SEC Filing Summary
Registrant: New Jersey Mining Company; the request metadata identifies Idaho Strategic Resources, Inc., but the supplied Form 10-Q names New Jersey Mining Company as the registrant. The filing covers the quarter and nine months ended September 30, 2017, and was filed November 14, 2017.
Business Context and Reporting Period
The company is an emerging gold producer operating the Golden Chest Mine in Idaho and the majority-owned New Jersey Mill Joint Venture. It also owns a 50% interest in the Butte Highlands Joint Venture. During the period, production came from the Golden Chest open pit; underground operations were scheduled to begin in November 2017.
- Open-pit ore processed: approximately 8,314 tonnes in the quarter and 21,840 tonnes for the nine months.
- Gold recovered: approximately 952 ounces in the quarter and 2,700 ounces year to date.
- Nine-month average head grade and recovery were 4.55 grams per tonne and 84.6%, respectively.
Financial Performance and Position
| Metric | Q3 2017 | Q3 2016 | Nine months 2017 | Nine months 2016 |
|---|---|---|---|---|
| Total revenue | $1.266 million | $52,354 | $3.218 million | $144,632 |
| Operating income (loss) | $222,723 | ($352,699) | $342,432 | ($605,785) |
| Net income (loss) attributable to the company | $144,407 | ($838,458) | $81,935 | ($1.167 million) |
| Operating cash flow | Not separately provided | Not separately provided | $231,785 | ($453,716) |
- Revenue was generated almost entirely from gold sales: $1.266 million in the quarter and $3.218 million for the nine months. Milling income was $6,500 for the quarter and $21,114 year to date.
- Approximate operating margins were 17.6% for the quarter and 10.6% for the nine months. Net margins attributable to the company were approximately 11.4% and 2.5%, respectively.
- Production costs were $813,785 for the quarter and $2.118 million for the nine months.
- Cash and cash equivalents were $249,263 at September 30, 2017, versus $154,833 at December 31, 2016.
- Current assets were $932,597 and current liabilities were $1.543 million, resulting in negative working capital of approximately $610,559 and a current ratio of approximately 0.60.
- Total assets were $9.431 million and total liabilities were $2.966 million. Stockholders’ equity was $6.464 million.
- Net notes payable, after discount, totaled $506,466. Related-party notes and accrued interest totaled $905,745. Forward gold contract liabilities totaled $1.102 million, including $649,411 classified as current.
- The company paid $89,458 for property, plant and equipment and $14,522 for mineral properties during the nine months.
Material Changes Versus the Prior Comparable Period
- Revenue increased from $52,354 to $1.266 million in the quarter and from $144,632 to $3.218 million for the nine months, reflecting Golden Chest production and milling.
- The company moved from operating and net losses in 2016 to operating and net income in 2017.
- Operating cash flow improved by $685,501 year over year, from a use of $453,716 to cash provided of $231,785.
- Cash increased by $94,430 during the first nine months, compared with an increase of $420,839 in the prior-year period; the prior-year increase was substantially supported by financing activities.
- Total liabilities declined by $745,638 from December 31, 2016, primarily through scheduled debt payments and reclassification of certain related-party obligations to long-term liabilities.
- Common shares outstanding increased to 108,893,704 at September 30, 2017 from 97,193,704 at year-end 2016, reflecting private placements and other equity transactions.
- Forward gold contract liabilities declined from $1.386 million to $1.102 million after cash and gold payments, but the contracts still require future gold deliveries or, at counterparties’ option, cash settlement.
Guidance, Outlook, Risks, and Unusual Items
- Management expected underground operations to commence in November 2017 and projected improving production and cash flow over the following 18 months.
- Management stated that existing cash, operating cash flow, planned production, equity financing, and debt restructuring were expected to be sufficient to fund planned operations and contractual obligations for the next 12 months.
- The filing includes a going-concern discussion, noting the company’s history of operating losses and dependence on production, profitable operations, and additional equity financing.
- In October 2017, the company completed a private placement generating $250,000 in cash and reducing debt by $60,000. It also used proceeds to pay the remaining $250,000 balance on the Golden Chest property.
- Forward gold contracts had a September 30, 2017 fair value of $1.102 million and approximately 891.5 ounces of future deliveries remained under the disclosed contracts.
- Asset retirement obligations increased to $102,142, with estimated Golden Chest reclamation costs of $70,087 based on current disturbance.
- Key risks include fluctuating gold prices, production and grade uncertainty, mining and reclamation costs, regulatory requirements, access to capital, dependence on key personnel and counterparties, joint-venture obligations, equipment availability, and the company’s limited operating history.
- Management reported effective disclosure controls as of September 30, 2017 and no material change in internal control over financial reporting during the quarter. No legal proceedings were reported.
Important Facts for Investors to Verify
- Confirm the correct issuer identity, because the supplied filing names New Jersey Mining Company while the request metadata names Idaho Strategic Resources, Inc.
- Verify whether underground production began as scheduled and whether projected production and cash-flow improvements were achieved.
- Reconcile the company’s liquidity, including negative working capital, current debt maturities, related-party obligations, and forward gold contract settlements.
- Assess the sustainability of reported profitability after production, depreciation, reclamation, financing, and fair-value effects from forward gold contracts.
- Review the dilution impact of the 2017 private placements, outstanding warrants, stock options, and the October 2017 financing.
- Evaluate exposure to the sole disclosed concentrate broker, H&H Metals Corp., which purchased all gold concentrate during the reported periods.