10-Q: United States Antimony Corp. Reports Mixed Results in Q2 2024, Shuts Down Mexican Operations

United States Antimony Corporation reported a net income of $202,792 for the second quarter of 2024, despite a loss from continuing operations, and announced the shutdown of its Mexican subsidiary.

Summary

• United States Antimony Corporation (USAC) reported a net income of $202,792 for the three months ended June 30, 2024, a significant improvement compared to a net loss of $336,465 in the same period last year.
• However, the company experienced a loss from continuing operations of $55,704 for the quarter, but a gain of $30,397 for the six months ended June 30, 2024.
• The company has decided to sell its Mexican subsidiary, US Antimony de Mexico, S.A. de C.V. (USAMSA), and has classified its operations as discontinued.
• USAC also plans to sell a personal residence in Idaho near its Bear River Zeolite (BRZ) operation.
• Revenue for the three months ended June 30, 2024, was $2,813,780, up from $2,265,117 in the same period last year, and $5,645,170 for the six months ended June 30, 2024, up from $4,475,961 in the same period last year.
• Antimony product revenue increased to $1,814,778 for the three months ended June 30, 2024, and $4,043,163 for the six months ended June 30, 2024, driven by higher volume and demand.
• Zeolite product revenue also increased to $994,386 for the three months ended June 30, 2024, and $1,597,391 for the six months ended June 30, 2024, due to higher sales prices and volumes.
• Precious metals revenue decreased significantly to $4,616 for both the three and six months ended June 30, 2024, compared to $126,321 and $242,433 respectively in the same periods last year.
• The company's working capital increased to $13,454,756 as of June 30, 2024, compared to $12,963,081 at the end of 2023.
• The company had cash and cash equivalents of $12,391,431 as of June 30, 2024.
• The company has a new installment contract payable to Komatsu for $392,094, related to a wheel loader purchase.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to the net income and revenue growth, but tempered by the loss from continuing operations, the shutdown of the Mexican subsidiary, and the ineffective disclosure controls. The company is taking steps to improve its financial position, but faces some challenges.

Positives

• The company achieved a net income of $202,792 for the quarter, a significant turnaround from the previous year's loss.
• Revenue increased across both antimony and zeolite product lines.
• Working capital and cash reserves have improved.
• The company is taking steps to streamline operations by selling off underperforming assets such as the Mexican subsidiary.

Negatives

• The company experienced a loss from continuing operations of $55,704 for the quarter.
• Precious metals revenue decreased significantly.
• Gross profit for the zeolite segment decreased due to increased maintenance and inefficient facility expenses.
• The company's disclosure controls and procedures were deemed ineffective due to the small size of the accounting staff.

Risks

• The company's ability to access capital or raise funds when needed is not assured.
• The company may not realize the value of its USAMSA assets in Mexico or personal residence in Idaho upon sale or disposal.
• The company's mineral operations are subject to government regulation.
• The company faces risks related to fluctuations in prices for antimony and precious metals.
• The company's operations are subject to various risks including labor disputes, leaks, fires, flooding, landslides, power outages, explosions, unscheduled downtime, transportation interruptions, war and terrorist activities, global pandemics or civil unrest, and cybersecurity and business disruptions.
• The company's small accounting staff may prevent adequate controls in the future.

Future Outlook

The company intends to fund its cash requirements with its cash and cash equivalents, cash generated from its operations, and capital raised from various investment vehicles and believes cash from these sources are sufficient to cover our requirements for the next 12 months. The company is focused on generating positive cash flow to fund its mission.

Management Comments

• Our mission is to service our employees, customers, and vendors well and grow our business profitably both organically and through strategic acquisitions and partnerships to increase shareholder value.
• The Company is focused on generating positive cash flow to fund its mission.
• One method of improving positive cash flow has been through our review of each segments operations and financial results to make informed decisions that benefit the Company overall.

Industry Context

The company operates in the antimony, zeolite, and precious metals markets. The shutdown of the Mexican operations reflects a strategic shift to focus on more profitable segments. The increase in antimony and zeolite revenue suggests a positive trend in demand for these products. The company is the only significant U.S. producer of antimony products.

Comparison to Industry Standards

• The company's performance in the antimony sector shows a significant increase in revenue and gross profit, indicating a strong position in the market, especially as the only significant U.S. producer.
• The zeolite segment's revenue growth is positive, but the decrease in gross profit due to maintenance and inefficiency issues suggests a need for operational improvements.
• The significant decrease in precious metals revenue and gross profit indicates a potential weakness in this segment, possibly due to reliance on a single supplier.
• The company's decision to sell its Mexican operations is a strategic move to cut losses, which is a common practice in the mining industry when certain assets become unprofitable.
• The company's working capital and cash position are relatively healthy, which is important for sustaining operations and funding future growth.

Legal Proceedings

• The company received four significant and substantial citations from MSHA, all of which have been rectified by BRZ.

Stakeholder Impact

• Shareholders may be impacted by the sale of the Mexican subsidiary and the potential sale of the Idaho residence.
• Employees may be impacted by the shutdown of the Mexican operations.
• Customers may be impacted by changes in the company's product offerings and supply chain.
• Suppliers may be impacted by changes in the company's sourcing strategies.

Next Steps

• The company intends to sell its USAMSA subsidiary over the next year.
• The company intends to sell the personal residence in Idaho near its BRZ operation.
• The company is reviewing various plans to strengthen its internal controls.
• The company will continue to research other domestic and non-domestic sources for antimony ore that are economically profitable.

Key Dates

Keywords

antimony, zeolite, precious metals, mining, financial results, discontinued operations, USAMSA, Mexico, Bear River Zeolite, capital expenditures