United States Antimony Corporation — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. This is an annual report, not a standalone fourth-quarter report. The company produces and sells antimony, zeolite, and precious metals, with operations in the United States and Mexico. Financial statements are audited; the auditor gave an unqualified opinion.
Financial and operating results
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | $5.24 million | $8.27 million |
| Gross profit (loss) | $205,698 | $(816,251) |
| Gross margin | About 3.9% | About (9.9%) |
| Net loss | $(3.29) million | $(3.67) million |
| Net loss available to common stockholders | $(3.34) million | $(3.72) million |
| Basic and diluted loss per share | $(0.05) | $(0.05) |
| Operating cash flow | $(1.31) million | $(11,355) |
| Cash and cash equivalents at year-end | $665,102 | $115,506 |
| Current assets / current liabilities | $1.81 million / $4.48 million | $1.28 million / $3.98 million |
| Net working capital | $(2.67) million | $(2.70) million |
Company-reported EBITDA was negative $2.40 million, versus negative $2.78 million in 2019. Total assets were $13.30 million and total liabilities were $6.11 million at year-end. Bank notes and long-term debt totaled approximately $186,000, excluding the $443,400 CARES Act loan, $1.13 million in Hillgrove advances, and other liabilities. The PPP loan was expected to qualify for forgiveness; formal forgiveness had not yet been reported.
Business lines
- Antimony: Revenue fell to $2.94 million from $5.45 million; volume sold declined 48% to 815,310 pounds, while average selling price rose to $3.61 per pound from $3.48. The division recorded a gross loss of $205,326 and a reported net loss of $3.64 million.
- Zeolite: Revenue declined to $2.12 million from $2.62 million as sales volume fell 22% to 10,661 tons. Average price increased to about $199 per ton from $192. Net income was $262,861, down from $497,470.
- Precious metals: Revenue was $174,079, compared with $194,239; segment net income was $87,244.
Material changes versus 2019
- Revenue decreased about 37%, principally reflecting lower antimony sales volume and lower zeolite volume. Antimony prices improved modestly year over year, but sales remained below production cost.
- Gross results improved by about $1.02 million, from a gross loss to a small gross profit, as cost of revenue fell more than revenue. The company nevertheless remained loss-making.
- Operating cash use increased to $1.31 million. Year-end cash improved with equity financing and PPP proceeds, while current liabilities rose, including a new Mexican export-tax liability.
- The company relinquished its Wadley mines lease in 2020 and recorded a $318,502 loss on mineral properties. In 2019, abandonment of the Soyatal and Guadalupe properties generated a $1.41 million noncash loss.
Outlook, risks, and unusual items
- Management plans for 2021: Process about 1,300 tons of Los Juarez rock, at least 720 tons of Wadley ore, 300 tons of milled tailings, and 60 tons of stibnite ore for antimony trisulfide production for the Defense Logistics Agency. These are operating plans, not guaranteed results. Management anticipated cost reductions from Mexican sourcing and Madero gas-contract changes, and higher cash flow from precious-metals recovery through the leach circuit.
- Management reported that early-2021 antimony prices were approximately $5.23 per pound, about double the 2019 level. Prices, supply availability, production, and cost assumptions remain uncertain.
- In 2020, the company recognized approximately $1.12 million of Mexican export/IVA tax expense for imported coal from 2016–2018 and paid the assessment in early 2021. Separately, a disputed Mexican income-tax assessment relating to 2013 remained under appeal; management accrued no liability, believing the company would prevail.
- At December 31, 2020, the company reported negative working capital of $2.67 million and an accumulated deficit of $32.65 million. It had incurred losses in most recent years. Management stated that a first-quarter 2021 equity-and-warrant raise of $23.50 million, net of fees, was expected to fund operations and obligations for at least 12 months after the financial statements’ issuance. This subsequent financing also creates potential shareholder dilution.
- Internal controls over financial reporting and disclosure controls were deemed ineffective because of material weaknesses, including inadequate control design and monitoring, weak segregation of duties, and insufficient management oversight. Management described remediation plans.
- Environmental reclamation and asset-retirement accruals totaled $291,719; the company lacks environmental liability insurance and says potential losses beyond accruals cannot be reasonably estimated. It reports no SEC-defined proven or probable antimony or zeolite reserves.
- The auditor identified impairment testing of Mexican property, plant, and equipment as a critical audit matter. The $8.44 million carrying value was not impaired based on management’s estimated future cash flows, which depend on mineral quantities, metal prices, production, and cost assumptions.
Most important facts for investors to verify
- Whether the 2021 financing proceeds and planned production translate into sustained positive operating cash flow, and the resulting dilution from shares and warrants.
- Actual recoveries, throughput, costs, and sale proceeds from the Los Juarez leach circuit and the company’s other 2021 operating plans.
- Current antimony prices and raw-material supply, including the status and terms of North American supplier contracts and Mexican ore sourcing.
- Resolution of the Mexican tax matters, including confirmation that the paid IVA assessment is settled and the outcome of the separate income-tax appeal.
- Progress in remediating material weaknesses in internal controls and any changes to reclamation estimates or obligations.