Business Context and Reporting Period
New Jersey Mining Company, the registrant identified in the filing, reported unaudited results for the three months ended March 31, 2014. The company remained in the development stage, focused on gold exploration in Idaho, operation of the New Jersey mineral processing mill, and potential contract milling and joint-venture opportunities.
The company owned 65% of the New Jersey Mill Joint Venture and 48% of Golden Chest LLC. It reported 79,760,148 common shares outstanding as of May 1, 2014.
Financial Highlights
- Revenue: $76, primarily joint-venture management fee income, compared with $14,045 in the first quarter of 2013. There were no gold sales or contract milling revenue in the quarter.
- Net loss: $268,356, or nominal loss per share, compared with a $75,214 net loss in the prior-year quarter. The increase was attributed primarily to resumed exploration and general corporate activities.
- Operating loss: $268,748, compared with operating income of $15,079 in the prior-year quarter.
- Operating expenses: $268,824, compared with a reported negative expense amount of $1,034 in the prior-year quarter, which was affected by a $95,000 gain on the sale of equipment.
- Exploration expense: $84,569, compared with $30.
- General and administrative expense: $156,525, compared with $57,157.
- Cash flow: Operating activities used $261,497; investing activities used $29,249; and financing activities provided $387,710. Cash increased by $96,964 to $733,091.
- Liquidity: Current assets were $881,237 and current liabilities were $200,499, producing reported working capital of approximately $680,738.
- Assets and equity: Total assets were $6.35 million, including $4.90 million of property, plant and equipment and $540,433 of mineral properties. Total stockholders’ equity was $5.78 million.
- Debt and obligations: Current and non-current notes payable totaled $233,387, related-party notes payable totaled $215,984, and current and non-current capital lease obligations totaled $17,813 based on the balance-sheet amounts. The company also reported an $11,237 asset retirement obligation.
- Capital raising: A private placement generated $405,000 of net proceeds through the issuance of 6,000,000 shares and 3,000,000 warrants. Each warrant was exercisable at $0.15 through March 2017.
Material Changes Versus the Prior Comparable Period
- Revenue declined from $14,045 to $76. Gold sales fell to zero because remaining inventory had been liquidated in 2013, and no contract milling occurred in 2014.
- The net loss increased by $193,142, driven mainly by increased exploration, management, and general and administrative activity.
- Cash increased from $20,102 at March 31, 2013 to $733,091 at March 31, 2014, primarily reflecting the 2014 private placement.
- Weighted-average shares outstanding increased to 75,760,148 from 45,515,862.
- Joint-venture receivables increased to $92,574 from $61,143 at December 31, 2013, reflecting delayed payment by United Silver/Crescent-related interests for mill activities.
- A $23,616 deposit was made on a gravity concentrator for the mill.
- The prior-year quarter included a $95,000 gain on the sale of a core drill; no comparable gain was recorded in 2014.
Outlook, Commentary, Risks, and Unusual Items
- Management expected to process ore from the Golden Chest Skookum project for Juniper Resources later in 2014 and anticipated development of a Golden Chest portal beginning in June 2014.
- The company had no additional production plans as of the filing date beyond potential Golden Chest-related mill feed and remained dependent on exploration success and future joint-venture or mill activity.
- Funding for exploration was expected to depend on joint-venture contributions, fundraising, and mill cash flow. The filing does not provide a formal revenue or earnings guidance range.
- Juniper’s Golden Chest arrangements included completed drilling, property payments, a 2% net smelter return royalty, and potential future processing income for the company.
- The New Jersey Mill had been idled following mining and marketing problems at the Crescent mine. It was uncertain when Crescent Silver would produce mill feed for the mill.
- Key risks included metal-price volatility, uncertain cash flow, exploration and mining risks, environmental and regulatory matters, litigation, competition, and the possibility that exploration will not produce commercially viable reserves.
- Outstanding warrants totaled 14.1 million at March 31, 2014, all with a $0.15 exercise price. Their potential dilution was anti-dilutive for the quarter and excluded from loss-per-share calculations.
- The filing reported no material legal proceedings, no senior securities, and no mine-safety events requiring disclosure.
- Management stated that disclosure controls were effective and that no material changes occurred in internal control over financial reporting during the quarter.
Investor Verification Items
- Verify the registrant identity: the supplied filing is for New Jersey Mining Company, while the request metadata identifies Idaho Strategic Resources, Inc.
- Verify whether Golden Chest development, Juniper’s planned activities, and expected mill processing commenced as projected after March 31, 2014.
- Assess the collectability and timing of the $92,574 in joint-venture receivables, particularly amounts associated with United Silver/Crescent-related activities.
- Review the company’s ability to fund exploration and debt obligations given the absence of meaningful current-period revenue and continued operating cash use.
- Evaluate the dilution impact of 14.1 million outstanding warrants and the company’s reliance on additional equity financing.
- Confirm whether the New Jersey Mill obtained sustainable third-party or joint-venture ore feed after the quarter.