UNITED STATES ANTIMONY CORP - Annual Report: 2017 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

 

For the fiscal year ended December 31, 2017

 

 

  For the transition period __________ to __________

 

 

Commission file number 001-08675

UNITED STATES ANTIMONY CORPORATION

(Exact name of registrant as specified in its charter)

 

Montana		81-0305822
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

P.O. Box 643, Thompson Falls, Montana	59873
(Address of principal executive offices)	(Zip Code)

 

Registrant's telephone number, including area code: (406) 827-3523

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☑

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller reporting company	☑

 

Yes ☐ No ☑

 

The aggregate market value of the voting stock held by non-affiliates of the registrant, based on the average bid price of such stock, was $18,797,116 as of June 30, 2017.

 

At April 2, 2018, the registrant had 67,488,153 outstanding shares of par value $0.01 common stock.

 

UNITED STATES ANTIMONY CORPORATION

2017 ANNUAL REPORT

 

TABLE OF CONTENTS

 

PART I
ITEM 1.	DESCRIPTION OF BUSINESS		1
ITEM 1A.	RISK FACTORS		5
ITEM 1B.	UNRESOLVED STAFF COMMENTS		6
ITEM 2.	DESCRIPTION OF PROPERTIES		6
ITEM 3.	LEGAL PROCEEDINGS		15
ITEM 4.	MINE SAFETY DISCLOSURES		15
PART II
ITEM 5.	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS		15
ITEM 6.	SELECTED FINANCIAL DATA		16
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS		16
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET		22
ITEM 7B.	CRITICAL ACCOUNTING ESTIMATES		22
ITEM 8.	FINANCIAL STATEMENTS		22
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		22
ITEM 9A.	CONTROLS AND PROCEDURES		22
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT		23
ITEM 11.	EXECUTIVE COMPENSATION		26
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		27
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		29
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICE		29
PART IV
ITEM 15.	EXHIBITS AND REPORTS ON FORM 8-K		30
SIGNATURES			33
CERTIFICATIONS
FINANCIAL STATEMENTS			F-1-F-22

 

 

PART I

 

General

 

Item 1. Description of Business

 

General

 

	Explanatory Note: As used in this report, the terms "we," "us" and "our" are used to refer to United States Antimony Corporation and, as the context requires, its management.

Some of the information in this Form 10-K contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words as "may," "will," "expect," "anticipate," "believe," "estimate" and "continue," or similar words. You should read statements that contain these words carefully because they:

 

History

United States Antimony Corporation, or USAC, was incorporated in Montana in January 1970 to mine and produce antimony products. In December 1983, we suspended antimony mining operations but continued to produce antimony products from domestic and foreign sources. In April 1998, we formed United States Antimony SA de CV or USAMSA, to mine and smelt antimony in Mexico. Bear River Zeolite Company or BRZ, was incorporated in 2000, and it is mining and producing zeolite in southeastern Idaho. On August 19, 2005, USAC formed Antimonio de Mexico, S. A. de C. V. to explore and develop antimony and silver deposits in Mexico. Our principal business is the production and sale of antimony, silver, gold, and zeolite products. On May 16, 2012, we started trading on the NYSE MKT (now NYSE AMERICAN) under the symbol UAMY.

 

Antimony Division

 

Our antimony smelter and precious metals plant is located in the Burns Mining District of Sanders County, Montana, approximately 15 miles west of Thompson Falls, MT. We hold 2 patented mill sites where the plant is located. We have no "proven reserves" or "probable reserves" of antimony, as these terms are defined by the Securities and Exchange Commission. Environmental restrictions preclude mining at this site.

 

Mining was suspended in December 1983, because antimony could be purchased more economically from foreign sources.

 

For 2017, and since 1983, we relied on foreign sources for raw materials, and there are risks of interruption in procurement from these sources and/or volatile changes in world market prices for these materials that are not controllable by us. We have developed sources of antimony in Mexico but we are still depending on foreign companies for raw material in the future. We expect more raw materials from our own properties for 2018 and later years. We continue working with suppliers in North America, Central America, Europe, Australia, and South America.

 

We currently own 100% of the common stock, equipment, and the leases on real property of United States Antimony, Mexico S.A. de C.V. or “USAMSA”, which was formed in April 1998. We currently own 100% of the stock in Antimony de Mexico SA de CV (AM) which owns the San Miguel concession of the Los Juarez property. USAMSA has three divisions (1) the Madero smelter in Coahuila, (2) the Puerto Blanco flotation mill and oxide circuit in Guanajuato that is ramping up for 2018, and (3) mining properties that include the Los Juarez mineral deposit with concessions in Queretaro, the Wadley mining concession in San Luis Potosi, the Soyatal deposits in Queretaro, and the Guadalupe properties in Zacatecas.

 

 

In our existing operations in Montana, we produce antimony oxide, sodium antimonate, antimony metal, and precious metals. Antimony oxide is a fine, white powder that is used primarily in conjunction with a halogen to form a synergistic flame retardant system for plastics, rubber, fiberglass, textile goods, paints, coatings and paper. Antimony oxide is also used as a color fastener in paint, as a catalyst for production of polyester resins for fibers and film, as a catalyst for production of polyethylene pthalate in plastic bottles, as a phosphorescent agent in fluorescent light bulbs, and as an opacifier for porcelains. Sodium antimonate is primarily used as a fining agent (degasser) for glass in cathode ray tubes and as a flame retardant. We also sell antimony metal for use in bearings, storage batteries and ordnance.

 

We estimate (but have not independently confirmed) that our present share of the domestic market and international market for antimony oxide products is approximately 4% and less than 1%, respectively. We are the only significant U.S. producer of antimony products, while China supplies 92% of the world antimony demand. We believe we are competitive both domestically and world-wide due to the following:

 

 

Following is a five year schedule of our antimony sales:

 

Schedule of Antimony Sales
	Lbs Metal		Average
Year	Contained	$	Price/Lb
2017	1,891,439	$7,588,470	$4.01
2016	2,936,880	$8,744,170	$2.98
2015	2,487,321	$9,863,933	$3.97
2014	1,727,804	$8,132,410	$4.71
2013	1,579,182	$8,375,158	$5.30

 

Concentration of Sales:

 

During the two years ended December 31, 2017, the following sales were made to our three largest customers:

 

Sales to	For the Year Ended
Largest Customers	December 31, 2017	December 31, 2016
Mexichem Specialty Compounds Inc.	$3,335,046	$2,108,998
East Penn Manufacturing Inc	512,621	1,147,854
Kohler Corporation	1,928,962	1,474,854
	$5,776,629	$4,731,706
% of Total Revenues	56.50%	39.80%

 

 

While the loss of one of our three largest customers would be a problem in the short term, we have numerous requests from potential buyers that we cannot fill, and we could quickly, in the present market conditions, be able to replace the lost sales. Loss of all three of our largest customers would be more serious and may affect our profitability.

 

Marketing: We employ full-time marketing personnel and have negotiated various commission-based sales agreements with other chemical distribution companies.

 

Antimony Price Fluctuations: Our operating results have been, and will continue to be, related to the market prices of antimony metal, which have fluctuated widely in recent years. The volatility of prices is illustrated by the following table, which sets forth the average prices of antimony metal per pound, as reported by sources deemed reliable by us.

 

 

A five year price range of prices for antimony oxide and antimony metal, per pound, was as follows:

 

	USAC SALES
	Oxide	Metal	Combined	USA	Rotterdam
			(Metal Contained Price)
	Average	Average	Average	Average	Average
Year	Price/Lb	Price/Lb	Price/Lb	Price/Lb	Price/Lb
2017	$3.40	$3.41	$4.01	$3.77	$3.78
2016	$3.11	$2.62	$2.98	$2.99	$2.94
2015	$3.34	$3.71	$3.97	$3.41	$3.32
2014	$4.00	$4.18	$4.71	$4.40	$4.31
2013	$4.41	$4.69	$5.30	$4.73	$4.78

 

Antimony metal prices are determined by a number of variables over which we have no control. These include the availability and price of imported metals, the quantity of new metal supply, and industrial demand. If metal prices decline and remain depressed, our revenues and profitability may be adversely affected.

 

We use various antimony raw materials to produce our products. We currently obtain antimony raw material from sources in Canada and Mexico.

 

Zeolite Division

 

We own 100% of Bear River Zeolite Company, (BRZ), an Idaho corporation that was incorporated on June 1, 2000. BRZ has a lease with Webster Farm, L.L.C. that entitles BRZ to surface mine and process zeolite on property located near Preston, Idaho, in exchange for a royalty payment. In 2010 the royalty was adjusted to $10 per ton sold. The current minimum annual royalty is $60,000. In addition, BRZ has more zeolite on U.S. Bureau of Land Management land. A company controlled by the estate of Al Dugan, a significant stockholder and, as such, an affiliate of USAC, receives a payment equal to 3% of net sales on zeolite products. William Raymond and Nancy Couse are paid a royalty that varies from $1 to $5 per ton. On a combined basis, royalties vary from 8%-13%. BRZ has constructed a processing plant on the property and it has improved its productive capacity. In addition to a large amount of fully depreciated equipment that has been transferred from the USAC division, we have spent approximately $3,945,000 to purchase and construct the processing plant as of December 31, 2017.

 

We have no "proven reserves" or "probable reserves" of zeolite, as these terms are defined by the Securities and Exchange Commission.

 

"Zeolite" refers to a group of industrial minerals that consist of hydrated aluminosilicates that hold cations such as calcium, sodium, ammonium, various heavy metals, and potassium in their crystal lattice. Water is loosely held in cavities in the lattice. BRZ zeolite is regarded as one of the best zeolites in the world due to its high CEC of approximately 180-220 meq/100 gr., its hardness and high clinoptilolite content, its absence of clay minerals, and its low sodium content. BRZ's zeolite deposits’ characteristics which make the mineral useful for a variety of purposes including:

 

 

 

Environmental Matters

 

Our exploration, development and production programs conducted in the United States are subject to local, state and federal regulations regarding environmental protection. Some of our production and mining activities are conducted on public lands. We believe that our current discharge of waste materials from our processing facilities is in material compliance with environmental regulations and health and safety standards. The U.S. Forest Service extensively regulates mining operations conducted in National Forests. Department of Interior regulations cover mining operations carried out on most other public lands. All operations by us involving the exploration for or the production of minerals are subject to existing laws and regulations relating to exploration procedures, safety precautions, employee health and safety, air quality standards, pollution of water sources, waste materials, odor, noise, dust and other environmental protection requirements adopted by federal, state and local governmental authorities. We may be required to prepare and present data to these regulatory authorities pertaining to the effect or impact that any proposed exploration for, or production of, minerals may have upon the environment. Any changes to our reclamation and remediation plans, which may be required due to changes in state or federal regulations, could have an adverse effect on our operations. The range of reasonably possible loss in excess of the amounts accrued, by site, cannot be reasonably estimated at this time.

 

We accrue environmental liabilities when the occurrence of such liabilities is probable and the costs are reasonably estimable. The initial accruals for all our sites are based on comprehensive remediation plans approved by the various regulatory agencies in connection with permitting or bonding requirements. Our accruals are further based on presently enacted regulatory requirements and adjusted only when changes in requirements occur or when we revise our estimate of costs to comply with existing requirements. As remediation activity has physically commenced, we have been able to refine and revise our estimates of costs required to fulfill future environmental tasks based on contemporaneous cost information, operating experience, and changes in regulatory requirements. In instances where costs required to complete our remaining environmental obligations are clearly determined to be in excess of the existing accrual, we have adjusted the accrual accordingly. When regulatory agencies require additional tasks to be performed in connection with our environmental responsibilities, we evaluate the costs required to perform those tasks and adjust our accrual accordingly, as the information becomes available. In all cases, however, our accrual at year-end is based on the best information available at that time to develop estimates of environmental liabilities.

 

Antimony Processing Site

 

We have environmental remediation obligations at our antimony processing site near Thompson Falls, Montana ("the Stibnite Hill Mine Site"). We are under the regulatory jurisdiction of the U.S. Forest Service and subject to the operating permit requirements of the Montana Department of Environmental Quality. At December 31, 2017 and 2016, we have accrued $100,000 to fulfill our environmental responsibilities.

 

BRZ

 

During 2001, we recorded a reclamation accrual for our BRZ subsidiary, based on an analysis performed by us and reviewed and approved by regulatory authorities for environmental bonding purposes. The accrual of $7,500 represents our estimated costs of reclaiming, in accordance with regulatory requirements, the acreage disturbed by our zeolite operations, and remains unchanged at December 31, 2017.

 

 

General

 

Reclamation activities at the Thompson Falls Antimony Plant have proceeded under supervision of the U.S. Forest Service and Montana Department of Environmental Quality. We have complied with regulators' requirements and do not expect the imposition of substantial additional requirements.

 

We have posted cash performance bonds with a bank and the U.S. Forest Service in connection with our reclamation activities.

 

We believe we have accrued adequate reserves to fulfill our environmental remediation responsibilities as of December 31, 2017. We have made significant reclamation and remediation progress on all our properties over thirty years and have complied with regulatory requirements in our environmental remediation efforts.

 

Employees

 

As of December 31, 2017, we employed 27 full-time employees in Montana. In addition, we employed 16 people at our zeolite plant in Idaho, and more than 60 employees at our mining, milling and smelting operation in Mexico. The number of full-time employees may vary seasonally. None of our employees are covered by any collective bargaining agreement.

 

Other

 

We hold no material patents, licenses, franchises or concessions. However, we consider our antimony processing plants proprietary in nature.

 

We are subject to the requirements of the Federal Mining Safety and Health Act of 1977, the Occupational Safety and Health Administration's regulations, requirements of the state of Montana and the state of Idaho, federal and state health and safety statutes and Sanders County, Montana and Franklin County, Idaho health ordinances.

 

Item 1A Risk Factors

 

There may be events in the future that we are not able to accurately predict or over which we have no control. The risk factors listed below, as well as any cautionary language in this report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements.

 

If we were liquidated, our common stockholders could lose part, or all, of their investment.

 

In the event of our dissolution, the proceeds, if any, realized from the liquidation of our assets will be distributed to our stockholders only after the satisfaction of the claims of our creditors and preferred stockholders. The ability of a purchaser of shares to recover all, or any portion, of the purchase price for the shares, in that event, will depend on the amount of funds realized and the claims to be satisfied by those funds.

 

We may have un-asserted liabilities for environmental reclamation.

 

Our research, development, manufacturing and production processes involve the controlled use of hazardous materials, and we are subject to various environmental and occupational safety laws and regulations governing the use, manufacture, storage, handling, and disposal of hazardous materials and some waste products. The risk of accidental contamination or injury from hazardous materials cannot be completely eliminated. In the event of an accident, we could be held liable for any damages that result and any liability could exceed our financial resources. We also have one ongoing environmental reclamation and remediation projects at our current production facility in Montana. Adequate financial resources may not be available to ultimately finish the reclamation activities if changes in environmental laws and regulations occur, and these changes could adversely affect our cash flow and profitability. We do not have environmental liability insurance now, and we do not expect to be able to obtain insurance at a reasonable cost. If we incur liability for environmental damages while we are uninsured, it could have a harmful effect on our financial condition and results of operations. The range of reasonably possible losses from our exposure to environmental liabilities in excess of amounts accrued to date cannot be reasonably estimated at this time.

 

We have accruals for asset retirement obligations and environmental obligations.

 

We have accruals totaling $271,572 on our balance sheet at December 31, 2017, for our environmental reclamation responsibilities and estimated asset retirement obligations. If we are not able to adequately perform these activities on a timely basis, we could be subject to fines and penalties from regulatory agencies.

 

 

Item 1B Unresolved Staff Comments

 

Not Applicable

 

Item 2 Description of Properties

 

ANTIMONY DIVISION

 

Our antimony smelter and precious metals plant is located in the Burns Mining District, Sanders County, Montana, approximately 14 miles west of Thompson Falls on Montana Highway 471. This highway is asphalt, and the property is accessed by cars and trucks. The property includes two five-acre patented mill sites that are owned in fee-simple by us. The claims are U. S. Antimony Mill Site No. 1 (Mineral Survey 10953) and U. S. Antimony Mill Site No. 2 (Mineral Survey 10953).

 

The U. S. Antimony Mill Sites were used to run a flotation mill and processing plant for antimony that we mined on adjacent claims that have been sold. Presently, we run a smelter that includes furnaces of a proprietary design to produce antimony metal, antimony oxide, and various other products. We also run a precious metals plant. The facility includes 6 buildings and our main office. There are no plans to resume mining on the claims that have been sold or abandoned, although the mineral rights have been retained on many of the patented mining claims. The U. S. Forest Service and Montana Department of Environmental Quality have told us that the resumption of mining would require an Environmental Impact Statement, massive cash bonding, and would be followed by years of law suits. The mill site is serviced with three-phase electricity from Northwest Power, and water is pumped from a well.

 

We claim no reserves on any of these properties.

 

 

 

 

Antimony mining and milling operations in the U.S. were curtailed during 1983 due to continued declines in the price of antimony. We are currently purchasing foreign raw antimony materials and producing our own raw materials from our properties in Mexico. We continue to produce antimony metal, oxide, sodium antimonite, and precious metals from our processing facility near Thompson Falls, Montana.

 

ANTIMONY MINERAL PROPERTIES

 

Los Juarez Group

 

We hold properties that are collectively called the “Los Juarez” property, in Queretaro, as follows:

 

1.	San Miguel I and II were purchased by a USAC subsidiary, Antimonio de Mexico, S. A. de C. V (AM), for $1,480,500. As of December 31, 2017, we have paid for the property, and have incurred significant permitting costs. The property consists of 40 hectares.
2.	San Juan I and II are concessions owned by AM and include 466 hectares.
3.	San Juan III is held by a lease agreement by AM in which we will pay a 10% royalty, based on the net smelter returns from another USAC Mexican subsidiary, named United States Antimony Mexico, S. A. de C. V. or USAMSA. It consists of 214 hectares.

 

The concessions collectively constitute 720 hectares. The claims are accessed by roads that lead to highways.

 

 

 

 

 

Part of the USAC Mexican property, including San Miguel I, II and part of San Juan III, was originally drilled by the Penoles Company in 1970, when antimony metal prices were high. They did not proceed with the property, due to the complex metallurgy of antimony. Subsequently, the Mexican Government did additional work and reported a deposit of mineralized material of 1,000,000 metric tons (mt) grading 1.8% antimony and 8.1 ounces of silver per metric ton (opmt) in Consejo de Recursos  Minerales (Publicacion M-4e). Such a report does not qualify as a comprehensive evaluation, such as a final or bankable feasibility study that concludes legal and technical viability, and economic feasibility. The Securities and Exchange Commission does not recognize this report, and we claim no reserves.

 

The mineralized zone is a classic jasperoid-type deposit in the Cretaceous El Doctor Limestone. The mineralization is confined to silicified jasperiod pipes intruded upwards into limestone. The zone strikes north 70 degrees west. The dimension of the deposit is still conjectural. However, the strike length of the jasperoid is more than 3,500 meters. 

 

The mineralization is typically very fine-grained stibnite with silver and gold.  It is primarily sulfide in nature due to its encapsulation in silica. The mining for many years will be by open pit methods. Eventually it will be by underground methods. At the present time, mining has included hauling dump rock and rock from mine faces.

 

 

Soyatal Mining District, Pinal De Amoles, Queretaro, Mexico

 

Soyatal

 

Reportedly, the Soyatal District was the third largest producer of antimony in Mexico. U. S. Geological Survey Bulletin 960-B, 1948, Donald E. White, Antimony Deposits of Soyatal District, State of Queretaro, Mexico records the production from 1905-1943 at 25,600 tons of antimony metal content. In 1942, the mines produced ore containing 1,737 tons of metal, and in 1943, they produced ore containing 1,864 tons of metal. This mining was performed primarily all by hand labor, with no compressors or trammers, and the ore was transported by mules, in sacks, to the railroad. Recoveries were less than 40% of the values. Mining continued throughout World War II.

 

Mr. White remarks p. 84 and 85, “In the Soyatal Mines, as in practically all antimony mines, it is difficult to estimate the reserves, for the following reasons:

 

 

Minimal ore, primarily through hand mining and sorting methods, has continued at the Soyatal properties since 1943. We do not claim any reserves at Soyatal as defined by the SEC.

 

USAMSA Puerto Blanco Flotation Mill, Guanajuato, Mexico

 

The flotation plant has a capacity of 140 metric tons per day. It includes a 30” x 42” jaw crusher, a 4’x 8’ double-deck screen, a 36” cone crusher, an 8’x 36” Harding type ball mill, and eight No. 24 Denver sub A type flotation machines, an 8’ disc filter, front end loaders, tools and other equipment. The flotation circuit is used for the processing of rock from Los Juarez, Guadalupe, and other properties. We are in the process of installing a 400 metric ton per day flotation mill that will be dedicated to processing ore from our Los Juarez property. The crushing equipment currently in place is adequate for both flotation mills. An oxide circuit was added to the plant in 2013 and 2014 to mill oxide ores from Soyatal and other properties. It includes a vertical shaft impactor, 3 ore bins, 8 conveyors, a 4’ x 6’ high frequency screen, jig, 8 standard concentrating tables, 5 pumps, sand screw and two buildings. The capacity of the oxide circuit is 50 tons per day. We are presently installing a cyanide leach circuit and settling pond that will be used to recover precious metals from our Los Juarez mine. During 2017 and 2016, less than 10% of the mill’s capacity was utilized.

 

USAMSA Madero Smelter, Estacion Madero, Parras De La Fuente, Coahuila, Mexico

 

USAC, through its wholly owned subsidiary, USAMSA, owns and operates a smelting facility at Estacion Madero, in the Municipio of Parras de la Fuente, Coahuila, Mexico. The property includes 13.48 hectares. Seventeen small rotating furnaces (SRF’s) and one large rotating furnace (LRF) with an associated stack and scrubber were permitted and installed by the end of 2015. Other equipment includes cooling ducting, dust collectors, scrubber, laboratory, warehouse, slag vault, stack, jaw crusher, screen, hammer mill, and a 3.5’ x 8’ rod mill. The plant has a feed capacity of five to six metric tons of direct shipping ore or concentrates per day, depending on the quality of the feedstock. If the feedstock is in the mid-range of 45% antimony, the smelter could produce approximately 1.8 MM pounds of contained antimony annually. Concentrates from our flotation plant, and hand-sorted ore from Mexico sources and other areas, are being processed. During 2017, we completed the installation of a leach circuit to process concentrates from the Puerto Blanco cyanide leach plant containing precious metals from our Los Juarez Mining property. The Madero production is either sold or shipped to our Montana plant to produce finished Antimony products and precious metals. Access to the plant is by road and railroad. Set forth below are location maps:

 

 

 

ZEOLITE DIVISION

 

Location

 

This property is located in the southeast corner of Idaho, approximately seven miles east of Preston, Idaho, 34 miles north of Logan, Utah, 79 miles south of Pocatello, Idaho, and 100 miles north of Salt Lake City, Utah.

 

The mine is located in the N ½ of section 10 and the W ½ of section 2, section 3, and the E ½ section 4, Township 15, Range 40 East of the Boise Meridian, Franklin County, Idaho. The plant and the initial pit are located on the Webster Farm, L.L.C., which is private land.

 

Transportation

 

The property is accessed by seven miles of paved road and about l mile of gravel road from Preston, Idaho. Preston is near the major north-south Interstate Highway 15 to Salt Lake City or Pocatello.

 

Several Union Pacific rail sidings may be available to the mine. Bonida is approximately 25 miles west of the mine and includes acreage out of town where bulk rock could be stored, possibly in existing silos or on the ground. Three-phase power is installed at this abandoned site.  Finished goods can also be shipped from the Franklin County Grain Growers feed mill in the town of Preston on the Union Pacific Railroad.

 

The Burlington Northern Railroad can be accessed at Logan, Utah.

 

 

 Location Map 

 

 

 

 

 

Property and Ownership

 

BRZ leases 320 acres from the Webster Farm, L.L.C. The term of the lease is 15 years and it began on March 1, 2010. This includes the mill site and zeolite in the area of the open pit. The property is the NW ¼ and W ½ of the SW ¼ of section 3 and the N ½ of the W ¼ of section 10, Township 15 South, Range 40 East of the Boise Meridian, Franklin County, Idaho. The lease requires a payment of $10.00 per ton plus an additional annual payment of $10,000 on March 1st of each year. In addition, there are two other royalty holders. Nick Raymond and the estate of George Desborough each have a graduated royalty of $1.00 per ton to $5.00 per ton, depending on the sale price.

 

The balance of the property is on Bureau of Land Management property and includes 480 acres held by 24, 20-acre Placer claims. Should we drop our lease with Webster Farms LLC., we will retain these placer claims as follows:

 

BRZ 1        IMC 185308 BRZ 2        IMC 185309 BRZ 3        IMC 185310 BRZ 4        IMC 185311 BRZ 5        IMC 185312 BRZ 6        IMC 185313 BRZ 7        IMC 185314 BRZ 8        IMC 185315 BRZ 9        IMC 185316 BRZ 10      IMC 185317 BRZ 11      IMC 185318 BRZ 12      IMC 185319

BRZ 20      IMC 186183 BRZ 21      IMC 186184 BRZ 22      IMC 186185 BRZ 23      IMC 186186 BRZ 24      IMC 186187 BRZ 25      IMC 186188 BRZ 26      IMC 186189 BRZ 27      IMC 186190 BRZ 28      IMC 186191 BRZ 29      IMC 186192 BRZ 30      IMC 186193 BRZ 31      IMC 186194

 

 

 

Geology

 

The deposit is a very thick, sedimentary deposit of zeolitized volcanic ash of Tertiary age known as the Salt Lake Formation. The sedimentary interval in which the clinoptilolite occurs is more than 1000 feet thick in the area. Thick intervals of the zeolite are separated by thin limestone and sandstone beds deposited in the freshwater lake where the volcanic ash accumulated.

 

The deposit includes an 800- foot mountain. Zeolite can be sampled over a vertical extent of 800 feet and on more than 700 acres. The current pit covers more than 3 acres.  Despite the apparent size of the deposit, we claim no reserves.

 

Exploration, Development, and Mining

 

Exploration has been limited to the examination and sampling of surface outcrops and mine faces.

 

Mining Methods

 

Depending on the location, the zeolite is overlain by 1 to 12 feet of zeolite-rich soil. On the ridges, the cover is very little, and in the draws the soil is thicker. The overburden is stripped using a tractor dozer, currently a Caterpillar D-8K. It is moved to the toe of the pit, and will eventually be dozed back over the pit for reclamation.

 

Although near-surface rock is easily ripped, it is more economical to drill and blast it. Breakage is generally good. Initial benches were 20 to 30 foot, and each bench is accessed by a road.

 

Haulage is over approximately 4,000 feet of road on an uphill grade of 2.5% to the mill. On higher benches, the grade will eventually be downhill. Caterpillar 769 B rock trucks are being used. They haul 18 to 20 tons per load, and the cycle time is about 30 minutes.

 

With the trucks and the other existing equipment, the mine is capable of producing 80 tons per hour. 

 

MILLING

 

Primary Crusher

 

The primary crushing circuit is a conventional closed circuit, utilizing a Stephens-Adamson 42” x 12’ apron feeder, Pioneer 30” x 42” jaw crusher, Nordberg standard 3’ cone crusher, a 5’ by 12’  double deck Kohlberg screen, and has a self-cleaning dust collector. The rock is crushed to minus 1 inch and the circuit has a rated capacity of more than 50 tons per hour.

 

Dryer

 

There are two dryer circuits, one for lines one and two, and one for the Raymond mill. The dryer circuits include one 50 ton feed bin, and each dryer has a conveyor bypass around each dryer, a bucket elevator, and a dry rock bin. The dryers are 25 feet long, 5 feet in diameter and are fired with propane burners rated at 750,000 BTUs. One self-cleaning bag house services both dryers. Depending on the wetness of the feed rock, the capacity is in the range of 10 tons per hour per dryer. During most of the year, the dryers are not run.

 

Coarse Products Circuit

 

There are two lines to produce coarse products:

 

 

 

Fine Products Circuit

 

The fine products circuit is in one building and it includes (2) 3.5’ x 10.5’ Derrick 2 deck high frequency (3450 RPM) screens and various bucket elevators, augers, bins, and Sweco screens for handling product. Depending on the screening sizes, the plants can generate approximately 150 tons of granules and 125 tons of fines per 24-hour day.

 

 

Raymond Mill Circuit

 

The Raymond mill circuit includes a 6058 high-side Raymond mill with a double whizzer, dust collector, two 100 ton product silos, feed bin, conveyors, air slide, bucket elevators, and control booth. The Raymond mill has a rated capacity of more than 10 tons per hour.

 

Item 3 Legal Proceedings

 

No director, officer or affiliate of USAC and no owner of record or beneficial owner of more than 5.0% of our securities or any associate of any such director, officer or security holder is a party adverse to USAC or has a material interest adverse to USAC in reference to pending litigation.

 

Item 4 Mine Safety Disclosures

 

The information concerning mine safety violations or other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Annual Report.

 

PART II

 

Item 5 Market for Common Equity and Related Stockholder Matters

 

Currently, our common stock is traded on the NYSE-AMERICAN under the symbol UAMY. The following table sets forth the range of high and low bid prices as reported for the periods indicated. The quotations were taken from a website available to the public, and generally believed to be accurate. The quoted prices may not necessarily represent actual transactions.

 

2017	High	Low
First Quarter	$0.52	$0.34
Second Quarter	0.43	0.31
Third Quarter	0.29	0.21
Fourth Quarter	0.36	0.31

2016	High	Low
First Quarter	$0.33	$0.17
Second Quarter	0.31	0.20
Third Quarter	0.60	0.20
Fourth Quarter	0.47	0.22

 

The approximate number of holders of record of our common stock at April 2, 2018, is 2,500.

 

We have not declared or paid any dividends to our stockholders during the last five years and do not anticipate paying dividends on our common stock in the foreseeable future. Instead, we expect to retain earnings for the operation and expansion of our business.

 

In March of 2016 the Company issued the Board members 550,000 shares of the Company’s common stock for services provided during 2015 with a value of $137,500.

 

In December of 2016, the Company issued Daniel Parks, the Company’s Chief Financial Officer, 200,000 shares of the Company’s common stock valued at $54,000 to retain his services for a two year period. As part of the agreement, Mr. Parks’ hours worked and normal compensation was reduced.

 

During 2016, the Company awarded, but did not issue, common stock with a value at December 31, 2016, of $168,750 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $168,750 in director compensation expense. In March of 2017, at a price of $0.40 per share, the directors were issued 421,875 shares for 2016.

 

 

During 2017, the Company awarded, but did not issue, common stock with a value at December 31, 2017, of $175,000 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $175,000 in director compensation expense. As of April 2, 2018, the shares had not been issued to the directors.

 

 

Not Applicable.

 

 

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.

 

Overview

 

Company-wide

For the year ended December 31, 2017, we incurred a loss of $1,134,394 for 2017 after depreciation and amortization of $968,888, compared to a loss of $1,309,200 for 2016 after depreciation and amortization of $999,737, and an income tax provision of $298,138 for our Mexican operations. Our company-wide EBITDA was a negative $165,506 for 2017, compared to a negative $11,325 for 2016.

 

Net non-cash expense items totaled $1,275,000 for 2017 and included $968,888 for depreciation and amortization, $93,450 for amortization of debt discount, $175,000 for director compensation and $37,662 for other items.

 

Net non-cash expense items totaled $1,176,608 for 2016 and included $999,737 for depreciation and amortization, $70,590 for amortization of debt discount, $54,000 for stock-based compensation, $168,750 for director compensation and ($116,469) for other items.

 

Antimony Sales

 

During 2017, we saw our average sale price increase by $1.03 per pound to $4.01 per pound from an average price of $2.98 per pound for 2016. Due to the loss of our supply of antimony concentrates from Australia, the volume of antimony sold (metal contained) decreased from a record of 2,936,880 pounds sold in 2016 to 1,891,439 pounds sold in 2017, a decrease of 1,045,441pounds. During 2017 our production and sales from Mexican sources was approximately 530,000 pounds from our mines, and approximately 35,000 pounds from Australian concentrates. During 2017, the loss of raw material from Australia saw our gross sales of antimony decrease by $1,155,700 (13%). The antimony division had a negative EBIDTA of $1,094,579 for 2017, compared to a negative EBITDA of $1,131,971 for 2016. Our loss from antimony decreased from a loss of $2,171,611 in 2016 to a loss of $1,776,239 in 2017.

In November of 2017, we renegotiated our sodium antimonite supply agreement to recognize that antimony prices were in a world-wide slump, and that our general and administrative costs were a larger percent of our revenues than they were under the previous agreement. The new price agreement was implemented in December of 2017, and will result in lower antimony production costs and an improved cash flow for 2018 and the following years.

Zeolite Sales

Our sales volume of zeolite in 2017 was 766 tons less than we sold in 2016, a decrease of 6%. Our average sales price decreased by approximately $5 per ton, from $188 per ton in 2016 per ton to $183 per ton in 2017 (3%). During 2017, total sales of zeolite decreased by $206,458 from 2016. The zeolite division had EBIDTA of $554,201 for 2017, compared to EBITDA of $447,775 for 2016. Net income increased from $233,907 in 2016 to $331,472 in 2017, approximately $98,000.

 

Precious Metals Sales

Precious Metals Sales
Silver/Gold
Montana	2014	2015	2016	2017
Ounces Gold Shipped (Au)	64.77	89.12	108.10	107.00
Ounces Silver Shipped (Ag)	29,480	30,421	38,123	32,021
Revenues	$461,083	$491,426	$556,650	$480,985
Australian - Hillgrove
Ounces Gold Shipped (Au)			496.65	90.94
Revenues - Gross			$597,309	$96,471
Revenues to Hillgrove			(481,088)	(202,584)
Revenues to USAC			$116,221	$(106,113)
Total Revenues	$461,083	$491,426	$672,871	$374,872

 

Results of operations by division at December 31, 2017 and 2016 are as follows:

Results of Operations by Division
	2017	2016
Antimony Division - United States:
Revenues - Antimony (net of discount)	$7,588,470	$8,744,170
Domestic cost of sales:
Production costs	3,898,097	3,274,100
Depreciation	57,761	62,863
Freight and delivery	321,282	419,256
Indirect production costs	328,411	272,161
Direct sales expense	65,652	65,652
Total domestic antimony cost of sales	4,671,203	4,094,032
Cost of sales - Mexico
Production costs	2,223,663	3,480,252
Depreciation and amortization	623,899	678,639
Freight and delivery	45,461	113,412
Land lease expense	190,116	261,154
Indirect production costs	281,922	363,160
General and administrative	109,582	178,048
Total Mexico antimony cost of sales	3,474,643	5,074,665
Total revenues - antimony	7,588,470	8,744,170
Total cost of sales - antimony	8,145,846	9,168,697
Total gross profit (loss) - antimony	(557,376)	(424,527)
Precious Metals Division:
Revenues	374,872	672,871
Cost of sales:
Depreciation	64,499	44,367
Total cost of sales	64,499	44,367
Gross profit - precious metals	310,373	628,504
Zeolite Division:
Revenues	2,266,636	2,473,094
Cost of sales:
Production costs	919,876	1,210,832
Depreciation	222,729	213,868
Freight and delivery	175,303	226,258
Indirect production costs	176,566	178,881
Royalties	235,021	258,206
Direct sales expense	128,738	52,375
Total cost of sales	1,858,233	2,140,420
Gross profit - zeolite	408,403	332,674
Total revenues - combined	10,229,978	11,890,135
Total cost of sales - combined	10,068,578	11,353,484
Total gross profit - combined	$161,400	$536,651

 

Results of Operations by Division
Antimony - Combined USA
and Mexico	2017	2016
Lbs of Antimony Metal USA	1,326,659	1,422,957
Lbs of Antimony Metal Mexico:	564,780	1,513,923
Total Lbs of Antimony Metal Sold	1,891,439	2,936,880
Average Sales Price/Lb Metal	$4.01	$2.98
Net loss/Lb Metal	$(0.94)	$(0.74)
Gross antimony revenue - net of discount	$7,588,470	$8,744,170
Cost of sales - domestic	(4,671,202)	(4,094,032)
Cost of sales - Mexico	(3,474,643)	(5,074,665)
Operating expenses	(1,056,862)	(1,265,518)
Non-operating expenses	(162,002)	(183,428)
Income tax provision	-	(298,138)
	(9,364,709)	(10,915,781)
Net loss - antimony	(1,776,239)	(2,171,611)
Depreciation,& amortization	681,660	741,502
Income taxes	-	298,138
EBITDA - antimony	$(1,094,579)	$(1,131,971)
Precious Metals
Ounces sold
Gold	107	108
Silver	32,021	38,123
Gross precious metals revenue	$374,872	$672,871
Production costs, royalties, and shipping costs	(64,499)	(44,367)
Net income - precious metals	310,373	628,504
Depreciation	64,499	44,367
EBITDA - precious metals	$374,872	$672,871
Zeolite
Tons sold	12,377	13,143
Average Sales Price/Ton	$183.13	$188.17
Net income (Loss)/Ton	$26.78	$17.80
Gross zeolite revenue	$2,266,636	$2,473,094
Cost of sales	(1,858,234)	(2,140,420)
Operating expenses	(64,237)	(87,655)
Non-operating expenses	(12,693)	(11,112)
Net income - zeolite	331,472	233,907
Depreciation	222,729	213,868
EBITDA - zeolite	$554,201	$447,775
Company-wide
Gross revenue	$10,229,978	$11,890,135
Production costs	(10,068,578)	(11,353,484)
Operating expenses	(1,121,099)	(1,353,173)
Non-operating expenses	(174,695)	(194,540)
Income tax provision	-	(298,138)
Net income (loss)	(1,134,394)	(1,309,200)
Depreciation,& amortization	968,888	999,737
Income taxes	-	298,138
EBITDA	$(165,506)	$(11,325)

 

 

During the two year period ended December 31, 2017, the most significant events affecting our financial performance were the fluctuation of antimony prices and the decrease in our sources of antimony raw material. During the first half of 2016, the price for antimony hit a seven year low, but recovered to approximately $4.00 per pound by the end of 2017. By the end of 2016, we stopped the processing of antimony concentrate for Hillgrove Mines, Ltd., of Australia and started production from our own mines in Mexico. There was no production from our own mines in Mexico, during 2016 due to the processing of concentrates from Hillgrove. We produced approximately 530,000 pounds from our Mexican properties in 2017. The Puerto Blanco mill circuits were utilized less than 10% of their capacity. Going forward, the increased supply of raw material from Mexico and the metal prices for both antimony and precious metals will be the most significant factors influencing our operations. Included in antimony cost of sales-Mexico are costs of approximately $276,000 and $358,000 for 2017 and 2016, respectively, relating to maintaining our mineral properties which were idle for 2016 and for a portion of 2017.  

 

The following are highlights of the significant changes during 2017 and the two year period then ended:

 

Antimony:

 

 

Zeolite:

 

During 2017, BRZ sold 12,377 tons compared to 13,143 tons in 2016, down 766 tons (6%). BRZ realized a net income of $331,472 in 2017 after depreciation of $222,729 compared to a net income of $233,907 in 2016 after depreciation of $213,868. Production efficiency at the plant in Preston, Idaho, increased in 2017 due to repairs and new equipment. Sales activity in the early part of 2018 includes a number of new customers.

General and administrative costs, as reported in our statement of operations, include fees paid to directors through stock based compensation, office expenses, and fees to the NYSE AMERICAN, and other non-operating costs. The combined general and administrative costs were 5.2%, and 5.7%, of sales for 2017 and 2016, respectively.

 

 

The decrease in professional fees for 2017 (approximately $91,000) was primarily due to attorney fees of approximately $72,000 paid in 2016 related to our former Investor Relations representative. Our accounting fees for 2017 related to our annual audit and our quarterly SEC filings decreased by approximately $15,000 from the prior year.

Factoring costs increased in 2017 from approximately $35,000 in 2016 to approximately $36,000 in 2017.

 

The discounts we gave for early payments were approximately $110,000 for both 2017and 2016.

Subsidiaries

 

The Company has a 100% investment in two subsidiaries in Mexico, USAMSA and AM, whose mineral property carrying values were assessed at December 31, 2017 and 2016 for impairment. Management’s assessment of the subsidiaries’ fair value was based on their future benefit to us.

 

Financial Condition and Liquidity

 

	2017	2016
Current assets	$1,562,270	$1,692,555
Current liabilities	(3,934,726)	(3,382,123)
Net Working Capital	$(2,372,456)	$(1,689,568)
Cash provided by operations	$716,705	$425,837
Cash used for capital outlay	(365,541)	(583,029)
Cash provided (used) by financing:
Net payments (to) from factor	(139,519)	136,617
Proceeds from notes payable to bank	25,248	36,645
Principal paid on long-term debt	(211,529)	(175,238)
Checks issued and payable	(7,434)	35,682
Net change in cash	$17,930	$(123,486)

 

Our net working capital decreased for the year ended December 31, 2017, from a negative amount of $1,689,568 at the beginning of the year to a negative amount of $2,372,456 at the end of 2017. Our current assets decreased primarily due to a decrease in our accounts receivable, which was partially offset by an increase in our inventories. Our current liabilities increased by approximately $550,000 primarily due to an increase in our accounts payable and the current portion of long-term debt, which were partially offset by the decrease in our liability for factored accounts receivable. Capital improvements were paid for with cash and debt.

 

For the year ending December 31, 2018, we are planning to finance our improvements with operating cash flow. Our 2018 improvements are expected to include improvements related to completing the cyanide leach circuit at Puerto Blanco.

 

The current portion of our long term debt is serviceable from the cash generated by operations.

 

Going Concern Consideration

 

At December 31, 2017, the Company’s financial statements show negative working capital of approximately $2.4 million and an accumulated deficit of approximately $26.5 million.  In addition, the Company has incurred losses for the prior three years.  These factors indicate that there may be doubt regarding the ability to continue as a going concern for the next twelve months. 

 

The continuing losses are principally a result of the Company’s antimony operations and in particular to the production costs incurred in Mexico. The other two operating divisions, precious metals and zeolite, had gross profits of $310,373 and $408,403, respectively, in 2017.

 

 

Regarding the antimony division, in 2016 the Company endured some of the lowest prices for antimony in the past seven years, with an average sales price of only $2.98 per pound of metal contained.  Prices improved during 2017 with an average sale price of $4.01. Through March 2018, our average sale price for antimony is approximately $4.10 per pound. Additionally, in November 2017, the Company renegotiated its domestic sodium antimonite supply agreement resulting in a lower cost for antimony per pound of approximately $0.44. With the new supply agreement in place, most of the market increase in antimony prices will result in increased Company cash flow in 2018 from its antimony division.

 

In 2017, the Company reduced costs for labor at the Mexico locations which has resulted in a lower overall production costs in Mexico which will continue through 2018. The reduction was due to a large reduction in the work force at the Madero smelter because of the decrease in antimony concentrates from Hillgrove (see Note 10). In the fourth quarter 2017, the Company also adjusted operating approaches at Madero that will likely result in a decrease in operating costs for fuel, natural gas, electricity, and reagents. Although total production activity in Mexico decreased in 2017 due to the lack of Hillgrove concentrates, the Company’s 2018 plan involves ramping up production at its own antimony properties in Mexico. In addition, a new leach circuit expected to come on line during 2018 in Mexico will result in more extraction of precious metals.

 

In 2017, management implemented wage and other cost reductions at the corporate level that will keep administrative costs stable in 2018. The Company expects to continue paying a low cost for propane in Montana, which in years past has been a major operating cost.

 

Over the past several years, the Company has been able to make required principal payments on its debt from cash generated from operations without the need for additional borrowings or selling shares of its common stock. The Company plans to continue keeping current on its debt payments in 2018 through cash flows from operations.

 

Management believes that the current circumstances and cost reduction actions taken will enable the Company to be actively operating for the next twelve months.

 

Critical Accounting Estimates

 

We have, besides our estimates of the amount of depreciation on our assets, two critical accounting estimates. The value of our unprocessed ore in inventory is assessed on assays taken at the time the ore is delivered, and may vary when the ore is processed and final settlement is made. Also, the asset recovery obligation on our balance sheet is based on an estimate of the future cost to recover and remediate our properties as required by our permits upon cessation of our operations, and may differ when we cease operations.

 

 

 

 

Item 7A Quantitative and Qualitative Disclosures about Market Risk

 

Not Applicable.

 

Item 8 Financial Statements

 

The consolidated financial statements of the registrant are included herein on pages F1-F22.

 

Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

None

 

Item 9A Controls and Procedures

 

Evaluation of disclosure controls and procedures

 

At the end of the period covered by this Annual Report on Form 10-K, an evaluation was carried out under the supervision of and with the participation of our management, including the Principal Executive Officer and the Principal Financial Officer of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act) as of the end of the period covered by this report.  Based on that evaluation, the Principal Executive Officer and the Principal Financial Officer have concluded that our disclosure controls and procedures were not effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.  

 

Disclosure controls and procedures were not effective due primarily to material weaknesses in the Company’s internal control of financial reporting as discussed below.

 

Internal control over financial reporting

 

Management's annual report on internal control over financial reporting

 

The management of USAC is responsible for establishing and maintaining adequate internal control over financial reporting. This internal control system has been designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of our published financial statements.

 

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

 

 

The management of USAC has assessed the effectiveness of our internal control over financial reporting as of December 31, 2017. To make this assessment, we used the criteria for effective internal control over financial reporting described in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

As a result of our assessment, we concluded that we have material weaknesses in our internal control over financial reporting as of December 31, 2017. These weaknesses are as follows:

 

 

 

 

We are aware of these material weaknesses and will develop procedures to ensure that independent review of material transactions is performed. The chief financial officer will develop internal control measures to mitigate the lack of inadequate documentation of controls and the monitoring of internal controls over significant accounts and processes including controls associated with the period-ending reporting processes, and to mitigate the segregation of duties within significant accounts and processes and the absence of controls over management oversight, including antifraud programs and controls.

 

We plan to consult with independent experts when complex transactions are entered into.

 

Because these material weaknesses exist, management has concluded that our internal control over financial reporting as of December 31, 2017, is ineffective.

 

Changes in internal control over financial reporting

 

There were no changes in internal control over financial reporting for the quarter ended December 31, 2017.

 

PART III

 

Identification of directors and executive officers at December 31, 2017, is as follows:

 

Name		Age		Affiliation		Expiration of Term
John C. Lawrence		79		Chairman, President,		Annual meeting
				Director
John C. Gustavsen		69		First Vice-President		Annual meeting
Russell C. Lawrence		49		Second Vice-President		Annual meeting
				and Director
Matthew Keane		62		Third Vice-President		Annual meeting
Daniel L. Parks		69		Chief Financial Officer		Annual meeting
Alicia Hill		36		Secretary, Controller,		Annual meeting
				and Treasurer
Gary D. Babbitt		72		Director		Annual meeting
Whitney Ferer		59		Director		Annual meeting
Hart W. Baitis		68		Director		Annual meeting
Jeffrey Wright		48		Director		Annual meeting
Craig Thomas		43		Director		Annual meeting

 

 

Business Experience of Directors and Executive Officers

 

John C. Lawrence. Mr. Lawrence has been the president and a director since our inception in 1969. Mr. Lawrence was the president and a director of AGAU Mines, Inc., our corporate predecessor. He is a member of the Society of Mining Engineers and a recipient of the Uuno Sahinen Silver Medallion Award presented by Butte Tech, University of Montana. He has a vast background in mining, milling, smelting, chemical processing and oil and gas.

 

Gary D. Babbitt. Mr. Babbitt has experience in the mining industry with approximately 30 years dealing with joint ventures, purchases, royalty leases and contracts. He has a working knowledge of Spanish and has negotiated supply and mining agreements in Mexico. Mr. Babbitt has a B.A. from the Albertson College of Idaho, and earned his J.D. from the University of Chicago.

 

Russell C. Lawrence. Mr. Lawrence has experience in applied physics, mining, refining, excavation, electricity, electronics, and building contracting. He graduated from the University of Idaho in 1994 with a degree in physics, and worked for the Physics Department at the University of Idaho for a period of 10 years. He has also worked as a building contractor and for USAC at the smelter and laboratory at Thompson Falls, for USAMSA in the construction and operation of the USAMSA smelter in Mexico, and for Antimonio de Mexico, S. A. de C. V. at the San Miguel Mine in Mexico.

 

Hart W. Baitis. Mr. Baitis graduated from the University of Oregon in 1971 with a B.S. in Geology, and was awarded a Ph. D. in Geology in 1976. He has 35 years of experience as an exploration geologist in the United States, Canada, Central America, and Mexico. Mr. Baitis is experienced in numerous geologic environments and terrains, and has been involved in all phases of exploration, ranging from field geologist, consultant, management, and acquisition team director.

 

Whitney Ferer.  Mr. Ferer was nominated to the board of USAC in February 2012. He worked for 34 years for Aaron Ferer & Sons Co. headquartered in Omaha, Nebraska, where he was the Vice President of Operations and Senior Trader, as well  Vice Chairman of the Board of AF&S Co..  He has been involved in the patenting of various processes for the breakdown of plastics and metal recovery, and was Vice President of the Lead & Zinc Division of AF&S.  In addition, Mr. Ferer has been active in the trading of all metals, and facilitated the opening of eight offices in the Far East and China for AF&S.  Mr. Ferer has recently opened his own company W.H. Ferer Co., LLC.   He is one of the largest traders of antimony metal and oxides in the United States and, additionally, he handles approximately 20-30 elements in various forms and grades.

 

Jeffrey D. Wright. Mr. Wright graduated from North Carolina University in 1991, and from the University of Southern California, Marshall School of Business (MBA) in 2004. Mr. Wright was a naval officer from 1991 through 1996, serving aboard the aircraft carrier USS Carl Vinson and the destroyer USS John Young. After duty in the military, Mr. Wright held successively more responsible positions in the securities and finance industry. From 2011 through 2013 he was the managing director metals and mining research for Global Hunter Securities, and he held the same position for H.C. Wainwright for 2013 through 2015.

 

Craig W. Thomas. Mr. Thomas is a professional investor with fifteen years of investing experience.  He is currently the co-founder of Shareholder Advocates for Value Enhancement and the managing member of various investment partnerships.   Mr. Thomas is currently a director of Full House Resorts, Inc.  Mr. Thomas earned a B.A. from Stanford University and an M.B.A. from the Graduate School of Business at Stanford University.

 

Alicia Hill. Ms. Hill was hired by the Company in 2006 as an accounting assistant, and was eventually promoted to chief accountant responsible for the recording of transactions for three companies. In 2011, she was appointed Company Controller, Secretary, and Treasurer. Ms. Hill has guided the Company through the listing on the NYSE-MKT, in the addition of a new division in Mexico, and has been the liaison with the Company’s auditors through a progressively complicated reporting process.

 

Daniel L. Parks. Mr. Parks graduated from the University of Idaho in 1974 with a B.S. in Accounting, and was licensed as a certified public accountant in 1976. He worked as an auditor for Coopers & Lybrand for three years, as controller for a lumber manufacturing company for one year, and owned his own accounting practice for thirty years. Mr. Parks was extensively involved in auditing and financial statement preparation during this time.

 

 

John C. Gustaven. Mr. Gustaven graduated from Rutgers University in 1970 with a BS in chemistry and started work for Harshaw Chemical (purchased by Amspec Chemical Corporation), a major producer of antimony trioxide. Mr. Gustaven took engineering courses from 1976 through 1980, and became president and treasurer of the company in 1983. He was promoted CEO in 1990. Mr. Gustaven designed a new type of production furnace for antimony trioxide that eventually produced 20 million pounds of antimony trioxide per year. Mr. Gustaven is conversant in Spanish, Chinese, and other languages, and travelled to many countries as part of his duties as president of Amspec Chemical Corporation. Mr. Gustaven came to work at United States Antimony Corporation in November of 2011.

 

Matt Keane. Mr. Keane graduated from Mankato State University in 1978 with degrees in geography and environmental studies. Mr. Keane was owner of a construction business and a retail building supply business before becoming the director of sales for United States Antimony Corporation in 2000. Mr. Keane has developed the Company’s growing zeolite sales through Bear River Zeolite and the increase in the Company’s share of the domestic market for antimony products.

 

We are not aware of any involvement by our directors or executive officers during the past five years in legal proceedings that are material to an evaluation of the ability or integrity of any director or executive officer.

 

Board Meetings and Committees Our Board of Directors held four (4) regular meetings during the 2017 calendar year. Each incumbent director attended all of the meetings held during the 2017 calendar year, in the aggregate, by the Board and each committee of the Board of which he was a member.

 

Our Board of Directors established an Audit Committee on December 10, 2011. It consists of four members, Gary Babbitt (Chairman), Whitney Ferer, Jeffrey Wright, and Craig Thomas. None of the Audit Committee members are involved in our day-to-day financial management. Jeffrey Wright and Craig Thomas are considered financial experts.

 

During 2011, the Board also established a Compensation Committee and a Nominating Committee.

 

Board Member Compensation Following is a summary of fees, cash payments, stock awards, and other reimbursements to Directors during the year ended December 31, 2017:

 

Directors Compensation

 

Name and Principal Position	Fees Earned or paid in Cash	Stock Awards	Total Fees, Awards, and Other Compensation
John C. Lawrence, Chairman		$25,000	$25,000
Gary D. Babbitt, Director	$18,000	$25,000	$43,000
Russell Lawrence, Director		$25,000	$25,000
Hartmut Baitis, Director		$25,000	$25,000
Whitney Ferer, Director		$25,000	$25,000
Jeffrey Wright, Director		$25,000	$25,000
Craig Thomas, Director		$25,000	$25,000
Totals	$18,000	$175,000	$193,000

 

Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and the holders of 10% or more of our common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and stockholders holding more than 10% of our common stock are required by the regulation to furnish us with copies of all Section 16(a) forms they have filed. Based solely on our review of copies of Forms 3, 4 and 5 furnished to us, Mr. Baitis, Mr. Babbitt, Mr. Ferer, and Mr. Russell Lawrence did not file timely Forms 3, 4 or Form 5 reports during 2017 and 2016.

 

 

Code of Ethics

The Company has adopted a Code of Ethics that applies to the Company's executive officers and its directors. The Company will provide, without charge, a copy of the Code of Ethics on the written request of any person addressed to the Company at: United States Antimony Corporation, P.O. Box 643, Thompson Falls, MT 59873.

 

Item 11 Executive Compensation

 

Summary Compensation Table

The Securities and Exchange Commission requires the following table setting forth the compensation paid by USAC to its principal executive officer for fiscal years ended December 31, 2017 and 2016.

 

Name and Principal Position		Year	Salary	Bonus	Stock Awards (2)	Total
John C. Lawrence,		2017	$141,000	N/A	$25,000	$166,000
President and Chief Executive Officer		2016	$141,000		$25,000	$166,000
John C. Gustaven,		2017	$100,000	N/A		$100,000
Executive Vice President		2016	$100,000			$100,000
Russell Lawrence,		2017	$110,000	N/A	$25,000	$135,000
Vice President for Latin America		2016	$110,000		$25,000	$135,000

 

Compensation for all executive officers, except for the President/CEO position, is recommended to the compensation committee of the Board of Directors by the President/CEO. The compensation committee makes the recommendation for the compensation of the President/CEO. The compensation committee has identified a peer group of mining companies to aid in reviewing the President’s compensation recommendations for executives, and for reviewing the compensation of the President/CEO. The full Board approves the compensation amounts recommended by the compensation committee. Currently, the executive managements’ compensation only includes base salary and health insurance. The Company does not have annual performance based salary increases, long term performance based cash incentives, deferred compensation, retirement benefits, or disability benefits.

 

Two executive officers, the President/CEO and the Vice-President for the Latin American operations, receive restricted stock awards for their services as Board members.

 

The following table sets forth information concerning the outstanding equity awards at December 31, 2017, held by our principal executive officer. There were not any other outstanding equity awards or plan based awards to officers or directors as of December 31, 2017.

 

 

Outstanding Equity Awards at Fiscal Year End Awards
	Number of Securities UnderlyingUnexercised Options		Equity Incentive Plan Awards:
	Exercisable	Unexercisable	Number of Securities Underlying Unexercised	Exercise	Expiration
Name	#	#	Unearned	Price	Date
John C. Lawrence	250,000	0	0	$0.25	None
(Chairman of the Board of Directors and Chief Executive Officer)

Item 12 Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth information regarding beneficial ownership of our common stock as of April 2, 2018, by (i) each person who is known by us to beneficially own more than 5% of our Series B, C, and D preferred stock or common stock; (ii) each of our executive officers and directors; and (iii) all of our executive officers and directors as a group. Unless otherwise stated, each person's address is c/o United States Antimony Corporation, P.O. Box 643, 47 Cox Gulch, Thompson Falls, Montana 59873.

 

 

Title of Class		Name and Address of Beneficial Owner (1)	Amount and Nature of Beneficial Ownership	Percent of Class (1)	Percent of all Voting Stock
Common Stock		Reed Family Limited Partnership 328 Adams Street Milton, MA 02186	4,018,335	5.95%	5.80%
Common Stock		The Dugan Family c/o A.W. Dugan 1415 Louisana Street, Suite 3100 Houston, TX 77002	6,362,927(3)	9.43%	9.19%
Series B Preferred		Excel Mineral Company P.O. Box 3800 Santa Barbara, CA 93130	750,000(5)	100.00%	N/A
Series C Preferred		Richard A. Woods 59 Penn Circle West Penn Plaza Apts. Pittsburgh, PA 15206	48,305(4)	27.10%	*
Series C Preferred		Dr. Warren A. Evans 69 Ponfret Landing Road Brooklyn, CT 06234	32,203(4)	18.10%	*
Series C Preferred		Edward Robinson 1007 Spruce Street, 1st floor Philadelphia, PA 19107	32,203(4)	18.10%	*
Series C Preferred		All Series C Preferred Shareholders as a Group	177,904(4)	100.00%	*
		John C. Lawrence	4,343,607(2)	68.59%	6.27%
		Russell Lawrence	343,145	5.42%	*
		Hart Baitis	233,680	3.69%	*
		Garry Babbitt	271,486	4.29%	*
Common Stock		Whitney Ferer	162,500	2.57%	*
		Jeffrey Wright	130,320	2.06%	*
		Mathew Keane	10,300	0.16%	*
		Daniel Parks	264,500	4.18%	*
		Craig Thomas	572,711	9.04%	*
Common Stock		All Directors and Executive Officers as a Group	6,332,249	100.00%	9.16%
		John C. Lawrence	1,590,672(4)	90.80%	2.29%
Series D Preferred		Leo Jackson	102,000	5.80%	*
		Garry Babbitt	58,333	3.40%	*
Series D Preferred		All Series D Preferred Shareholders as a Group	1,751,005(4)	100.00%	2.52%
		All Directors and Executive Officers as a Group	6,332,249(2)	78.38%	9.16%
Common Stock and Preferred Stock w/ voting rights			-	-	-
		All preferred Shareholders that are officers or directors	1,751,005(4)	21.62%	2.52%
Common and Preferred Voting Stock		All Directors and Executive Officers as a Group	8,083,254	100.00%	11.69%

(1)Beneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of April 2, 2018, are deemed outstanding for computing the percentage of the person holding options or warrants but are not deemed outstanding for computing the percentage of any other person. Percentages are based on a total of 67,488,153 shares of common stock, 750,000 shares of Series B Preferred Stock, 177,904 shares of Series C Preferred Stock, and 1,751,005 shares of Series D Preferred Stock outstanding on April 2, 2018. Total voting stock of 69,417,062 shares is a total of all the common stock issued, and all of the Series C and Series D Preferred Stock outstanding at April 2, 2018.

 

 

 

 

 

 

 

Described below are transactions during the last two years to which we are a party and in which any director, executive officer or beneficial owner of five percent (5%) or more of any class of our voting securities or relatives of our directors, executive officers or five percent (5%) beneficial owners has a direct or indirect material interest.

 

In March of 2016 the Company issued the Board members 550,000 shares of the Company’s common stock at $0.25 per share for services performed in 2015 with a value of $137,500.

 

In December of 2016, the Company issued Daniel Parks, the Company’s Chief Financial Officer, 200,000 shares of the Company’s common stock valued at $54,000 to retain his services for a two year period. As part of the agreement, Mr. Parks’ hours worked and normal compensation was reduced.

 

During 2016, the Company awarded, but did not issue, common stock with a value at December 31, 2016, of $168,750 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $168,750 in director compensation expense. In March of 2017, at a price of $0.40 per share, the directors were issued 421,875 shares for 2016.

 

On December 31, 2017, the Company awarded shares of unregistered common stock to be paid to its directors for services during 2017, having a fair value of $175,000, based on the stock price at the date declared. The stock has not been issued as of April 2, 2018.

 

The Company’s President and Chairman, John Lawrence, rents equipment and an aircraft to the Company and charges the Company for lodging and meals provided to consultants, customers and other parties by an entity that Mr. Lawrence owns. The amount due to Mr. Lawrence as of December 31, 2017 and 2016 was $22,668 and $14,525, respectively. Expenses paid to Mr. Lawrence for the years ended December 31, 2017 and 2016 were $13,603 and $16,791, respectively.

 

Item 14     Principal Accountant Fees and Services

 

The Company's Board of Directors and audit committee reviews and approves audit and permissible non-audit services performed by DeCoria, Maichel & Teague P.S., as well as the fees charged by DeCoria, Maichel & Teague P.S. for such services. In its review of non-audit service fees and its appointment of DeCoria, Maichel & Teague P.S. as the Company's independent accountants, the Board of Directors considered whether the provision of such services is compatible with maintaining DeCoria, Maichel & Teague P.S. independence. All of the services provided and fees charged by DeCoria, Maichel & Teague P.S. in 2017 were pre-approved by the Board of Directors and its audit committee.

 

Audit Fees

The aggregate fees billed by DeCoria, Maichel & Teague P.S. for professional services for the audit of the annual financial statements of the Company and the reviews of the financial statements included in the Company's quarterly reports on Form 10-Q for 2017 and 2016 were $119,985 and $134,985, respectively, net of expenses.

 

 

Audit-Related Fees

There were no other fees billed by DeCoria, Maichel & Teague P.S. during the last three fiscal years for assurance and related services that were reasonably related to the performance of the audit or review of the Company's financial statements and not reported under "Audit Fees" above.

 

Tax Fees

The aggregate fees billed by DeCoria, Maichel & Teague P.S. during the last two fiscal years for professional services rendered by DeCoria, Maichel & Teague P.S. for tax compliance for 2017 and 2016 were $8,985 and $12,695, respectively.

 

All Other Fees

There were no other fees billed by DeCoria, Maichel & Teague P.S. during the last two fiscal years for products and services provided by DeCoria, Maichel & Teague P.S

Item 15. Exhibits and Reports on Form 8-K

 

 

 

 

 

 

 

Documents filed with USAC's Annual Report on Form 10-KSB for the year ended December 31, 1995 (File No. 001-08675), are incorporated herein by this reference: