<PAGE>
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: March 31, 1999
-------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 2-2274
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ALTA GOLD CO.
- ----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 87-0259249
- ------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 Whitney Ranch Drive, Suite 10, Henderson, Nevada 89014
- ---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(702) 433-8525
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(Registrant's telephone number, including area code)
Not Applicable
- ----------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
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 No X
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Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d)
of the Securities Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court. Yes No
Not Applicable X ------- --------
-------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
The number of shares outstanding of the registrant's common stock as
of May 13, 1999 was 33,478,000
<PAGE>
ALTA GOLD CO.
TABLE OF CONTENTS
PAGE
NUMBER
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PART I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheets as of
March 31, 1999 and December 31, 1998 . . . . . . . . 3
Condensed Statements of Operations for the
Three Months Ended March 31, 1999 and 1998 . . . . . 5
Condensed Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 1998 . . . . . 6
Notes to Condensed Financial Statements . . . . . . 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . 10
Item 3. Quantitative and Qualitative Disclosures About
Market Risks . . . . . . . . . . . . . . . . . . . . 13
PART II. Other Information . . . . . . . . . . . . . . . . . 15
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . 15
Item 2. Changes in Securities . . . . . . . . . . . . . . . 15
Item 3. Defaults Upon Senior Securities . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 16
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . 18
2
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<TABLE>
<CAPTION>
ALTA GOLD CO.
CONDENSED BALANCE SHEETS
ASSETS
March 31, 1999 December 31,
(Unaudited) 1998
-------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 163,000 $ 953,000
Inventories 9,475,000 7,020,000
Prepaid expenses and other 398,000 951,000
-------------- -------------
Total current assets 10,036,000 8,924,000
PROPERTY AND EQUIPMENT, net
Mining properties and claims 17,185,000 17,185,000
Buildings and equipment 29,502,000 29,491,000
-------------- -------------
46,687,000 46,676,000
Less - accumulated depreciation (9,723,000) (9,033,000)
-------------- -------------
Total property and equipment, net 36,964,000 37,643,000
DEFERRED MINE DEVELOPMENT COSTS, net 24,177,000 24,185,000
DEFERRED FINANCING COSTS 2,498,000 2,790,000
OTHER ASSETS 633,000 950,000
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Total Assets $ 74,308,000 $ 74,492,000
============== =============
</TABLE>
The accompanying notes to condensed financial statements are an
integral part of these statements.
3
<PAGE>
<TABLE>
<CAPTION>
ALTA GOLD CO.
CONDENSED BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, 1999 December 31,
(Unaudited) 1998
-------------- -------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 4,464,000 $ 4,403,000
Accrued liabilities 1,409,000 1,273,000
Current portion of long-term debt 7,188,000 4,821,000
-------------- -------------
Total current liabilities 13,061,000 10,497,000
LONG-TERM DEBT, net of current portion 21,527,000 24,381,000
DEFERRED INCOME TAXES 662,000 662,000
OTHER LONG-TERM LIABILITIES 1,071,000 995,000
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Total liabilities 36,321,000 36,535,000
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STOCKHOLDERS' EQUITY:
Common stock, $.001 par value; authorized
60,000,000 shares, issued 33,477,990 shares 34,000 34,000
Additional capital 53,184,000 53,184,000
Accumulated deficit (15,231,000) (15,261,000)
-------------- -------------
Total stockholders' equity 37,987,000 37,957,000
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Total liabilities and stockholders' equity $ 74,308,000 $ 74,492,000
============== =============
</TABLE>
The accompanying notes to condensed financial statements are an
integral part of these statements.
4
<PAGE>
<TABLE>
<CAPTION>
ALTA GOLD CO.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
-------------------------------
1999 1998
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<S> <C> <C>
REVENUE $ 6,672,000 $ 3,624,000
-------------- -------------
OPERATING COSTS AND EXPENSES:
Direct mining, production, reclamation
and maintenance costs 5,414,000 2,944,000
General and administrative 348,000 307,000
Exploration 106,000 49,000
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5,868,000 3,300,000
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INCOME FROM OPERATIONS 804,000 324,000
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OTHER INCOME (EXPENSE):
Interest and other income 33,000 42,000
Interest expense and other (807,000) -
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(774,000) 42,000
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INCOME BEFORE PROVISION FOR INCOME
TAXES 30,000 366,000
PROVISION FOR INCOME TAXES - -
-------------- -------------
NET INCOME $ 30,000 $ 366,000
============== =============
NET INCOME PER SHARE:
Basic and Diluted $ 0.00 $ 0.01
============== =============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic and Diluted 35,169,252 35,069,096
============== =============
</TABLE>
The accompanying notes to condensed financial statements are an
integral part of these statements.
5
<PAGE>
<TABLE>
<CAPTION>
ALTA GOLD CO.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
--------------------------------
1999 1998
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 30,000 $ 366,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation, depletion and amortization 1,923,000 769,000
Gain on sale of assets (6,000) -
Decrease (increase) in -
Inventories (2,455,000) (271,000)
Prepaid expenses and other 552,000 225,000
Increase (decrease) in -
Accounts payable 61,000 (171,000)
Accrued and other liabilities 136,000 (160,000)
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Net cash provided by operating activities 241,000 758,000
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, buildings and equipment (438,000) (938,000)
Additions to deferred mine development costs (208,000) (1,144,000)
Proceeds from sale of property and equipment 102,000 -
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Net cash used in investing activities (544,000) (2,082,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on debt (487,000) (1,627,000)
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Net cash used in financing activities (487,000) (1,627,000)
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NET DECREASE IN CASH AND
CASH EQUIVALENTS (790,000) (2,951,000)
CASH AND CASH EQUIVALENTS, beginning of period 953,000 3,330,000
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CASH AND CASH EQUIVALENTS, end of period $ 163,000 $ 379,000
============= =============
</TABLE>
The accompanying notes to condensed financial statements are an
integral part of these statements.
6
<PAGE>
<TABLE>
<CAPTION>
ALTA GOLD CO.
CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
Three Months Ended March 31,
--------------------------------
1999 1998
-------------- -------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest,
net of amount capitalized $ 491,000 $ -
Cash paid during the period for income taxes $ - $ -
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Debt retired with common stock $ - $ 1,985,000
</TABLE>
The accompanying notes to condensed financial statements are an
integral part of these statements.
7
<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.
On April 14, 1999, the Company filed a voluntary petition for
relief under Chapter 11 of the United States Bankruptcy Code
("Bankruptcy Code") in order to facilitate the reorganization of the
Company's business and the restructuring of its long-term debt and
other liabilities. The petition was filed in the United States
Bankruptcy Court for the District of Nevada ("Bankruptcy Court"). On
the filing date, the Bankruptcy Court assumed jurisdiction over the
assets of the Company. The Company is acting as debtor-in-possession
on behalf of its bankruptcy estate, and is authorized as such to
operate its business subject to Bankruptcy Court supervision. No
assurance can be given that the Company will remain a debtor-in-
possession and that a trustee will not be appointed to operate the
Company's business. The Company is currently preparing a plan of
reorganization to be submitted to the Bankruptcy Court. No assurance
can be give that the plan of reorganization will be confirmed by the
Bankruptcy Court. In the event a plan of reorganization cannot be
confirmed, the Company may be forced to liquidate its assets. The
interim, unaudited condensed financial statements have been prepared
assuming that the Company will continue as a going concern.
Accordingly, the interim, unaudited condensed financial statements do
not include any adjustments that might result if the Company is unable
to successfully emerge from bankruptcy and continue as a going
concern.
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, 1998, 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
months ended March 31, 1999 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1999.
NOTE 2. INVENTORIES
<TABLE>
<CAPTION>
Inventories consist of the following:
March 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Precious metals:
Refined products $ 1,329,000 $ 946,000
In process 7,933,000 5,945,000
8
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March 31, December 31,
1999 1998
------------ ------------
Consumable supplies 213,000 129,000
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$ 9,475,000 $ 7,020,000
============ ============
</TABLE>
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.
NOTE 3. LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt is summarized as follows:
March 31, December 31,
1999 1998
------------- -------------
<S> <C> <C>
Term loan with Standard Chartered Bank,
Credit Agricole Indosuez and Gerald
Metals, Inc.; interest at LIBOR plus 2%;
due December 31, 2001; principal payments
payable in 11 equal quarterly
installments, commencing June 30, 1999;
secured by a first priority mortgage lien
on Olinghouse, Griffon, Copper Flat and
Kinsley $ 11,000,000 $ 11,000,000
Revolving credit loan with Standard
Chartered Bank, Credit Agricole Indosuez
and Gerald Metals, Inc.; interest at
LIBOR plus 2%; due April 30, 2000;
secured by a first priority mortgage lien
on Olinghouse, Griffon, Copper Flat and
Kinsley 6,000,000 6,000,000
Note payable; interest at 12% payable
quarterly; due January 2, 2000; secured
by property 1,400,000 1,400,000
Convertible debentures; interest at 4%
payable quarterly; due April 14, 2000;
unsecured 3,350,000 3,350,000
Notes payable; interest at various rates
of 8.2% to 11.8%; due at various dates
between April 1999 and October 2003;
secured by equipment 6,965,000 7,452,000
------------- -------------
28,715,000 29,202,000
Less - current portion (7,188,000) (4,821,000)
------------- -------------
Total long-term debt $ 21,527,000 $ 24,381,000
============= =============
</TABLE>
The credit facility contains certain financial covenants
including a requirement for Minimum Net Worth, Minimum Current Ratio,
Maximum Leverage Ratio, Minimum EBITDA to Interest Expense, Minimum
EBITDA to Interest Expense and Principal and Maximum Allowable Capital
Expenditures, as defined. As of March 31, 1999, the Company was not
in compliance with the Minimum Current Ratio or the Maximum Leverage
Ratio. In addition, the Company's Chapter 11 petition on April 14,
1999, triggered an event of default under all of the Company's
indebtedness. To date, none of the Company's creditors have
accelerated the maturities of any of the outstanding indebtedness.
9
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Section 21E of the Securities Exchange Act of 1934 provides a
"safe harbor" for forward-looking statements. Certain information
included herein contains statements that are forward-looking, such as
statements regarding management's expectations about 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 sources of cash
necessary to meet obligations, the market price of metals, production
rates, production costs, the successful preparation and approval of a
plan of reorganization for the Company, 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, dependence on existing management and weather conditions.
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 MARCH 31, 1999 AND MARCH 31, 1998
In the first quarter of 1999, the Company had $6,672,000 in
revenue from the sale of 19,700 ounces of gold at an average price of
$339/oz, as compared to $3,624,000 in revenue in the first quarter of
1998 from the sale of 10,800 ounces of gold at an average price of
$336/oz. In the first quarter of 1999, the Company (1) mined 690,000
tons of ore at Olinghouse with an average grade of 0.0374 oz/ton gold
containing 25,837 ounces of gold, (2) mined 449,000 tons of ore at
Griffon with an average grade of 0.0286 oz/ton gold containing 12,844
ounces of gold and (3) produced 20,884 ounces of gold, including
12,230 ounces of gold from Griffon at an average cash cost of $146/oz,
7,917 ounces of gold from Olinghouse at an average cash cost of
$265/oz and 737 ounces of gold from Kinsley at an average cash cost of
$320/oz. In the first quarter of 1998, the Company (1) mined 408,000
tons of ore at Griffon with an average grade of 0.0338 oz/ton gold
containing 13,822 ounces of gold, (2) mined 94,000 tons of ore at
Kinsley with an average grade of 0.0334 oz/ton gold containing 3,135
ounces of gold, and (3) produced 10,610 ounces of gold, including
7,090 ounces of gold from Griffon at an average cash cost of $145/oz
and 3,520 ounces of gold from Kinsley at an average cash cost of
$275/oz. Mining at Griffon began in September 1997 and production of
refined gold began in January 1998. Mining at Olinghouse began in
July 1998 and production of refined gold from the initial shakedown
run of the mill began in September 1998 and from the leach pad in
December 1998. Mining at Kinsley was completed in early March 1998,
with gold production from pad rinsing expected to continue in
declining amounts through 1999. During part of the first quarter of
1999, the Company continued to have the same start-up problems at
Olinghouse that occurred during the fourth quarter of 1998. Management
believes that the correction of these problems should improve
Olinghouse's operating results. The decrease in gold production at
Kinsley from 3,520 ounces of gold in the first quarter of 1998 to 737
ounces of gold in the first quarter of 1999 is due to the completion
of mining at Kinsley in March 1998 and to the diminution of the size
and the metallurgical quality of the last two ore bodies mined at
Kinsley. The increase in the average cash cost of production at
Kinsley from $275/oz in the first quarter of 1998 to $320/oz in the
first quarter of 1999 is due to the diminution of the size and the
metallurgical quality of the last two ore bodies mined at Kinsley.
The increase in gold production at Griffon from 7,090 ounces of gold
in the first quarter of 1998 to 12,230 ounces of gold in the first
quarter of 1999 is due to the first quarter of
10
<PAGE>
1999 being preceded by over fifteen months of mining as compared to
the first quarter of 1998 being preceded by less than four months of
mining.
The increase in revenue from $3,624,000 in the first quarter of
1998 to $6,672,000 in the first quarter of 1999 is due to Griffon
being in full production in the first quarter of 1999 and the
initiation of gold production at Olinghouse in September 1998, as
partially offset by the decrease in production at Kinsley.
Direct mining, production, reclamation and maintenance costs
increased from $2,944,000 in the first quarter of 1998 to $5,414,000
in the first quarter of 1999 as the result of Griffon being in full
production in the first quarter of 1999, the initiation of gold
production at Olinghouse in September 1998 and the higher cash cost of
production at Kinsley, as partially offset by the completion of mining
at Kinsley in March 1998.
The increase in general and administrative expenses from $307,000
in the first quarter of 1998 to $348,000 in the first quarter of 1999
is attributed primarily to the difference in the timing of recurring
corporate expenditures. The increase in exploration expense from
$49,000 in the first quarter of 1998 to $106,000 in the first quarter
of 1999 is attributed to an increase in evaluation-related work
conducted on the Company's exploration properties.
Interest and other income decreased from $42,000 in the first
quarter of 1998 to $33,000 in the first quarter of 1999 as the result
of less funds being available for investment in 1999. The $807,000
charge for interest expense and other in the first quarter of 1999
represents the expensing of Olinghouse debt-related costs. Similar
costs incurred in 1998, prior to the initiation of gold production,
were capitalized.
No provision for income taxes was recognized in either the first
quarter of 1999 or the first quarter of 1998 because of the
utilization of net operating loss carryforwards. As of March 31,
1999, the Company estimates that it has approximately $36,306,000 in
net operating loss carryforwards. These net operating loss
carryforwards are scheduled to expire during the period from 2005 to
2018.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1999, the Company's working capital had
deteriorated by $1,452,000, from a working capital deficit of
$1,573,000 as of December 31, 1998, to a working capital deficit of
$3,025,000 as of March 31, 1999. For this reason, as well as others,
the Company filed a voluntary petition for relief under Chapter 11 of
the Bankruptcy Code on April 14, 1999.
INVESTING AND FINANCING ACTIVITIES
During the first three months of 1999, the Company expended
$438,000 for site development, construction and equipment at
Olinghouse and $208,000 for the permitting of Copper Flat, and
realized $102,000 from the disposal of non-essential property and
equipment. In addition, during the first three months of 1999, the
Company also retired $487,000 in outstanding debt.
11
<PAGE>
OTHER
The approach of the year 2000 has become a potential problem for
businesses utilizing computers in their operations since many computer
programs are date sensitive and will only recognize the last two
digits of the year, thereby recognizing the year 2000 as the year 1900
or not at all (the "Year 2000 Issue"). Management has made a
comprehensive assessment of the Company's exposure to the Year 2000
Issue and what will be required to ensure that the Company is Year
2000 compliant. The primary computer programs utilized in the
Company's operations and financial reporting systems have been
acquired from independent software vendors. All of these vendors have
been formally contacted to determine whether their systems are Year
2000 compliant, and, if not, timelines have been or will be
established as to when the Company will receive the required upgrades
that assure that these systems will be Year 2000 compliant.
Maintenance or modification costs associated with the Year 2000 Issue
will be expensed as incurred, while the cost of any new software will
be capitalized and amortized over the software's useful life. The
Company does not expect to incur costs in connection with the Year
2000 Issue that would have a material impact on operations. Although
the Company presently believes that all of its software programs will
be Year 2000 compliant, there can be no assurances that the Company
will not be adversely affected by the Year 2000 Issue.
OUTLOOK
The Company is solely dependent upon cash flow from operations at
Olinghouse and Griffon to fund operations and to repay its
obligations. The Company's operating results and working capital
position has been negatively impacted by start-up problems at
Olinghouse, as well as cost overruns caused by delays in obtaining all
of the necessary building permits.
Although the Company has addressed most of the start-up problems
at Olinghouse, a very significant start-up problem pertaining to the
mill has yet to be successfully resolved. In addition, due to an
unexpected delay in receiving an approval from the U.S. Forest Service
for an amended plan of operations which would have allowed the Company
to continue mining at Griffon, as of April 30, 1999, the Company was
forced to cease mining operations at Griffon for the remainder of
1999. As a result of this delay, gold production from Griffon is
expected to decline during the remainder of 1999.
As a result of the above problems, as well as other issues, and
their effect on the Company's financial condition, on April 14, 1999,
the Company filed a voluntary petition to reorganize under Chapter 11
of the Bankruptcy Code.
The pending Chapter 11 proceedings may affect the Company's
ability to maintain its present arrangements with suppliers that are
vital to the Company's continued operations. The Chapter 11 petition
may also affect the Company's ability to successfully negotiate future
arrangements with suppliers. No assurance can be given that suppliers
of goods and services vital to the Company's mining operation will
continue to provide such goods and services to the Company as a result
of the Company's voluntary petition for relief under the bankruptcy
laws. The refusal of any irreplaceable key supplier of such goods or
services could force the Company to cease operations at any one or
both of its operating mines, and would have a material adverse effect
on the financial condition and results of operations of the Company.
The Company's emergence from Chapter 11 is dependent upon
submittal and approval of a plan of reorganization. Unless it
receives an extension, the Company has the exclusive right until
12
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August 12, 1999 to file its plan of reorganization with the Bankruptcy
Court. No assurance can be given that the Company's plan of
reorganization will be approved, or if approved that it will be
successful.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISKS
GOLD PRICE
The Company's profitability is significantly impacted by changes
in the market price of gold. Gold prices may fluctuate widely. On
May 10, 1999, the market price of gold declined to the lowest levels
in 20 years and has been below $300/oz. for all of 1999.
In order to mitigate the detrimental effects of significant
decreases in the price of gold, the Company has historically hedged
all or a portion of its anticipated gold production. As of March 31,
1999, the Company had in place the following hedges which cover in
full the Company's projected future gold production through September
2001:
<TABLE>
<CAPTION>
EXPECTED MATURITY OR TRANSACTION YEAR
----------------------------------------
1999 2000 2001
------------ ----------- ----------
<S> <C> <C> <C>
FORWARD SALES CONTRACTS:
Ounces 18,300 - -
Average Price ($/oz.) $322 - -
PUT OPTIONS OWNED:
Ounces 99,000 132,000 82,800
Average Price ($/oz.) $280 $280 $280
</TABLE>
As of December 31, 1998, the Company had in place the following
hedges which cover in full the Company's projected future gold
production through September 2001:
<TABLE>
<CAPTION>
EXPECTED MATURITY OR TRANSACTION YEAR
---------------------------------------
1999 2000 2001
----------- ---------- ----------
<S> <C> <C> <C>
FORWARD SALES CONTRACTS:
Ounces 25,800 - -
Average Price ($/oz.) $339 - -
PUT OPTIONS OWNED:
Ounces 133,400 132,000 82,800
Average Price ($/oz.) $283 $280 $280
</TABLE>
Based on the Company's estimated production for 1999 (and
excluding the deep, in-the-money forward sales contracts owned), every
$10 increase in the price of gold above $280/oz. would result in an
increase of approximately $0.7 million in both net income and net cash
flow. Conversely, if the price of gold is above the protected floor
price of $280/oz., every $10 decrease in the price of gold would
result in the same corresponding decreases in both net income and net
cash flow.
INTEREST RATES
At March 31, 1999, the Company's outstanding debt included $17.0
million in variable rate debt with a weighted average interest rate of
7.1% and $11.7 million in fixed rate debt with a weighted average
interest rate of 7.4%, compared with $17.0 million in variable rate
debt with a weighted average interest rate of 7.1% and $12.2 million
in fixed rate debt with a weighted average interest rate
12
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of 7.4% as of December 31, 1999. Every hypothetical one percentage
increase or decrease in the variable interest rate in 1999 would
result in a corresponding $0.2 million increase or decrease in both
net income and net cash flow.
FOREIGN CURRENCY
The price of gold is denominated in United States dollars and all
of the Company's operations and expenses are incurred in United States
dollars. Accordingly, the Company has no direct foreign currency
exposure.
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 14, 1999, the Company filed a voluntary petition to
reorganize under Chapter 11 of the Bankruptcy Code to facilitate the
reorganization of the Company's business and the restructuring of its
long-term debt and other liabilities. The petition was filed in
United States Bankruptcy Court in Reno, Nevada on April 14, 1999. As
of that date, the United States Bankruptcy Court for the District of
Nevada assumed jurisdiction over the assets of the Company. The
Company is acting as debtor-in-possession on behalf of its bankruptcy
estate, and is authorized as such to operate its business subject to
bankruptcy court supervision.
On April 1, 1999, a complaint was filed in the Second Judicial
District Court of the State of Nevada for the County of Washoe
(Mitchell W. Fanning, et al. v. Alta Gold Co., et al.) against the
Company. The complaint purports to seek relief on behalf of a group
of individuals doing business as "Babe Mines" who leased to the
Company certain mining claims which constitute an integral part of the
Olinghouse mine. Specifically, the complaint seeks (i) a judicial
declaration that the lease of mining claims to the Company has been
terminated, (ii) money damages for alleged trespass and conversion,
and (iii) a judicial declaration that plaintiffs own an ore body
within a mining claim owned by the Company by reason of "extralateral
rights" pursuant to 30 U.S.C. Sec. 26 (1994). Following the Company's
filing of a Chapter 11 petition, the plaintiffs removed the action to
the Bankruptcy Court. The plaintiffs filed a motion in Bankruptcy
Court for relief from the automatic stay provided under the bankruptcy
laws, and have applied to the Bankruptcy Court for essentially the
same relief they sought in the state court. Hearings before the
Bankruptcy Court are scheduled for May 25, 1999. The Company's
counsel will shortly file an answer to the complaint as well as
counterclaims against plaintiffs, which the Company believes will
refute their allegations.
ITEM 2. CHANGES IN SECURITIES
In response to the Company's filing for reorganization under
Chapter 11 of the Bankruptcy Code, effective April 15, 1999, Nasdaq
halted trading in the Company's common stock and changed the Company's
trading symbol to "ALTAQ." On April 23, 1999, the Company received
notice that, absent the filing of an appeal by the Company, Nasdaq
intended to delist the Company's common stock from the Nasdaq National
Market effective May 1, 1999. On April 27, 1999, the Company filed an
appeal to Nasdaq, pursuant to the procedures set forth in the Nasdaq
Marketplace Rules, whereby the Company submitted the appropriate fee
and requested an oral hearing. The Company has been advised that the
hearing will be held on June 17, 1999. At the hearing, the Company
expects that it will be required to demonstrate its ability to sustain
long-term compliance with all applicable criteria for continued
listing on the Nasdaq National Market. In that regard, Nasdaq may
apply additional or more stringent criteria for the continued listing
of the Company's common stock as a result of the Company's bankruptcy.
No assurance can be given that a hearing regarding Nasdaq's
determination will be successful. Management believes that until the
Company's common stock is delisted, Nasdaq will continue to halt any
trading of the Company's stock on the Nasdaq National Market. If the
Company's common stock is delisted, trading, if any, in the common
stock would thereafter have to be conducted in the so-called "pink
sheets" or, if available, the OTC Bulletin Board. As a result,
holders of common stock would find it more difficult to dispose of, or
to obtain accurate quotations as to the market value of, the Company's
common stock.
15
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company's credit facility with Standard Chartered Bank,
Credit Agriole Indosuez and Gerald Metal, Inc. contains certain
financial covenants. As of March 31, 1999, the Company was not in
compliance with the Minimum Current Ratio or the Maximum Leverage
Ratio, as defined by the credit facility. In addition, the Company's
Chapter 11 petition on April 14, 1999 triggered an event of default
under all of the Company's indebtedness.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits:
27.01 Financial Data Schedule
(b) Reports on Form 8-K:
Forms 8-K (Items 3 and 7) and 8-K/A (Items 3 and 5) dated
April 14, 1999, reporting the filing of a voluntary petition
to reorganize under Chapter 11 of the Bankruptcy Code and
the consequent probable delisting of the Company's common
stock from the Nasdaq National Market.
16
<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)
Date: May 14, 1999 By: /s/ John A. Bielun
----------------------------------
John A. Bielun
Chief Financial Officer and Chief
Accounting Officer
(Duly authorized officer,
principal financial officer and
chief accounting officer)
17
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- --------- ----------- ---------
27.01 Financial Data Schedule 19
18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 163
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 9,475
<CURRENT-ASSETS> 10,036
<PP&E> 46,687
<DEPRECIATION> 9,723
<TOTAL-ASSETS> 74,308
<CURRENT-LIABILITIES> 13,061
<BONDS> 21,527
0
0
<COMMON> 34
<OTHER-SE> 37,953
<TOTAL-LIABILITY-AND-EQUITY> 74,308
<SALES> 6,672
<TOTAL-REVENUES> 6,672
<CGS> 5,414
<TOTAL-COSTS> 5,414
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 30
<INCOME-TAX> 0
<INCOME-CONTINUING> 30
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
