United States Antimony Corporation (NYSE American: UAMY) — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The filing was signed April 12, 2024. This is an annual report, not a standalone fourth-quarter report; quarterly figures are not provided in the supplied filing text.
Business context
The company produces antimony products, zeolite and precious metals, with operations in Montana, Idaho and Mexico. It sells primarily to customers in the United States and Canada. During 2023, antimony and zeolite were the principal revenue sources. The Montana antimony plant relies on externally sourced ore; the company reports no proven and probable mineral reserves for its properties and has not prepared a technical report summary for its zeolite property.
Key financial results
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $8.69 million | $11.04 million |
| Gross profit (loss) | $(3.34) million | $2.00 million |
| Gross margin | (38.5)% | 18.1% |
| Operating income (loss) | $(7.07) million | $0.35 million |
| Net income (loss) | $(6.35) million | $0.43 million |
| Net loss per common share | $(0.06) | Nil |
| Net cash used in operating activities | $(4.75) million | $(0.25) million |
| Cash and cash equivalents at year-end | $11.90 million | $19.06 million |
| Total assets | $28.09 million | $34.70 million |
| Total stockholders’ equity | $25.52 million | $31.87 million |
| Total debt | $28,443 | $312,005 |
Working capital was reported as $12.64 million, down from $19.40 million. The filing’s working-capital table lists current liabilities of $1.43 million, while the consolidated balance sheet reports $897,458; the filing text does not reconcile this difference. The company says year-end cash should fund operations, working capital, capital expenditures and contractual obligations for the next 12 months.
Material changes versus 2022
- Revenue declined 21%, mainly due to lower antimony prices and sales volumes and fewer zeolite tons sold.
- Combined antimony revenue fell 23%; pounds sold declined 9%, while average selling price per pound fell 15% to $4.65. Average cost per pound rose 61% to $7.06.
- Antimony segment gross loss was $3.06 million, versus $1.51 million gross profit in 2022. Mexico processing costs, low antimony content in purchased ore, inventory valuation and a reserve against Mexican VAT receivables contributed to the deterioration.
- Zeolite revenue declined 22% and the segment recorded a $496,000 gross loss, versus $340,000 gross profit. Production downtime totaled 18 weeks, primarily due to equipment problems; tons sold fell 22%.
- Precious-metals revenue increased 25% to $326,496, although gold and silver ounces sold decreased.
- Cash and restricted cash decreased by $7.16 million. Operating cash use was $4.75 million; investing cash use was $1.34 million; financing cash use was $1.07 million.
Outlook, risks and unusual items
- Mexico shutdown: On March 11, 2024, after year-end, the company shut down USAMSA’s Madero and Puerto Blanco operations, terminated most USAMSA employees at a stated cost of approximately $40,000, and began seeking a buyer or lessee for the subsidiary, operations or assets. It plans to retain ADM’s Los Juarez claims, where no operations are active. The value and timing of any sale or lease are uncertain.
- Losses and funding: Management plans to fund 2024 cash needs from existing cash, but says future access to capital is not assured. Continued operating losses or asset sales below expectations could require reduced activity or additional financing, potentially diluting shareholders.
- Significant accounting items: The company recorded a $2.07 million write-down of inventory to net realizable value, a $687,534 reserve against Mexican VAT receivables and a $324,984 expense related to asset-retirement obligation estimates. The asset-retirement and reclamation liability was $1.64 million at year-end.
- Tax matter: A March 2024 ruling on the Mexican tax authority’s audit of USAMSA’s 2013 return was favorable, with no assessment due. The filing notes a lower-court final ruling will determine whether the decision can be appealed.
- Customers and markets: Three customers represented 46% of 2023 revenue, compared with 34% in 2022. Antimony pricing, external ore supply, energy costs, customer concentration, foreign exchange and Mexican operating and regulatory conditions are key exposures.
- Controls and listing: Management concluded disclosure controls and internal control over financial reporting were ineffective at year-end due to a material weakness, primarily insufficient segregation of duties. Management describes remediation steps but gives no assurance they will be successful. The company also identifies continued NYSE American listing compliance as a risk.
- Audit and contingencies: The auditor issued an unqualified opinion on the financial statements and reported no critical audit matters; it did not audit internal control effectiveness. The company reported no pending material legal proceedings. BRZ received 14 significant-and-substantial MSHA citations and three orders in 2023, all stated to have been rectified before filing; no related assessment liability was accrued at year-end.
Important facts for investors to verify
- Reconcile the reported working-capital figure and current-liability amounts across the MD&A and balance sheet.
- Track cash use after the Mexico shutdown, costs of closure and reclamation, and whether USAMSA assets are sold or leased at meaningful value.
- Assess whether the Montana antimony and Idaho zeolite businesses can generate positive gross profit after the operational and cost issues described.
- Review the size, collectability and timing of recovery of the Mexican VAT receivable, and the final status of the tax appeal.
- Monitor remediation of the material weakness and any NYSE American listing developments.
- Consider potential dilution: 12.35 million warrants were outstanding at year-end, and the 2023 equity plan authorizes up to 8.7 million shares for awards; no plan shares had been issued by year-end.