Brazil Minerals, Inc. (BMIX) — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. The filing is under the name Brazil Minerals, Inc.; management said it expected the previously announced name change to Atlas Lithium Corporation to take effect before year-end 2022. Figures below are in U.S. dollars.
Business context and operations
The company is an exploration-stage mineral company focused primarily on its hard-rock lithium project in Minas Gerais, Brazil. It reported 48 mineral rights across approximately 46,659 acres for that project, and said it had no mineral reserves as defined by SEC Regulation S-K Subpart 1300. Its other interests include battery metals, iron, gold, quartzite, diamonds, and industrial sand. Apollo Resources and Jupiter Gold are consolidated in the financial statements despite the company’s minority ownership interests.
Management reported ongoing drilling in the Neves Area, including a drill zone of more than 27 meters of spodumene and a geochemical result of 2.86% Li2O. SLR Consulting was finalizing an initial Neves Area report. These are company-reported exploration results, not a disclosed reserve or resource estimate.
Financial results and liquidity
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue, 2022 (2021) | $2,367 ($1,645) | $2,844 ($6,104) |
| Gross loss, 2022 (2021) | $23,976 ($22,460) | $33,354 ($40,990) |
| Operating expenses, 2022 (2021) | $989,294 ($740,540) | $1,816,611 ($1,852,836) |
| Net loss attributable to stockholders, 2022 (2021) | $871,016 ($826,674) | $1,402,506 ($1,542,696) |
- Revenue came from industrial sand, which management described as a residual business line. Q2 revenue rose 44% year over year, while first-half revenue fell 53%.
- Q2 operating expenses increased 34%, mainly due to higher public-company general and administrative costs and officer and director compensation. First-half operating expenses declined 2%.
- At June 30, cash was $393,864; current assets were $434,098 and current liabilities were $847,192, producing a $413,094 working capital deficit. Total assets were $2.16 million and total liabilities were $962,613.
- For the first half, operating cash use was $1.327 million, investing cash use was $247,163, and financing provided $1.911 million. Financing included $1.386 million from common-stock sales and $525,000 from sales of subsidiary shares to noncontrolling interests. Cash ended the period at $393,864.
- Accounts payable and accrued expenses were $837,875, including $495,028 of mineral-rights payables. The filing does not provide a clear amount of outstanding interest-bearing debt at June 30.
- Common shares outstanding were 3.385 billion at June 30, versus 3.109 billion at December 31, 2021; the cover reports 3.499 billion as of August 12, 2022. The company also reported 403.8 million outstanding options and warrants at June 30.
Outlook, risks, and other matters
Management stated that limited working capital, recurring losses, and the absence of material product or service revenue raise substantial doubt about the company’s ability to continue as a going concern. It expects to rely on common-stock sales, potential debt financing, future mining revenue, and potentially sales of its holdings in Apollo Resources or Jupiter Gold; it cautioned there is no assurance these efforts will succeed. The filing provided no quantified production or revenue guidance.
Key risks include exploration and development uncertainty, the possibility that deposits will not be economically viable, commodity-market fluctuations, Brazilian regulatory and environmental requirements, infrastructure and weather disruptions, competition, and foreign-currency exposure. Management reported no material legal proceedings, no material subsequent events, and no material changes to the risk factors in its 2021 Form 10-K. It reported disclosure controls and internal control over financial reporting were effective as of June 30, 2022. The company also disclosed no off-balance-sheet arrangements.
Important facts for investors to verify
- Review the independent SLR report and qualified-person disclosures for the Neves Area; distinguish reported drill results from any future resource or reserve estimate.
- Assess near-term liquidity, mineral-rights payables, and the company’s financing needs against its going-concern warning and historical cash burn.
- Reconcile share counts through the filing date and review the dilution potential of outstanding options and warrants and future equity financing.
- Confirm progress and requirements for the proposed Atlas Lithium name change and Nasdaq uplisting, neither of which was completed in this report.
- Consider how consolidation of minority-owned Apollo Resources and Jupiter Gold affects reported revenue, losses, cash flows, and noncontrolling interests.