley from $186/oz to
$223/oz between comparable periods is due to 1)
mobilization, de-mobilization and stripping costs
incurred in the first half of 1996 associated with
shifting production from the Main deposit to the
Upper and Access deposits and 2) a decrease in the
grade of ore mined and longer hauls. During the
first nine months of 1996, the Company mined
1,242,000 tons of ore at Kinsley with an average
grade of .0344 oz/ton gold, principally from
the Upper, Access and Ridge deposits. During
the first nine months of 1995, the Company
mined 994,000 tons of ore at Kinsley with
an average grade of .0506 oz/ton of gold,
principally from the Main deposit, which was
depleted during the fourth quarter of 1995.
Gold production at Kinsley began in late
January 1995. Mining at Easy Junior was completed
in the third quarter of 1994; however, gold
production is expected to continue through
December 1996, as the leach pad is rinsed. The
increase in revenue from $12,899,000 to
$15,000,000 between comparable periods is due to
Kinsley being in full production during the first
nine months of 1996, as partially offset by the
decrease in the grade of ore mined at Kinsley and
the winding down of gold production at Easy
Junior. The increase in direct mining, production
and holding costs from $7,603,000 to $8,810,000
between comparable periods is directly related to
the increase in production and to the lower
average grade of ore mined at Kinsley.
General and administrative expenses increased
from $975,000 during the first nine months of 1995
to $1,094,000 during the first nine months of
1996. The increase is principally due to 1) legal
and accounting fees incurred in 1996 associated
with various regulatory filings with the
Securities and Exchange Commission and 2) costs
incurred in 1996 associated with the Company's
efforts to raise additional equity and debt
capital.
As the result of the Company's focus on
developing Olinghouse, Copper Flat and Griffon,
exploration expense was de minimis during the
first nine months of both 1996 and 1995.
The increase in depreciation, depletion and
amortization from $1,957,000 during the first nine
months of 1995 to $2,326,000 during the first nine
months of 1996 is principally due to the
depreciation, depletion and amortization of
various costs associated with Kinsley, which was
in full production during the first nine months of
1996.
During the first nine months of 1995, the
Company sold its remaining royalty interest in the
Robinson copper property for a net gain of
$2,425,000; there were no similar transactions
during the first nine months of 1996. Interest
income and other decreased from $109,000 during
the first nine months of 1995 to $66,000 during
the first nine months of 1996 primarily as the
result of lower average balances available for
investment in 1996. Interest expense and other
decreased from $482,000 during the first nine
months of 1995 to $186,000 during the first nine
months of 1996 principally due to financing fees
incurred in 1995.
No provision for income taxes was recognized
in the first nine months of either 1996 or 1995
because of the utilization of net operating loss
carryforwards. As of September 30, 1996, the
Company estimates that it has approximately
$17,360,000 in remaining net operating loss
carryforwards. These net operating loss
carryforwards are scheduled to expire during the
period 2005 to 2009.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of September 30, 1996, the Company had
negative working capital of $683,000, as compared
to positive working capital of $1,020,000 as of
June 30, 1996. This $1,703,000 decrease in
working capital is due to funds expended on the
development of Olinghouse, Copper Flat and
Griffon, as partially offset by 1) internal funds
generated from gold production at Kinsley and 2)
the retirement of convertible debentures via the
issuance of common stock. The Company believes
that production from Kinsley and the remaining
$2,000,000 balance available under the $5,000,000
line of credit obtained in May 1996 will provide
adequate liquidity for the Company's operational
needs during the remainder of 1996. Outside
financing, whether from debt or equity or through
joint ventures or similar arrangements, will
be required to begin site development and
construction at Olinghouse and Copper flat. See
"Outlook" below.
INVESTING AND FINANCING ACTIVITIES
- ----------------------------------
During the first nine months of 1996, the
Company expended 1)$2,271,000 for plant and
equipment, including $1,060,000 for a mill
for Copper Flat, $1,029,000 for additional
facilities and equipment at Kinsley, and $182,000
for additional mining properties and claims at
Olinghouse and 2) $4,223,000 for the development
of Olinghouse, Copper Flat and Griffon. During
the same period, the Company borrowed $4,207,000
and retired $1,430,000 in debt.
In June 1996, $1,600,000 of the $3,000,000
due under two $1,500,000 subordinated convertible
debentures due June 1996 and June 1998 were
converted into 400,000 shares of the Company's
common stock and warrants to buy 400,000 shares of
the Company's common stock. The remaining
$1,400,000 was credited against certain Mining
Properties and Claims which were subject to a
right of offset as provided for in the Purchase
Agreement in regard to which the subordinated
convertible debentures were originally issued.
OUTLOOK
- -------
During the remainder of 1996, the Company has
budgeted cash expenditures of $2,100,000 for
drilling programs at and the permitting of
Olinghouse, Copper Flat and Griffon, $720,000 for
debt repayments and $150,000 for reclamation.
These expenditures are expected to be funded from
revenues generated from gold production at Kinsley
and the remaining $2,000,000 balance available
under the $5,000,000 line of credit obtained in
May 1996. Because of delays in permitting, no
additional expenditures for site development,
construction or equipment are presently
anticipated for the remainder of 1996 for
Olinghouse, Copper Flat or Griffon. The
Company is in the process of permitting
these mines and presently anticipates
the approval of all of the necessary permits for
Olinghouse, Copper Flat and Griffon by the second
quarter of 1997.
In addition to permitting, outside financing,
whether from debt or equity or through joint
ventures or similar arrangements, will be required
to begin site development and construction at
Olinghouse and Copper Flat. The Company is
currently in the process of investigating
potential sources of funding.
Although the Company expects to be able to
obtain all of the necessary permits and the
necessary financing, there is no assurance
that the Company will be able to find external
sources of capital or that all of the necessary
permits will be obtained.
Budgeted cash expenditures are estimates,
subject to certain assumptions regarding future
events which cannot be predicted with total
accuracy and which may be beyond the control of
the Company. Nevertheless, the Company expects to
meet its obligations.
As of September 30, 1996, the Company did not
have any forward gold contracts outstanding.
The Company's business is subject to various
risk factors, some of which are discussed in the
Company's report on Form 10-K for the year ended
December 31, 1995, "Items 1 and 2. Business and
Properties - Risk Factors."
-16-
<PAGE>
PART II OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None
(b) No reports were filed on Form 8-K during
the three-month period ended September 30,
1996.
-17-
<PAGE>
SIGNATURE
---------
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.
ALTA GOLD CO.
-------------
(Registrant)
November 8, 1996 BY: /s/ John A. Bielun
- ---------------- ------------------------
(Date) John A. Bielun
Chief Financial Officer
and Principal Accounting
Officer
-18-
<PAGE>
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