ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition
COVID-19 Coronavirus Pandemic Response and Impact
One of the principal challenges facing the Company in 2021 as a result of stimulus funding from Covid-19 has been the evaporation of available labor. This issue has seriously impacted both operations in Montana and at its zeolite operation in Idaho. The following measures are being taken in an attempt to obtain and retain laborers:
|
1.
|
The Company has raised the starting wage both in Montana and Idaho and as a result increased its labor costs for existing laborers.
|
|
2.
|
The Company has advertised on multiple job search platforms and is also advertising in two languages on conventional job search platforms as well as on multiple social media sites.
|
|
3.
|
The Company is increasing capacity at the Mexican smelter where labor is not a problem.
|
|
4.
|
The Company is investigating hiring from alternative potential labor pools.
|
It is difficult to hire people if they are getting paid more not to work, which is the reality in many cases but is hopeful that the situation(s) fueling this crisis will end soon.
General
Certain matters discussed are forward-looking statements that involve risks and uncertainties, including the impact of antimony prices and production volatility, changing market conditions and the regulatory environment and other risks. Actual results may differ materially from those projected. These forward-looking statements represent our judgment as of the date of this filing. We disclaim, however, any intent or obligation to update these forward-looking statements.
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition, continued:
|
|
Three Months
|
|
|
Three Months
|
|
|
Nine Months
|
|
|
Nine Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
Antimony - Combined USA and Mexico
|
|
September 30,
2021
|
|
|
September 30,
2020
|
|
|
September 30,
2021
|
|
|
September 30,
2020
|
|
Lbs of Antimony Metal USA
|
|
|
306,045
|
|
|
|
89,052
|
|
|
|
817,131
|
|
|
|
375,519
|
|
Lbs of Antimony Metal Mexico:
|
|
|
-
|
|
|
|
57,790
|
|
|
|
10,000
|
|
|
|
300,474
|
|
Total Lbs of Antimony Metal Sold
|
|
|
306,045
|
|
|
|
146,842
|
|
|
|
827,131
|
|
|
|
675,993
|
|
Average Sales Price/Lb Metal
|
|
$
|
4.20
|
|
|
$
|
3.25
|
|
|
$
|
4.08
|
|
|
$
|
3.71
|
|
Net loss/Lb Metal
|
|
$
|
(0.43
|
)
|
|
$
|
(7.60
|
)
|
|
$
|
(0.59
|
)
|
|
$
|
(3.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross antimony revenue - net of discount
|
|
|
1,284,969
|
|
|
|
477,273
|
|
|
|
3,371,015
|
|
|
|
2,509,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales - domestic
|
|
|
(585,875
|
)
|
|
|
(491,092
|
)
|
|
|
(2,080,987
|
)
|
|
|
(1,559,018
|
)
|
Cost of sales - Mexico
|
|
|
(654,380
|
)
|
|
|
(557,399
|
)
|
|
|
(1,220,069
|
)
|
|
|
(1,805,127
|
)
|
Operating expenses
|
|
|
(189,703
|
)
|
|
|
(223,293
|
)
|
|
|
(1,147,906
|
)
|
|
|
(852,631
|
)
|
Non-operating income (expenses)
|
|
|
13,249
|
|
|
|
(2,887
|
)
|
|
|
590,031
|
|
|
|
(1,062
|
)
|
Loss on abandonment of mineral properties
|
|
|
-
|
|
|
|
(318,502
|
)
|
|
|
-
|
|
|
|
(318,502
|
)
|
|
|
|
(1,416,709
|
)
|
|
|
(1,593,173
|
)
|
|
|
(3,858,931
|
)
|
|
|
(4,536,340
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss - antimony
|
|
|
(131,740
|
)
|
|
|
(1,115,900
|
)
|
|
|
(487,916
|
)
|
|
|
(2,027,157
|
)
|
Depreciation,& amortization
|
|
|
153,059
|
|
|
|
153,494
|
|
|
|
458,794
|
|
|
|
460,181
|
|
EBITDA - antimony
|
|
$
|
21,319
|
|
|
$
|
(962,406
|
)
|
|
$
|
(29,122
|
)
|
|
$
|
(1,566,976
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Precious Metals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ounces sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold
|
|
|
12
|
|
|
|
6
|
|
|
|
34
|
|
|
|
31
|
|
Silver
|
|
|
5,638
|
|
|
|
2,403
|
|
|
|
15,246
|
|
|
|
11,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross precious metals revenue
|
|
$
|
73,736
|
|
|
$
|
48,832
|
|
|
$
|
280,164
|
|
|
$
|
173,029
|
|
Cost of sales
|
|
|
(28,361
|
)
|
|
|
(22,141
|
)
|
|
|
(84,191
|
)
|
|
|
(66,422
|
)
|
Net income - precious metals
|
|
|
45,375
|
|
|
|
26,691
|
|
|
|
195,973
|
|
|
|
106,607
|
|
Depreciation
|
|
|
28,361
|
|
|
|
22,141
|
|
|
|
84,191
|
|
|
|
66,422
|
|
EBITDA - precious metals
|
|
$
|
73,736
|
|
|
$
|
48,832
|
|
|
$
|
280,164
|
|
|
$
|
173,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zeolite
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tons sold
|
|
|
3,045
|
|
|
|
2,500
|
|
|
|
8,823
|
|
|
|
8,354
|
|
Average Sales Price/Ton
|
|
$
|
227.59
|
|
|
$
|
192.45
|
|
|
$
|
218.68
|
|
|
$
|
197.89
|
|
Net income (Loss)/Ton
|
|
$
|
(4.23
|
)
|
|
$
|
38.39
|
|
|
$
|
22.03
|
|
|
$
|
41.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross zeolite revenue
|
|
$
|
693,008
|
|
|
$
|
481,126
|
|
|
$
|
1,929,383
|
|
|
$
|
1,653,201
|
|
Cost of sales
|
|
|
(681,888
|
)
|
|
|
(371,690
|
)
|
|
|
(1,685,551
|
)
|
|
|
(1,254,821
|
)
|
Operating expenses
|
|
|
(23,468
|
)
|
|
|
(12,623
|
)
|
|
|
(47,736
|
)
|
|
|
(51,214
|
)
|
Non-operating expenses
|
|
|
(519
|
)
|
|
|
(844
|
)
|
|
|
(1,732
|
)
|
|
|
(3,021
|
)
|
Net income (loss) - zeolite
|
|
|
(12,867
|
)
|
|
|
95,969
|
|
|
|
194,364
|
|
|
|
344,145
|
|
Depreciation
|
|
|
41,776
|
|
|
|
42,015
|
|
|
|
122,619
|
|
|
|
140,395
|
|
EBITDA - zeolite
|
|
$
|
28,909
|
|
|
$
|
137,984
|
|
|
$
|
316,983
|
|
|
$
|
484,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-wide
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross revenue
|
|
$
|
2,051,713
|
|
|
$
|
1,007,231
|
|
|
$
|
5,580,562
|
|
|
$
|
4,335,413
|
|
Production costs
|
|
|
(1,950,504
|
)
|
|
|
(1,442,322
|
)
|
|
|
(5,070,798
|
)
|
|
|
(4,685,388
|
)
|
Operating expenses
|
|
|
(213,171
|
)
|
|
|
(235,916
|
)
|
|
|
(1,195,642
|
)
|
|
|
(903,845
|
)
|
Non-operating income (expenses)
|
|
|
12,730
|
|
|
|
(3,731
|
)
|
|
|
588,299
|
|
|
|
(4,083
|
)
|
Loss on abandonment of mineral properties
|
|
|
-
|
|
|
|
(318,502
|
)
|
|
|
-
|
|
|
|
(318,502
|
)
|
Net loss
|
|
|
(99,232
|
)
|
|
|
(993,240
|
)
|
|
|
(97,579
|
)
|
|
|
(1,576,405
|
)
|
Depreciation,& amortization
|
|
|
223,196
|
|
|
|
217,650
|
|
|
|
665,604
|
|
|
|
667,298
|
|
EBITDA
|
|
$
|
123,964
|
|
|
$
|
(775,590
|
)
|
|
$
|
568,025
|
|
|
$
|
(909,107
|
)
|
Certain amounts shown in this table may not add exactly to total amounts due to rounding differences
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition, continued:
Company-Wide
For the third quarter of 2021, we recognized a net loss of $99,232 on sales of $2,051,713 and other income and expense of $12,730 after depreciation and amortization of $223,196. We reported a net loss of $993,240 in the third quarter of 2020 on sales of $1,007,231, after depreciation and amortization of $217,650.
For the first nine months of 2021, we recognized a net loss of $97,579 on sales of $5,580,562 and other income and expense of $588,299, after depreciation and amortization of $665,604. We reported a net loss of $1,576,405 for the first nine months of 2020 on sales of $4,335,413, after depreciation and amortization of $667,298.
For the three and nine months ended September 30, 2021, EBITDA was a positive $123,964 and $568,025 compared to a negative $775,590 and $909,107 for the same periods in 2020.
For the three and nine months ended September 30, 2021, general and administrative expenses were $112,744 and $572,905 compared to $110,051 and $429,973 for the same periods of 2020.
Antimony
Antimony has been the focus of the Company since its inception. China, historically the sole supplier of lump antimony trisulfide and the dominate supplier of antimony in general, has held back the export of all antimony products leading to a marked increase in price in 2021.
The Madero crew continued to produce crude antimony oxide and some of this production was simultaneously diverted to crude metal. While the price is high the Company has decided to convert some of its crude oxide to finished metal. This move will eliminate shipping charges for the finished metal as the product will be shipped directly to the customer.
Two new furnaces in Thompson Falls are fully operational and started producing test batches of antimony trisulphide in early October. Throughput nameplate capacity of antimony trisulphide will increase from 100 lbs per day to approximately 1100 lbs per day. A second sample of antimony trisulfide lump has been prepared and sent for grinding and laboratory analysis. If the quality meets specifications, the second sample will be sent to the Picatinny Arsenal of the U. S. Department of Defense.
The Company continues to track developments at Ambri, Inc. which has purchased the Company’s antimony metal during the year and may be a significant customer in the future.
For the three and nine month periods ended September 30, 2021, we sold 306,045 pounds and 827,131 pounds of antimony compared to 146,842 and 675,993 pounds for the three and nine month periods ended September 30, 2020. The raw material received from our North American supplier increased by approximately 64,077 and 238,195 pounds for the three and nine month periods ended September 30, 2021, compared to the same periods for 2020. We had an increase in raw material from Mexico of approximately 87,223 pounds for the three month period and a decrease of 86 pounds for the nine month period ended September 30, 2021, compared to the same periods for 2020.
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition, continued:
The average sales price of antimony during the three and nine month periods ended September 30, 2021 was $4.20 and $4.08 per pound compared to $3.25 and $3.71 during the same periods in 2020.
Precious Metals
Discussions have been initiated with Canadian and American gold and silver exploration companies, presently operating in Mexico, with a view towards a joint venture option agreement. A potential joint venture would ideally have existing personnel with experience in exploration for gold and silver in Mexico and would initially fund and manage the initial exploration programs as part of their earn-in requirement. Traditionally summer is a slow time for junior exploration companies and progress on negotiations has been slower than expected.
For the three and nine month periods ended September 30, 2021, revenue for precious metals from North American sources was $73,736 and $280,164 compared to $48,832 and $173,029 for the same periods of 2020.
Current and prior periods’ revenue from precious metals is as follows:
Precious Metal Sales
Silver/Gold
|
|
For the three months ended
September 30,
|
|
|
For the nine months ended
September 30,
|
|
Montana
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Ounces Gold Shipped (Au)
|
|
|
12
|
|
|
|
6
|
|
|
|
34
|
|
|
|
31
|
|
Ounces Silver Shipped (Ag)
|
|
|
5,638
|
|
|
|
2,403
|
|
|
|
15,246
|
|
|
|
11,434
|
|
Total Revenues
|
|
$
|
73,736
|
|
|
$
|
48,832
|
|
|
$
|
280,164
|
|
|
$
|
173,029
|
|
Bear River Zeolite (BRZ)
On August 12, 2021 the bearings went out on the primary jaw crusher, essentially shutting down production. The Company was able to source and purchase a refurbished jaw crusher, which shortened the down time that would have been required for repairs and dovetailed with the continuing program to upgrade the efficiency and reliability of the zeolite plant. Installation of the new jaw crusher was completed and online by September 3, 2021. Pit production test work utilizing a D-9 dozer to rip the in-situ zeolite instead of drilling and blasting continues. New uses and increased awareness of several of the recognized uses of zeolite are becoming known to the public. This is especially apparent in the advanced treatment requirements for mine discharge water and in the removal of naturally occurring radioactive isotopes in otherwise potable drinking water sources.
For the three and nine month periods ended September 30, 2021, BRZ sold 3,045 and 8,823 tons of zeolite compared to 2,500 and 8,354 tons in the same periods of 2020.
For the three and nine month periods ended September 30, 2021, BRZ realized a net loss of $12,867 and income of $194,364 after depreciation of $41,776 and $122,619 compared to a net income of $95,969 and $344,145 after depreciation of $42,015 and $140,395 for the same period of 2020.
BRZ realized an EBITDA for the three and nine month periods ended September 30, 2021 of $28,909 and $316,983 compared to $137,984 and $484,540 for the same periods in 2020.
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition, continued:
Financial Position
Financial Condition and Liquidity
|
|
September 30,
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
23,064,211
|
|
|
$
|
1,808,161
|
|
Current liabilities
|
|
|
(1,824,055
|
)
|
|
|
(4,477,543
|
)
|
Net Working Capital
|
|
$
|
21,240,156
|
|
|
$
|
(2,669,382
|
)
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
|
|
September 30,
2021
|
|
|
September 30,
2020
|
|
Cash used by operations
|
|
$
|
(2,477,864
|
)
|
|
$
|
(566,587
|
)
|
Cash provided (used) by investing:
|
|
|
|
|
|
|
|
|
Cash used for capital outlay
|
|
|
(616,479
|
)
|
|
|
(220,455
|
)
|
Proceeds from redemption of certificates of deposit
|
|
|
210,184
|
|
|
|
-
|
|
Cash provided (used) by financing:
|
|
|
|
|
|
|
|
|
Net payments (to) from factor
|
|
|
|
|
|
|
(5,032
|
)
|
Payments on notes payable to bank
|
|
|
(100,000
|
)
|
|
|
(46,270
|
)
|
Payments on Hillgrove advances payable
|
|
|
(1,020,799
|
)
|
|
|
-
|
|
Proceeds from common stock issued, net
|
|
|
23,342,180
|
|
|
|
1,813,068
|
|
Proceeds from exercise of warrants
|
|
|
1,790,703
|
|
|
|
-
|
|
Principal paid on long-term debt
|
|
|
(86,426
|
)
|
|
|
(30,876
|
)
|
Payments on advances from related party
|
|
|
(56,416
|
)
|
|
|
(64,650
|
)
|
Proceeds from note payable-SBA
|
|
|
-
|
|
|
|
443,400
|
|
Change in checks issued and payable
|
|
|
(86,685
|
)
|
|
|
(2,879
|
)
|
Net change in cash, cash equivalents and restricted cash
|
|
$
|
20,898,398
|
|
|
$
|
1,319,719
|
|
Our net working capital increased by $23,909,538 from December 31, 2020 to September 30, 2021. Our cash and cash equivalents increased by $20,898,398 during the same period. We spent $616,479 for capital items, our debt decreased by $1,901,479 including $1,020,799 paid to Hillgrove, and our accounts payable and other accrued liabilities decreased by $1,895,860 including $1,120,730 paid for an export tax assessment. During the first nine months of 2021, we raised approximately $23.3 million from sale of shares of common stock and approximately $1.8 million for the exercise of warrants.
We have estimated commitments and improvements of less than $100,000 to finish building and installing the precious metals leach circuits. However, this funding will be implemented after its geological study of the Los Juarez property. The Company plans to conduct a proper study of the Los Juarez property and its tailings at its flotation plant and pending the results of these studies decide how to proceed regarding a drill program and/or mining of the property. The study may involve a partnership with a junior mining Company in order to assist US Antimony in the proper characterization of the deposit. Should the deposit be of great value, the Company will likely move the flotation plant closer to the mine. We believe that with our current cash balance, along with the future cash flow from operations and operating agreements, we have adequate liquid assets to meet these commitments and service our debt for the next twelve months.
PART I - FINANCIAL INFORMATION, CONTINUED:
ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition, continued:
At September 30, 2021, the Company’s condensed consolidated financial statements show working capital of approximately $21.2 million and an accumulated deficit of approximately $32.7 million. The Company continues to search for areas to reduce production costs, and expects improvement in cash flow for the remainder of the year from the sale of antimony and zeolite along with the increased price of antimony as the price of antimony has been increasing during the past nine months.
In the first half of 2021, the Company raised net proceeds of approximately $23.3 million from sale of shares of its common stock and approximately $1.8 million from the exercise of stock purchase warrants. These funds have been and will continue to be used for general corporate purposes, working capital, hiring of additional labor, leverage for reducing legacy contracts, a geochemical, geological, and geophysical study of the Los Juarez property, additional managerial staff at USAC and BRZ headquarters, a revised website including measures aimed at increased visibility for advertising, more labor at its Mexican smelter, repair and improved infrastructure at the Mexican smelter, potential securement of additional antimony mine reserves in Mexico, and improvement of furnaces in Montana. With the funds raised, management believes the Company has sufficient funds to sustain its operations and meet its financial obligations during the 12 months following the date of issuance of these condensed consolidated financial statements.
ITEM 3.
None