United States Antimony Corporation — Q1 2021 Form 10-Q
Business context and period. This unaudited filing covers the three months ended March 31, 2021, compared with Q1 2020. The company operates U.S. and Mexican antimony operations, precious-metals recovery, and U.S. zeolite operations.
Financial results and position
| Metric | Q1 2021 / March 31, 2021 | Comparable period / December 31, 2020 |
|---|---|---|
| Revenue | $1.253 million | $1.743 million, Q1 2020 |
| Gross profit; gross margin | $212,157; 16.9% | $101,177; 5.8%, Q1 2020 |
| Operating expenses | $553,883 | $406,115, Q1 2020 |
| Operating loss | $341,726 | $304,938, Q1 2020 |
| Net loss | $335,488; $347,650 loss attributable to common stockholders | $308,882; $321,044 attributable to common stockholders, Q1 2020 |
| EBITDA, as presented by the company | Negative $113,024 | Negative $82,601, Q1 2020 |
| Operating cash flow | Negative $2.450 million | Negative $36,265, Q1 2020 |
| Cash and cash equivalents | $23.042 million | $665,102 |
| Working capital | $21.574 million | Negative $2.669 million |
| Total liabilities | $3.939 million | $6.113 million |
Gross margin improved despite lower revenue, but higher operating expenses contributed to a larger net loss. Cash and restricted cash totaled $23.100 million at quarter-end; the company’s cash-flow statement reports a $22.377 million increase during the quarter. Capital spending was $23,298. Cash used in operations included payment of the $1.121 million Mexican export-tax assessment and working-capital movements.
Quarter-end obligations included $73,908 of long-term debt, a $443,400 CARES Act/PPP note, and $1.134 million of Hillgrove advances payable. The company paid off its $100,000 bank notes during Q1. After quarter-end, it paid $1.021 million to settle the Hillgrove balance; the PPP loan was reported paid in full by the SBA on April 26, 2021.
Changes, operations, and management commentary
- Revenue declined 28.1% year over year. Antimony sales fell to $657,107 from $1.121 million; pounds sold decreased to 181,969 from 295,453, while the average selling price rose to $3.61 from $3.06 per pound. The company reported no Mexican antimony metal sales in Q1 2021.
- Zeolite revenue decreased to $519,947 from $559,360; tons sold were 2,743 versus 2,809. Zeolite net income declined to $66,485 from $135,139. Precious-metals revenue increased to $76,233 from $62,206.
- Antimony operations remained loss-making. Management cited depressed antimony prices and Mexican production costs, and said it was seeking ways to reduce costs. It also reported pandemic-related labor shortages in Montana and Idaho and higher labor costs following wage increases.
- Management expects improvement in 2021 cash flow from antimony and zeolite sales, and believes available funds are sufficient for operations and obligations over the following 12 months. No quantitative earnings or revenue guidance was provided.
- The company plans studies of the Los Juarez property and Puerto Blanco mill tailings before deciding on further development; it estimated less than $100,000 to complete and install precious-metals leach circuits, subject to the study. On May 3, 2021, it signed a collaboration agreement with Perpetua Resources to study potential processing of Perpetua concentrates at its Montana facilities.
Risks, contingencies, and unusual items
- Funding and dilution: Q1 stock sales generated $23.342 million net of issuance costs, and warrant exercises generated $1.764 million. The offerings comprised 26.29 million shares; 3.724 million additional shares were issued on warrant exercise. Common shares outstanding rose from 75.950 million at year-end to 105.964 million at March 31.
- Mexican tax dispute: SAT’s 2019 assessment was approximately $821,000. The company has appealed, posted a guarantee, and recorded no accrual because management believes it is likely to prevail; an adverse outcome could affect results or financial position. Separately, the $1.121 million export-tax assessment was paid in Q1.
- Internal controls: Management concluded disclosure controls were not effective at March 31 because of material weaknesses in financial-reporting control design and monitoring, segregation of duties, and management oversight. Remediation plans were described, but no significant control changes occurred during the quarter.
- Other exposure: The company reported an accumulated deficit of approximately $33 million and losses in recent years. It is negotiating changes to certain zeolite royalty agreements. Management’s outlook is subject to antimony prices, production variability, market conditions, regulation, and other risks.
Important facts for investors to verify
- Whether antimony production, sales volume, and Mexican production costs improve, and how labor constraints affect operations.
- Progress and results of the Los Juarez and Puerto Blanco studies, and any subsequent investment or partnership decisions.
- Status and potential financial impact of the SAT appeal and related guarantee.
- Use of equity proceeds, ongoing liquidity and operating cash burn, and the effects of share issuance and remaining warrants on dilution.
- Whether the company remediates its disclosed material weaknesses in internal controls.